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Watching Brief - February 2021

Home Insights Watching Brief - February 2021

Matter of opinion

Intervention in local government – is this a trend?

Another local authority in the news, this time its warring Wellington councillors, currently communicating by way of media statement. In the wake of the Government's replacement of Tauranga City Council with a Commission, there have been immediate calls for the appointment of a Commission for Wellington City Council. The strength of this response prompted Hon Nanaia Mahuta, the Minister of Local Government, to enter the fray saying that she is not "as yet" considering appointing a Commission. This is unlikely to be of much comfort to Wellington councillors.
The Government intervention powers in the Local Government Act (LGA) are there for good reason, providing a level of accountability to central government and enabling a Minister to take action if necessary. But this is in the context of an elected body that has its own democratic legitimacy and unique mandate to prioritise community goals. From a constitutional and democratic perspective, a readiness to see an elected council replaced with Crown appointees is deeply concerning, suggesting the wider implications and available options are not well understood. Time to pause perhaps and be cautious what we wish for.
Appointment of a Commission (a panel of Government appointed commissioners) is one of seven available Government interventions under the LGA and the most extreme. This option upends and undermines local democracy with elected councillors removed and replaced with Ministerial appointees, potentially for significant lengths of time (there is a power to defer a next election). 
The LGA says the intervention options do not have to be used in a particular order (from least invasive to most severe). However, because appointment of a Commission is the most invasive option, the LGA requires the Minister to first be satisfied that a lesser intervention would be unlikely to prevent a problem "impairing good local government". This is a high bar. A review of the statutory requirements for other interventions demonstrates "impairing" must mean more than governance dysfunction or a failure to address a problem. The appointment of a Commission is rightly the last resort – none of the other interventions have a lesser intervention test.  
The next less invasive intervention is the appointment of a Crown Manager whose powers include the ability to direct councillors on decisions and actions. It is hard to envisage many situations where a Crown manager would be ineffective. Refusal by councillors to comply with a Crown Manager provides an immediate ground for the appointment of a Commission further indicating that moving from a Crown manager to Commission is the right order - not the other way around. Other lesser interventions include the appointment of a Crown Review Team or a Crown Observer. 
Appointment of a Commission not only moves power away from communities but can have a broader negative impact on local government democracy (voter turnout in particular) by making it appear to be merely a central government agent. Further, it is not the best option for getting governance back on track. Without councillors in place, it is difficult in practice to develop improved processes that could then carry over to newly elected councillors – a Crown Observer or Manager are arguably more effective in ensuring longer lasting improvements. Nor will a Commission necessarily lead to rate reductions (which is often a key concern for constituents). To the contrary, in Tauranga, the officials' papers suggest a Government preference for investment options that would result in the highest rate increases. Local ratepayers might yet regret the absence of a locally elected voice.
Of concern, available officials' papers relating to the Minister's decision to appoint a Commission for Tauranga City Council do not appear in include a rigorous assessment of lesser options. Nor does the information in these papers clearly demonstrate that the appointment of a Crown Manager would be insufficient – to the contrary a Crown Manager intervention was put forward as a viable option.
It is in the nature of local government that councillors will squabble or conduct themselves from time to time in ways that are deeply frustrating for their community. There are also deeper problems with New Zealand's local government model (which is a separate subject in itself). It is understandable that, at times, any fix might look appealing. However, it is important to hold not only local government to account but central government too. The Minister's decision for Tauranga was a popular one, positively reported by the press and with few questions asked. This in itself is a concerning precedent. As Andy Foster, Mayor of Wellington, calls for an independent review (a similar first step was taken by Tauranga City Council), remember there are many levels of support available that do not involve the loss of the elected community voice.

In the news

2021 Budget Policy Statement

On 9 February, the Government released its 2021 Budget Policy Statement (Policy Statement). Released each year, the Policy Statement presents the priorities that will guide the Government's Budget decisions for the fiscal year.
Budget 2021 has been identified as an important vehicle for delivering on the Labour Government's overarching policy goals this term, being to keep New Zealand safe from COVID-19, to accelerate the recovery and rebuild, and to address key challenges such as climate change and housing. These are reflected in the Budget priorities, which are to:

  • continue the COVID-19 response;

  • deliver priority and time-sensitive manifesto commitments;

  • support core public services through managing critical cost pressures; and

  • continue to deliver on existing investments.

As required by the Public Finance Act 1989, all investment decisions are also guided by the Government's wellbeing objectives, which are:

  • supporting a just transition to a low carbon economy;

  • lifting productivity and innovation;

  • lifting Māori and Pacific incomes and opportunities;

  • reducing child poverty and improving child wellbeing; and

  • improved mental and physical health outcomes.

