Publication - Research and analysis

Overview of costs and benefits associated with regulation in Scottish agriculture

Published: 20 February 2009
Directorate: Agriculture and Rural Economy Directorate
Topic: Farming and rural
ISBN: 9780755919222

Research providing an overview of the regulations in Scottish agriculture and exploring 12 case studies in further detail.

Supporting documents

Appendix C: Regulation in New Zealand

Background

New Zealand provides a useful benchmark because competitiveness is critical to their long term success given their dependence on trade. A light regulatory touch is generally considered important in maintaining this competitiveness. That said, growing concerns about the environmental impact of dairy farming are leading politicians to question whether the regulatory balance is right. New Zealand farmers, on the other hand, complain about the growing influence of "Auckland greenies" in environmental matters.

The New Zealand government liberalised its agricultural industry in the mid 1980s. Consequently, New Zealand agriculture is notable for the lack of "red tape" associated with farm subsidies, which many Scottish farmers complain of. It is important to note, however, that this red tape is associated with accessing financial support rather than simply complying with regulations. The New Zealand comparison is therefore particularly useful because it highlights the cost of complying with regulations typical of industry in general.

Scotland and New Zealand - key statistics
		Scotland	NZ
Total area (incl water) (km ²)		78,772	268,680
Area cf. Scotland (Scot=100)		100	341
Land use (%)	- arable - permanent crops - other	7.94 .02 92.04	5.54 6.92 87.54
Population		5,116,900	4,115,771
GDP ( PPP³⁰ - $ ³¹ billion)		172	106.9
GDP real growth rate (%)		na	1.5
GDP per capita ( PPP - $)		33,680	26,200
GDP composition by sector (%)	- agriculture - industry - services	1.2 26.8 72	4.3 26.9 68.8
Labour force by occupation (%)	- agriculture - industry - services		10 25 65
Unemployment rate (%)		3.5	3.8
Inflation rate (%)		as per UK	3.4
Source: The World Factbook 2007 ( CIA), Scottish Economic Statistics 2007; Economic Report on Scottish Agriculture 2006, Wikipedia

Reforms

Since the reforms of the 80's, New Zealand agricultural sector has changed significantly as the various sectors have responded to market demands rather than subsidy signals. The table below shows how the productivity experience of New Zealand farming has changed over time.

Economic contribution

New Zealand's agricultural sector remains a key driver of the New Zealand economy despite its share of national GDP declining since the late 1980's. Agriculture accounted for 4.9% of GDP in 2007 ³², down from 5.4% in 1988. If subsequent processing is also added the combined contribution of agriculture and associated processing came to 9.2% of GDP in 2004/05 ³³.

In terms of export receipts, the importance of New Zealand agriculture is much more evident. Dairy products were New Zealand's largest export earners in the year to June 2007, accounting for 21 percent of total merchandise exports and valued at $7.5 billion. Meat and wood were the next largest export earners, accounting for 13.2 and 6.3 percent of total exports respectively.

Scale and productivity

Stock units ³⁴ and productivity indicators - New Zealand

		1982/83	2003/04	Change %
Sheep	stock unit	64474	37010	-42.6
Beef	stock unit	22018	21593	-1.9
Dairy	stock unit	19658	32365	64.6
Total	stock unit	106150	90968	-14.3
Milk solids per cow	kg	231	305	32.3
Lambing rate	%	96	113	17.9
Lamb weight	kg/hd	13	17	27.7
Mutton weight	kg/hd	19	24	26.3
Beef weight	kg/hd	223	257	15.2

Source: Agriculture in New Zealand, NZMAF (2006)

Key Issues

New Zealand farm leaders are concerned about how increasingly tougher environmental regulations are limiting competitiveness. Key areas relate to climate change and access to water. Farmers are also concerned about a suite of employment regulations that are currently being introduced which will lead to increased costs for employers. Other regulations, notably on animal welfare, may be imposed by overseas customers (eg, UK supermarkets), and may exceed global gap requirements.

Regulation in New Zealand - the Policy Process

New Zealand has historically experienced cycles of economic de- and re-regulation and debate has tended to focus on the heavy or light-handedness of settings. After a period of significant deregulation and public sector reorganisation in the 1980s, the emphasis of regulatory policy is now on quality management and the maintenance of robust regulatory frameworks across all sectors.

The feedback obtained from businesses during the New Zealand government's Quality Regulation Review in 2007 suggested that the current regulatory environment for business in New Zealand was in fairly good shape, with no fundamental or widespread systemic problems being identified. This is consistent with New Zealand's ranking on the World Bank's Ease of Doing Business survey, where New Zealand is second only to Singapore.

