Budget 2012 is Bill English’s blandest Budget yet. There was almost no sense of excitement, and certainly no panic, at this year’s Budget Day. But perhaps unexciting Budgets are a good thing. The Government has already told us what it is doing, and now it is doing it.
This year English did not have to deal with a recession (Budget 2009), reveal major tax changes (Budget 2010) or deal with the fiscal impact of the Christchurch earthquake (Budget 2011). There was the usual warning that what happens to other economies around the world will affect us, but Australia and our Asian trading partners are forecast for steady growth. Without any crisis or major new policy, English can focus on the initiatives we already know about: SOE share sales, investment in infrastructure, prioritising spending in frontline services, especially health and education, and making the public sector more efficient.
National’s key message is the return to surplus by 2014/15. This is the target it has set itself to prove it is the best party to manage the economy, and it remains fixed on this goal. Over the next few years we may see the message change to focus on repaying the debt that has been accumulated over the past few years. The current goal is to reduce net core Crown debt to 20% of GDP by 2020 (it is forecast to peak at about 29% in 2013/14).
National has a well known plan and is sticking to it. Its four priorities are:
- responsibly managing the government’s finances;
- building a more productive and competitive economy;
- delivering better public services; and
- rebuilding Christchurch and surrounding areas.
National also appears firm in its opposition to a capital gains tax, we know John Key would resign before increasing the age of entitlement for New Zealand Superannuation, and there is no sign that National will give in to any pressure on the SOE share sales programme.
Even many of the new policies in Budget 2012 were announced ahead of time: changes to student loans and allowances, more money for health and education, and closing tax loopholes for holiday homes.
Today’s announcements were that the Māori Party has won another series of rises to tobacco excise tax, which many speculated would happen, and there will be some additional tinkering to the tax system. The Government also laid out its plans to spend the Future Investment Fund, which is the $5 billion to $7 billion that will be earned from the sale of shares in select SOEs and Air New Zealand.
The only change in policy from the election campaign appears to be on ACC. One of the items on National’s Post-Election Action Plan was to introduce competition to the ACC Work Account. Since changing the ACC Minister to Judith Collins not much further has been said, and Collins’ Budget press release made no mention of it.
All in all, Budget Day revealed little we didn’t already know.
The numbers
The Government is forecasting a modest surplus of $197 million in 2014/15. Once surpluses become the norm, the Government will have to balance repaying debt and making new contributions to the New Zealand Superannuation Fund. Current forecasts are for contributions to the Fund to begin in 2017/18.
There has now been growth for nine out of the past ten quarters, and growth is forecast to exceed 3% by 2014/15. With that will come unemployment of less than 5% by 2015. New Zealand’s household saving rate is positive, a rare event over the past two decades. This is expected to reduce growth in the short-term but help rebalance the economy in the longer-term. Rebuilding in Christchurch is expected to add about 1% of growth in each year from 2012 to 2016.
Tax and KiwiSaver changes
Three tax credits will be repealed for the 2012/13 and subsequent tax years, as they “no longer fit the purpose for which they were set up”:
- the income-under $9,880 tax credit;
- the childcare and housekeeper tax credit; and
- the tax credit for the active income of children (which will be replaced with a limited exemption).
The rules on deductibility of costs related to mixed-use assets (used by their owners and rented out for income), such as holiday homes, will be tightened.
Changes to livestock valuation rules will be included in legislation, to prevent farmers who change valuation schemes from receiving an unintended tax break.
Those changes are forecast to generate $410 million in savings over the next four years.
Tobacco excise tax will increase by 10% on 1 January 2013, and continue to increase 10% each year in 2014, 2015 and 2016. Those increases will be in addition to annual inflation-indexed increases.
There will also be some small changes to KiwiSaver. New disclosure rules will apply from April 2013, requiring fund managers to report on their performance, fees and other indicators in a standardised way. This disclosure will encourage investors to shop around and hopefully lift investor confidence. The Government is also beginning a review of the current default provider arrangements.
As announced in last year’s Budget, from 1 April 2013 the minimum employee contributions to KiwiSaver will rise from 2% to 3%.
But the Government has abandoned the idea of an auto-enrolment in KiwiSaver in 2014/15 and will defer consultation on the issue until after 2012. English confirmed that Government will only entertain an auto-enrolment exercise when there are sufficient surpluses.
Public sector reform
The Government has re-affirmed its intention to amend the Public Finance Act, State Sector Act and Crown Entities Act. In particular, the changes to the Public Finance Act will require Governments to:
- consider the impact of fiscal policy on the economic cycle
- set out their priorities for revenue, spending and the balance sheet
- take into account the impact of fiscal policy decisions on future generations, and
- report on the successes and failures of past fiscal policy.
The Government is still considering the ACT Party proposal to introduce a spending cap based on population growth and inflation. It would be a soft cap, as a Government could breach it but would have to explain why it was doing so.
There has also been some more work done on more co-ordinated approaches by different agencies. A new cross-agency funding pool has been established for the justice sector, allowing money saved in one justice sector agency to be used in another.
A bit more polish and at least a measure of substance were features of the third of Labour leader David Shearer’s scene-setting speeches, delivered this time to the Wellington Employers' Chamber of Commerce on 4 May 2012.
The speech was well-timed, both for its audience and for the Budget. Painting the picture of a government without direction, Shearer highlighted National’s preoccupation with administrative tinkering and an unwillingness to grasp the big issues.
Opposition is of course a comfortable place to be courageous, especially this far out from a general election, but Shearer at least delivered up the beginnings of a policy framework that was quite distinct from the fluff that characterized his previous efforts.