The public may make submissions to the Finance and Expenditure Committee on the Policy Statement, by 15 March 2021. The Committee is required to report back to the House within 40 working days of the Policy Statement being released.
The Select Committee's submissions page (which includes a link to the Policy Statement) is available here.

COVID-19 vaccine update

New Zealand's COVID-19 immunisation programme is officially underway.  Among the first New Zealanders to have received a COVID-19 vaccination were cleaners, nurses and security staff at Auckland's Jet Park quarantine hotel. This process began on 20 February 2021 and is the first stage of the Government's plan to immunise thousands of border workers by mid-March. Other facilities at the front of the queue include Wellington's Grand Mercure and Christchurch's Sudima Airport hotels. In the second quarter of the year vaccinations will begin for healthcare and essential workers and those most at risk from the virus. The general population is not expected to be vaccinated until the second half of 2021.
The Government has agreements to purchase:

  • 1.5 million vaccines from Pfizer and BioNTech, enough for 750,000 people;

  • 5 million vaccines from Janssen Pharmaceutica (which only requires a single dose);

  • 10.72 million vaccines from Novavax, which is enough for 5.36 million people but is not likely to be received until later in 2021; and

  • 7.6 million doses from AstraZeneca (under an advance purchase agreement), which is fridge-stable and may allow for a more efficient rollout.

The vaccines are estimated at 90-95% effectiveness, though it is unknown whether booster shots will be required yearly.

Electricity Authority consultation on new trading conduct rule

The Electricity Authority (EA) recently published its Wholesale markets - Trading conduct consultation paper (Paper), which commences their consultation on a new trading conduct rule. The Paper sets out the EA's response to recommendations from the Market Development Advisory Group, following its consultation on trading conduct last year. The EA is proposing to replace the current high standard of trading conduct provisions in the Electricity Industry Participation Code 2010 (Code). The key change proposed is the introduction of a new trading conduct rule, which will replace clauses 13.5A and 13.5B, and the definition of "pivotal" in the Code. Under this new rule, generators and ancillary service agents will be required to ensure all their offers are consistent with offers they would have made in a market where no party could exercise significant market power. This will apply regardless of whether the generators and the ancillary service agents are pivotal.
The objective of the proposal is to introduce a trading conduct rule that improves efficiency of prices, in circumstances where the wholesale spot electricity market competition is weak. The EA anticipates that the proposal will also improve confidence in the wholesale market, providing long term benefits for consumers.
Interested stakeholders should make a submission to the EA by Tuesday 23 March 2021.

Flexi-wage initiative expansion

On 11 February, Prime Minister Jacinda Ardern and Minister for Social Development and Employment Carmel Sepuloni announced an expansion to the Flexi-wage programme, which is designed to support businesses getting back on their feet to take on new workers and support more job seekers into employment. Businesses can now receive an average of $7,500 per employee, with the amount depending on individual circumstances. Flexi-wage support can include training and in-work support, as well as a contribution to wages. The job must be ongoing, continuing after the Flexi-wage has finished.
The announcement also including a ring-fenced $30 million self-employment component which covers training and mentoring for those out of work wishing to start their own business. The expansion took effect on Monday 15 February and aims to support up to 40,000 New Zealanders into work over the next two years. It does not affect current Flexi-wage contracts, which will continue. Through the existing scheme, 40,167 Flexi-wage subsidies were approved between 1 July 2014 and 30 June 2020.

Next steps in firearms buy-back

On 22 January 2021, Police Minister Poto Williams announced a three month buy-back scheme for newly prohibited firearms and arms items. The Arms Legislation Act 2020 prohibited specified semi-automatic firearms, shotguns and pistols, in direct response to the 15 March 2019 terrorist attack. This second tranche follows the initial buy-back scheme, which collected 60,297 firearms, modifying 5,630 firearms and collecting 299,837 prohibited parts and magazines. The Government has allocated $15.5 million for compensation and administration costs which is indicative of the smaller scale of the scheme compared to the last. Another difference in this second tranche is that appointments will need to be made at Police stations, instead of large-scale collection events as under the first scheme in 2019. The key elements of the scheme are as follows:

  • The amnesty is in place for a period of six months until 1 August 2021.

  • The buy-back compensation period started on 1 February 2021 and ends on 1 May 2021.

  • Compensation will be based on the brand, make, model, base price, and condition of the firearm.

  • Standard compensation claims must be made within the 90-day period from 1 February 2021 while unique compensation claims (such as those for modified firearms) must be made within 60 days.