The policy cycle in New Zealand

The Generic Policy Development Process

The GPDP sets out the best practice procedures that should occur at each of the five stages (strategic, tactical, operational, legislative and implementation and review) of regulatory development and formalises the opportunities for stakeholder involvement.

Figure C1. The Generic Policy Development Process

Figure C1. The Generic Policy Development Process

The key objectives of the GPDP are to:

provide transparency at every stage of the policy development process;
encourage earlier, explicit consideration of key policy elements and trade-offs;
clarify the responsibilities of participants and accountabilities of policy agencies;
provide opportunities for substantial external input into policy advice and the review of its effect; and
formalise a process of interaction between public and private sector participants in the policy process.

Role of consultation

The GPDP states that public consultation should occur as widely as possible, given the circumstances, in the policy development process. This is in recognition that a well-designed and implemented consultation programme can contribute to better quality regulations, identification of the more effective alternatives, lower costs to business and administration, and ensure better compliance.

Treaty of Waitangi ³⁵ implications must also be assessed and advised on to ensure compliance with the basic principles of the legal and constitutional system.

In order to complete an RIA, adequate consultation is required. This will generally involve consulting with a representative sample of affected parties on the, problem, range of feasible options and impacts of the options.

Consultation can be deemed to be inadequate for a number of reasons, including

when affected or interested parties are not consulted (e.g.: not consulted at all or unrepresentative consultation, such as where only large organisations are consulted)
when consultation processes are ineffective (e.g.: consulted parties not given enough time to provide responses, important issues not consulted on, consultation document merely posted on department's website and not advertised widely enough).

Regulatory Impact Analysis

New Zealand, like other developed countries, uses Regulatory Impact Analysis ( RIA) for considering the need for, and design of, regulatory intervention. The Code of Good Regulatory Practice sets the framework within which the RIA requirements sit. It sets out principles of quality regulation under the headings of efficiency, effectiveness, transparency, clarity, and equity.

The Regulatory Impact Assessment Unit of the Ministry of Economic Development ( RIAU) found that RIA procedures were sometimes considered too late in the policy development process to be truly integrated with decision making. Clarifying the purpose of the RIS and how it is different from a Cabinet paper; rationalising the guidance material; amending the approach to adequacy certification; raising expectations of the RIA/ RIS quality; and providing support for analysts with no or little experience have all been advanced as possible ways to improve departmental compliance with RIA requirements.

In April 2007 a new regime that focuses on the RIA analysis undertaken in policy development was put into place. The main changes to the requirements were that:

discussion documents must include questions/discussion of the substantive RIA elements (problem, options, impacts of options) or a draft RIS
the RIA analysis undertaken in policy development needs to meet certain adequacy criteria
the Regulatory Impact Analysis Unit will only have involvement in proposals that are "likely to have a significant impact on economic growth"
the Regulatory Impact Statement ( RIS) is now more of a summary document.

The level of analysis has be commensurate with the significance/magnitude of the proposal and allow confidence in the selection of the best option. There are four parts to this:

identification of feasible options
identification of the impacts of each option
assessment of the magnitude of each impact
choosing the preferred option.

For proposals that are more significant, wider consultation, more data collection, research and more rigorous analysis is required. All impacts of all options need to be quantified where possible. In broad terms an RIA is adequate if it convincingly establishes that the proposed regulatory change is needed because the current framework cannot deal with the problem, that appropriate analysis was undertaken given the issue's magnitude, and that adequate consultation was undertaken

An evaluation report on compliance with regulatory impact analysis requirements was completed in 2008. Overall around 60% of these outputs were not satisfactory. The main areas of weakness tended to be around problem definition and the size of the issue, and the analysis of cost and benefits. Consultation seems to be an area of strength. The report also found that in some cases there was more analytical substance behind the proposals than was being communicated in the RIS.

Evaluation and Trial of the Standard Cost Model

PricewaterhouseCoopers was commissioned to undertake an evaluation of the Standard Cost Model and the Australian Costing Tool (now termed the "Business Cost Calculator") in December 2005. Based on the findings of the feasibility study, the government agreed to implement the Business Cost Calculator on a two year pilot programme within government agencies. At present SCM use across government is currently minimal to non-existent. The Ministry is continuing to evaluate the standard cost model, or a variation of it, for potential use in the New Zealand context. Together with Australian officials, analysts are re-developing the model and transferring it to the web. Tests are due to be carried out in 2008.

