5. Outstanding legal issues

The various legal issues impinging on the evolution of electronic service delivery strategies have been amply rehearsed in our review of June last year. Feedback received in the course of the present review, however, suggests that the quest for certainty would be best served if additional emphasis were to be placed on the statutory and regulatory bases of any charges that may be imposed by the Crown in respect of electronic services.

Also, while not specifically a legal question, the policy considerations guiding decisions concerning the provision of electronic services, as well as the appropriateness and quantum of any charges involved should, in our view be clearly articulated.

5.1 Charging for electronic services

The practice of cost recovery for certain government services has become a well-established and generally accepted one. We note, however, that the familiarity of the practice may have engendered a certain contempt - or at least ignorance - of the constitutional importance of ensuring that any fee-for-service regime has an explicit statutory foundation.

The need for such foundation this lies in the principle that the Crown may not tax except with the authority of Parliament. Accordingly, where a fee is set for a service that the citizen has no choice but to 'purchase' from the Crown, it is necessarily a tax and requires statutory authority. [Section.22 Constitution Act 1986: Parliamentary control of public finance. It shall not be lawful for the Crown, except by or under an Act of Parliament -(a) To levy a tax...]

Consistent with this, care should be exercised in respect of empowering provisions that are not technologically 'neutral' - or in other words, that provide only for charging for services delivered through more traditional channels. In such instances, the legitimacy of any charge for an electronic service may be doubtful and will need to be addressed on a case by case basis by any agency contemplating the imposition of a charging regime.

The same injunction should also apply where charges are fixed through regulation. Again, these need an adequate statutory foundation and should be reviewed on a case by case basis. [ Useful guidance on these matters can be found in: the 'Report of the Regulations Review Committee: on the Inquiry into the constitutional principles to apply when Parliament empowers the Crown to charge fees by regulation. First Session, Forty-Second Parliament.] [ See also: Guidelines for Setting Charges in the Public Sector, The Treasury, 1998; and Guidelines on Costing and Charging for Public Sector Goods and Services, Report of the Controller and Auditor-General, 1989. ]

5.2 Credit Contracts - Disclosure Requirements

One possible impediment to electronic bill presentment and payment may arise under the disclosure requirements of section 20 of the Credit Contracts Act. Specifically, if users of electronic services are provided with credit under a credit contract - e.g. a credit card transaction - disclosure of the transaction is required to be made to the client by giving or sending the relevant documents to the debtor in physical form. Electronic forms do not currently ensure compliance with the Act and will not do so until the Electronic Transactions Bill is passed.

5.3 Electronic Transactions Bill

By way of general note, continued delays in the passage of the Electronic Transaction Bill should, in our view be a matter of real concern. While its relevance to electronic bill presentment and payment may, in practice, be only peripheral, its provisions remain a critically important step - and signal - in the evolution of electronic transactions in New Zealand. Authentication using electronic signatures, consent to the use of electronic forms, and the disclosure of credit contracts are among several issues left unresolved as a result of Parliament's failure to pass the legislation.

5.4 Fees

In practice the potential legal issues associated with fees arise through a variety of mechanisms:

• Normal charges from the operators of services that are employed, such as credit companies;

• Specific cost related recoveries that government agencies are encouraged to impose as part of the normal approach to public finance (see next section); and

• Occasional attempts to create a cross subsidy within a government agency's finances to enable it to undertake some wider service. [ Such an approach was said to lie behind the charging regime proposed by DIA for birth and death certificates earlier this year.]

Aside from the legal matters inherent in these matters, they also raise wider questions related to cost recovery and the public good.

5.5 Policy priorities - fiscal neutrality versus public good

There is an evident tension in officials' perspectives on both the cost-benefit justification for providing services by electronic means, and the appropriateness and quantum of any associated charges. This is significant.

On the one hand, it appears that some agencies may weigh the decision to offer electronic billing and payment facilities primarily on the basis of achievable cost savings. This, in most cases, seems to be predicated on the extent to which an agency can shut down its alternative delivery channels, or at least achieve a neutral budgetary outcome by the imposition of cost recovery mechanisms. Concern about the political sustainability of either option and the consequent risk of increased costs to the agency appear to give rise to concerns about the merits of pursuing electronic service strategy.

On the other hand, it appears that some officials take greater cognisance of what could be loosely called the 'public good' aspects of enhancing citizen access to government services using electronic as well as more traditional means. The business case rests not on cost savings, but on the delivery of a wider public benefit. This is accepted by several commentators we spoke to, and in particular seems to lie, at least in part, behind the local government initiatives in this area.

We note here, as elsewhere in this report, that these competing perspectives need to be reconciled if public sector agencies are to develop a consistent set of service offerings and appropriate charging regime. The issue should not be under-estimated. Any decision to place perceived public benefit above cost savings, for example, will have substantial fiscal implications when generalised across the public sector as a whole. On the other hand, as we noted in our report on the Levin view of government [ See, John Yeabsley, NZIER and D.Bailey, Lazar Associates (2001) The view from Levin, Report to the E-Government Unit, SSC.] services, there is a degree of citizen cynicism about the motives of implementation of technology in government.