Capital gains tax, a visitation of the retirement age. This and an unequivocal statement that government contributions to the Cullen fund would only be resumed when they were affordable, lent a much-needed air of responsibility to Labour’s policy platform.
The hints of government-led solutions were still there, the variant of the school leavers monitoring system successfully run by a few local councils was among them. Suggestive of a larger bureaucracy and a greater demand for the taxes to pay for them, these less developed policies will need considerable care and attention if Shearer and his front bench are to present a consistent and credible face. That is likely to be an internal challenge for Shearer, whose team is far from solidly united behind him.
Land and Water Forum releases second report
The Land and Water Forum (LAWF) released its second report on 18 May 2012. The LAWF comprises a range of stakeholder groups and organisations with an interest in freshwater and land management, and has the objective of developing advice for the Government on land and water management through a stakeholder-led collaborative process. The first report by the LAWF was released in 2010 and focused mainly on problem definition. This second report is more detailed and contains recommendations relating to the general framework for the setting of limits for water quality and quantity.
At this stage there is no opportunity to formally comment on the second report. The proposals contained in it represent a significant departure from the current processes under the RMA and are likely to influence the Phase 2 reform process for the Resource Management Act 1991, the timeframes for which are uncertain.
A third report containing further details about the proposed allocation and water quality limits is expected to be released around September this year.
Recommendations contained in the second report include the following:
- Setting national interim/bottom line limits for water quality and quantity through a National Environmental Standard (NES) using numeric standards. These will be finalised in the third report to be released later this year. The interim limits / bottom line limits will apply to all water bodies except in "exceptional circumstances".
- Classifying any activity which breaches the interim/bottom line limits as a prohibited activity.
- Developing the NES and new regional plan provisions to implement the limits in the NES through a "collaborative process". Regional councils would have a choice whether to use a traditional Schedule 1 process or a collaborative process. Features of the proposed collaborative process include:
- establishing a stakeholder group to engage technical experts and then work with the community and council to draft plan provisions to go through a public submission and a hearing process; and
- only allowing appeals from the decisions of the hearing panel on points of law to the High Court. Appeals on the merits of the council decision could, however, be appealed on the basis that the decision does not give effect to the consensus position of the stakeholder group or will have material implications for matters of national significance.
The second report represents consensus of the LAWF on all matters contained in the report bar one - the circumstances in which appeals to the Environment Court from regional council decisions on land and water planning should be permitted.
The full report can be accessed here.
FMA releases draft guidance on the disclosure of non-GAAP financial information
The Financial Markets Authority has this week released a consultation paper requesting feedback on its Draft Guidance Note: Disclosing non-GAAP financial information. The draft guidance note concerns the use of financial information in corporate documents such as transaction documents and market communications where that financial information is not presented in accordance with general accepted accounting practice (referred to as non-GAAP financial information).
The guidance note accepts that non-GAAP financial information may be useful in corporate documents and may be necessary to meet disclosure obligations under the Securities Act and Companies Act and provide insights into the financial performance of a business. The guidance note sets out points to follow in order to ensure that the information is not misleading and the additional disclosure that is required. The guidance is different for information in transaction documents and financial statements and other investment communications.
- Transaction documents and financial statements: information must not be misleading and should enable users to properly assess the information by outlining the assumptions, an explanation of how the information was calculated, reconciliation, statements of comprehensive income and financial position, and consideration of the whole transaction rather than selected aspects of it.
- Other investment communications: information must not be misleading and not be given undue prominence or emphasis. The information must be consistent with financial statements, reconciled with the GAAP financial information, calculated consistently from period to period, and must be unbiased and not used to disguise bad news.
Submissions are due by 29 June and the FMA proposes to issue a final version of the guidance note by 31 August. The draft guidance note and consultation paper can be accessed here.
New Ministry gets Cabinet and due diligence sign-off
The Government has confirmed its intention to establish the new Ministry of Business, Innovation and Employment (MoBIE) to bring together the Ministry of Economic Development, the Ministry of Science and Innovation, the Department of Labour and the Department of Building and Housing.
Cabinet agreed in principle to the amalgamation last month, subject to due diligence and further advice from the Minister of Economic Development and the Minister of State Services.
The due diligence process has now been completed. That process confirmed that the four agencies have significant synergies, and outlined the level of savings could be realised from the amalgamation in the medium term.
The Cabinet papers, Cabinet minutes and State Services Commission reports produced as part of the Government's decision making process have now been released and can be accessed here.
The new Ministry will be established from 1 July 2012 and the four agencies brought together under a single chief executive. MED's chief executive, David Smol, has been named acting chief executive and will be able to make decisions relating to the establishment of the new Ministry that will take effect from 1 July 2012. Mr Smol's responsibilities as chief executive of MED will be delegated to allow him to focus on MoBIE. The appointment of a permanent Chief Executive for the new Ministry is expected to be made by the State Service Commissioner by the end of September 2012.
Government looks into loyalty scheme for Kiwi investors in State assets
The Government is undertaking market research into what would entice potential investors to buy shares in the forthcoming floats of four State-owned energy companies.
Minister for State Owned Enterprises, Tony Ryall, announced last week that the Government is considering a loyalty scheme to encourage Kiwis to retain shares in the assets. Mr Ryall also said that parcels of shares may be offered for just a thousand dollars to encourage everyday people to invest.
The Government will be considering such schemes over the next few months and looking into a loyalty scheme offered in Queensland in particular, where buyers of shares in the state’s railways receive bonus shares if they did not sell their initial buy-up for a specified time.
Mr Ryall emphasised that Government consideration is at an early stage and that a loyalty scheme may not necessarily be a feature of the public offers.