Officials commented that although it is a very useful tool, a lot of analysis has to be done around the figures. It is hoped that having a tailored programme will reinvigorate policy analysts and standardise thinking at the front end of the policy development process. This will be enhanced as more information becomes available through statistics New Zealand.

Stock review

Periodic reviews of regulatory frameworks, key productive sectors, and general compliance issues across government are how New Zealand currently assesses and monitors the effectiveness of the stock of existing regulation. However, there is no central agency formally responsible for reviewing existing regulation. In the first instance, responsibility lies with individual agencies to review the laws that they administer.

The regulatory burden on agriculture in New Zealand

Current debate

The feedback obtained from businesses during the Quality Regulation Review in 2007 suggested that the current regulatory environment for business is in fairly good shape, with no fundamental or widespread systemic problems being identified. This is consistent with New Zealand's ranking on the World Bank's Ease of Doing Business survey, where New Zealand is second only to Singapore.

Industry view

Federated Farmers New Zealand (an industry body similar to the NFU) suggests however that the main view of regulation by the farming community is that the burden being put on farmers is increasing. Federated Farmers also highlights the view that the gap between urban and rural viewpoints is widening, with the feeling that the concerns of, and impact on, the farming community are not really considered by regulators. As a result, Federated Farmers believes that regulations are progressed which have potentially huge negative impacts on farmers and their livelihoods and don't necessarily achieve the desired results due to being unworkable, impractical, and inappropriate for the circumstances. Federated Farmers based this assessment of the impact of regulatory burden primarily on informal farmer feedback.

The Ministry of Agriculture and Forestry ( MAF) farm monitoring commentary highlighted major farmer concerns with the potential for increasing costs associated with regulated constraints in nitrogen output and carbon credits. There is increasing concern from farmers regarding the management of the environment, and requirements that could be imposed, for example requirements for feed pads would lead to higher costs which could threaten the viability of dairy farms in particular. There is concern of increasing bureaucracy and compliance.

Concerns about compliance related to employment and the increased cost of labour resulting from additional holiday leave (now four weeks) and contributions to kiwisaver (a savings programme) were also raised during the farm monitoring process.

Quality Regulation Review 2007

Four sector studies (horticulture, hospitality, retail, and wine) were undertaken as part of the quality regulation review. Employment issues were raised in all four studies. Many interviewees indicated support for added flexibility to dismiss staff in probationary periods, and criticised the paperwork associated with employment agreements. Requirements to do with part-time and seasonal workers, including calculating leave and statutory holiday payments, were common to all sectors. Immigration enforcement, noting that the immigration status of contract workers is often not clear to employers, was a particular concern to the wine and horticulture sectors.

Concerns about the complexity and impracticality of the information communicated about The Hazardous Substances and New Organisms Act ( HSNO) requirements were expressed in the horticulture, retail and wine sectors. The horticulture and wine participants also shared concerns over the perceived inflexibility and inconsistency of New Zealand's biosecurity processes. Without more sector studies along these lines it is difficult to assess how widespread these views are, and the extent of the concerns in reality. That environmental issues are at the fore, however, is not in dispute. Some farmers may see this as a threat, but others are working to turn this in to an opportunity.

Dairy intensification and the environment

The dairy industry has been facing increasing pressure from environmentalist lobbyists as the industry intensifies. Requirements such as the Clean Streams Accord are an example of compliance areas that have arisen from this pressure. The industry also faces continuous pressure over effluent management. With the expansion of dairying into the South Island, water allocation has become a large resource management compliance cost for many dairy farmers.

Dairy farmers are adapting to the call for more environmental responsibility and are meeting most of the targets of the Clean Streams Accord. A significant on-farm trend is the use of nutrient budgeting. Fonterra, along with the major fertiliser companies, have recommended that all dairy farmers complete a nutrient budget for their property. In many cases, this has resulted in more targeted nutrient application, especially on effluent areas, and potential cost savings on the amount of fertiliser used.

Nitrogen inhibitor use has increased steadily from a small base. Many farmers are trialling a small area of their farm or are waiting for more results from research relevant to their situation to prove the environmental, production and economic benefits of the product.

On dairy farms, especially in cooler wetter areas, stand off pads, long term feed pads and herd homes are becoming more popular. Their aim is to increase production of milk solids and to prevent environmental damage to soils and waterways. This change is interesting given that the New Zealand agricultural industry has been upheld as an example of low cost, extensive systems. The consequential impacts on animal welfare (real or consumer perception), the environment and cost will be interesting to follow.

Evidence of the scale of the regulatory burden

New Zealand is ranked second (after Singapore) out of 178 economies in 2008. The UK is ranked sixth. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 178 economies. Regulations affecting 10 stages of a business's life are measured.

