New Zealand's economic regulatory system is turning off overseas investors and is well out of step internationally, a conference heard this week.

Anton Murashev, of economic consultancy firm Castalia, told the Regulatory Evolution Summit in Wellington foreign investors because they don't know what to expect from New Zealand.

He said the main factors putting off potential investors issue were the amount of discretion regulators had and the lack of guidance about how that discretion was to be used.

New Zealand regulatory system was an outlier, meaning (in the language of statistics) that it was "distant from the rest of the data" or "outside the overall pattern of a distribution".

This is despite the government's boast that New Zealand is the second most easiest place in the world in which to do business (according to the World Bank which put Singapore first, New Zealand second followed by the USA, Hong Kong and Denmark).

Castalia had created a scorecard from the common characteristics of good regulatory regimes and compared New Zealand with three other countries, Australia, the UK and the USA.

Thirteen characteristics were grouped under three broad headings: the quality of regulatory structures; the quality of regulatory mechanisms; and the quality of regulatory practices.

In all three groups New Zealand was assessed as being well behind the other three countries.

On a scale of one to three where one is good and three is bad, New Zealand's overall score was three compared to 1.26 for the UK, 1.28 for Australia and 1.40 for the USA.

Mr Murashev cited the Commerce Commission's dealings with Transpower and Vector, claiming that the Commission had a culture of "getting the bad guy".

It was also less driven by precedent than overseas regulators.

"The Commission does not seem to want to be bound by precedent.

"It wants to be able to change its mind at any point, and it works to preserve the maximum amount of discretion it can. That makes investors uncomfortable," he said.

Although the Commission's consultation process was transparent, it wasn't predictable. "The approaches used to deal with Vector and Transpower were different over time."

Mr Murashev agreed that changes proposed in the Commerce Amendment Bill would move New Zealand closer to the mainstream. However "the Bill still allows for wide discretion thereby retaining significant uncertainty."

Commerce Minister Lianne Dalziell told the conference that the Regulatory Impact Analysis Unit would move from the Ministry of Economic Development to the Treasury.

The RIAU assesses and reports on the Regulatory Impact Statements produced by other government agencies, and that role was out of step with the MED's approach to business development.

Ms Dalziell said the Treasury was a more suitable home because it was already offering second opinion policy advice and carrying out analysis of Departmental Votes.