Publications

Watching Brief: Election 2017 Special

Home Insights Watching Brief: Election 2017 Special

In Politics: Election Special

The Framework for Relentless Positivity

Four weeks on from the general election, the arrangements that will guide the shape of the new Government are in place, notably the Coalition Agreement between NZ First and the Confidence and Supply Agreement between Labour and the Greens (Agreements).  

The Agreements are a critical feature of our constitutional arrangements, informed by the Cabinet Manual and convention. They are founded on the principle of collective responsibility, which essentially requires Ministers to represent and implement government policy, ensuring functionality of an MMP government. 

Uniquely, this Government has the largest ever spread of seats across three parties, bringing challenges that will put the operation of the Agreements and MMP to the test. This also brings an opportunity for New Zealand to demonstrate its ability to function effectively as a modern multi-party democracy governed by a diverse but co-operative block (a further evolutionary move towards a European model and away from First Past the Post). It is notable in this regard that National's larger block in part reflects ACT's failure to provide an alternative for the centre right in a way that the Greens have for the centre left.

The key difference between a Coalition Agreement and a Confidence and Supply Agreement is that the former involves Ministers within Cabinet who are bound by higher expectations of collective responsibility. As the Cabinet Manual provides "[a]ny public dissociation from Cabinet decisions by individual coalition Ministers outside the agreed processes is unacceptable". These agreed processes involve negotiation of "agree to disagree" positions, which in turn can only relate to differing party positions, not matters that have become government policy.

Confidence and Supply arrangements on the other hand are limited to agreement not to oppose any "no confidence" motions and to support the Government's budgets. Ministers outside Cabinet are bound by collective responsibility in relation to their own portfolios only – not all government policy.

The Agreements with NZ First and the Greens, at first blush, reflect a significant degree of commonality across a range of policy areas, including climate change, employment, education and regional development. Perhaps more tellingly, the agreements reached show that all parties have been prepared to make significant concessions in order to reach common ground. It is also clear that the Agreements work as a package where no one agreement can be inconsistent with another. The level of interconnection across the Agreements is highlighted by the inclusion of a Green policy in the NZ First Agreement. 

Saying that, the policies in the Agreements are currently set out at a high (and relatively aspirational) level. Disagreement is likely to surface as details are worked out (noting that a more detailed document lies behind the Labour/NZ First agreement but is yet to be publicly released). The strong emphasis placed on common values, and the Prime Minister's obvious negotiation talents, could well assist here.

Importantly, the biggest challenge for Labour lies with its 100 Day Plan policies not included in the Agreements (for example the commitment to free tertiary education and the tax working group). Labour has been clear that these policies are still on the table unless directly overridden by policies in the Agreements. However, Labour may have to work hard to get these off the ground and fault lines between the three parties could emerge. Significant, or controversial policy, must go past Cabinet where NZ First has four Ministers. Proposed new legislation must pass through the legislative process where Labour will need votes from both NZ First and the Greens.

Overall, the ambitious policy and legislative agenda outlined in the agreements signal an activist government which in turn will require an informed activist private sector. There will be a myriad of opportunities for engagement at the official and Ministerial level as policies and legislation are developed over the next three years. 

This is a fresh Government which will likely be open to, and assisted by, briefings and information from business to help it fully understand the operation of the business sector and how policies could impact more broadly, including by way of unintended impact and counterproductive outcomes. It should be front of mind for businesses to engage early in the process while policy is being formulated and before final decisions are made.

A relentlessly positive Government will be looking for positive engagement from the private sector.

The Coalition Agreements

Determining the policy direction of the newly elected Government are:
  1. a coalition agreement between the New Zealand Labour Party (Labour) and the New Zealand First Party (NZ First) (Coalition Agreement); and
  2. a confidence and supply agreement between Labour and the Green Party of Aotearoa New Zealand (Green Party) (Confidence and Supply Agreement).

Key policy changes to expect

Introduction

The following section sets out expected changes in key areas of policy. The policies that are set out in the Coalition Agreement are most likely to be implemented followed by policies set out in the Confidence and Supply Agreement. Labour's 100 Day Plan policies not included in the Agreements will have to be negotiated on a case by case basis. We highlight below where the respective policies sit.   