New Zealand and the UK's ranking in Doing Business 2008

Compared to Global Best / Selected Economies

	New Zealand	United Kingdom
Ease of Doing Business	2	6
Starting a Business	3	6
Dealing with Licenses	2	54
Employing Workers	13	21
Registering Property	1	19
Getting Credit	3	1
Protecting Investors	1	9
Paying Taxes	9	12
Trading Across Borders	16	27
Enforcing Contracts	13	24
Closing a Business	16	10

Source: http://www.doingbusiness.org/ExploreEconomies/?economyid=140

Compliance costs

Compliance costs are an ongoing concern to agricultural, horticultural and forestry sector businesses. The Government has taken a number of initiatives to identify and reduce compliance costs.

A survey of compliance costs in New Zealand agriculture (1998)

In 1998, a report was completed for MAF to quantify the costs of compliance with legislation incurred by farmers and investigate any impacts on farm management arising from the process of compliance. The costs covered both the farmers' time and the direct cost of compliance. Nearly 1,000 farmers and horticulturists were surveyed plus 24 case study interviews of farmers with high compliance costs.

The chief conclusion was that most New Zealand farmers incurred only limited costs in complying with regulations. Improving taxation regulations was the best means of reducing the regulatory burden on farmers. The conclusions drawn regarding farmers perception and understanding of regulations were telling. Regulations with the highest cost like taxation were generally accepted, while farmers were most upset by regulations that involved limited cost to meet such as resource consents. Fear and uncertainty was therefore considered a bigger issue than actual financial cost.

Compliance item	% of farmers incurring	Median hours spent, for those incurring (hrs)	Median dollars spent, for those incurring ($)	Median total cost (incl. hours at $20/hour) ($)
Key findings of the 1998 report.
Taxation (time, accountant's fees)	99	60	1,800	3,220
Spent time on employment paperwork	55	24	NA	480
Spent time or money on safety paperwork	48	3	120	220
Applied for resource consent in past year	13	3	235	330
Objected to resource consent in past year	4	4	0	110
Need for resource consent changed farm management	10	NA	NA	NA
Made submission to District Plan	15	6	0	160
Made submission to Regional Plan	6	4	0	150

Source: New Zealand MAF, 1998

Taxation was the biggest compliance cost for most farmers. Most farmers regarded taxation compliance costs as a normal cost of doing business.
Two-thirds of farmers surveyed employed staff spending a median of two hours per month on associated paperwork. Some farmers used consultants to help with contracts of employment.
Farmers were generally aware of health and safety legislation. At a median of just three hours and NZ$120 annually, none of the case study farmers resented the cost of improving farm safety.
Resource consents effectively relate to environmental legislation. The most common consent applied for involved the disposal of dairy parlour effluent, and involved farmers switching from oxidation ponds to spray irrigators. While most farmers accepted the need for environmental legislation, they were critical of the way enforcement agencies interpreted and administered the regulations.

Compliance costs 2006

In 2005 MAF Policy commissioned research to look at and understand the nature of compliance costs for on-farm businesses. The Scoping, surveying and monitoring farming compliance costs report was completed in December 2006 but was not made public for various reasons. Comments from officials suggest that taxation is still the leading compliance cost to farmers and horticulturalists in both money paid to external advisors and also their own time. This is followed by industry and market requirements and employment. Industry and market requirements have also become more important to farmers and growers as there are an increasing number of consumer and market demands to be met. Resource management compliance costs are another significant area for both farmers and growers. This may be indicative of both the increasing environmental pressure being placed on the primary sector and also the expansion of intensive horticulture and pastoral farming that requires irrigation.

General comments suggest that the overall perception of the survey respondents is that compliance requirements have increased between 2003 and 2006, particularly in the areas of hazardous substances, employment, resource management, occupational health and safety and industry and market requirements. MAF is now looking to extend this research, focusing on businesses beyond the farm gate. This particular research will seek to understand the compliance burden imposed on businesses, their origin and their perceived benefit. MAF Policy is looking to understand the regulatory quality of compliance regimes that impact on agricultural, horticultural and forestry businesses, the incentives they create and the potential opportunities to leverage competitive advantage for New Zealand businesses.

