In the News
Overview
We have been closely monitoring legislative and policy developments during the Government's response to the COVID-19 public health crisis – both in relation to the controls that the Government has implemented, and the assistance that the Government has provided. Given that significant updates are made on a daily basis, we expect this story to continue.
Although the situation is clearly unprecedented, the legal framework governing the Government's action was established well before COVID-19. In 2005, New Zealand ratified the International Health Regulations, which requires WHO members to be able to detect, plan for, and respond to disease outbreaks. Specifically, countries must:
- designate a focal point for coordination and communication with WHO;
- develop and maintain capacities for surveillance, investigation and response;
- take measures to avoid exporting disease (ie, when cases have been identified in New Zealand – measures may be needed at the border).
To ensure domestic legislation was compliant with its international obligations, Parliament passed the Epidemic Preparedness Act in 2006. However, more specifically, many of the steps we identify below can be traced to New Zealand's Influenza Pandemic Plan – a 193 page document that was published in 2017.
A centralised source of official government information is available at www.covid19.govt.nz.
Infectious Disease
There are many legal powers available to the Government to exercise during a public health crisis, if certain statutory preconditions are met.
The Government published two Orders to expand the scope of "quarantinable infectious disease" and "infectious disease" in the Health Act to include "novel coronavirus capable of causing severe respiratory illness" and "COVID-19" on 30 January 2020 and 11 March 2020 respectively.2 The publication of these Orders enabled the use of specific powers in the Health Act, and other legislation.
Following this designation, the Government has been able to exercise special powers under the Health Act, including the power to:
- quarantine craft and persons, where there was a suspected case;3
- forbid people to congregate in outdoor places of amusement or recreation of any stated kind or description (whether public or private);4 and
- undertake "contact tracing" to obtain specified information from confirmed cases to ensure that those who have been in contact with that person do not spread the disease further.5
For the purposes of preventing the outbreak or spread of any infectious disease, medical officers of health may (if authorised by the Minister), require persons, places, buildings, ships, vehicles, aircraft, animals, or things to be isolated, quarantined, or disinfected as they think fit.6
Border Closure
As set out in the Immigration Act, every New Zealand citizen has, by virtue of his or her citizenship, the right to enter and be in New Zealand at any time.7 The decision to close the borders, which came into effect at 11.59pm on 19 March 2020, therefore did not apply to New Zealanders. The Prime Minister also exempted New Zealanders' partners, legal guardians or any dependent children travelling with them.
Everybody else arriving in New Zealand requires a valid visa (or a visa waiver). The Minister of Immigration has the power to cancel temporary entry class visas at any time when the holder is outside New Zealand.8 To ensure that this restriction applied to those transiting through New Zealand (who would ordinarily be exempt by reason of a waiver), the Minister of Immigration, Hon Iain Lees-Galloway suspended the waiver otherwise provided in the Immigration (Visa, Entry Permission, and Related Matters) Regulations 2010. The effect of this was that, only Australian citizens, permanent residents, and their immediate family members, were able to transit through New Zealand, provided Australia was their final destination.
Alert Level 2 (Reduce)
On 21 March 2020, the Prime Minister announced the four stage COVID-19 alert system, with escalating restrictions on human contact, travel and business operations. At the same time, the Prime Minister announced that New Zealand was at Alert Level 2.
Alert Level 2 did not impose any legal restrictions, but encouraged New Zealanders to reduce their contact to the extent possible, without shutting down their workplaces and productivity.
Alert Level 3 (Restrict) and Alert Level 4 (Eliminate)
On 23 March 2020, the Prime Minister announced that New Zealand was at Alert Level 3, and would move to Alert Level 4 in 48 hours. Alert Level 3 was only to assist with the transition, as the Government made it clear that Alert Level 4 should quickly become status quo. These restrictions were for the purpose of (to the extent possible) preventing community transmission from taking off in New Zealand, for fear that it would inundate the health system.
48 hours of Alert Level 3 was to ensure that businesses had time to prepare, essential workers had time to arrange childcare (given the closure of schools) and New Zealanders located overseas had time to travel domestically to get home.
Alert Level 4 was expected to be in place for four weeks at (and from) the date of the announcement.
Closure of Premises
Special powers in the Health Act allow medical officers of health, on the authorisation of the Minister (or other authorisation referenced below) to broadcast (via newspaper, television, radio station, or other form of communication) an order that requires all premises to be closed – until further order or for a fixed period.9 Such an order cannot apply to private dwellings, parliamentary precincts, courtrooms, or prisons.