Researchers develop methodology for calculating the cost of law-making
A methodology to estimate the financial cost of law-making in New Zealand has been developed by researchers at the University of Otago's Department of Public Health and the University of Queensland's School of Population Health. The research is one of few studies that have been carried out to look at the costs of law-making specifically. A new Act of Parliament was calculated to cost on average USD $2.6 million, while a new regulation was costed at an average of USD $382,000 (values converted using the 2010 exchange rate of 1 USD = 1.387 NZD). Together, regulations and Acts work out at an average cost of USD $32,434 per page.
The figures were arrived at by calculating both the cost of running Parliament and the cost of policy advice by government departments in the years 1999 - 2010. The cost of new Acts and regulations was then derived from the proportion of parliamentary time (ie sitting days) and policy advice dedicated specifically to law-making. Dividing that total cost by the number of Acts and regulations gave the average costs set out above.
This methodology could be used to enhance policymakers' cost-benefit analyses, particularly in the field of public health, for example to compare the cost-effectiveness of legislative interventions with non-legislative interventions. For example, the cost-effectiveness of an anti-smoking social media campaign could be more accurately compared with the cost-effectiveness of legislative prohibitions.
The authors qualify their findings, noting that their approach may over-estimate the time devoted to law-making as sitting days may involve activity other than law-making (such as question time and budget debates), for example. On the other hand, they may have underestimated the time devoted to law making by not recognising the time MPs spend considering legislation outside of sitting days, for example. While the methodology is intended to have ready application in a number of jurisdictions, the authors recognise that comparability may be limited by the peculiarities of the New Zealand parliamentary system - including MMP, a relatively short parliamentary term, and a unicameral Parliament.
The research article (including further explanation of the methodologies used) can be found here.
Tweaks to collective bargaining rules and employment law on the horizon
Labour Minister Kate Wilkinson announced last week that Cabinet had approved a package of measures that would make changes to collective bargaining laws and extend the right for workers to request flexible working arrangements. The changes are expected to go before Parliament this year. Specifically, the following changes are proposed:
- Extending the right to request flexible working arrangements to all workers, starting from day one at a new job (currently this right is only available to caregivers, and only then after six months of employment).
- A return to the original position in the Employment Relations Act where the duty of good faith does not require the parties to conclude a collective agreement.
- Allowing employers to opt out of multi-employer bargaining.
- Allowing for partial pay reductions in cases of partial strike action.
- Removing the 30-day rule that forces non-union members to take union terms and conditions.
The National Party outlined its intention to make these changes in its 120 Point Economic Development Action Plan released prior to the 2011 general election.
New directors for Crown Companies
Earlier this month, the Minister for State Owned Enterprises, Tony Ryall, announced a number of new appointments across several Crown Companies. The new directors are identified in the table below.
Crown Company |
Name |
Background/former role |
Crown Fibre Holdings Limited |
Danelle Dinsdale |
Senior Equity Partner and Head of the IT & Telecoms team at DLA Piper UK |
Electricity Corporation of New Zealand Limited |
Jane Meares |
Barrister with Clifton Chambers and formerly with Treasury and Partner of Bell Gully |
Kordia Group Limited |
Tony Briscoe |
Managing Director of Telecom New Zealand International |
Landcorp Farming Limited |
Chris Day |
CFO of AXA Insurance |
Nikki Davies-Colley |
Cattle and sheep farmer and company director |
Pauline Lockett |
Chartered accountant and New Plymouth District Councillor |
NZ Post Limited |
Carol Campbell |
Chartered accountant and business advisor, formerly a Partner of Ernst & Young |
Richard Leggat |
Banker and member of the Tourism NZ Board |
Quotable Value Limited |
Kim Wallace |
CFO of Westland Milk Products |
International Air Transport Policy Review commences
Transport Minister Gerry Brownlee this week released a discussion document on New Zealand’s International Air Transport Policy, to mark the commencement of the Ministry of Transport's review of this sector to assess what policy changes could be made to benefit the New Zealand economy.
The discussion document sets out a number of policy proposals to be addressed in the review, including:
- removing limits on foreign ownership of New Zealand airlines (currently set at 25 per cent ownership by any one foreign airline, or 35 per cent by foreign airlines in total), with the exception of Air New Zealand; and
- continuing to seek inter-government agreements with liberalised investment criteria, provided certain criteria are met. The immediate priorities for negotiating new air services agreements have been identified as being East Asia and South America. Successful negotiations have already been completed this year with Japan and China. Negotiations are currently underway with Brazil and French Polynesia.
Submissions on the discussion document are due on 18 June. The discussion document can be accessed here.
Levy instead of ETS compliance for importers of certain goods
Minister for Climate Change Issues Tim Groser has announced that the Government intends to impose a levy on importers of goods containing synthetic greenhouse gases instead of demanding compliance with the New Zealand Emissions Trading Scheme. Mr Groser said that the importers of synthetic greenhouse gases in refrigerators, air conditioning units, and electrical switchgear face higher compliance costs than other sectors and that a levy will help keep costs at a reasonable level while reducing New Zealand's overall emissions.
Further information about the ETS obligations that apply to this sector and the proposed changes can be viewed here.
Trade Minister at OECD Ministerial Council meeting this week
Trade Minister Tim Groser will be in Paris this week to discuss trade and economic issues at the OECD Ministerial Council meeting. Ministers from the OECD's 34 member countries, and other countries including Brazil, China, India, Indonesia, Russia and South Africa, as well as representatives from the IMF, the World Bank and the World Trade Organisation will also be attending.
