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2025 will be a challenging year for the coalition Government, a sink-or-swim test of its resilience and capacity to lead the country through difficult economic, fiscal and social times toward a new equilibrium.
The Prime Minister in particular will need to manage the potentially destabilising effects of both the debate around the Treaty Principles Bill and the transfer of the Deputy’s role on 31 May from Winston Peters to David Seymour.
Budget 2025 will also severely try the Cabinet’s internal coherence. It is going to be a very tough Budget to pull together with a future operating allowance of only $707m against massive cost pressures, especially in health.
However, there will be some positives to lighten the load – most obviously the downward trend in inflation and interest rates. And we expect business confidence, particularly the important ‘own activity’ metric, to remain relatively buoyant on the back of a busy policy work programme, itemised below, much of which has a strong pro-business bias.
The issue for the Government will be how quickly and how strongly this sentiment flows through into higher economic growth.
We have summarised the Government’s key workstreams below.
Corporate law settings
Competition
Parallel reviews of competition law and the governance and effectiveness of the Commerce Commission:
- To upgrade competition settings, particularly with relation to mergers and the tools to address anti-competitive conduct.
- To examine the Commerce Commission’s organisational capability and performance. Led by Paula Rebstock.
Timeline
Submissions on the competition review close 7 February 2025, recommendations to Cabinet “early” 2025, any legislative changes to be introduced in late 2025 for implementation by mid-2026.
Report on governance review due May 2025.
Banking sector
Finance Minister Nicola Willis has instructed the Reserve Bank to “meaningfully train its focus on competition while pursuing its financial stability objective”.
The Government has also committed to acting on all 14 of the recommendations arising from the Commerce Commission’s market study into the retail banking sector.
Timeline
The letter outlining the new Financial Policy Remit was sent on 9 December.
Capital markets
The work has two strands:
- to make it easier for KiwiSaver funds to be invested in non-listed assets, and
- to reduce the costs and barriers for companies listed or listing on the NZX, including adjustments to the climate-related disclosures regime.
Timeline
Submissions close on 14 February.
Consumer data right
The Customer and Product Data Bill will enable greater access to, and sharing of, customer and product data between businesses. It will be introduced on a sectoral basis, beginning with banking followed by electricity (see our commentary here).
Timeline
A redrafted Bill, incorporating the recommendations of the select committee, was released on 23 December. For more details on key dates see our most recent ‘state of play’ here.
Infrastructure
30-year National Infrastructure Plan
Being developed by the NZ Infrastructure Commission/Te Waihanga.
Timeline
To be delivered to the Minister for Infrastructure this year for response.
National Infrastructure Funding and Financing Limited (NIFFCo)
The Treasury has developed a Funding and Financing Framework to guide the Crown’s infrastructure investment choices.
Timeline
Established 1 December 2024.
Market-led proposals guidelines
An avenue to allow private sector interests to pitch project ideas directly to NIFFCo.
Timeline
Effective now.
Strategic leasing guidance
Sets out the policy and project circumstances for which strategic leasing could be a viable option for public sector entities.
Timeline
Effective now.
Regional central/local government deals
All regions have been invited to submit infrastructure proposals for their area.
Timeline
The aim is to finalise the first deal by December 2025 and to conclude a further three deals by October 2026.
Resource Management
Resource Management (Consenting and Other System Changes) Amendment Act
Specifies default maximum timeframes for consent processing, provides for longer consent durations and lapses for renewable energy and infrastructure projects, removes the requirement for Medium Density Residential Standards, and introduces higher penalties for non-compliance.
Timeline
Passed before Christmas
Fast Track Approvals Act
Creates a one-stop shop approvals process for projects of national or regional significance.
Timeline
The expert panels to consider applications will be set up from 7 February.
Two Acts to replace the Resource Management Act 1991 – one to manage environmental effects, the other to enable urban development
Cabinet has agreed to 10 core design features and an Expert Advisory Group has developed a blueprint for the Government to consider.
Timeline
The replacement legislation will be introduced in 2025 for passage before the 2026 election.
National direction instruments
Government is progressively updating and introducing new national direction instruments under the RMA.
Timeline
Most changes are expected in 2025.
Energy Sector
Review of the electricity market
The Terms of Reference were released on 15 November and ask whether current settings support economic growth and access to reliable and affordable supply.
Timeline
The review is expected to get underway in 2025 and is required to provide a draft report within two months of appointment and a final report within four months.
