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Pure Business Project

Project Overview - Understanding the Issues

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2 Project Goals and Stakeholders

2.1 Overall Goal

The overall goal of the SME "Good Regulation" project (as stated in the funding request to the Ministry of Science Research and Technology - MoRST) is to enhance the economic and social productivity of New Zealand SMEs. The organising principle "to enable SMEs to thrive in a regulated world" has been developed during Phase One of the project.

To achieve this goal, the specific objectives of the overall project are to:

  1. Identify the nature of the problem that regulation poses for SMEs and regulating agencies.
  2. Promote and support an understanding of regulation as a social activity.
  3. Support regulatory agencies and SMEs to develop mutually beneficial solutions to regulatory concerns.
  4. Actively disseminate and support improvements in the way that regulation is developed and utilised by SMEs and regulatory agencies.

2.1.1 Purpose

Aligned with the goals outlined above, the unifying purpose of the SME "Good Regulation" Project is to enable small and medium enterprises to thrive in a regulated world, that is: to create an environment where it is easier for Government and SMEs to interact, in ways that bring the greatest possible benefits to individual businesses and to New Zealand as a whole.

2.2 Research rationale

In order to meet these stated project objectives, the SME "Good Regulation" project has been designed to construct a 'research laboratory'[9]. This means that selected SME owners, management and workers, and selected management, policy and operational staff from government regulatory agencies, will work together outside of the normal policy or operational environment and within a separate space created to explore each others' perspectives and change policy and practice. The project deliberately seeks to merge the usual 'silos' that apply in the development and application of regulation by:

  • involving government agencies that administer regulation that has a general impact on SMEs relating to social, commercial and environmental risk[10]
  • understanding and changing the relationship between regulatory agencies and SMEs by engaging them in shared decision-making processes. The project seeks to achieve regulatory changes by 'doing with' rather than 'doing to' SMEs to improve regulation.

2.2.1 Research Objectives

The overall research objectives of the SME "Good Regulation" Project are to:

  1. Engender a shift in thinking about the way regulations are formed and utilised
  2. Understand the relationship between regulator and regulated
  3. Understand what helps and hinders obtaining the objectives of the regulation
  4. Generate and support collective responsibility amongst agencies and SMEs for obtaining regulatory objectives and reducing unwanted compliance costs by enabling SMEs to thrive[11].

The research methods employed by the project are necessarily developmental and iterative in nature to accommodate the complex dynamics of the relationships between (and within) regulatory agencies and SMEs and SME networks. Appendix One provides detail about the specific Developmental Work Research (DWR) methodology used. This is the first time that this method has been used in a government setting in New Zealand.

2.3 Outcomes

The intended outcomes of the SME "Good Regulation" Project are that:

  • Agencies and SME have a more sophisticated understanding about regulation as a social system.
  • Means of developing and using regulation are improved in ways that make SMEs and regulator's work easier, i.e.:
    • the costs and difficulties for SMEs in complying with regulatory requirements are minimised
    • regulatory compliance processes generate relevant, meaningful information for the management of enterprises
    • the supply of information needed by government from regulatory compliance processes is improved (at a reduced cost).
  • Agencies and SMEs use shared processes to collectively develop and apply regulation in an ongoing fashion.

2.4 Stakeholders

Because the Project examines the broad social systems of regulation of SMEs, the stakeholders are many and varied. Diagram 2. below illustrates at the highest level whom key stakeholders are for the overall project.

Diagram 2. SME "Good Regulation" Project Key Stakeholder Groups

Diagram 2. SME Good Regulation Project Key Stakeholder Groups.

2.5 The reasons for key stakeholder involvement

The stakeholders broadly represent the elements that make up the 'regulatory system' for SMEs. No list can be complete, and almost certainly the diagram above will change as information is gathered on the system(s) that actually apply. The task is to approximately model the system and therefore those who are to be part of the project. Where there are gaps, they can be filled, or if they are too large to fill, at least identified for further work.

2.6 Related Projects

There are many agency projects that are progressing separately to this project that seek to reduce compliance issues for SMEs. Some of these may have unintended effects, for instance the work of MED to allow Company registration online has increased direct registration but the office is not aware if this is reducing the advice that companies receive before they set up in business, and therefore might lead to increased failures. Examples of projects in development are:

  • IRD are engaged in a project to make taxation easier for small business.
  • MED has the SME Directorate and the Small Business Advisory Panel, also is looking to reduce reporting requirements for small companies. The Compliance Cost Unit in MED is working on a programme of better regulation, concentrating on.
  • MfE have been actively engaging with enterprises to promote sustainable industry concepts, there is a group promoting triple bottom line management to enterprises. This group has only just made contact with the Department about the social dimensions of triple bottom line.
  • DoL has been pursuing funding to roll out lessons learned from the "Active Pilot" project finished last year for employment relations, immigration and health and safety issues to be dealt with by the Department in a more holistic fashion.
  • Stats NZ has been seeking to reduce compliance costs for SMEs. As a result of their participation in the SME "Good Regulation" Project the Company's Office in Auckland (MED) and Stats NZ are meeting regularly to better integrate their activities when dealing with enterprises.

2.7 Other Agencies with Areas of Interest

  • NZ Customs (exporters and importers)
  • Health (providers)
  • Education (providers)
  • MFAT
  • Countries interested in trade agreements with NZ
  • International regulators and organisations such as the OECD, APEC
  • Centres of academic research into regulation: Harvard, LSE, ANU
  • Think tanks, such as DEMOS in the UK.

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Footnotes

[9] See Appendix 1.

[10] The agencies were those identified as having the largest role in the Business Compliance Cost Panel work and in surveys.  There are, however, many agencies that have a regulatory role for particular sectors, for instance the Ministries of Health and Education for health and education providers.  The project may need to evolve to include ‘specialist’ regulators; this is a matter for the design of Phase Two of the project.

[11] For specific information on the objectives of Phase One, see Appendix 1., Research Management Plan.