In the News
Budget 2022 – focus areas announced
In December 2021, the Government announced its two policy areas of focus for the 2022 Budget: embedding health reforms and climate change.
Health reforms
This year's Budget will make significant investments towards implementing the public health sector reforms announced by the Minister of Health in early 2021. This includes replacing the existing district health board system with one national organisation (Health New Zealand), establishing a new Māori Health Authority, and creating a dedicated Public Health Agency. Budget 2022 will also mark the beginning of the transition to multi-year funding for New Zealand's public health system, which will increase funding certainty for long-term planning. This change is intended to establish these new entities on a "sustainable footing".
Climate change
The Budget Policy Statement 2022 recognises that climate change is one of the "most pressing long-term challenges" facing New Zealand and the wider global community. As such, the Government has expressed its intention to make significant investments across multiple Budgets to support a transition towards a low-emissions and climate resilient economy.
The cornerstone of this focus will be the establishment of a Climate Emergency Response Fund (CERF) that will be allocated towards initiatives that support climate change objectives. This fund will be made up of the proceeds from the New Zealand Emissions Trading Scheme. For Budget 2022, the CERF will focus on initiatives and programmes aimed at delivering the emissions reductions outlined in the Government's first Emissions Reduction Plan. The plan will be released by 31 May 2022.
To read the full Budget Policy Statement, please click here.
Wholesale electricity market – 100% renewable electricity supply consultation
The Market Development Advisory Group (MDAG) has begun investigating how the wholesale electricity market might operate with 100% renewable electricity supply and has published an issues discussion paper for consultation.
The objective of the project is for the MDAG to develop recommendations to the Electricity Authority (Authority) on what changes should be made to the wholesale electricity market, assuming 100% renewable supply, to ensure economically efficient price signals (from short- to long-term) to meet the statutory objective of enabling reliable supply by, and promoting competition and efficient operation in, the electricity industry for the long-term benefit of consumers. The evolution of the wholesale electricity market is a critical project on the Authority's 'Energy Transition Roadmap', future-proofing the market to respond to increasing renewable electricity generation, more smart technology, and more distributed energy resources, such as batteries and electric vehicles, connected to the system.
The project will occur over three stages:
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Issue discovery [where we are now]: understanding the way in which the electricity system is likely to behave with 100% renewable supply and identifying the key issues that may need to be addressed from a market design perspective.
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Option identification and analysis: identifying and analysing options to address the problems established in the first stage.
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Recommendations and proposal: reporting with recommendations to the Authority’s Board.
Consultation on MDAG's issues paper is now open, with submissions due by 15 March 2022. Options to address the key issues will be considered in the next stage of the project and will be separately consulted on later in 2022.
More information on the project can be found on the Authority's website.
New Zealand's border set to reopen
The Government has announced its 5-step plan to reopen New Zealand's border, beginning 27 February 2022. Managed isolation and quarantine (MIQ) will be removed for most travellers in steps over 2022, replaced by self-isolation and tests on arrival. Unvaccinated travellers, and those who do not meet New Zealand's vaccination requirements, who are eligible to enter New Zealand will continue to enter MIQ. The Government's 5-step plan is as follows:
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Step 1 (from 11:59pm 27 February 2022): fully vaccinated New Zealand citizens and residents and other eligible travellers (eg people with border exceptions), arriving from Australia can self-isolate upon arrival instead of entering MIQ.
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Step 2 (from 11:59pm 13 March 2022): fully vaccinated New Zealanders and other eligible travellers from anywhere in the world will be able to self-isolate upon arrival instead of entering MIQ. Similarly, fully vaccinated skilled workers earning at least 1.5 times the median wage, travellers on a working holiday scheme, and partners and dependent children of New Zealand citizens and residents can enter New Zealand from anywhere in the world and self-isolate upon arrival.