Case studies

Water issues

By international standards, freshwater in New Zealand is both clean and in good supply. However, some aspects of water quality are getting worse in areas dominated by intensive land use. Demand for water is increasing, particularly in areas that are already water-stressed. The volume of water allocated increased by 50 per cent between 1999 and 2006, driven mainly by an increase in land area under irrigation. Around 60 per cent of the total volume of water allocated comes from rivers and streams, 34 per cent from groundwater, and 6 per cent from lakes and reservoirs. 77 per cent of all allocated water is allocated to irrigation and 11 per cent to manufacturing processes. Effort is increasingly focused on halting the decline in New Zealand's water quality. The control of point-source pollution of freshwater is managed under the Resource Management Act 1991 and attention has turned to reducing diffuse pollution from intensive land use and urban run-off. As a result, there is greater emphasis than in the past on managing intensively used land through stream bank planting, nutrient budgeting, and exclusion of stock from waterways through bridging and fencing.

The Dairying and Clean Streams Accord

The Dairying and Clean Streams Accord is a voluntary agreement between Fonterra Co-operative Group (the largest dairy company in New Zealand), regional councils and the Ministers for the Environment and of Agriculture and Forestry. Signed in May 2003, its aim is to achieve clean, healthy waterways in dairying regions.

The accord sets out practical targets for farmers; for example, that "50 per cent of regular stream crossing points are to have bridges or culverts by 2007 and 90 per cent by 2012". This target has already been met, while there has also been a steady increase in the number of waterways from which stock have been excluded (up from 67 per cent in 2003-2004 to 75 per cent in 2005-2006). However, the level of non-compliance of discharges of dairy shed effluent (33 per cent) falls significantly short of the target set.

Federated Farmers launched the 10 in 10 Campaign in November 2006. The aim of this campaign is improve water quality by getting members to reduce nutrient loss from their property by 10 percent over the next 10 years.

The Sustainable Water Programme of Action

In 2003, the Ministry for the Environment and MAF jointly launched the Sustainable Water Programme of Action ( SWPoA) to identify priorities for government action to improve freshwater management in New Zealand. The SWPoA focuses on addressing the pressures on water bodies from land-use change and intensification. By 2007, Cabinet had approved the development of a national policy statement on freshwater, as well as two national environmental standards, including one that will ensure methods used to allocate water are geared to safeguard aquatic ecosystems. Another focus of the SWPoA is to produce tools and best-practice guidance for regional councils on water quality and land-use management. The Government has committed $81.5 million to the long-term Lake TaupÅ protection programme and $4 million towards remedial work to improve water quality in Lake Rotoiti.

Local action to protect water quality

Three examples of local action to protect water quality are outlined below. The Bay of Plenty and Waikato regional councils are working with district councils, MÄori trust boards, land owners, and the wider community to protect the water quality of Lake TaupÅ and the Rotorua Lakes. The Manawatu-Wanganui regional council has proposed nitrogen leaching targets.

The Rotorua Lakes

In the Rotorua district, action plans are under development for each of 12 lakes to reduce their nutrient (nitrogen and phosphorus) levels. One example of action planned is the construction of a channel that will limit the input of nutrient-rich water to Lake Rotoiti. Environment Bay of Plenty regional council has produced Rule 11, a set of regional rules designed to limit the loss of nitrogen and phosphorus from land-use activities. The rule requires farm owners to give nutrient budgeting information to the Council so a Nutrient Discharge allowance can be set, which caps the nutrient discharge at the average for 2001-2004. This set of rules is in the process of being replaced with a set of rules for each lake. Federated Farmers reports that farmers are strongly opposed to council collection of information for the nutrient discharge allowance. Farmers are also opposing the controlled activity status (under the RMA) of farming in certain catchments and the level of restrictions placed on farming by the way in which nutrient allowances are to be managed. It is proposed for Lake Okareka to review all nutrient discharge allowances in 2018 and reset them according to the catchment discharge average, which will cut some (mainly dairy) properties' allowances below what can be achieved with current technology and best practices.

Lake TaupÅ

In the Waikato, a proposed variation to the regional plan sets a water quality objective for Lake TaupÅ and changes land-use controls on nutrients entering the lake from urban and rural sources. Variation 5 to the Waikato Regional Plan seeks to maintain Lake Taupo water quality at the current level of clarity. This requires a 20 percent reduction in the amount of nitrogen entering Lake Taupo. Agriculture is seen as the primary source of manageable nitrogen entering Lake Taupo and for the first time, farmers in the Waikato region will be required to cap the amount of nitrogen that may leach from their farming activities.

Federated Farmers is an appellant in the Environment Waikato regional plan change, which requires a resource consent for farming in the Lake Taupo catchment. Federated Farmers contends that farming activity can be undertaken as a permitted activity in the catchment. The Court has directed the parties to draw up an appropriate rule, although this does not mean the Court will necessarily adopt the permitted activity rule. Hearings are continuing for these appeals this month (June 2008).

