Treasury advice on rushing the Reserve Bank bill

From a Treasury paper to the Minister of Finance, written in March and pro-actively released yesterday (emphasis added)

Legislative Timeline
14. Officials’ recommended timeline, set out in Annex 2, would see drafting instructions issued in tranches from the end of April, and Cabinet approval of draft legislation by the end of August. Consistent with previous decisions, the recommended process does not allow for public consultation on an exposure draft of the legislation prior to the Bill being referred to select committee. You should note that this timeline is indicative only, and will depend on how quickly decisions are made, securing time in the House and the length of the select committee process.

15. Officials’ proposed timeline will allow the first reading of the Bill when Parliament resumes in the first week of September. Assuming the normal six month select committee process, this would enable Royal Assent by the end of April 2019.

16. The bid for space on the legislative agenda suggested the legislation would be passed this year. However, we do not recommend passing the legislation in 2018. Doing so would require shortening either the policy and drafting process, the select committee process or both. Reducing the time for either of these processes risks compromising the quality of the final legislation, and will make it harder to build public support for the reforms. A substantive select committee process that builds public support is particularly important given that the changes are to one of New Zealand’s major economic frameworks and that only limited public consultation was conducted during the policy development process.

17. If you want to pass legislation in 2018 and run a full select committee process, the policy and drafting process would need to be completed by early June. While this is not impossible, it would greatly increase the risks around introducing legislation. Risks could include introducing legislation with provisions with unintended consequences or new processes that are unworkable. This would make significant amendments likely during the select committee and the committee of the whole House stages.

Since the bill introduced this week has to be reported back from select committee by 3 December, it seems likely the government wishes to pass the bill this year, contrary to Treasury’s fairly-trenchantly worded advice.

I’m a little torn.  I’m keen to see a statutory committee in place, and I don’t usually put much store in Treasury’s economic analysis (and see Eric Crampton on the limited number of economists they are recruiting), but they should know something about policy development and legislative processes.  And they clearly think this legislation is being rushed, in an unnecessary, inappropriate, and risky way.

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