Tax

The Coalition Agreement contains little in the way of substantive tax policy changes. The tax policies in the Coalition Agreement relate to increasing the penalties for tax evasion as well as implementing charges for exports of bottled water. A key concession made by Labour in the negotiation of the Coalition Agreement was that it will not introduce resource rentals for water during this term of Parliament. Specifically, the Coalition Agreement contains the following:

  • To increase the penalties for tax evasion (NZ First campaigned to increase the maximum penalties for evasion offences to 10 years imprisonment and/or a $5 million fine).
  • That no resource rentals for water will be introduced in this term of Parliament (this differs from Labour's policy position going into the election).
  • To introduce a royalty on exports of bottled water. 

The Confidence and Supply Agreement does not contain any tax policy measures. Labour has indicated in its 100 Day Plan that it will:

  • Establish a Tax Working Group to ensure that there is a fair balance between the taxation of income and assets (including consideration of a capital gains tax).
  • Repeal the currently legislated income tax cuts and government working for families tax package which were legislated by the previous Government (due to take effect 1 April 2018).

In addition to the above policies, Labour has indicated that it will:

  • Provide an additional $30 million per annum in funding to Inland Revenue to "crack down on multinational tax avoidance".
  • Consider the introduction of a "Diverted Profits Tax" as a further measure to address concerns about multinational tax avoidance.
  • "Crack down" on housing speculation by extending the bright line test to five years (which applies to the sale of properties other than the family home) as well as preventing "speculators" from engaging in negative gearing.
  • Abolish secondary tax and, as a transitional measure, make the refund process for secondary taxation workers automatic.
  • Introduce tax incentives to encourage research and development.
Environment and Climate Change

The Labour – Green block endeavoured to put climate change at the heart of the election campaign with Prime Minister Jacinda Ardern describing it as "my generation's nuclear-free moment." This is an area where there is strong alignment between the parties. In terms of concessions, NZ First has agreed to a zero carbon emissions goal (a key policy in Labour's 100 Day Plan). Labour has agreed to honour existing Crown irrigation investments, which it previously said that it would disband. All parties agree to the establishment of an Independent Climate Commission.  

The environmental and climate change related features of the Coalition Agreement includes plans to:

  • Introduce a Zero Carbon Act to require net zero carbon emissions by 2050.
  • Plant 100 million trees a year per year as part of the Billion Trees Planting Programme.
  • Re-establish the New Zealand Forestry Service, to be located in regional New Zealand (projected to be in Rotorua).
  • Make the Government's vehicle fleet, where practicable, emissions free by 2025 / 2026. This is likely to exclude emergency and defence force vehicles.
  • Instruct the Climate Commission to determine the role of agriculture under the Emissions Trading Scheme. If agriculture is to be included then upon entry, the free allocation of credits to agriculture will be 95% with all revenues from this source recycled back into agriculture in order to encourage agricultural innovation, mitigation and additional planting of forestry.
  • Increase funding for the Department of Conservation.
  • Increase water quality standards for urban and rural areas using measurements that take into account seasonal differences.
  • Work with Māori and other quota holders to resolve outstanding issues in the Kermadec Ocean Sanctuary Bill.
  • Increase MPI BiosecurityNZ’s resourcing and arrange a Select Committee Inquiry into Biosecurity.

The Confidence and Supply Agreement contains similar features to the Coalition Agreement, reflecting the overlapping policy between the three parties in this area. In addition to the above, Labour and the Green Party have also agreed to:

  • Make all new legislation subject to a climate impact assessment.
  • Establish a new cross-agency climate change board of public sector CEOs.
  • Transition the Climate Commission to 100% renewable electricity by 2035 (including geothermal) in a normal hydrological year.
  • Stimulate up to $1 billion of new investment in low carbon industries by 2020, kick-started by a Government-backed Green Investment Fund of $100 million.
  • Provide assistance to the agricultural sector to reduce biological emissions, improve water quality, and shift to more diverse and sustainable land use including more forestry.
  • Investigate establishing a Taranaki blue whale sanctuary.
  • Commit to minimising waste to landfill with significant reductions in all waste classes by 2020.