A power to close part or all of an educational institution at any time because of epidemic is also in the Education Act.10
Essential Services
The order may also provide for specific exemption for people engaged in necessary work in the premises to which the order relates. Essential services (ie, premises that are not required to close) are listed on the Government's COVID-19 website. It has been constantly updated since the first guidance was issued following the announcement of the passage to Alert Level 3.
The Ministry for Business Innovation and Employment (MBIE) is leading the Government's engagement with businesses on what is and is not an essential service. It has refined the guidance based on queries that have arisen through their helpline 0800 22 66 57, or at [email protected]. There is no formal accreditation or certification for essential businesses or their employees, but the Ministry of Primary Industries is running a registration process for businesses that it regulates - specifically those involved in primary industries, including food and beverage production and processing.
Businesses that provide essential services cannot operate "business as usual". Those businesses are only permitted to operate to the extent that those operations are essential (and are expected to carve out and close down those operations that are not). Those businesses are also expected to operate the essential services in a way that minimises the risk of transmission, for example by:
- working from home as far as possible;
- limiting physical interaction between staff and customers; and
- frequently cleaning premises.
Similarly, those businesses that are not considered essential are permitted to continue operating remotely. There is an express exemption for critical support services to ensure that business and workers can continue working from home, which include functions such as IT and payroll.
Police constables are permitted to do anything reasonably necessary (including the use of force) to ensure compliance with the directions to close premises.11 A failure to comply with the order is an offence under the Health Act, which attracts liability on conviction to imprisonment not exceeding six months, a fine not exceeding $4,000, or both.12 All individuals are potentially liable.
Epidemic Notices
On 24 March 2020, the Government published the Epidemic Preparedness (COVID-19) Notice 2020 (Notice), pursuant to the Epidemic Preparedness Act 2006. The Notice can only be published if, with the agreement of the Minister of Health, the Prime Minister is satisfied that the effects of an outbreak of a quarantinable disease are likely to significantly disrupt essential governmental and business activity in New Zealand.13 The Notice also requires written recommendation from the Director-General of Health.
Along with providing additional authority for the exercise of special powers under the Health Act, the issuance of the Notice:
- allows certain Judges and Associate Judges to, in particular cases, modify rules of court as they think necessary in the interests of justice to take account of the effects of COVID-19;14
- is a prerequisite for the making of epidemic management notices that may:15
- activate dormant provisions in various Acts that are intended to deal with the outbreak of disease (eg, the Immigration Act); and
- prospective modification orders which may modify requirements or restrictions in legislation that are either required to enable effective management of, or are unworkable in light of the outbreak.16
- allowing the granting of emergency benefits to people who would not otherwise be entitled to them (under s 64 of the Social Security Act 2018); and
- allowing the extension of existing temporary entry class visas in certain circumstances (under s 78 of the Immigration Act 2009).
The purpose of epidemic management notices and immediate modification orders is primarily to facilitate modifications to legislation when it becomes unworkable during an outbreak or pandemic. An immediate modification order was published on 26 March 2020 to modify a requirement in the Social Security Act 2018 to allow temporary support to be granted to an applicant, without that applicant having to complete the application form in writing. We expect that more of these modifications will be made in due course, as and when the need arises.
Declaration of Emergency
A Declaration of State of National Emergency was made by the Minister, Hon Peeni Henare, on 26 March 2020. The state of national emergency came into force immediately, and expires seven days after coming into force, unless extended or terminated at an earlier time. The initial declaration was extended on 31 March 2020. It can be extended as many times as necessary. Each week, the Director of Civil Defence Emergency Management provides the Minister with advice on whether it should be extended again.
In a press statement, the Prime Minister noted that this was only the second state of emergency declared in New Zealand, and was required to ensure that the Government had "all the tools at our disposal to ensure everyone reduces down contact with one another across the board".
While in force, the state of emergency provides powers to:
- require information;17
- assist people to survive the emergency (such as clearing roads, setting up first aid, providing relief and disseminating information/advice);18
- control an emergency (such as evacuating or entering premises, closing roads, requisitioning and examining property);19 and
- the Director to coordinate personnel, enter into arrangements, carry out research and investigations, issue warnings of hazards, disseminate information, carry out training, and advise/assist in planning and coordination.20
That completes the toolkit to ensure that the Government has what legal powers it may need to respond adequately to COVID-19. The Prime Minister has stated that:
We do not expect to use the full extent of these measures but, as with everything we have done in response to Covid-19, we plan, we prepare, we have in place everything we need to get through.
For now, I ask that New Zealanders do their part. Stay home, break the chain, save lives.
Commercial Cooperation
The Government recognised that COVID-19 required certain businesses to work together to ensure that essential services remained in adequate supply. This was the reason the Minister of Commerce, Hon Kris Faafoi, issued a direction to the Commerce Commission, requesting it to be more flexible than it might be in normal times around allowing business to work together and share resources.
