Regulatory stewardship: virtue, mechanism or both?

Group of people, united in the meeting of an organization. Paper cut out in the shape of people.
  • Published Date: 06 November 2020

Regulatory stewardship is described by the NZ Treasury as involving government regulatory agencies adopting a whole-of-system, lifecycle view of regulation, and taking a proactive, collaborative approach to the monitoring and care of the regulatory system(s) within which they have policy or operational responsibilities.

To go a little deeper into what it might mean for regulators to become regulatory stewards, it is helpful to consider the idea of stewardship more generally. We use the term stewardship to describe a virtue and a mechanism. As a virtue, it touches on values such as looking after the interest of others, taking care of what is given in trust, acting in service of others, and looking after the interests of future generations. As a mechanism, it touches on practical issues such as being accountable for one’s actions, being honest about one’s behaviour, not taking unnecessary risks with what is given in trust, and keeping in mind short-term and long-term outcomes.

Different accounts of regulatory stewardship by the NZ Treasury and a NZ regulatory agency exemplify the differences between these two approaches, the former seeing regulatory stewardship as an ideal for which to strive, the latter as a mechanism through which to achieve desirable regulatory outcomes.

The question then becomes: what are the mechanisms which need to be in place in order to realise regulatory stewardship in its normative sense?

There are three dimensions of this question we need to consider:

1. Stewardship is an activity and a structure

As an activity, it touches on the motivations of human and organisational behaviour. How do we nurture organisational leaders, staff and stakeholders to put the wellbeing of their organisations and the environments they serve and influence as more important than their personal interests? As structure, it touches on the processes and institutions we have in place to put stewardship into practice.

2. Stewardship is outward-looking and inward-looking

As outward-looking, stewardship is about holding something in trust for another, whether current or future. As inward-looking, it touches on the responsibility and obligations of collectives and organisations to look after the people who work for and with them.

3. Stewardship is of regulation and through regulation

The stewardship of regulation relates to the role of regulatory agencies to look after the quality of their regulation and staff and keep them fit-for-purpose. The notion of stewardship through regulation asks regulatory agencies to think about how they act as good stewards of the regulatory instruments, regimes, and systems for which they are responsible. While closely related, these are essentially different expectations.

This unpacking of the term stewardship may help to provide some clarity about how we can and should operationalise the idea of regulatory stewardship. The figure below outlines some of the critical dimensions to ensuring regulatory stewardship as a mechanism will ultimately live up to its potential as a virtue.

    Stewardship focus   
     Internal (inward-looking)  External (outward-looking)
Stewardship approach Activity (people)   
  • Engage staff in essential decisions that involve them.
  • Share critical information with staff and share it on time.
  • Staff rewards that aid to a long-term view of their career path (ideally within the organisation), and leadership rewards that trigger intrinsic satisfaction.
  • Cultivate a sense of personal responsibility for the long-term wellbeing of the regulatory agency and its contribution to society.
  • Engage stakeholders in essential decisions that involve them.
  • Share critical information with stakeholders and share it on time.
  • Receptiveness to the diversity of public concerns about the development, implementation, review, and termination of regulation.
  • Display and exercise empathy and compassion.
 
 

Structure (processes/

institutions)

 

  • Have in place clear and transparent internal accountability processes to cultivate a culture of rigorous self-critique.
  • Nurture staff skills and competencies (“good regulatory practice”) and train-up future organisational leaders.
  • Well-articulated organisational values (including an expression of the type of steward an agency seeks to be through regulation).
  • The (institutional) duties of ownership without the (institutional) rights.

  • Have in place clear and transparent external accountability processes to ensure fundamental procedural fairness, accessibility, and responsiveness.
  • Have in place ‘apply and explain’ principles about the development, implementation, review, and termination of regulation.
  • Increase stakeholder skills, competencies, and capacities to comply with regulation.
  • Have in place genuine stakeholder participation processes.

Professor Jeroen van der Heijden is Chair in Regulatory Practice, School of Government, Victoria University of Wellington and Honorary Professor, School of Regulation and Global Governance (RegNet), Australian National University

Regulatory Stewardship: a practitioner’s perspective

The New Zealand Ministry of Business, Innovation and Employment (MBIE) was formed in 2012 with the merger of the Department of Building and Housing, Department of Labour, Ministry of Economic Development and the Ministry of Science and Innovation. The merger gives MBIE a wide range of responsibilities, but the bulk of its day-to-day work is focused upon regulation in one way or another: creating it, delivering it, evaluating it.

A primary impact of the concept of regulatory stewardship at MBIE is a shift in thinking about regulation itself – not just about rule setting, but instead how the wider process of enacting, implementing and reviewing these rules takes place. Essentially, it involves thinking about regulation within the concept of a regulatory system. A regulatory system is broader than regulatory rules and includes consideration of the institutions, people and practices that make regulation work well.

MBIE has responsibility for 18 different regulatory systems. These systems are not of equal scope, size or construct. For example, some of MBIE’s regulatory systems, such as the immigration and employment standards, are almost entirely contained within MBIE. Other systems, for example: health and safety at work, financial markets conduct, and competition systems, have Crown Entities playing a large role. The different constructs each raise their own governance, monitoring and performance-measurement challenges.

MBIE has developed a program of work to enhance its stewardship of all its regulatory systems. The work includes more investment in system assessment to provide confidence that systems are working as intended, and more focus on the governance of each system. Another priority is ensuring that systems are clear about their boundaries and overlap with others, through the development of system charters.

To support this program of work, MBIE has established a centralised Regulatory Stewardship Branch to provide advice and guidance around regulatory stewardship to help encourage this way of working across the organisation.

Regulatory stewardship has also led to an increased focus on thinking about our regulatory culture –primarily focused on the ongoing professionalisation of the regulatory workforce across MBIE. MBIE houses the secretariat for the Government Regulatory Practice Initiative which promotes collaboration between agencies to improve regulatory practice and professionalise the regulatory workforce through ongoing training and development opportunities.

From a leadership perspective, thinking through a stewardship lens has demonstrated the need for a focus on a longer time horizon. The stock of regulation needs to take account of changing dynamics such as demographics, the environment, business models, technology and so on, and adapt to ensure regulatory systems are strong, resilient and meet the needs of the users.

MBIE makes a significant investment in supporting whole-of-government work supportive of better regulatory stewardship. MBIE houses the Government Centre for Dispute Resolution which is a dedicated resource for the enhancement of a key aspect of regulatory system performance and Better for Business which works to improve business’ experience of regulation.

MBIE is also involved in international work on improving the quality of regulation. This includes working with Treasury to represent New Zealand at the OECD Regulatory Policy Committee and acting as NZ lead for the regulatory cooperation and regulatory quality chapters of New Zealand’s free trade agreements.

Notwithstanding this impressive list of achievements, thinking about regulatory stewardship and applying it to current regulatory systems is an ongoing process of development and learning.

Dr Rebecca Foley is currently the manager of MBIE’s Regulatory Stewardship Development team. Dr Foley has worked in regulatory roles for the past 13 years across several government agencies in Wellington, New Zealand.