Mr Groser has said he is particularly looking forward to discussing issues such as trade protectionism and fossil fuel subsidy reform with other Ministers. While in Paris, Mr Groser will also participate in an OECD Forum panel discussion on trade and jobs and attend a series of business events and meetings aimed at promoting trade and investment between New Zealand and France.
Bail Amendment Bill
Type of Bill: Government
Member in charge: Hon Judith Collins
This Bill proposes to amend the Bail Act 2000 to make it harder for those accused of serious offences to get bail and to displace the strong presumption in favour of bail for defendants aged 17 to 19 years old when the defendant has previously been sentenced to imprisonment. The changes arise from the Government’s 2008 election commitment to review aspects of the bail system and were included in the National Party's Post 2011-Election Action Plan.
Mount Maunganui Borough Reclamation and Empowering Act Repeal Bill
Type of Bill: Local
Member in charge: Te Ururoa Flavell
This Bill would repeal the Mount Maunganui Borough Reclamation and Empowering Act 1975, which was enacted to authorise the Mount Maunganui Borough Council to reclaim tidal lands constituting part of the bed of the Harbour of Tauranga and to develop such reclaimed land for sewerage and other municipal purposes.
Reserve Bank of New Zealand (Covered Bonds) Amendment Bill
Type of Bill: Government
Member in charge: Hon Bill English
This Bill would establish a legislative framework to effectively endorse certain basic elements of existing covered bond structures. The framework as proposed in the Bill would require:
- covered bond issuers to be registered under different eligibility classes;
- cover pool assets to be held by a special purpose vehicle (SPV), which is a separate legal entity from the issuer;
- the appointment of a cover pool monitor to verify the accuracy of the asset coverage test and amortisation test;
- clarification of the treatment of cover pool assets held by a covered bond SPV in the event that an issuer is placed into statutory management or liquidation.
The Bill would also empower the Reserve Bank of New Zealand to allow entities other than registered banks to register covered bond programmes in the future.
Waitaki District Council Reserves and Other Land Empowering Bill
Type of Bill: Local
Member in charge: Jacqui Dean
This Bill would revoke the reservation of two pieces of land within the Waitaki District and to clarify the status of a third piece of land (Lookout Point land, also known as Forrester Heights) in that district.
Bills Awaiting First Reading
Citizenship Amendment Bill
Commerce (Cartels and Other Matters) Amendment Bill
Companies and Limited Partnerships Amendment Bill
Depleted Uranium (Prohibition) Bill
Domestic Violence Reform Bill
Geneva Conventions (Third Protocol-Red Crystal Emblem) Amendment Bill
Health and Safety in Employment Amendment Bill (No 2)
Holidays (Full Recognition of Waitangi Day and ANZAC Day) Amendment Bill
Human Rights Amendment Bill
Illegal Contracts (Unlawful Limitation on Regulators' Powers) Amendment Bill
Immigration Amendment Bill
Joint Family Homes Repeal Bill
Lobbying Disclosure Bill
Local Electoral Amendment Bill
Mokomoko (Restoration of Character, Mana, and Reputation) Bill
New Zealand Geographic Board (Ngā Pou Taunaha o Aotearoa) Amendment Bill
Ngā Rohe Moana o Ngā Hapu o Ngāti Porou Bill
Parental Leave and Employment Protection (Six Months' Paid Leave) Amendment Bill
Prisoners' and Victims' Claims (Redirecting Prisoner Compensation) Amendment Bill
Register of Pecuniary Interests of Judges Bill
Shop Trading Hours Act Repeal (Waitaki Easter Trading) Amendment Bill
Standards and Accreditation Bill
Subantarctic Islands Marine Reserves Bill
Waitaki District Council Reserves and Other Land Empowering Bill
Bills before Select Committee
Open for submissions
Bill |
Select Committee |
Submissions close (2012) |
Report due (2012) |
Administration of Community Sentences and Orders Bill |
Law and Order |
22 June |
8 November |
Bail Amendment Bill |
Law and Order |
29 June |
10 November |
Building Amendment Bill (No 4) |
Local Government and Environment |
11 June |
1 September |
Child Support Amendment Bill |
Social Services |
20 June |
8 November |
Gambling (Gambling Harm Reduction) Amendment Bill |
Commerce |
21 June |
9 November |
Heritage New Zealand Pouhere Taonga Bill |
Local Government and Environment |
21 June |
8 November |
Immigration Amendment Bill |
Transport and Industrial Relations |
8 June |
10 September |
International Finance Agreements Amendment Bill |
Finance and Expenditure |
5 June |
8 November |
Reserve Bank of New Zealand (Covered Bonds) Amendment Bill |
Finance and Expenditure |
3 July |
22 November |
Submissions not yet called
Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill
Submissions closed
Bill |
Select Committee |
Report due (2012) |
Consumer Law Reform Bill |
Commerce |
9 August |
Corrections Amendment Bill |
Law and Order |
28 August |
Dairy Industry Restructuring Amendment Bill |
Primary Production |
8 June |
Defence Amendment Bill |
Foreign Affairs, Defence and Trade |
6 September |
Electronic Identity Verification Bill |
Government Administration |
29 June |
Financial Markets Conduct Bill |
Commerce |
7 September |
Game Animal Council Bill |
Local Government and Environment |
1 September |
Hutt City Council (Graffiti Removal) Bill |
Local Government and Environment |
28 August |
Legal Assistance (Sustainability) Amendment Bill |
Justice and Electoral |