The Labour Party's own policy also includes a number of other commitments in the environmental and climate change sphere. These include:

  • Helping farmers and other owners of waterways with fencing and riparian planting through Labour's Ready for Work programme.
  • Supporting a just transition for workers in industries that need to reduce emissions and the creation of jobs in sectors that are carbon-free or carbon sinks, such as forestry.
  • Establishing a $75 million a year Tourism and Conservation Infrastructure Fund to pay for projects that will improve the experience of visitors to New Zealand and enhance our natural environment.
  • Retaining the Resource Management Act, while improving processes and ensuring that local communities can have their say.
  • Introducing a Tourism and Conservation Infrastructure Fund to improve DOC biodiversity funding and tourism infrastructure.
  • Keeping the threatened Maui dolphin safe from activities such as fishing or petroleum exploration.
Employment

This Parliamentary term is likely to see a number of new employment initiatives as well as policies that will undo changes made in the last three Parliamentary terms by National-led governments.

The employment features of the Coalition Agreement include:

  • Progressively increasing the minimum wage to $20 per hour by 2020, with the final increase to take effect in April 2021. Labour's first 100 Day Plan also indicates that that the minimum wage will increase to $16.50 an hour from 1 April 2018.
  • Reviewing the official measures for unemployment to ensure they accurately reflect the modern workforce.
  • Piloting the Youth Education, Training & Employment initiative and provide 800 extra places for the Limited Service Volunteer scheme.
  • Introducing programmes for long-term unemployed to improve work readiness such as 'Ready for Work'.

In addition, the Labour Party has stated in its 100 Day Plan that it will increase paid parental leave from 1 July 2018. 

The Confidence and Supply Agreement includes a goal of eliminating the gender pay gap within the core public sector and that "substantial" progress on this will be made within this Parliamentary term. The agreement also provides that there will be work to ensure the wider public sector and private sector is on a similar pathway.

Labour policy also includes a number of employment features, although implementation will depend on the support of NZ First. Those policies include:

  • Strengthening union protections including increasing protections against discrimination and providing for increased worker participation rights.
  • Unwinding and replacing the 90-day trial period that was introduced in March 2009 by setting up a "referee" service to conduct short hearings into disputes arising within the first 90 days of employment.
  • Restoring the statutory preference for the reinstatement of employees who have been unjustifiably dismissed.
  • Unwinding a number of amendments National made to the collective bargaining process such as restoring unions' ability to initiate collective bargaining in advance of employers as well as the duty to reach agreement in bargaining unless there is a genuine reason not to.
  • Extending collective bargaining rights to independent contractors as well as introducing statutory support and legal rights for "dependent contractors" who do not satisfy the legal definition of an "employee".

Finally, one of Labour's more significant proposals is the introduction of a system of industry and sector collective bargaining that allows unions and employers to enter into Fair Pay Agreements which set minimum conditions (wages, hours, leave entitlements etc) for all employees across an industry.

Finance

The Coalition Agreement contains a number of significant policy proposals in relation to Government Finance. These include:

  • Honouring existing Crown irrigation investment commitments.
  • Reviewing and reforming the Reserve Bank Act 1989 (Labour has stated that it wants the Reserve Bank to target full employment and NZ First has stated that it wants the Reserve Bank to manage the exchange rate of the dollar).
  • Reforming government procurement rules to give New Zealand companies greater access to these contracts (during the election, Labour advocated for job creation to be a determinative factor when deciding whether to award a procurement contract).
  • Investigating growing Kiwibank's capital base and capabilities so that it is positioned to be the Government's banker when the contract is next renewed.

The Confidence and Supply Agreement contains limited policies in relation to finance. One stated goal of the Confidence and Supply Agreement is to stimulate up to $1 billion of new investment in low carbon industries by 2020, kick-started by a Government-backed Green Investment Fund of $100 million.

In Labour's 100 Day Plan, it has indicated that it will resume government contributions to the New Zealand Superannuation Fund and introduce legislation to amend the Public Finance Act 1989 so that the Budget reports the Government's progress on reducing child poverty.

Labour has a number of other finance policies that may be implemented. These include:

  • Reducing government debt to 20% of GDP by 2021/2022.
  • Maintaining an operating surplus.
  • Keep government spending as a proportion of GDP within the recent historic range.
  • Establish an independent body to monitor government spending.
  • Making procurement decisions based upon which bid creates the greatest number of jobs.
Education and Charter Schools

There are a number of education related policies in the Coalition Agreement. They include:

  • Developing a 30 year strategic plan for New Zealand education.
  • Restoring funding for gifted students.
  • Offering free driver training to all secondary students.
  • Restoring funding for Computers in Homes
  • Restarting the Te Kohatihanga teacher professional development initiative.

