Hospitality red tape targeted after review finds costly and confusing rules

New Zealand’s hospitality businesses could face fewer regulatory hurdles and lower compliance costs following the completion of a wide-ranging review that identified duplicated paperwork, lengthy approval processes and disproportionate licensing requirements across the sector.

Regulation Minister David Seymour and Tourism and Hospitality Minister Louise Upston announced the completion of the Ministry for Regulation’s Hospitality Sector Review, with ministers expected to decide in the coming weeks which recommendations will be adopted.

Seymour said the objective was to make it easier and less expensive to establish and operate cafés, restaurants, bars and other hospitality businesses.

“Everybody has a favourite café, bar or restaurant they wish was still open,” Seymour said. “Today’s announcement is about cutting red tape and getting rid of dumb rules which can contribute to closures.”

The review examined the cumulative effect of regulations administered across multiple central and local agencies, finding businesses can be required to provide the same information repeatedly, sometimes even to the same regulator.

It also identified uncertainty and delays in regulatory decisions, concerns about the cost and transparency of licensing and registration fees, and alcohol licensing processes that can be inefficient or disproportionate to the risks involved.

Food safety regulation was another area singled out, with the review finding some requirements, inspections and compliance practices may not be sufficiently effective, efficient or proportionate to actual food-safety risks.

Transport regulations and building and planning requirements were also identified as potential obstacles. In particular, requirements applying to temporary structures such as marquees can generate unnecessary costs and delays for hospitality operators.

Seymour pointed to the experience of a food truck operator that considered establishing its business in Australia because of the complexity of New Zealand’s regulatory system.

According to the review, the operator was provided with a single contact and a clear route through the Australian regulatory process. In New Zealand, however, the business had to deal with 13 officials representing eight central and local agencies.

“They said the pathway to set up was incredibly confusing and complex,” Seymour said.

He argued that hospitality businesses had already faced considerable disruption during the Covid-19 period and that excessive regulation had made the subsequent recovery more difficult.

“If we are going to unlock New Zealand’s potential, we need to let Kiwi businesses get on with business,” he said.

Upston said hospitality remains a significant part of the national economy, generating $21.4 billion and employing more than 193,000 people.

“Our hospitality sector plays a vital role in New Zealand’s economy – it supports jobs, local communities and the experiences of domestic and international visitors across the country,” she said.

Because many of the regulatory problems cross ministerial portfolios and involve several agencies, Upston said she would develop a Hospitality Action Plan to coordinate priority initiatives.

The plan will be developed alongside the response to the review, with ministers now considering which recommendations should proceed and how they should be implemented.

Upston said officials would continue working with the industry to reduce barriers to expansion and create conditions in which hospitality businesses can grow.

“I intend to continue working in partnership with the sector to remove barriers to growth, support businesses and workers, and ensure hospitality can thrive as part of a growing New Zealand economy.”

Image credit: Nathan Dumlao