The Commerce Commission welcomed the Government's policy statement, and sought to offer reassurance to businesses providing essential goods and services that it would follow this approach. However, it warned that it would not tolerate "unscrupulous businesses using COVID-19 as an excuse for non-essential collusion or anti-competitive behaviour".
The agreement in approach between the Government and the Commerce Commission did not result in a law change, but simply altered the approach to enforcement.
Further detail can be found at our previous alert here.
Economic Package
We provided information on the Government's COVID-19 economic stimulus package on 17 March 2020, which can be accessed here. The Government has made further announcements which, along with their resulting changes, are summarised below.
Removal of the $150,000 support cap under the wage subsidy scheme
The government had previously capped the total amount of support that businesses were eligible to receive under the wage subsidy scheme to $150,000. This support cap has now been removed, signalling a clear intention that large employers are able to access the wage subsidy, provided of course that those businesses satisfy the other eligibility criteria specified in their declaration.
GST treatment of wage subsidy and leave payments clarified
The Governor-General has passed the Goods and Services Tax (Grants and Subsidies) Amendment Order 2020, which clarifies the GST treatment of payments made by the Ministry of Social Development to businesses under the wage subsidy scheme, and the discontinued leave payment scheme. Specifically, the Order declares these types of payments to be non-taxable grants and subsidies for the purposes of the Goods and Services Tax Act 1985, meaning that businesses are not required to return GST on the payments they have received.
Wage subsidy scheme declaration changes
The government has introduced changes to the wage subsidy declaration that businesses are required to submit together with their application for relief. The updated declaration builds on the requirement to make best endeavours to pay staff a minimum of 80% of their normal income, and now obliges businesses to:
- retain the employees named in their application as employees for the period they receive the subsidy in respect of those employees;
- use the full amount of the subsidy to pay each of the employees named in their application in fulfilment of, or towards the fulfilment of, the wages or salary obligations contained in each of their employment agreements for the period they receive the subsidy;
- not unlawfully compel or require any of the employees named in their application to use their leave entitlements for the period they receive the subsidy in respect of those employees.
In addition, the updated declaration clarifies that, where the wages or salary of an employee named in an application is lawfully below the amount of the subsidy, a business shall pay the employee the full amount of the subsidy instead of the wages or salary that would otherwise be payable.
The full announcement on the changes to the wage subsidy scheme can be accessed here.
Removal of the leave and self-isolation payment scheme
Businesses are no longer able to access a separate leave and self-isolation payment scheme to provide relief to employees that were required to self-isolate, and were doing so in accordance with Ministry of Health guidelines. However, applications already submitted before the scheme's removal will continue to be processed and paid.
The scheme was removed due to concerns businesses were "double dipping" to receive support under the wage subsidy scheme in respect of the same employees, and because the scheme is no longer fit for purpose given that such a large portion of the workforce is currently in self-isolation.
In lieu of this scheme, the Minister of Finance has indicated that the government is developing new, targeted arrangements for those in essential work who require sick leave due to COVID-19.
Tenancy protections
Through the COVID-19 Response (Urgent Management Measures) Amendment Act, Parliamenthas implemented measures to support self-isolation efforts by ensuring that tenants can remain in their rental properties. These measures comprise a freeze of rent increases, as well as an extension of no-cause terminations. Under this new legislation, landlords will be unable to terminate existing tenancies during the period of the lock-down, except where the tenant:
- substantially damages the premises; or
- assaults or threatens to assault the landlord, their family, or the neighbours; or
- abandons the property; or
- engages in "significant antisocial behaviour"; or
- is 60 days behind in rent, which is increased from 21 days (and the Tribunal will need to take into account fairness and whether the tenant is making reasonable efforts to pay the rent)
In support of these new termination protections, the new legislation also deems every fixed-term tenancy that would otherwise expire during the lockdown period to convert to, and continue as, a periodic tenancy, unless the parties agree otherwise or the tenant gives notice.
The rent freeze and protections against terminations will apply for an initial period of six and three months, respectively. At the end of these initial periods, the Government is set to evaluate the need for further extension.
Mortgage deferral and business finance support schemes
The Government and New Zealand's retail banks have agreed on the detail of a mortgage deferral scheme to support mortgage holders and small business customers whose incomes have been affected as a result of COVID-19. Under this scheme, eligible customers will receive a six-month deferral on making principal and interest payments on their mortgage. Banks will assess the eligibility of each customer requesting a deferral.
To complement the range of tax measures designed to stimulate business cash flow, the government has also announced a business finance guarantee scheme. The scheme is designed to relieve financial pressure on solvent small and medium-sized firms with annual revenues between $250,000 and $80 million by assisting banks to extend short-term credit for a period of up to three years. To help support credit availability under the scheme, the Crown has reduced banks' core funding ratios from 75 percent to 50 percent.
