Appendix 3
Other forms of penalty
Administrative penalties
The term “administrative penalty” is used here to refer to (usually) low-quantum, fixed penalties imposed directly by a regulator. In the main there is no discretion around their imposition, though there may be discretion to waive or remit them. Most of the Tax Administration Act 1994 penalties would generally be understood to be administrative penalties. Other examples are in the Charities (Fees Other Matters) Regulations 2006 (for example, failing to file an annual return results in a $200 penalty) and the Financial Reporting Order 1994 (late filing of financial statements can result in a $25 or $100 penalty).
However, there are exceptions to the generally low quantum of administrative penalties in New Zealand. The “administrative penalty” in the Gambling (Fees) Regulations 2007, while not discretionary as to quantum, can be very large: the penalty for late payment of an annual fee amounts to five per cent of the fee per month. In the first year that the regulations were in force, Sky City Auckland Casino’s annual fee was $3,006,474, so a late payment penalty would have totalled around $150,000 per month.
And, the term “administrative penalty” is used to describe a variety of penalties, some of which occupy an administrative/discretionary middleground. For example, the responsible Minister can impose “civil penalties” under the Fisheries (Demerit Points and Civil Penalties) Regulations 2001 and the Forests (Permanent Forest Sink) Regulations 2007. Under the former, the Minister may record demerit points for certain breaches of the regulations by an “approved service delivery organisation”. The demerit points are converted to penalties at the end of each year. The demerit points and their accompanying penalties are fixed in the regulations; however, the Minister has discretion as to whether to impose them; unlike some other administrative penalties, they do not accrue automatically. We also note that the Land Transport Management Act 2003 and the Tokelau (Territorial Sea and Exclusive Economic Zone) Act 1977 provide for the creation of civil penalties by regulation. None have been made and it is not clear what the process for their imposition would be – whether these would be administrative penalties similar to those just discussed or whether they would be more in the nature of a non-judicial discretionary penalty.
Finally, the Fisheries Act 1996 contains what is referred to as an “administrative penalty”, but which differs from those described above. The penalty can be imposed in place of instigating criminal proceedings where the penalty for the offence is up to $250,000. The Chief Executive may, having regard to all the circumstances including whether the offence was a minor one, and the person’s previous conduct, offer an administrative penalty in place of prosecution. The person can opt to be subject to normal criminal proceedings, or can admit the offence and make submissions as to the level of administrative penalty. They are deemed to have admitted the offence if they do not respond within 28 days. The maximum penalty is one–third of the maximum criminal fine that would otherwise be available, and the Chief Executive cannot commence criminal proceedings if the offence is admitted.
The penalty is enforced as a criminal fine. So, while the term “administrative penalty” is used, this is more akin to an infringement offence but with a much higher fine (see discussion of infringement offences below).