10 August |
Manukau City Council (Regulation of Prostitution in Specified Places) Bill |
Local Government and Environment |
31 July |
Maraeroa A and B Blocks Incorporation Bill |
Māori Affairs |
8 September |
Maraeroa A and B Blocks Claims Settlement Bill |
Māori Affairs |
8 September |
Marine Reserves Bill |
Local Government and Environment |
14 December |
Marine Reserves (Consultation with Stakeholders) Amendment Bill |
Local Government and Environment |
14 December |
Medicines Amendment Bill |
Health |
2 July |
Members of Parliament (Remuneration and Services) Bill |
Government Administration |
28 September |
Mixed Ownership Model Bill |
Finance and Expenditure |
16 July |
Natural Health Products Bill |
Health |
31 July |
Ngai Tāmanuhiri Claims Settlement Bill |
Māori Affairs |
16 August |
Ngāti Mākino Claims Settlement Bill |
Māori Affairs |
16 August |
Ngāti Manuhiri Claims Settlement Bill |
Māori Affairs |
8 September |
Ngāti Whātua Ōrākei Claims Settlement Bill |
Māori Affairs |
8 September |
Non-Bank Deposit Takers Bill |
Finance and Expenditure |
1 June |
Prisoners' and Victims' Claims (2012 Expiry and Application Dates) Amendment Bill |
Justice and Electoral |
11 June |
Privacy (Information Sharing) Bill |
Justice and Electoral |
15 June |
Regulatory Standards Bill |
Commerce |
30 July |
Rongowhakaata Claims Settlement Bill |
Māori Affairs |
8 September |
Social Security (Youth Support and Work Focus) Amendment Bill |
Social Services |
31 May |
South Taranaki District Council (Cold Creek Rural Water Supply) Bill |
Local Government and Environment |
21 September |
Statutes Amendment Bill (No 3) |
Government Administration |
16 August |
Victims of Crime Reform Bill |
Justice and Electoral |
3 July |
Bills Awaiting Second Reading
Bills that have recently been reported back to the House from a Select Committee are in bold and the Select Committee reports on these Bills are linked.
Antarctica (Environmental Protection: Liability Annex) Amendment Bill
Arms Amendment Bill (No 3)
Children, Young Persons, and Their Families Amendment Bill (No 6)
Consumer Guarantees Amendment Bill
Employment Relations (Rest Breaks and Meal Breaks) Amendment Bill
Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill (Report of the Local Government and Environment Committee)
Food Bill
Housing Corporation Amendment Bill
Identity Information Confirmation Bill
Inquiries Bill
Insolvency Practitioners Bill
Lawyers and Conveyancers Amendment Bill
Legislation Bill
Māori Trustee and Māori Development Amendment Bill
Patent Attorneys Bill
Patents Bill
Public Health Bill
Radio New Zealand Amendment Bill
Reserves and Other Lands Disposal Bill
Social Assistance (Living Alone Payments) Amendment Bill
Social Security Amendment Bill (No 3)
Spending Cap (People's Veto) Bill
Taxation (Income-sharing Tax Credit) Bill
Therapeutic Products and Medicines Bill
Trustee Amendment Bill
Bills Awaiting Third Reading
Airports (Cost Recovery for Processing of International Travellers) Bill
Alcohol Reform Bill
Arms (Military Style Semi-Automatic Firearms and Import Controls) Amendment Bill
Arts Council of New Zealand Toi Aotearoa Bill
Biosecurity Law Reform Bill
Commerce Commission (International Co-operation, and Fees) Bill
Crown Entities Reform Bill
Cultural Property (Protection in Armed Conflict) Bill
Fair Trading (Soliciting on Behalf of Charities) Amendment Bill
Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill
Gambling Amendment Bill (No 2)
Regulatory Reform Bill*
Regulatory Reform (Repeals) Bill*
Sentencing (Aggravating Factors) Amendment Bill
Trade (Safeguard Measures) Bill
* = these Bills will have their third readings together, as cognate Bills.
Southland District Council (Stewart Island/Rakiura Visitor Levy) Empowering Bill
Appropriation (2010/11 Financial Review) Act 2012
This Act confirms expenses incurred for the financial year ended 30 June 2011 in excess but within the scope of an existing appropriation and validates unappropriated expenses and capital expenditure incurred for the 2010/11 financial year that were in excess of an existing appropriation, or without appropriation, by or under an Act of Parliament. This Act also confirms emergency expenses relating to the Christchurch earthquake incurred during this period with the approval of the Minister of Finance under section 25 of the Public Finance Act 1989.
Crown Pastoral Land (Rent for Pastoral Leases) Amendment Act 2012
This Act amends the Crown Pastoral Land Act 1998 to establish a new system to set rents for Crown pastoral leases. Rent is currently set through a system based on land value, which does not produce consistent, transparent or auditable rents. Under the Act, rents would be set based on the earning capacity of the property subject to a pastoral lease. The Act also establishes a new dispute resolution system for situations where the Crown and lessees disagree over the calculation of the rent.
Employment Relations (Secret Ballot for Strikes) Amendment Act 2012
This Act amends the Employment Relations Act 2000 to require unions to hold a secret ballot vote of their members to approve a strike before undertaking any strike action.
Taxation (International Investment and Remedial Matters) Act 2012
This Act amends the Income Tax Act 2007 to continue the reform of the way in which that Act applies to gains of New Zealand residents from income from overseas interests, and gains of foreign residents from interests in New Zealand companies. It also amends the Tax Administration Act 1994 and the Stamp and Cheque Duties Act 1971.
