Embrace regulation or we will have anarchy

PERHAPS THE major business story of the past couple of years has been the redevelopment and tightening of our regulatory environment. There would be few eras in modern times when more new restrictions, reporting requirements and regulations have been imposed on the likes of issuers, advisers, auditors, trustees and more. It’s ironic that it was a National government that has done this, but then it was a Labour government that led deregulation in the 1980s.

Sometimes it is easier for the other side in politics to break ranks because they take with them a certain number of people, who would otherwise be opposed to such policies, and in the process dampen criticism enough to actually get stuff done.

I have few quibbles with the new regulations we see being bedded down. Mostly they were well earned by business and they are already starting to deliver increased confidence among retail investors and that will be a boon for the economy down the track.

Let’s hope that confidence is not misplaced.

But for those with a knee-jerk hatred of regulation and government, consider another regulation that arrived last week: the one that stops repossession agents from taking kids’ toys to settle bad debts. It also stops them taking family photos and the like.

Yes, that regulation was required because there were people who actually did this. And they would continue to do it if they weren’t explicitly stopped.

My old headmaster at Massey High School out in West Auckland was one Jack Adam. A fine man who taught me an unforgettable lesson (but that’s not a story for right now). Jack was the founding headmaster at Massey and he idealistically started out with ‘‘no rules but common sense’’.

I arrived a few years later and that approach was already history because people took advantage of that freedom and did unto others what they would not have done unto themselves.

Regulations can be stupid and bureaucracies can get out of control and need to be reined in. But so can anything, including businesses, both individually and collectively.

This latest bout of regulation was spurred by the enormous cost to the country and to investors of not having the right regulatory structures in place to begin with. The cost of not having effective regulation proved too high and too damaging for New Zealand and investors.

We are well towards fixing that. Some people have had to tick some boxes while others have had to shut up shop and get out of town. Some have gone to jail. Some have had to lift their standards and their qualifications. None of that is a bad thing.