Crown Minerals Amendment Bill
This rolls back the mining and petroleum exploration ban, and purports to reduce the burden of decommissioning requirements (particularly financial security requirements) with the goal of incentivising investment in oil and gas.
Timeline
The Bill was to have been passed this year but has been held back in response to submissions from major oil and gas producers that it would not reduce the decommissioning burden and may further stifle investment through unwieldy financial security requirements.
A redrafted Bill is expected early in 2025.
Offshore renewable energy
The Government is developing a regime to regulate and encourage the development of offshore energy infrastructure.
Timeline
The Offshore Renewable Energy Bill was introduced before Christmas. Submissions will be due to the Select Committee at the start of 2025.
Standardised flexibility product development
Flexibility products have been identified as a key risk management tool in periods of volatile energy security and pricing.
Timeline
The Standardised Flexibility Product Co-design Group set up by the Electricity Authority released its report on proposed products on 18 December.
Housing
Strengthening Community Housing Providers (CHPs)
Treasury and the Ministry of Housing and Urban Development (HUD) have been instructed to investigate options to improve CHPs ability to access debt. Initiatives are already in place to put CHPs on to a firmer financial basis, including contract changes and easier access to leasing arrangements.
Timeline
Treasury and HUD are to deliver their advice early this year.
Climate Adaptation
Parliament has committed to developing a cross-party consensus on climate adaptation
The Finance and Expenditure Committee delivered a report on 1 October 2024, acknowledging that the tight timeframe it had been given had limited the “value, quality and scope” of its findings. The Government had 60 working days to respond.
Timeline
The response was expected before Christmas but has yet to appear. Legislation is scheduled for introduction this year.
Overseas Investment
A more arms-open regime is being developed, including for foreign direct investment
The key change will be to reverse the onus of proof so that, rather than investors needing to justify their proposed transaction, the investment will be allowed to proceed unless there is an identified risk to the national interest.
Timeline
Legislation is due this year.
Invest New Zealand
A new agency to attract foreign direct investment. It will be based on the Irish and Singaporean model and will be incubated within New Zealand Trade and Enterprise before being created as an Autonomous Crown Entity.
Timeline
To be actioned this year.
Financial Services
New conduct regime for financial institutions (CoFI)
Financial institutions subject to CoFI will be required to be licensed by the Financial Markets Authority (FMA), and to establish, implement and maintain an effective fair conduct programme that ensures consumers are treated fairly.
Timeline
The CoFI regime comes into force on 31 March 2025.
Insurance law reform
The Government is developing regulations to support the Contracts of Insurance Act, passed in November last year.
Further policy decisions are also expected from the ongoing review of the Insurance (Prudential Supervision) Act.
Timeline
No firm timeline has been announced.
Consumer credit law reforms
The Government is working towards establishing “fit for purpose” regulation of consumer credit products and services.
Reforms include transferring regulatory responsibility for the Credit Contracts and Consumer Finance Act 2003 (CCCFA) from the Commerce Commission to the FMA, introducing licensing for consumer credit providers and improving consumer access to and effectiveness of financial dispute resolution schemes.
Timeline
The intention is to introduce a “Financial Services Reform Bill” in early 2025.
Depositor Compensation Scheme (DCS)
The final elements of the DCS regime are now being completed, including setting the regulations and the Day One requirements on industry for payout solutions.
Products to be protected under the DCS are:
- current, savings accounts and term deposits, and equivalent products, and
- loan products that function in positive balance e.g. credit cards and revolving credit products.
Timeline
The DCS will be operational from 1 July this year.
Single regulator and new funding model for anti-money laundering and countering financing of terrorism regulation
Cabinet has approved an AML/CFT reform work programme, including the replacement of the existing three AML/CFT supervisors with a single regulator (the Department of Internal Affairs) and the introduction of an industry levy.
Timeline
No timeline for implementation has been announced but consultation is likely to begin this year.
Tax
The Government’s work programme
Workstreams include:
- improvements to employee share scheme rules
- simpler approved issuer levy rules
- changes to the PIE regime
- initiatives to reduce compliance costs,
- considering tax settings for business income of charities, and
- progressing OECD-led solutions to international tax matters. The idea of a Digital Services Tax may also be revisited in this context.
Timeline
The Taxation (Annual rates for 2024-25, Emergency Response and Remedial Measures) Bill is due to be reported back on 25 February. The rest of the work programme will be progressed, and consulted on as decisions are taken.
We also expect Inland Revenue will continue to intensify its focus on audit, enforcement and debt recovery.