Community Magistrates (Remuneration and Allowances) Amendment Order 2012
Corporations (Investigation and Management) Order 2012
Deposit Takers (Funding Conduits) Exemption Amendment Notice 2012
Deposit Takers (Insurance Australia Group Limited) Exemption Notice 2012
District Courts (General) Amendment Rules 2012
District Courts Fees Amendment Regulations 2012
Electoral (Expenditure Limit) Order 2012
High Court Amendment Rules 2012
Major Events Management (Olympic Games and Commonwealth Games Emblems and Words) Order 2012
Ombudsmen Act (Schedule 1—Ministry of Business, Innovation, and Employment) Order 2012 Commodity Levies (Nashi Pears) Order 2012
Royal New Zealand Foundation of the Blind Act Commencement Order 2012
Search and Surveillance (Transitional Provision) Regulations 2012
Social Security (Long-term Residential Care) Amendment Regulations (No 4) 2012
State Sector (Ministry of Business, Innovation, and Employment) Order 2012
The House is sitting next week and is likely to continue to progress the Crown Entities Reform Bill, the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill and the Commerce Commission (International Co-operation, and Fees) Bill. The House will be in recess the following week.
Commerce Committee
Earlier this month the Committee heard submissions on the Consumer Law Reform Bill. Of particular note was the Commerce Commission's submission, in which it called for:
- compulsory interview powers when investigating potential breaches of the Fair Trading Act 1986, similar to its compulsory interview powers under the Commerce Act 1986 and the Credit Contracts and Consumer Finance Act 2003;
- a substantial increase in the current maximum FTA penalties, namely from $200,000 per offence for a company and $60,000 per offence for an individual to $1.1 million per offence for a company and $220,000 per offence for an individual (to match the equivalent penalties in Australia); and
- the introduction of specific provisions in the FTA requiring 'all inclusive pricing', as well as prohibitions on unfair contract terms and unsubstantiated claims.
A detailed overview of the Commission's submissions and the potential implications if they are accepted and incorporated into the legislation can be found in Russell McVeagh's recent Competition Alert.
The Committee also heard submissions from the Electricity Authority and from Anne Darroch, the Principal Disputes Tribunal Referee. The Electricity Authority supported the clause defining an acceptable quality of supply for gas and electricity but opposed the clause indemnifying electricity retailers from issues of supply if those issues are not the fault of the retailers. The Electricity Authority thought that this was not a consumer law issue but rather one that the Authority should regulate and pointed out that it had introduced a provision to regulate this already.
Anne Darroch supported the Bill but asked that it be amended to include a provision to allow the Disputes Tribunal to deem a contractual provision unfair, for example based on a provision in UK legislation that looks at ancillary terms in the contract and requires that the term represent a significant imbalance to the detriment of the consumer in order to be deemed unfair.
Finance and Expenditure Committee
The Committee continued to hear submissions on the Mixed Ownership Bill earlier this month. The Tuwharetoa Māori Trust Board and Ngati Tuwharetoa made a joint submission opposing the Bill out of concern that it would have a negative impact on Treaty of Waitangi interests. Specifically, the submitters emphasised that:
- the legal ownership of the lakes and rivers used by Mighty River and Genesis had not been consulted;
- the relevant energy sources should be used for public good not private profit;
- the Crown had not fully acknowledged its Treaty obligations in respect of geothermal taonga; and
- there was no equivalent to Section 9 of the State-Owned Enterprises Act 1986 in the Bill to preserve Treaty obligations.
- A number of individual submitters opposed the Bill on various grounds, including that it is open to wide interpretation and there are viable alternatives to asset sales to address government debt. The Waitaki Power Trust submitted that the legislation would lead to bad law making as other enactments would need to be amended to consolidate the transition of public entities into the private sector, and that moving control of the market from Government to corporate hands was not a good thing.
- The New Zealand Chamber of Commerce submitted in favour of the Bill on the basis that it presents a safer alternative for investment than property, but noted that the transition would require careful oversight and transparent processes.
Foreign Affairs Defence and Trade Committee
The Committee heard a submission from Vice Admiral Sir Somerford on the Defence Amendment Bill. Sir Somerford Teagle submitted that the proposed changes were largely unnecessary and might confuse the chain of command. He explained to the Committee why the New Zealand Defence Force is not part of the public service and warned against the increased politicisation of the defence forces as being constitutionally undesirable. He further emphasised the need for the three services to remain separate with clear hierarchical structures so that there is no confusion as to who is in command
Health Committee
The Nursing Council of New Zealand made a submission to the Committee in support of the Medicines Amendment Bill. In particular, the Council was supportive of:
- the proposal to make nurse practitioners authorised prescribers, as this would align with other health practitioners with a similar level of education; and
- the collaborative model of the designated prescriber category, as being safer than having a delegated prescriber model with more temporary rights (although the Council did propose minor changes to the wording of this category to enable nurses to prescribe nicotine patches to smokers wanting to quit).
- The Council did, however, note its concern at the lack of regulation relating to temporary prescribers to specify the qualifications and training required for these people. The Council believes this raises a public safety issue and ought to be addressed in the legislation, as the lack of regulation could lead to registered professionals known to the regulator through its fitness to practice processes being inadvertently authorised and thus made able to prescribe.
Primary Production Committee
Members of the Commerce Commission appeared in front of the Committee to continue earlier discussions about the Dairy Industry Restructuring Amendment Bill and to allow the Committee to seek clarifications of its earlier submissions. Chair of the Commerce Commission Mark Berry clarified in response to a question that, in its monitoring capacity, the Commission would report on whether price was reasonable against the purpose statement of the legislation. Mark Berry also emphasised that there are often teething problems with implementing a new regime and that
When question by Labour MP Damien O'Connor about the prospect of litigation risk, the Commission's Chief Regulatory Advisor, Callum Gunn, responded that the main concern for the Commission was not so much the prospect of litigation as the risk that a finding by the courts might send the Commission back to the drawing board.