Manawatu-Wanganui Regional Council - Proposed One Plan

The Horizons Council has proposed nitrogen leaching targets, using a "sinking lid approach", based on a land use class as a way of reduce leaching of Nitrogen into water bodies. This has the effect of capping production as on some land classes stock numbers will have to be reduced. This prospect is being met with resistance from farmers. Also, council is requiring nutrient budgets and compliance with FARM Strategy workbooks. The workbooks propose further mitigation on farm to reduce nitrogen, such as herd homes, riparian planting, and rules around facilities. One of the problems with the proposed approach is that Horizons is using dairy production systems as the model for the provision/rules and trying to apply this to other farm types, such as irrigated sheep and beef, cropping and market gardening. This is also being met with some resistance as the model doesn't fit mixed farming systems.

The council has also proposed water management zones and different rules depending on the water quality in those zones. Another proposal is aimed at reducing phosphorus getting into water ways through reducing accelerated erosion.

Comparison with Scotland

Under New Zealand's Resource Management Act 1991 ( RMA) regional councils prepare of objectives, policies, and methods to achieve integrated management of the natural and physical resources of the region. As the above examples illustrate, this is a work in progress in terms of water issues. A key concern for farmers is how farming is classified under the RMA as this will dictate what activities are permitted and whether a resource consent is required. Resource consent applications can be both expensive and take a long time to complete depending on the particular consultation requirements. The RMA was cited in the quality regulations review as a potential barrier whereby a single objector, who can be a direct business competitor, can block a development. In working at the regional level, there can be issues of consistency of measures with councils using different approaches and classifications. This is avoided under the Scottish regulations given that areas are either venerable or not. However, the New Zealand system does allow flexibility in who is regulated, and how, to best fit the particular circumstances of a catchment.

Bovine Tuberculosis (Tb)

Bovine tuberculosis is a major animal health issue for New Zealand cattle and Deer farmers. There are approximately 130 infected cattle herds, and 18 deer herds. In New Zealand the most common way Tb is spread amongst deer and cattle is through contact with infected wildlife such as possums and ferrets. It can also be spread when infected animals are moved into a healthy herd. Each animal must be identified with a herd number and an individual number (via ear tags), assigned by the Animal Health Board. This provides a start point for re-tracing the movement of any animals which are later found to be infected with Tb.Cattle and deer over one month of age must be identified with a bar-coded primary tag and a secondary ear tag unless they are going straight to slaughter, in which case they need just one tag - either a primary tag or a direct to slaughter tag. Animals are exempt from ear tags if they have been moved for grazing and are kept under day-to-day management, and are not mixed with animals from other herds.

The frequency of testing varies depending on the Tb risk in the area. Animals that show a possible reaction to the first Tb test, it will either be directed to slaughter or be eligible for re-testing. All cattle and deer are given a Tb status showing their Tb history. The main categories are Clear, Infected and Suspended. he herd classification determines how frequently the herd is tested for Tb, as well as what restrictions are placed on its movements. When deer and cattle are moved from their herd or to another location, an Animal Status Declaration ( ASD) form must go with them. These forms provide a record of the animal's ownership and disease history. The forms are mandatory and required by law. The form must be fully completed with the test results from the most recent Tb test allocation form. Declaration forms given when animals are received should be retained for at least six months.

The Animal Health Board ( AHB) is currently determining its strategy for the period 2011 - 2030. Federated Farmers has encouraged the AHB to pursue a strategy of eradication. It is claimed that an eradication policy would have a 95% probability of success. Eradication will involve greater cost in the early years, but has greatly reduced costs in the long term (compared with containment) because, once eradication is achieved, wildlife vector control, herd testing and movement control can safely be ceased.

In order to increase the cost-effectiveness of wildlife vector control, the AHB have decided to directly manage vector control programmes rather than delegate this task to regional councils. Federated Farmers has supported this approach. In Canterbury, Federated Farmers has asked the Regional Council (via its submission on Environment Canterbury's Draft Annual Plan) to continue to collect the regional contribution for the Bovine Tb vector control programme (using a targeted rate), because setting up an alternative mechanism for collecting the regional contribution would needlessly impose additional cost.

Comparison with Scotland

The New Zealand system for TB control appears to be effective and farmers recognise the need and benefits of compliance. Earlier this year a dairy farmer was ordered to pay more than NZ$30,000 for breaches of bovine Tb regulations under the Biosecurity Act. Together with associated costs and fees the total was closer to NZ$55,000 (£21,200). Judge David Saunders identified the moving of 40 cattle, under lease, to a Darfield property in breach of a restriction place notice as the most serious charge.