  • Dealers and manufacturers will also be compensated for their stock. However, such applications must be made within 60 days and supporting evidence must be provided within 20 days.

Government announces transport measures to act on climate change

The Government has made a number of announcements that align with a key focus of the Climate Change Commission's recently released draft report – reforming emissions from the transport sector and encouraging New Zealanders into electric vehicles.
The first, on 28 January 2021, was in respect of an agreement in principle to mandate a lower emitting biofuel blend across the transport sector. As the first step in implementing this mandate, the Government has directed officials to review the 2008 Biofuels Sales Obligation for reinstatement, update it in light of international developments, and consider whether it will be of net benefit to New Zealanders. Public and stakeholder consultation on the lower emitting biofuel blend can be expected to occur before the end of the year. 
Other commitments emerging from this announcement include $50 million for councils to assist in the decarbonisation of the public transport fleet by 2035, the introduction of a Clean Car Import Standard (with legislation to be passed this year), and further discussion on an incentive scheme to assist New Zealanders with the switch to clean cars.
The Government also announced its approval for 22 new low-emission transport projects, which include a community electric bike and car share scheme, additional EV charging stations, five hydrogen trucks, and a demonstration electric truck. The projects will be supported by the Low Emission Vehicles Contestable Fund (Fund), which is administered by the Energy Efficiency and Conservation Authority.
Further information about the Fund is available here.

Business support under COVID-19 resurgence confirmed

On 16 February 2021, the Government introduced legislation under urgency to set up a new Resurgence Support Payment (RSP) for businesses affected by a resurgence of COVID-19. The legislation, which amended the Tax Administration Act 1994 and the Income Tax Act 2007, came into effect on 18 February 2021. If activated (following an increase to Alert Level 2 or higher for a period of seven days or more), the RSP will be available to eligible businesses that have been significantly impacted by the Alert Level rise. Businesses can apply for the RSP until 23 March 2021, through the Inland Revenue website.
The new legislation has reduced the time over which a revenue drop is assessed (the threshold remaining at 30 percent), from 14 days to seven. The decrease in revenue over the seven days will be compared to a similar revenue period of the business in the six weeks before the Alert Level rise. The RSP will include a core business rate of $1500 plus $400 per employee, up to a total of 50 full-time equivalents ($21,500).
This is part of a larger Government support package, including:

  • Short-Term Absence Payment: a one off $350 payment to cover eligible workers who are required to stay at home while awaiting a COVID-19 test result.

  • Leave Support: payment to businesses for workers who are instructed to self-isolate. This is paid as a lump-sum and covers each eligible employee at $585.80 (where working 20 hours or more a week) or $350 (working less than 20 hours a week).

  • Wage Subsidy: available during a regional or national move to Alert Levels 3or 4 for a period of seven days or more.

Extension of dietary supplements regulation

The Government has extended the expiry date of the Dietary Supplements Regulations 1985 by 5 years, from 1 March 2021 to 1 March 2026. The purpose of the extension is to provide certainty for industry and consumers by maintaining the market of dietary supplements, as well as existing safety measures, until a new natural health products regulatory regime is established. This will allow time for consultation and development of new legislation, and a minimum two-year transition period for the new regulatory regime to fully commence.

In Trade

New Zealand – China Free Trade Agreement upgrade

Since the signing of the New Zealand-China Free Trade Agreement (FTA) in 2008, two-way trade in goods and services between the countries has grown to exceed $32 billion per year. On January 2021, the countries signed an upgrade to the FTA to ensure that it remains fit for purpose 12 years after it was first signed.
The upgrade makes significant improvements to the original FTA. These include a number of strategic and commercial changes to existing chapters, and new chapters covering e-commerce and environment and trade, among others. The upgrade amends rather than replaces the existing New Zealand China FTA, meaning that all elements of the existing FTA remain in place unless amended.
The tangible benefits that will be felt most immediately by New Zealand exporters include a streamlining of customs and operational procedures, and rules of origin. Among other things, "approved exporters" will be permitted to self-declare the origin of their goods for the purposes of obtaining a certificate of origin and are no longer required to apply for additional certificates when their goods transit through another country on the way to China. It also introduces an expedited six-hour clearance time through customs for perishable goods such as seafood, and other fresh high value food products. This will include the release of such goods outside normal business hours to ensure they are stored appropriately.
Over the longer term, the upgrade will further liberalise trade in goods and services. Over a 10-year period, tariffs on 12 types of wood and paper products representing $36 million of current trade to China will be eliminated, and will result in preferential access for 99% of New Zealand’s $3 billion wood and paper trade. Existing conditions for dairy products have been maintained, meaning that tariffs will be eliminated in two years for most types of dairy products, and four years for milk powder.
The upgrade introduces new market access commitments in 22 service sectors not already covered by the existing FTA and expands the coverage of the 'Most-Favoured Nation' commitment to include 20 new service sectors, including private education and particular professional services. This means that if New Zealand or China makes any commitments to future trading partners in these specific sectors, the other will automatically benefit from this enhanced treatment as well. This will ensure that New Zealand exporters’ competitive positioning in China's markets for these services will not be eroded through future liberalisation.
To reflect advances in trade rules and modern business practices, the upgrade inserts four new chapters into the existing FTA. These chapters include:

