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Compliance places a heavy burden on businesses

Friday 1st September 2000

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Anyone who thinks running their own business gives them an independent mode of living should realise a fair amount of that independent time will be used working for the government and local authorities.

In 1996, Retail Merchants Association produced a booklet in conjunction with its solicitors outlining the statutes and regulations relevant to retailers and wholesalers. It identified 31 statutes and six sets of regulations that could affect people involved in retailing and wholesaling (see table II, opposite).

They ranged from the Companies Act and the Fair Trading Act to the Children's Night Clothes Regulations and the Pedal Bicycles Regulations. The RMA made a submission in 1998 to the commerce select committee's inquiry into compliance costs for business. It undertook a survey of cross-section of its members to assist in preparing submission for the inquiry.

It identified six forms its members needed to complete for various government agencies. Replies from four of its major members were collated to demonstrate both the time and cost of completing such returns (see table I).

Although the particular example would not relate to a self-employed individual, the association said one major general merchandise chainstore estimated it spent about $100,000 a year completing these statistical returns. The particular company also said the total cost of legislative compliance would have to be several hundred thousand dollars a year.

Another major general merchandise chain said it had cost $10,000 to establish a compliance programme pursuant to the Commerce Act. It also had costs of more than $10,000 to set up compliance procedures, as well as to train its staff, in meeting its responsibilities under the Health and Safety in Employment Act.

A major department store estimated its 1997/98 total costs of complying with various government statutes as:

TypeCost ($)
Relating to commerce$20,000
Relating to operating a business$20,000
Relating to contracts$15,000
Relating to employment$30,000
Miscellaneous$5000

The survey also invited respondents to identify three pieces of legislation that imposed the most costs on their businesses. The responses covered the Resource Management Act, the Health and Safety in Employment Act, the Fair Trading Act, the Employment Contracts Act (now about to be replaced by the Employment Relations Act) and the Human Rights Act.

There was considerable concern about the Resource Management Act, including the requirement of various local bodies to require the use of consultants in respect of particular applications made under the act.

Another concern had become evident in the considerable time delay in hearing appeals against decisions made under the act.

The association had other matters it recommended for the committee's consideration. There was a need to look at how information was collected - by electronic or manual means.

The methodology of information collected by the public sector should be examined and whether changes were warranted. For example, could the monthly retail sales data survey be changed to a sample survey where the results from selected participants could be used to input the total result?

The effect of laws such as the Privacy Act could preclude the collector of certain data from providing that information to other third parties. Alternatively, the provider of information may not see the value in sharing information with other third parties - for example, retail sales data.

Some peculiar situations arise in providing information to government agencies. By some strange alchemy, this writer's one-person operation was sucked into a Statistics NZ annual survey of business enterprises and has stayed there for years.

A dinky blue form arrives each year with dire warnings about what can happen if people included in the survey fail to comply. It comes with a letter saying the statistics minister has authorised the survey, although it is doubtful the particular minister at any time had applied his or her mind to the exercise, rather than just signing a document that came across the desk.

Some years ago the form asked for the area of one's work premises. This respondent diligently measured up a round table, put the resulting figure in the form and added a note saying the area was approximate, because it was too difficult to calculate the exact value of pi.

It is unknown whether Statistics NZ reacted to that information, or just got some common sense into its operation, but the question was not repeated in subsequent years.

People who engage in self-employment and are concerned about the time involved in compliance with government agencies' requirements can note there have been several organisations whose calculations have been less than exact when filling out the forms.

When this matter was raised informally with a now-retired government statistician it got the quick reply that statistics measured trends and if figures were prepared on a consistent basis from one period to another the trend shown would still be valid.

Compliance time and costs are still a burden on business, particularly self-employed individuals, irrespective of any short cuts taken to lessen the pain.

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