Labour has also indicated in its 100 Day Plan that it intends to make the first year of tertiary education or training fees from 1 January 2018 and increase student allowances and living cost loans by $50 a week from 1 January 2018. 

The Confidence and Supply Agreement includes the goals of:

  • Ensuring that every child with special needs and learning difficulties can participate fully in school life.
  • Making tertiary education more affordable for students and reducing the number of students living in financial hardship.

In addition to this, it is notable that under the Labour Party's Education Manifesto, it intends to repeal legislation allowing for charter schools. Given the Party's intense opposition to the creation of charter schools, it is expected that those schools will become Special Character Schools under the Education Act 1989.

Infrastructure

Infrastructure was a major point of contention between the two major parties during the election campaign. The Labour-led Government has indicated that there will be significant changes in this area over the coming parliamentary term.

We can expect a number of changes in the area of housing in the 100 Day Plan of the new Government. This includes passing the Healthy Homes Guarantee Bill that will require all rentals to be warm and dry, establishing the Affordable Housing Authority, beginning the KiwiBuild programme, and instructing Housing New Zealand to stop any state house sell-offs. Transport Minister Hon Phil Twyford has committed to introducing a regional fuel tax within the next four to five months. This new revenue will help local government fund key infrastructure projects.

The Coalition Agreement includes a $1 billion per annum Regional Development (Provincial Growth) Fund. This fund will provide for investment in regional rail, commissioning a feasibility study on the options for moving the Ports of Auckland (including giving Northport serious consideration) and other large-scale capital projects.

The Confidence and Supply Agreement includes a number of infrastructure-focused policies, including:

  • Reprioritising the National Land Transport Fund to increase the investment in rail infrastructure in cities and regions, and cycling and walking.
  • Halting development of Auckland’s East-West motorway link in its current form.
  • Beginning development of light rail from the city to the airport in Auckland.
  • Improving water quality through stronger regulatory instruments, increasing funding for freshwater enhancement and winding down Government support for irrigation.

Labour announced the following policies in the lead up to the election, including:

  • As part of its Canterbury recovery plan, establishing a $300 million capital acceleration facility to develop the red zone, and contributing towards a new stadium and other infrastructure in partnership with the Christchurch City Council.
  • A number of new initiatives relating to Auckland, including:
    • A new light rail network with routes to the central suburbs, Auckland International Airport, West Auckland, and the capacity to extend to the North Shore.
    • A new Bus Rapid Transit line from Howick to the airport, starting with a bus service connecting Puhinui and Manukau train stations to the airport within one year.
    • Greater investment in electric trains, electrification of rail lines to Pukekohe, and building a third main trunk line urgently between Westfield and Papakura.
    • Establishing a range of significant cross-town bus priority routes including New Lynn-Flat Bush, Point Chevalier-Botany, Silverdale-Whangaparoa, and Howick-Glenfield.
    • A passenger rail service linking Auckland, Hamilton and Tauranga.
    • Developing the Skypath on Auckland Harbour Bridge.
  • Develop a Congestion Free Network plan for Wellington and fast-track a feasibility study on rapid transit to the airport.
  • A number of changes to the railway system, including; instructing KiwiRail to retain an electrified network between Hamilton and Palmerston North; progressively electrify other key parts of the network; re-open railway lines which have community benefit such as the Napier to Gisborne rail line; investigate a rail line to Marsden Point and Northport; and upgrade the North Auckland Line.
  • Increasing funding available for transport projects of regional importance by doubling the funding range of $70 - $140 million to $140 - $280 million.
  • Committing to funding a replacement for the Manawatu Gorge Road in a timely manner.
  • As part of a national freight strategy, develop a national ports strategy with a particular focus on the upper North Island.
Energy

Changes to the energy sector are likely to occur under the Labour-led Government. While Labour has not promised anything directly in this space in its 100 Day Plan, the establishment of an independent climate commission and a Clean Water Summit, discussed in the Environment section, will affect the energy sector in the long term.