  • E-commerce: This chapter includes an express agreement to maintain the current practice of not imposing customs duties on electronic transmission, and to cooperate on initiatives to promote e-commerce between the Parties and encourage small and medium sized enterprises to use e-commerce.

  • Environment and trade: This chapter prevents the Parties from weakening environmental standards for a trade or investment advantage, or for trade protectionist purposes, making it the highest and most ambitious level of commitment to environmental considerations that China has agreed in any FTA.

  • Competition policy: This chapter requires the Parties to maintain consumer protection laws and provide a right of redress for goods or services that are not of acceptable quality, fit for purpose, or do not match their description.

  • Government procurement. This chapter generally promotes more transparency in procurement processes and requires China to enter into market access negotiations with New Zealand at such a point it makes a commitment to liberalise market access on government procurement.

 The Protocol to upgrade the FTA has now been referred to the Foreign Affairs, Defence and Trade Committee as part of New Zealand’s treaty examination process. The committee has 15 sitting days in which to report back its views on the Protocol to Parliament. The Protocol will enter into force 60 days after New Zealand and China exchange written notification that their respective domestic legal procedures, which includes the Parliamentary treaty examination process, have been completed.

Progress of legislation

Bills introduced

Climate Change Response (Auction Price) Amendment Bill
Type of Bill: Government
Member in Charge: Hon James Shaw
This Bill would amend the Climate Change Response Act 2002 (the Act) and the Climate Change (Auctions, Limits, and Price Controls for Units) Regulations 2020. This Bill would allow a confidential reserve price to be set for auctions in the New Zealand Emissions Trading Scheme to ensure units sold at auction cannot be sold significantly below the prevailing secondary market price.
Specifically, the Bill would amend the Act and regulations to:

  • Empower the Minister to make specific regulations; and

  • Require the Minister to consult with the Minister of Finance on the methodology; and

  • Prevent the sale of units at auction if the final auction clearing price does not match or exceed the confidential reserve price; and

  • Require the auction operator and any other person to keep the methodology and calculated prices confidential.

Girl Guides Association (New Zealand Branch) Incorporation Amendment Bill
Type of Bill: Private
Member in Charge: Duncan Webb
This Bill aims to confirm the powers of the Girl Guides Association of New Zealand Incorporated to do all things necessary for ensuring the welfare of the New Zealand Branch, including the disposition of property on terms that may be inconsistent with the requirements of section 6 of the Girl Guides Association (New Zealand Branch) Incorporation Act 1942.

Local Electoral (Māori Wards and Māori Constituencies) Amendment Bill
Type of Bill: Government
Member in Charge: Hon Nanaia Mahuta
This Bill would amend the Local Electoral Act 2001 and aims to:

  • align the treatment of Māori wards and constituencies with general wards and constituencies; and

  • remove all mechanisms for binding polls to be held on establishing Māori wards and constituencies; and

  • provide local authorities with an opportunity to make decisions on Māori wards and constituencies in time for the 2022 local elections.

 Practically, the Bill would repeal the provisions in the Local Electoral Act 2001 that relate to polls on the establishment of Māori wards and Māori constituencies, prohibit binding council-initiated polls on whether to establish Māori wards or Māori constituencies, and establish a transition period in which any local authority may, regardless of any previous decisions or precious poll outcomes, resolve to establish Māori wards or Māori constituencies for the 2022 local elections.

Taxation (COVID-19 Resurgence Support Payments and Other Matters) Bill 
Type of Bill: Government
Member in Charge: Hon David Parker
This Bill has received Royal Assent. See 'Acts Assented' below for a summary of the resulting legislation.

