‘The Consequence–Free Society’?

Regular readers of this column will be familiar with a central theme I repeatedly mention; the benign business environment from an operational and regulatory perspective. 
A good number of readers have challenged my assertions and together with business commentators regularly ‘have a go’, suggesting that my sources are unreliable. They repeat their perpetual mantra that we live in an over-regulated and overtaxed community. 
WE DON’T and it’s official. 
For those who want to have this confirmed and see the latest research, go to 
www.doingbusiness.org and download the report Doing Business in a More Transparent World. It was published by the World Bank and confirms that of all 183 economies researched, New Zealand is ranked third for ‘ease of doing business’. 
Having read the paper all I can say is that we need no longer persist in being polite to those who insist on sticking with the idea that it is just too hard and too expensive to comply with all our regulations. They clearly don’t get it and should keep quiet. 
If anything the lack of regulation in New Zealand is a major problem we can no longer afford. Deregulation and the encouragement of ‘market’ economics has come at an enormous cost. Trickle-down benefits are a fiction, just as promoting policies of austerity is, to quote a New York Times editorial, ‘a political ideology masquerading as economic policy’. 
The price of deregulation is measurable. Just look what happened when builders lobbied for an easier regime on code compliance; leaky homes ensued and continue to be built. The remedial costs, never come in at under $20 billion. 
Add in financial services and particularly the meltdown of the finance companies – another $7 billion to $8 billion. 
Then there is the failure to have proper oversight to shipping. Maritime NZ has no marine engineers on its board, mines have fewer safety inspectors than required in China and basic infrastructure is left vulnerable to the extent that a single pipeline failure can endure for more than a week and cost $175 million a day. 
Who picks up the tab for this lack of oversight? The Poor Bloody Taxpayer, that’s who. Who is held accountable? No one. 
Maybe my US acquaintance was not right, we are not a consequence-free society, perhaps we are just a bunch of cowboys who fail to understand the consequences of a lack of regulation.
To put this in perspective, during the week that this column was being written Auckland, gas supplies were interrupted to dramatic effect. Thus far we have had the ‘great and good’ treating accountability much as a punter might have once played pass the parcel (bomb) in a Belfast pub. The gas supply company denies responsibility, saying it doesn’t own the pipe. The customer should care less – their contract is with the supplier, not the pipe owner. But either way it matters little, as unlike in many first world countries, supplies in New Zealand are not guaranteed and no penalties for failure apply. 
Just by way of example of what occurs elsewhere, a residential customer experiencing a supply failure for three hours (for any reason) in the UK gets £50. Moreover, if directors of utility companies pay out more than very small amounts of supply-breach compensation their annual bonus goes out the window. If we want accountability we have to have fiscal consequences. Take the clean-up of the Bay of Plenty beaches after the Rena disaster – who is going to pay for that? No prizes for guessing – the taxpayer. Yet in contrast, who paid for the clean up of the Gulf of Mexico when the well-head failed last year and millions of barrels of oil spread far and wide? BP did. Who paid when a finance company boss got generous with his customers’ money and splashed it all over Canterbury and the business failed? Oh yes, the taxpayer. 
Does New Zealand have depositor protection insurance to cover the (albeit unlikely) event of bank failure? Is not having it normal or even reasonable? No it isn’t. 
It really doesn’t have to be this way. We just need to sit and think for while and consider the wisdom and consequences of having single supply chains for public utilities coming into our major towns and cities. We should require catastrophe plans to be published and for annual accounts to state the ‘shelf life’ of the key capital components and what fiscal preparations for renewal exist. If we had, then the plainly daft situation would never have arisen whereby a company bought our railways which, according to traffic levels, had a track life expectancy of 40 years – yet got away with imposing a maintenance programme whereby the track would be replaced every 117 years. The cost implications on the new owner (you and me again) are mind-numbing. 
In a market economy where ‘what’s in it for me’ is the essential driver, these hugely expensive failings will remain systemic. We need more and better regulation. 
Does anyone remember the Auckland power blackout or the water shortage because no one kept supply capacity in line with population growth? Is it really too hard or are we the public just too gullible?

Ashley Balls is senior partner of LegalBestPractice. Visit www.legalbestpractice.com