Scottish regulation is compatible with England's but is more stringent in terms of post movement control. The nature of the devolved relationship means that another layer of complexity is added as Scotland doesn't have full control of enforcement. In New Zealand, the Animal Health Board has taken back responsibility for vector control programmes from local councils to allow for a more coherent national strategy.

Animal transport

The principal legislation on animal welfare in New Zealand is the Animal Welfare Act 1999 (the Act). Under the Act, people who are responsible for animals must ensure that animals in their care have:

Proper and sufficient food and water
Adequate shelter
Opportunity to display normal patterns of behaviour
Appropriate physical handling
Protection from and rapid diagnosis of injury or disease.

The Act also makes specific provision for the transport of animals. The person in charge of a vehicle in which an animal is being transported is responsible for ensuring that the animal's welfare is properly attended to and, in particular, that proper and sufficient food and water are supplied.

Codes of welfare for different species of animals are developed by the National Animal Welfare Advisory Committee and issued under the Act. These codes expand on the principles in the Act, describing minimum standards and recommending best practices to provide for animals' physical, health and behavioural needs.

The Animal Welfare Act provides for the issue of codes of welfare that:

promote appropriate behaviour,
establish minimum standards
promote best practice for people owning or looking after animals.

The codes outline the basic level of animal management and care required, but are flexible enough to be modified and improved as community expectations, scientific knowledge and technical advances allow.

Recommended best practices in the codes are not legally binding. But minimum standards are - failing to meet a minimum standard can support a prosecution under the Animal Welfare Act 1999.

Similarly, evidence of meeting or exceeding minimum standards can be used as a defence against prosecution.

A voluntary Code of Recommendations and Minimum Standards for the Welfare of Animals Transported within New Zealand currently exists and this will be replaced with a new code of welfare for animal transport, currently being developed for issue under the Act. The current code contains detail on loading densities, food and drink requirements, journey duration, rest periods and stock handling amongst other things.

The draft Transport in New Zealand Code of Welfare which will soon be going out for a second round of key stakeholder consultation which means that a public draft for consultation is likely to be available in 2009.

At this stage MAF is trying to develop the code to be as outcome based (i.e. animal based) as possible. The focus is on fitness of the animal for that particular journey and what consideration should be given, rather than prescriptive details such as maximum journey times, or food and water requirements. It is important to note that this is possible within New Zealand given that travel times and climatic extremes are minimised.

The principles will be the same as in the current Code of Recommendations and Minimum Standards, but measures are likely to be more general and not so focussed on species specific requirements.

Comparison with Scotland

New Zealand has an outcome-focused and scientifically-based domestic animal welfare systems that are highly-regarded internationally. This approach appears to be operating effectively as the development of the transport code with less prescriptive detail illustrates. Until the new code is made public, it is difficult to make meaningful comparisons between the EC regulations, as implemented by Scotland, and the New Zealand system.

The EC regulations will need to reflect vastly different conditions in terms of distance travelled and temperature. Scotland may have to comply with regulations that do not necessarily fit with the particular conditions of the national industry. What system, in the end, is more effective will depend largely on the animal welfare outcomes and enforcement action where these are not achieved. However, an outcomes based approach allows for flexibility that can mean the most effective ways can be employed to avoid excessive costs for industry.

Over the last 10 years, the EC and New Zealand have developed a collaborative relationship on animal welfare policy, working together in the World Organisation for Animal Health ( OIE) and bilaterally. A 2006 New Zealand proposal to establish the EC/New Zealand Animal Welfare Cooperation Forum, to formalise and improve information exchange on key animal welfare matters formalised this relationship. The Forum is very much an "equal partner/mutual benefit" arrangement.

The scope of the Cooperation Forum includes animal welfare matters of operational and strategic importance, and allows for information exchange on domestic and international policy issues.

Lessons learned

New Zealand's regulatory environment is widely considered to be of a high standard. This is frequently commented on by business people operating in multiple jurisdictions and endorsed by international surveys such as the World Bank study Doing Business. New Zealand's high ranking in the World Bank survey continues into 2007. The New Zealand government recognises that quality of regulatory frameworks and the regulatory environment play a key role in determining business growth, productivity and innovation. The government is committed to the continuous improvement of the regulatory environment as a key part of achieving New Zealand's economic goals.

Quality Regulation Review 2007

The New Zealand government completed a review of the quality of New Zealand's regulatory frameworks, the findings of which were released in September 2007.