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Step 3 (from 11:59pm 12 April 2022): fully vaccinated temporary work and student visa holders who can still meet their visa requirements, and up to 5,000 international students for semester 2, can enter New Zealand from anywhere in the world and self-isolate on arrival.
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Step 4 (by July 2022): all travellers from Australia, visitors from countries who do not need a visa (visa waiver visitors), visitors from other countries who already hold a valid visitor visa and travellers arriving under the Accredited Employer Work Visa categories that are fully vaccinated can enter New Zealand and self-isolate upon arrival.
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Step 5 (from October 2022): all visa categories will reopen from October 2022, including visitor and student visas.
Self-isolation is only available for fully vaccinated travellers who are eligible to enter New Zealand. Travellers must isolate for 7 days in New Zealand, and will need to return a negative rapid antigen test on day 0/1 and day 5/6 to leave self-isolation.
Consultation opens on the National Environmental Standard for Sources of Human Drinking Water
The Ministry for the Environment is consulting on changes to the National Environmental Standard for Sources of Human Drinking Water (NES-DW). The NES-DW requires councils, while deliberating on resource consents and regional plans, to consider the effects of proposed activities on sources of drinking water. The purpose of the NES-DW is to minimise the contamination of drinking water supplies.
The Government considers that the current NES-DW is not for fit for purpose, citing the 2016 campylobacter outbreak in Havelock North, where contaminated drinking water resulted in the hospitalisation of almost 60 people.
Three key changes have been proposed that are intended to enable water suppliers to improve and maintain drinking water quality, as follows:
- standardising the definition of source water areas;
- bolstering regulation of activities adjacent to water sources; and
- increasing the number of water suppliers on the register.
The Ministry for the Environment seeks feedback on these proposed changes. Submissions are due by 6 March 2022.
Additionally, the newly established water services regulator Taumata Arowai is also currently running a consultation focusing on other areas of drinking water regulation, including drinking water standards and rules. More information is available here.
Auckland transport infrastructure initiatives announced
In late January 2022, the Minister for Infrastructure, Hon Grant Robertson and the Minister for Transport, Hon Michael Wood, announced key developments to Auckland's transport infrastructure, including:
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key decisions on a Waitematā Harbour crossing to be brought forward to 2023, to integrate with light rail and with new rapid transit to the North Shore and North West;
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progressing light rail from the Auckland's CBD to the airport; and
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creating a linked-up rapid transport network as part of a 30-year plan.
Alongside these plans, the Government is designing a business support package for those businesses that will be impacted by significant disruptions.
The plans are intended to boost economic recovery by creating up to 97,000 new jobs, and 66,000 homes by 2051.
Close Contact Exemption Scheme for critical services
The Government recently announced a voluntary Close Contact Exemption Scheme for businesses that support critical supply chains. The scheme seeks to ensure essential services can continue running during the Omicron outbreak and takes effect at Phases Two and Three of the Government's Omicron response.
Critical services eligible for the scheme include food production, health and emergency services, lifeline utilities such as power, water and transport, critical financial services, news media, social welfare, and animal welfare services. To join the scheme, businesses self-assess against set criteria.
Once part of the scheme, vaccinated workers identified as close contacts can continue to work if they provide a negative rapid antigen test result, and are asymptomatic for COVID-19. During the close contact isolation period, workers will be required to isolate outside of work, and to return a negative rapid antigen test result before each shift. Businesses taking part in the scheme may use their own testing kits, or, alternatively, workers can collect free testing kits from designated collection sites.
Sustainable biofuels mandate
In December 2021, the Minister for Energy and Resources, Hon Megan Woods, and the Minister for Transport, Hon Michael Wood, announced a sustainable biofuels mandate with the aim of reducing greenhouse gas emissions in the transport sector. This means that New Zealand is set to join over 60 other jurisdictions who have introduced similar measures.