The Coalition Agreement promises to hold a full-scale review into retail power pricing and restricts rental waters in the coming term. The agreement also sets the goal of having all Government vehicles emission free where possible by 2025/2026.

The Confidence and Supply Agreement includes a number of policy changes for the energy industry. In particular, the agreement outlines the parties' intention to:

  • Request the Climate Commission to plan the transition to 100% renewable electricity by 2035 (which includes geothermal) in a normal hydrological year. Solar panels on schools will be investigated as part of this goal.
  • Stimulate up to $1 billion of new investment in low carbon industries by 2020, kick-started by a Government-backed Green Investment Fund of $100 million.
  • Improve water quality and prioritise healthy rivers, lakes and aquifers with stronger regulatory instruments, funding for freshwater enhancement and winding down Government support for irrigation.

Labour's own policies include a large number of wind-backs from the previous Government's policies as well as introducing new initiatives, including (among others):

  • Investigating new electricity system structures that can cater to greater adoption of variable renewable energy sources such as wind, solar, and marine power.
  • Adding climate change mitigation and emissions reduction to the objectives of the Electricity Authority, in order to promote an increased uptake of renewable electricity.
  • Reinstating a moratorium on any new fossil-fuelled baseload electricity generation until 2028.
  • Facilitating the orderly rollout of economically viable distributed generation, barriers to this occurring, and regulating for high installation standards.
  • Ensuring households and other distributed generators can be grid-connected at a fair rate, and sell surplus electricity back into the power grid at a fair price (linked to the wholesale price).
  • Enabling lines companies to play a positive role in Distributed Generation rollout and in promoting energy efficiency.
  • Convening a cross-agency and cross-interest working group to undertake a wide-ranging review of the electricity sector and address issues such as:
    • regulatory and equity issues arising from the impact of the new technologies;
    • the optimal role for the electricity sector in making a just transition to a low-carbon economy;
    • whether in achieving this, any changes need to be made to current electricity industry arrangements, or any policy inconsistencies across the wider economy addressed;
    • any barriers that currently exist to improving energy productivity; and
    • whether responsibility for an overarching transitional plan should be placed with the Electricity Authority, as the regulator of the overall electricity system.
  • Ensuring that substantial parent companies are fully liable for any mistakes, spills and financial losses (rather than a smaller New Zealand subsidiary), by way of a bond, liability insurance, or both.
Commerce and Consumer Affairs

The Coalition Agreement contains two policies that may impact on commerce and consumer affairs. The first is a full-scale review into retail power pricing. The second is to increase funding for Community Law (a free legal advice service). The way this could impact consumer affairs is that it will increase access to legal services for those seeking financial advice around borrowing. 

Aside from the Coalition Agreement, neither the Confidence and Supply Agreement nor Labour's first 100 Day Plan contain policies relating to commerce and consumer affairs. 

However, Labour does have a number of other policies relating to commerce and consumer affairs, including:

  • Conducting a review of the Credit Contracts and Consumer Finance Act 2003 with a specific focus on the use of sports celebrities and community figures in lending advertising. The review will also consider whether a cap on interest rates could be implemented.
  • Ensuring that all students leave school with comprehensive skills to make informed choices about finance.
  • Reforming the law governing credit unions in order to give them legal status and to allow them to lend to small businesses.
  • Conducting a review of the Commerce Commission to ensure that it has adequate resourcing to undertake its functions and the potential for enhancing its capabilities.
  • "Urgently" reviewing part 2 of the Commerce Act 1986 with a specific emphasis on section 36 which relates to "taking advantage of market power".
  • Implementing a code of conduct for supermarkets that regulates the relationship between supermarkets and their suppliers as well as creating an independent adjudicator to resolve disputes.

