A lack of support from National means the Act Party's quest for what it calls the Holy Grail for better regulations is not likely to end soon.
Leader David Seymour has criticised the Government for not supporting the legislation, which he said would prevent sloppy or self-serving regulation.
"There has always been an objection that it [the legislation] will slow down the law-making process, and introduce more compliance for regulators and law-makers.
"Well, yes, that's the whole point - that New Zealanders out there building homes and businesses are often stifled by regulation."
Act has been pushing for a version of the Regulatory Standards Bill since 2006.
Mr Seymour said it would force politicians and regulators to, by law, clearly answer questions including, what are the alternatives, who wins and who loses from the regulation, and whether it affects property rights.
He said those questions were not currently being taken seriously enough.
However, Parliament's Commerce Committee disagreed and has recommended the Bill not be passed.
The committee's report stated the Bill would "add an extra layer to existing legislative processes and practice".
It will now face a parliamentary vote. Mr Seymour said he had not given up all hope.
"This is a long game ... it may have to die this term and be brought back again at some future time. But what I do know is that if you go and talk to the business community and ask if regulatory uncertainty is a difficulty, they'll say, 'Yes, it is.' The issue won't go away.
"I have told them [National] that I believe it's one of the most important things we can do to pass this, and it would place severe restrictions on the ability of the state to regulate.
"And they have said, well, that's why we are not in favour of doing it. That's the basic philosophic divide."
By Nicholas Jones of the New Zealand Herald