The quality regulation review aimed to ensure that New Zealand's regulatory environment is supportive of the government's economic transformation agenda by:

addressing issues that arise from duplication or inconsistency (across regimes), uncertainty or inconsistency (within regimes), and excessive paperwork requirements
reducing the regulatory burden on business
improving regulatory outcomes

The feedback obtained from businesses as part of the sector studies confirms that the regulatory environment for business was in fairly good shape, but that there is scope for improvement.Key messages from business community that came out of the review are listed below:

Duplicated or excessive reporting requirements as well as requirements that are considered to be overly complex (the strongest frustrations arise when there is no explanation of the purpose for collecting information)
Inconsistent treatment across regions, particularly at the local authority level, resulting in a lack of "fairness" and impressions of either over- or under-enforcement
Regulation that is disproportionate to the real level of risk or that disregards prior track records (e.g. in relation to licensing requirements)
Absence of safe harbours in the regulation resulting in a lack of certainty over what is required to reach compliance with the law
A need for more effective guidance or information to assist compliance
Regulation and regulators perceived as acting as barriers to business development and growth
Delays and uncertainty in the processing of regulatory requirements

In going forward, the government will use the experiences from the Review to inform the future work programme on quality regulation. The government's approach will focus on four key objectives:

Ensuring the quality of new regulation
Improving the quality of existing regulation
Developing a culture of good regulatory practice
Building the capability of regulators and business

The need to consider the stock and flow of regulation, as well as all stages of the regulatory lifecycle was highlighted in the review. A whole of government approach would be needed to address concerns about the cumulative impact of regulation on business. This will require agencies to be innovative and open-minded in their approaches to working together with other stakeholders. Agencies will need to be aware that f ixes for poor regulatory outcomes are diverse, with no "one size fits all".

The importance of i mplementation will also be emphasised as a number of the issues raised by business during the Review related to the way regulations are implemented, rather than the regulation's purpose or design.

The government intends to build on the work already undertaken in the review and develop a programme of annual sector studies. The studies will focus on one sector or one piece of cross-sector legislation each year. They will provide an in-depth analysis of the key regulatory issues affecting sectors, including the productivity, innovation and global connectedness of firms, and focus on finding solutions to these issues.

In addition to sector studies, the government intends to build on other initiatives undertaken during the Quality Regulation Review. This will include considering ways that the Regulatory Impact Analysis ( RIA) requirements could be further enhanced. A website dedicated to business consultation on compliance costs could prove to be a useful resource ( http://www.businessconsultation.govt.nz/). One area that will be considered carefully is the process around the development of policy proposals for the implementation, monitoring and review of regulatory proposals.

The Ministry of Economic Development is also looking at a two year trial of a Business Cost Calculator to quantify the compliance costs of regulation. The Business Compliance Cost Calculator was launched by the Government in April this year to help government departments assess the cost of new regulation before it is implemented. The calculator will also help improve consistency in the way regulatory decisions are made and create opportunities for greater international comparison on key pieces of regulation.

The government is considering whether a fast track legislative vehicle, such as the proposed Omnibus Bill, could be used as a permanent mechanism for quickly remedying failures in regulatory frameworks.

Lessons for Scotland

The number and range of reviews undertaken in recent years highlights the New Zealand government's commitment to ensuring an open and fair commercial environment and enhanced performance of the economy.

The reviews contain recommendations that can be applied universally. Although some of the recommendations may appear to be common sense, the value of finding out from the business community, and government agencies, where the key issues are provides focus for implementing remedial measures.

The recommendations will also lead to real benefits throughout the regulation process - from clearer guidance on design and assessment, to more efficient communication with affected parties. Benefits in the implementation of regulations should also increase as duplication is reduced and systems streamlined.

The outcome of work regarding the use of the standard cost model will be of interest to other countries. A more user friendly, targeted tool that is scalable depending on the economic impact of any proposed regulation would be a useful tool in compiling a regulatory impact statement and assessing the change in compliance cost burden over time. Other innovations such as the two year trial of a business compliance cost calculator and the business consultation website could be applied in other jurisdictions.

References

New Zealand Ministry of Agriculture and Forestry

http://www.maf.govt.nz/

Code of Recommendations and Minimum Standards for the Welfare of Animals Transported within New Zealand, MAF Biosecurity New Zealand.

Ministry of Economic Development

http://www.med.govt.nz/

Quality Regulation Review, MED, 2007

http://www.med.govt.nz/templates/ContentTopicSummary____19894.aspx

Federated Farmers New Zealand

http://www.fedfarm.org.nz/

The Scottish, Danish, Irish and New Zealand agricultural industries: a comparison

( AA211 Special Study report to SGRD) SAC 2007