Analog Regulation, Digital World

Dr Eric Crampton
Insights Newsletter
10 November, 2017

Which moves faster: technology, or the regulation that tries to keep up with it?

New Zealand’s ability to adapt to new technology depends on whether our regulations can keep pace. We have always faced the twin tyrannies of size and distance. We are small and remote.  If our rules hold back adoption of new technology, we can add a third tyranny to the list: being out of date.

This week, the Initiative and Internet New Zealand jointly launched a stocktake of New Zealand’s tech-facing regulations. New Zealand needs to be better at embracing permissionless innovation, at leaning more heavily on foreign certification where appropriate, and at watching out for regulatory stumbling blocks to creativity.

We need adaptable regimes that allow entrepreneurs to innovate without the need for constant permission. When innovation requires cumbersome permissions, innovators seek greener fields. And that is even more true for small and distant countries.

The report finds some areas where New Zealand has excelled. When Rocket Lab wanted to send satellites into space from New Zealand, MBIE very quickly developed a framework to let it happen.

In other areas, we have failed to fully appreciate how technology has changed the game. Where technology solves a problem and makes regulation redundant, regulation is too slow to get out of the way.

Rules around taxicabs, and around film ratings, worked to protect consumers when information was hard to get. Today, phone apps tell us how other riders have rated a taxi driver before we step in the car. And a host of websites can provide parents with far more detail about whether a film might be right for their children than was ever possible twenty years ago. But the rules have only partially adapted to this change.

The report argues for reform to copyright to enable greater flexibility in fair dealing, for greater commitment to open data practices that unlock innovation, and for easing the regulatory burden where risks are low.

Greater flexibility will not only be good for innovators, it will also be better for consumers. Kiwis risk missing out on technological developments if our regulations maintain precautionary approaches. Those approaches risk making New Zealand not only small and distant, but also years behind our neighbours.

Analog Regulation, Digital World is available here. Co-authors Eric Crampton and James Ting-Edwards are today discussing their report at NetHui.

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