Today, the new National-ACT-NZ First coalition Government delivered its Budget for 2024 – the "social investment" budget. The focus of Budget 2024 is on meeting the Government's election promises, with the priorities being tax relief for the "squeezed middle" and "frontline" services including health, education, and law and order. The reduced operating allowance underpinning the Budget shows just how little new money the Government has available to spend.
As expected, there are limited sector-specific announcements in today's Budget announcement, including for the energy sector. Energy is mentioned briefly with the following energy allocations:
- Energy Portfolio Programmes: Funding is being diverted away from Ministry of Business, Innovation and Employment's (MBIE) Energy Portfolio, which will affect programmes such as the Community Renewable Energy Fund and Support for Energy Education in Communities Programme. Additionally, the Energy Emissions Reporting Scheme work will be discontinued. It is unclear how MBIE's energy generation programmes are affected.
- The Electricity Authority is set to receive approximately 10% more Crown funding in the next year, around $112.5 million. However, this increase is fuelled by higher service provider costs, and the Electricity Authority will be receiving a reduced operating budget. This is notable as in December 2023, the Electricity Authority sought an increase to its funding, with its favoured course of action to provide a "consumer-led transition" requiring a budget of $124.9 million.1
- The Electricity Authority's funding for Transpower's costs as the system operator will not change from last year, at around $47 million.
- Climate initiatives from the previous Government's $2.6 billion Climate Emergency Response Fund will continue, including a public network of electric vehicle charging infrastructure (see our recent article on the Government's EV plans here).
- The Energy Efficiency and Conservation Authority's funding will be cut. New elements of Warmer Kiwi Homes will be discontinued (despite the Warmer Kiwi Homes programme being advertised as continuing on from the previous Government's $2.6 million Climate Emergency Response Fund).
The coalition Government will continue to pull non-fiscal levers to incentivise new investment into the energy sector. This includes regulatory reform with the Fast-track Approvals Bill (see our recent Energy Blog article here) and potential review of the Overseas Investment Act 2005. The energy sector will also be looking forward to the regulatory framework for offshore renewable energy being introduced later this year.
While Budget 2024 does not bring fresh news, there is no bad news either. This is confirmation that private sector investors and developers should just get on with it and not wait for the Government to drive or fuel investment in this sector.