Appointments

The new appointments are as follows:

Name

Portfolio(s)

Ministers Inside Cabinet

 

Rt Hon Jacinda Ardern (L)

Prime Minister
Minister for National Security and Intelligence
Minister for Arts, Culture and Heritage
Minister for Child Poverty Reduction

Rt Hon Winston Peters (NZF)

Deputy Prime Minister
Minister for Foreign Affairs
Minister for State Owned Enterprises
Minister for Racing

Hon Kelvin Davis (L)

Minister of Corrections
Minister for Crown/Māori Relations
Minister of Tourism
Associate Minister of Education (Māori Education)

Hon Grant Robertson (L)

Minister of Finance
Minister for Sport and Recreation
Associate Minister for Arts, Culture and Heritage

Hon Phil Twyford (L)

Minister of Housing and Urban Development
Minister of Transport

Hon Dr Megan Woods (L)

Minister of Energy and Resources
Minister for Greater Christchurch Regeneration
Minister of Research, Science and Innovation
Minister Responsible for the Earthquake Commission

Hon Chris Hipkins (L)

Minister of Education
Minister of State Services
Minister Responsible for Ministerial Services
Leader of the House

Hon Andrew Little (L)

Minister of Justice
Minister for Courts
Minister Responsible for the GCSB
Minister Responsible for the NZSIS
Minister for Treaty of Waitangi Negotiations
Minister Responsible for Pike River Re-Entry

Hon Carmel Sepuloni (L)

Minister for Social Development
Minister for Disability Issues
Associate Minister for Arts, Culture and Heritage
Associate Minister for Pacific Peoples

Hon Dr David Clark (L)

Minister of Health
Associate Minister of Finance

Hon David Parker (L)

Attorney-General
Minister for Trade and Export Growth
Minister for the Environment
Minister for Economic Development
Associate Minister of Finance

Hon Nanaia Mahuta (L)

Minister for Māori Development
Minister of Local Government
Associate Minister for the Environment

Hon Stuart Nash (L)

Minister of Police
Minister of Fisheries
Minister of Revenue
Minister for Small Business

Hon Iain Lees-Galloway (L)

Minister for Workplace Relations and Safety
Minister of Immigration
Minister for ACC
Deputy Leader of the House

Hon Jenny Salesa (L)

Minister for Building and Construction
Minister for Ethnic Communities
Associate Minister of Education
Associate Minister of Housing and Urban Development
Associate Minister of Health

Hon Damien O'Connor (L)

Minister of Agriculture
Minister for Biosecurity
Minister for Food Safety
Minister for Rural Communities
Associate Minister of Trade and Export Growth

Hon Clare Curran (L)

Minister of Broadcasting, Communications and Digital Media
Minister for Government Digital Services
Associate Minister for ACC
Associate Minister of State Services (Open Government)

Hon Ron Mark (NZF)

Minister of Defence
Minister for Veterans Affairs

Hon Tracey Martin (NZF)

Minister for Children
Minister of Internal Affairs
Minister for Seniors
Associate Minister of Education

Hon Shane Jones (NZF)

Minister of Forestry
Minister for Infrastructure
Minister for Regional Economic Development
Associate Minister of Finance
Associate Minister of Transport

Ministers Outside Cabinet

 

Hon Kris Faafoi (L)

Minister of Civil Defence
Minister of Commerce and Consumer Affairs
Associate Minister of Immigration

Hon Peeni Henare (L)

Minister for the Community and Voluntary Sector
Minster for Whānau Ora
Minister for Youth
Associate Minister for Social Development

Hon Willie Jackson (L)

Minister of Employment
Associate Minister for Māori Development

Hon Aupito William Sio (L)

Minister for Pacific Peoples
Associate Minister for Courts
Associate Minister of Justice

Hon Meka Whaitiri (L)

Minister of Customs
Associate Minister of Agriculture
Associate Minister for Crown/Māori Relations
Associate Minister of Local Government

Hon James Shaw (G)

Minister for Climate Change
Minister of Statistics
Associate Minister of Finance

Hon Julie-Anne Genter (G)

Minister for Women
Associate Minister of Transport
Associate Minister of Health

Hon Eugenie Sage (G)

Minister of Conservation
Minister for Land Information
Associate Minister for the Environment

Parliamentary Under-Secretaries

 

Michael Wood (L)

Parliamentary Under-Secretary to the Minister for Ethnic Communities

Fletcher Tabuteau (NZF)

Parliamentary Under-Secretary to the Minister of Foreign Affairs
Parliamentary Under-Secretary to the Minister for Regional Economic Development

Jan Logie (G)

Parliamentary Under-Secretary to the Minister of Justice (Domestic and Sexual Violence Issues)

Read more:
Watching Brief
Talk to one of our experts:
Related Expertise