Eligible businesses stand to receive loans of up to $500,000 from their bank, of which 80 percent of the associated credit risk is carried by the Crown, and the remaining 20 percent by the bank. Further specifics of the scheme, including detail as to when the support will be made available to businesses, are expected to be made public in the coming days.
The full announcement by the Minister of Finance on the mortgage deferral and business finance support schemes can be accessed here.
Aviation sector relief
a. Aviation sector support package
Of the Government's $600 million aviation support package, $330 million is set aside to ensure airfreight capacity is available on key routes for at least the next six months, and to be able to respond quickly to capability risks and opportunities as they arise in the sector.
The Government is inviting airlines and other airfreight businesses to submit proposals for first round funding allocation under this support package. In addition to the delivery and pricing of freight capacity on key routes, proposals must include detail on how critical imports and high-value exports will be prioritised. For those wishing to submit a proposal, deadline for submission is midday 3 April 2020 and the relevant documentation can be accessed on the Ministry of Transport's website here.
The remaining $270 million of the support package aims to secure the operators of New Zealand’s aviation security system by providing:
- financial support to airlines to pay passenger-based government charges for the next six months and to cover Airways' related fees for the next six months;
- a 12-month freeze on any fee rises or pricing reviews from agencies that charge fees at the border, including the Ministry for Primary Industries, Civil Aviation Authority, Aviation Security Service, New Zealand Customs Service, and Airways; and
- financial support for Airways in the face of declining revenue.
b. Air New Zealand support package
The Government and Air New Zealand have agreed a debt funding agreement, under which the Government has agreed to extend commercial 24-month loan facilities of up to $900 million while allowing for the conversion of the loan to equity at the request of the Crown.
The full announcement detailing the funding agreement can be accessed here.
c. Civil Aviation Authority regulatory relief package
The Civil Aviation Authority has provided for the relaxation of certain compliance obligations for the aviation sector. Under this regulatory relief package:
- for those persons with organisational certificates nearing expiry, the Authority will initiate processes to renew those certificates for a period of six months, provided that there are no significant safety concerns in doing so;
- persons with a scheduled Safety Management System implementation date, and have not been certificated, will be issued an exemption from the need to have a Safety Management System until an implementation date determined by Authority;
- medical certificates nearing expiry will be extended automatically by a period of 90 days; and
- persons with upcoming currency requirements, flight reviews, proficiency checks, or training and checking requirements will be issued a three-month extension for the period within which these checks and reviews must be completed.
The Authority has confirmed that other potential areas of regulatory relief are also being considered with respect to aircraft inspection and maintenance requirements.
Support for Maori communities and businesses
The Government has also developed a COVID-19 support package worth $56 million for Māori communities and businesses. The package is comprised of various health, social and economic measures tailored to meet the specific needs of Māori, including:
- a Whānau Māori Community and Mārae package reprioritising $10 million from the Māori Development vote to support community outreach, including to support Māori health providers to provide clinical expertise to whānau Māori and communities;
- Māori Health and Whānau Ora response with $30 million targeted directly to Māori Health services and an extra $15 million to Whānau Ora commissioning agencies; and
- $1 million worth of funding to enable a needs assessment for Māori businesses, and $470,000 to Te Arawhiti to engage and work with iwi on their COVID-19 pandemic response plans.
The Associate Health and Whānau Ora Minister, Peeni Henare's full press release detailing the support package for Māori communities and businesses can be accessed here.
International Trade
The Government has also implemented several measures to facilitate international trade, particularly with respect to essential goods and medical supplies needed for the country's COVID-19 response, as summarised below.
Tariff concessions for essential goods
The Government has temporarily removed tariffs on particular medical and hygiene imports, including soap, diagnostic reagents and testing kits suitable for use in the COVID-19 response. In addition, the Minister for Trade and Export Growth, Hon David Parker, has indicated that government officials are identifying other medical and hygiene products that may qualify for further tariff concessions.
The Minister's announcement on the new tariff concessions can be accessed here, and the tariff concession can be accessed here.
International commitment to keeping trade links open
Canada, Australia, Chile, Brunei and Myanmar have joined a collective response by New Zealand and Singapore to ensure that trade continues to flow unimpeded, and that critical infrastructure such as our air and seaports remain open to support the viability and integrity of supply chains globally. By joining the response, parties have affirmed the importance of refraining from the imposition of export controls or tariffs and non-tariff barriers, and have committed to remove any existing trade restrictive measures on essential goods and medical supplies.
The Minister's full announcement on the joint international response can be accessed here.