Bills awaiting first reading


Bills Defeated


Bills lapsed/withdrawn


Bills before Select Committee

Submissions open


Select Committee

Closing date for Submissions

Family Court (Supporting Children in Court) Legislation Bill

Justice Committee

28 Feb 2021

Films, Videos, and Publications Classification (Urgent Interim Classification of Publications and Prevention of Online Harm) Amendment Bill

Governance and Administration Committee

01 Apr 2021

Land Transport (Drug Driving) Amendment Bill

Transport and Infrastructure Committee

16 Apr 2021

Water Services Bil

Health Committee

02 Mar 2021

Submissions closed


Select Committee

Report Due

Arms (Firearms Prohibition Orders) Amendment Bill (No 2) 

Justice Committee

12 April 2021

Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill 

Environment Committee

04 Mar 2021

Child Support Amendment Bill 

Social Services and Community Committee

04 Mar 2021

Climate Change Response (Auction Price) Amendment Bill

Environment Committee

04 Mar 2021

Crown Pastoral Land Reform Bill

Environment Committee

25 May 2021

District Court (Protection of Judgment Debtors with Disabilities) Amendment Bill

Justice Committee

12 Apr 2021

Education (Strengthening Second Language Learning in Primary and Intermediate Schools) Amendment Bill

Education and Workforce Committee

31 May 2021

Electoral (Integrity Repeal) Amendment Bill

Justice Committee

20 Apr 2021

Fair Trading Amendment Bill

Economic Development, Science and Innovation Committee

Released without report

Gas (Information Disclosure and Penalties) Amendment Bill 

Economic Development, Science and Innovation Committee

04 Mar 2021

Holidays (Increasing Sick Leave) Amendment Bill

Education and Workforce Committee

06 Apr 2021

Insurance (Prompt Settlement of Claims for Uninhabitable Residential Property) Bill

Governance and Administration Committee

12 Apr 2021

Maori Commercial Aquaculture Claims Settlement Amendment Bill

Māori Affairs Committee

08 Jun 2021

Moriori Claims Settlement Bill

Māori Affairs Committee

23 Aug 2021

New Zealand Bill of Rights (Declarations of Inconsistency) Amendment Bill

Privileges Committee

04 Mar 2021

New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill

Finance and Expenditure Committee

04 May 2021

Oranga Tamariki (Youth Justice Demerit Points) Amendment Bill

Social Services and Community Committee

12 Apr 2021

Organic Products Bill

Primary Production Committee

04 Mar 2021

Overseas Investment Amendment Bill (No 3)

Finance and Expenditure Committee

04 Mar 2021

Protected Disclosures (Protection of Whistleblowers) Bill

Education and Workforce Committee

30 Mar 2021

Reserve Bank of New Zealand Bill

Finance and Expenditure Committee

08 Jun 2021

Rights for Victims of Insane Offenders Bill

Justice Committee

23 Mar 2021

Social Security (Financial Assistance for Caregivers) Amendment Bill

Finance and Expenditure Committee

08 Jun 2021

Taxation (Annual Rates for 2020-21, Feasibility Expenditure, and Remedial Matters) Bill

Finance and Expenditure Committee

04 Mar 2021

Bills awaiting second reading


Bills awaiting third reading



Bills awaiting Royal Assent


Acts assented

Food (Continuation of Dietary Supplements Regulations) Amendment Act 2021
This Act extends the expiry date of the Dietary Supplements Regulations 1985 by 5 years, from 1 March 2021 to 1 March 2026. The objective of this Act is to maintain consumer access to New Zealand dietary supplements until a fit-for-purpose regulatory regime is expected to fully commence.
Taxation (COVID-19 Resurgence Support Payments and Other Matters) Act 2021
This Act amends the Tax Administration Act 1994 and the Income Tax Act 2007. The amendments relate to the COVID-19 resurgence support payment scheme and are aimed at assisting with the impacts of further COVID-19 outbreaks. This Act also sets out the minimum family tax credit threshold (a tax credit aimed at providing financial support to low-income working families) for the 2021-22 and later tax years.
Subordinate Legislation Confirmation Act 2020
This Act's purpose is to prevent the revocation of certain subordinate legislation that by virtue of the Act under which it is made, is revoked at a stated time unless earlier confirmed by an Act of Parliament. This Act relates to items of subordinate legislation made in the year ending on 30 June 2020. The Act made confirmations relating to the following legislation:

  • Arms Act 1983;

  • Biosecurity Act 1993;

  • Commodity Levies Act 1990;

  • Customs and Excise Act 2018;

  • New Zealand Superannuation and Retirement Income Act 2001 and Social Security Act 2018;

  • Road User Charges Act 2012;

  • Social Security Act 2018; and

  • Tariff Act 1988.​
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