Fonterra in its submission emphasised that the timing of the legislation would have to be considered in light of the timing of the shareholder vote on TAF (to be held on 25 June). In order for shareholders to exercise an informed vote, the Bill would need to be in a state close to its final form by 25 June.
ACC to provide cover for pregnancy after failed sterilisation procedure
Allenby v H and Others
Supreme Court, 9 May 2012, [2012] NZSC 33
The Supreme Court determined that the Accident Compensation Scheme does provide cover to a woman (H) who becomes pregnant after a failed sterilisation operation. The cover is for the physical effects of the pregnancy.
The wider implications of this case were that if H's pregnancy was covered, then the Scheme would bar her common law claim for damages from the surgeon and the employer DHB. The case proceeded on the assumption that the surgeon was negligent.
The Accident Compensation Corporation ("ACC") argued that there was no cover and the surgeon and DHB argued there was in the context of a complex legislative history. H did not make arguments but stated that the Court's decision would determine whether she would continue with her claim for damages or seek her entitlements under the Scheme.
To be covered, the pregnancy following a failed sterilisation must be a personal injury caused by medical misadventure. The Supreme Court held that it would be inconsistent with the spirit of the statute (providing universal coverage for accidents and consequences of medical misadventure) to deny H coverage. The Court also made general comments about the legislation, as amended in 2001:
- "personal injury" is used in an expansive way in the current legislation and has a statutory meaning;
- the legislation was previously expressly extended to include pregnancy and would not have sought to remove that cover indirectly;
- the legislation covers pregnancy as a result of rape because it is caused by an accident to the victim; and
- there are limited costs at stake for the ACC in providing cover relative to the overall cost of the Scheme.
The Court held that to not provide cover in this case would create an "odd" gap in coverage for medical misadventure and would be detrimental for both the woman patient and medical practitioners who might require additional insurance cover or simply decline to perform sterilisations.
The full judgment can be accessed here.
Council avoids liability for leaky building
McNamara v Auckland City Council
Supreme Court, 9 May 2012, [2012] NZSC 34.
The Supreme Court upheld the Court of Appeal's decision that the Auckland City Council did not owe a duty of care in respect of the building issued by Approved Building Certifiers Ltd ("ABC") pertaining to compliance with the Building Act 1991. ABC is a private certifier approved by the Building Industry Authority.
The appellants argued that the certificate should never have been issued because the house did not meet the weather-tightness standard of the Building Code and ABC's authorisation did not encompass certificates for this type of building. The appellants sought to impose negligence liability on the Council because ABC and the developer of the property are in liquidation.
In order to extend liability to the Council, the appellants argued that the duty of care arose from the Council's wider responsibilities under the Building Act. This was made on two different bases:
- First, that the Council was not entitled to rely on the certificate as establishing compliance with the Code and should have taken steps to see that the certifier was authorised to issue the certificate (general duty of care).
- Second, the Council should have not told the appellants that a certificate had been issued when it had taken no steps to ascertain whether ABC was certified to issue the certificate (negligent misstatement).
A majority in the Supreme Court did not accept this because ABC's certificate, as a private certifier, did not enliven the statutory responsibilities of the Council. There is nothing in the legislation that suggests the Council has a roving certifying or inspecting role. Further, there was no point in time where the Council's staff had to exercise their own judgment in relation to the house and it is therefore not reasonable to impose a duty of care on the Council.
The Supreme Court similarly did not accept that the Council should be liable for negligent misstatement.
The majority's reasoning reflects the fact that the Council was obliged to accept the ABC certificate by the Building Act and provided immunity from civil liability for actions taken in good faith on the basis of such certificates. Justice Tipping concurred, relying on the good faith immunity for finding against the appellants.
Elias CJ dissented stating that the scheme of the Building Act was consistent with the imposition of duties of care.
The judgment can be accessed here.
Court of Appeal confirms Ministry of Health discriminated on the basis of family status
Ministry of Health v Atkinson
Court of Appeal, 14 May 2012, [2012] NZCA 184
Disclosure: Russell McVeagh (Andrew Butler and Oliver Gascoigne) acted for the Human Rights Commission as Intervener in this case.
The Court of Appeal upheld the declaration made by the Human Rights Review Tribunal1 (Tribunal) and affirmed in a decision by the High Court,2 that the Ministry of Health's policy of excluding family members from being paid for certain support services they provide to their adult disabled children was discriminatory.
Currently, the Ministry only funds certain disability support services if they are unable to be provided by family members. The respondents in Atkinson (seven parents of adult disabled children and two adult disabled children) claimed that this policy comprised unlawful discrimination against them on the basis of their family status (a prohibited ground of discrimination under s 19 of the New Zealand Bill of Rights Act 1990). Their claim was limited to four specified services which would be paid for by the Ministry if provided by a non-family member (namely, home-based support services, individualised funding, contract board, and supported independent living.).
The Tribunal accepted their claim and went onto determine that the policy was not a justified limitation on the right to freedom from discrimination under s 5 of the Bill of Rights.
The Ministry unsuccessfully appealed the Tribunal's declaration to the High Court. The Ministry was then granted leave to appeal the High Court's decision to the Court of Appeal on the following questions of law:
- Did the High Court correctly state and apply the test for a breach of s 19 of the Bill of Rights?
- Did the High Court misapply the test for s 5 of the Bill of Rights?