From 1 April 2023, fuel wholesalers will be required to reduce the total greenhouse gas emissions for transport fuels they sell, by a set percentage each year. This will be done through the sale of sustainable biofuels as part of the wholesale fuel supply. Short-term targets mandate a reduction of 3.5% in emissions by 2025, and current indications are that the longer-term goal will be to reduce wholesaler emissions by 9% by 2035.
Additional measures include a requirement for biofuels to meet specified sustainability criteria to certify that they do not impact on food production or indigenous biodiversity. The mandate also includes reporting requirements for fuel suppliers to demonstrate compliance with reduction targets and an accompanying penalty regime for non-compliant suppliers.
The current biofuel mandate comes in advance of a potential introduction of a separate mandate for aviation fuel. The Ministry of Business, Innovation, and Employment (MBIE) are currently working with the aviation sector to consider the unique challenges that the sector faces and are completing a feasibility study examining the potential for the domestic production of sustainable aviation fuel.
The legislation and regulations set to give effect to the mandate are expected to be introduced and passed in 2022.
Consultation opens on onshore fuel stockholding levels
MBIE has opened consultation on a proposed requirement for a minimum onshore fuel stockholding level and the options for how this level could be achieved. As part of this process, MBIE is also proposing to change the formula for calculating the petroleum and engine fuel monitoring levy.
From the Government's perspective, the move by Refining NZ to switch to an import only terminal and end refinery operations at Marsden Point by April 2022 is a significant change in the fuel supply chain that affects New Zealand's fuel security. As a result, in September 2021, Cabinet asked officials to investigate the option of increasing minimum levels of fuel stock held in New Zealand to improve our fuel security in the event of a fuel disruption.
The preferred option for minimum onshore fuel stockholding levels is 28 days of cover for diesel and its biofuel equivalent, and 24 days of cover for other liquid transport fuels (namely petrol and jet fuel). These stockholding levels have also been proposed in Australia. The minimum onshore fuel stockholding requirement would be reviewed after five years of implementation.
MBIE has proposed the following options for achieving a target level of onshore fuel stocks:
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the Government procuring stock or tickets for onshore fuel stocks;
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requiring fuel wholesale suppliers to meet a minimum onshore fuel stockholding level; and/or
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establishing a stockholding agency for managing the minimum stockholding obligations of fuel industry participants and the Government.
MBIE is seeking feedback on these options, with submissions due by 28 February 2022.
Consultation opens on the New Zealand Income Insurance Scheme
The New Zealand Income Insurance Scheme proposes to provide replacement income when New Zealanders lose their jobs. The scheme has been developed collectively by the Government, Business New Zealand and the Council of Trade Unions.
The proposed scheme would support workers who have been made redundant, or who have had to stop working because of a health condition or disability, by providing 80% of their usual salary for up to seven months, up to the current Accident Compensation Corporation (ACC) cap. It would also include up to 12 months of support for individuals to retrain. The Government intends for this to give people the time and financial security to find a good job or take part in training or rehabilitation.
The key features of the proposed scheme are as follows:
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broad coverage for different working arrangements;
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coverage for job losses due to redundancy, layoffs and health conditions and disabilities;
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a four-week notice period and four-week payment, at 80% of salary, from employers;
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a further six months of financial support from the scheme, at 80% of wages or a salary;
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option to extend support for up to 12 months for training and rehabilitation; and
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a case management service to support people's return to work.
To be eligible for the scheme, New Zealanders will need to have worked or been on statutory parental leave for at least six months in the past 18 months. Workers will be eligible after six months of levy contributions in the previous 18 months. The eligibility criteria will differ for people who have stopped working because of a health condition or disability, and those who are made redundant.
ACC would administer the scheme. The scheme would be funded by levies on wages and salaries, with both workers and employers paying an estimated 1.39% each.
Consultation on the Income Insurance Scheme is now open, with feedback due by 26 April 2022. If a decision is made to introduce the proposed scheme, the Government is expected to introduce legislation in 2022, and the scheme could start operating in 2023.