11 March 2015

Red light - Remuneration Authority Amendment Bill

Parliament is expected to pass the Remuneration Authority Amendment Bill under urgency today or this week.


Red lights.

We should be alarmed about some of its content and effect. In particular, its retrospective effect.

This feature is helpfully foreshadowed in the Bill's disclosure statement:

Retrospective laws are generally objectionable and should be avoided. Writing on the rule of law, for example, Lon Fuller described a retrospective law as a "monstrosity" (Fuller, The Morality of Law, p 53) – objectionable in terms of both morality and efficacy.  This is echoed in the presumptions against retrospective laws recognised throughout our legal system (see for example s 7 of the Interpretation Act, s 10A of the Crimes Act 1961 and s 26(1) of the New Zealand Bill of Rights). And its reflected in the Legislation Advisory Committee guidelines (§ 11 and 11.1):
Legislation should have prospective, not retrospective effect. ...
The starting point is that legislation should not have retrospective effect. It should not interfere with accrued rights and duties. 
However, there are some situations where retrospective legislation is relatively benign. Whether the retrospectivity is one of the rare cases where it is unobjectionable requires a degree of nuance in assessment, informed by the conceptual underpinnings of the virtue of prospectivity in law-making. 

The LAC set out some rule-of-thumb guidance about when retrospective legislation might be unobjectionable (§ 11 and 11.1):
Retrospective legislation might however be appropriate where it is intended to:
- be entirely to the benefit of those affected;
- validate matters that were generally understood and intended to be lawful, but were in fact unlawful as a result of a technical error;
- decriminalise conduct (for example, s 7 of the Homosexual Law Reform Act 198687);
- address a matter that is essential to public safety;
- provide certainty as a result of litigation...
- (in limited circumstances) make changes to tax law or other budgetary legislation.
None of those circumstances apply here.

The LAC go on to focus on the need for justification (§ 11.1):
Where direct retrospective effect is intended, this must be clearly stated in the legislation and must be capable of justification.
The problem with the above Bill is that the justification for retrospectivity here is weak. It's simply about nullifying a particular decision -- an increase in remuneration for MPs) -- which has been viewed as being politically unpalatable. There's little recognition of concern that backdating the new regime interferes with accrued rights of MPs to that salary. Greater justification is expected.

Of course, the original pay increase was itself backdated, which has retrospective effect. However, that's justifiable because it's for the benefit of MPs (as per one of the exceptions above) and, arguably, due to the administrative process that requires it.

Since the announcement of the release of the Remuneration Authority's determination on 26 February 2015, that pay increase is effectively an accrued right and MPs can rightly expect that it would be paid. That might have only been a couple of weeks, but we can expect that MPs may have relied on the that increase in the meantime.

I am unsure exactly when the increase first gets paid out, but I understand it's this week. Hence the rush, I guess, to nullify the increase without having to claw back money from MPs.

The upshot is, though, this Bill is inconsistent with an important constitutional principle and rule of law virtue. In the absence of good reason (and none has been advanced, in my view), laws should not be retrospective and take away accrued rights. It would be preferable for the changes to MPs remuneration to only apply as from the date on which the new law is based.

And, finally, does it make any difference that we're talking about the retrospective effect disadvantaging MPs?


They are still entitled to the protection of rule of law. Indeed, the most famous version of the rule of law specifically argues that the "governors" should be subject to the same laws as the "governed". It follows that the virtue of prospectivity in law is equally applicable to MPs and their remuneration.

PS Passing this law under urgency amplifies the rule of law concerns because it means the retrospective effect and justification are not able to be subjected to the degree of scrutiny they deserve.



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Course Outline

Lord Justice Lawton in Maxwell v Department of Trade and Industry [1974] 2 All ER 122 said:

"From time to time ... lawyers and judges have tried to define what constitutes fairness. Like defining an elephant, it is not easy to do, although fairness in practice has the elephantine quality of being easy to recognise. As a result of these efforts a word in common usage has acquired the trappings of legalism: 'acting fairly' has become 'acting in accordance with the rules of natural justice', and on occasion has been dressed up with Latin tags. This phrase in my opinion serves no useful purpose and in recent years it has encouraged lawyers to try to put those who hold inquiries into legal straitjackets.... For the purposes of my judgment I intend to ask myself this simple question: did the [decision-maker] act fairly towards the plaintiff?"

This course examines the elephantine concept of fairness in the law, along with other contemporary legal issues.

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