The Court of Appeal held that the High Court had correctly applied both the test for a breach of s 19 and for s 5 of the Bill of Rights and dismissed the Ministry's appeal, finding that:
- the policy had a discriminatory impact on the relevant respondents, in that:
- the parents had been treated differently from the comparator group (of non-related persons who are able and willing to provide disability support services to the Ministry) by excluding them from paid work; and
- the adult disabled children had also been treated differently because they were limited in their choice of carer by the fact that if they chose family carers, the Ministry would not pay them; and
- the policy imposed a limit that was greater than was reasonably necessary to achieve the Ministry’s objectives, and was not a reasonable limitation on the right to freedom from discrimination.
The fact that the Court of Appeal has upheld the Tribunal's declaration that the policy was discriminatory does not prevent the continuation of the policy. If the declaration had been overturned on appeal, the Minister of Health would have been required to table the declaration, and the Government's response to it, in the House.
The full judgment can be accessed here.
Who |
What |
By when… (2012) |
Biosecurity New Zealand |
Draft IHS for Buffalo and Cattle into New Zealand from Australia |
5 June |
Draft IHS for Tomato Seed for Sowing |
22 June |
Amendment to the IHS for Table Grapes from California |
2 July |
Draft IHS for Island Cabbage from Fiji, Samoa, Vanuatu, Cook Islands and Kingdom of Tonga |
6 July |
Ministry of Economic Development |
Discussion paper - Changes to the Trade Marks Regulations 2003 |
8 June |
Transitional arrangements for oil, gas and minerals permit holders |
8 June |
Electricity Authority |
2012 system operator draft policy statement |
1 June |
Part 10 Implementation: Proposed changes to the registry ICP switching process |
31 May |
Decision-making and economic framework for distribution pricing methodology review |
15 June |
Settlement and Prudential Security Review – WAG Discussion Paper |
29 June |
Ministry for the Environment |
Discussion paper - regulations proposed under the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill |
20 June |
Ministry of Fisheries |
No in season increase in FLA3 TAC for 2012 |
N/A |
Financial Markets Authority |
Consultation Paper - Disclosing non-GAAP financial information |
29 June |
New Zealand Food Safety Authority |
Fortification of Bread with Folic Acid |
16 July |
Food Standards Australia New Zealand |
Proposed Future Regulation of Nutritive Substances and Novel Foods |
25 May |
Inland Revenue Department |
Status of the commissioner's advice |
22 June |
Standards New Zealand - Joint Draft Standards |
Household and similar electrical appliances |
20 July |
Safety of transformers, reactors, power supply units |
20 July |
General requirements for electrical equipment |
20 July |
Australian/New Zealand Wiring Rules |
16 July |
Bathseats - Product requirements |
16 July |
Metallic flanges for waterworks purposes |
3 July |
Management systems for recordkeeping |
25 June |
Geographic information - Data product specifications |
19 June |
Mesh eye and face protectors for occupational applications |
18 June |
Mains socketoutlet mounted nightlights |
15 June |
Principles and functional requirements for records in electronic office environments |
8 June |
Standards New Zealand - New Zealand Draft Standards |
Concrete masonry buildings not requiring specific engineering design |
4 July |
Ministry of Transport |
Discussion document - International Air Transport Policy |
18 June |
NZ Transport Agency |
Border inspection service provider - Expression of interest |
31 May |
Land Transport Rule: Omnibus Amendment 2012 |
15 June |
Road Maintenance Task Force: Interim report |
29 June |
Wellington City Council |
Discussion paper - local government reform options |
29 June |
Who |
What |
By when… (2012) |
Department of Conservation |
Kauri National Park proposal |
tbc |
Canterbury draft guidelines for aircraft access |
Ongoing |
New listing of the threatened status of New Zealand frogs, reptiles, bats and birds |
5 June |
Draft Conservation Services Programme Annual Plan 2012/13 |
5 June |
Ministry of Economic Development |
Business consultation on regulatory reform |
31 December |
Discussion paper - Auditing and Assurance for Larger Registered Charities |
20 July |
Electricity Authority |
Part 10 implementation: Proposed Guideline for Metering Equipment Providers |
12 June |
New Zealand Food Safety Authority |
Proposals to Amend (No. 2) the New Zealand (Maximum Residue Limits of Agricultural Compounds) Food Standards 2011 |
18 June |
Food Standards Australia New Zealand |
Primary Production & Processing Standard for Minor Meat Species & Wild Game |
4 June (extended from 21 May) |
Hydrogen Peroxide as a Processing Aid |
5 June |
Companion Dogs in Outdoor Dining Areas |
13 June |
Inland Revenue Department |
Do the historic depreciation rates continue to apply to grandparented structures acquired before 1 April 2005? |
1 June |
Department of Labour |
Review of the Health and Safety in Employment (Petroleum Exploration and Extraction) Regulations 1999. |
1 June |
Law Commission |
Review of the Evidence Act 2006 |
1 June |
Productivity Commission |
Issues Paper - Strengthening economic relations between Australia and New Zealand |
31 May |
NZX |
Main Board / Debt Market Listing Rules - consultation memorandum and Draft Rules |
30 May |
Standards New Zealand - Joint Draft Standards |
Personal eye protection |
18 June |
Plugs and socket-outlets for household and similar purposes |
18 June |
Luminaires |
15 June |
Geographic information - Encoding |
15 June |
Requirements for records in electronic office environments |
8 June |
Information technology - Security techniques |
4 June |
Management systems for recordkeeping |
4 June |
Safety of toys |
4 June |
Electromagnetic compatibility - Voltage dips, short interruptions and voltage variations immunity tests |
25 May |
NZ Transport Agency |
Proposed changes to agricultural vehicle rules |
25 May |
ZESPRI Group Ltd |
Industry Recovery Discussion Paper |
tbc |
