Will the economy deliver re-election?

The Government’s economic reform agenda over the past two years and into this year has been directed toward lifting productivity and restoring a sense of prosperity in time for the 7 November 2026 general elections.

Much of the launch pad is already in place although, as we report here, important elements in the competition, corporate law, financial services, employment and resource management areas are yet to be completed.

There is intoxicating evidence, recited by the Prime Minister in his 19 January State of the Nation speech, of an economic upturn – an expectation of lowering inflation and interest rates (now possibly delayed), increasing consumer and business confidence, a lift in construction and manufacturing activity.

However, it is far too early to bank the political dividends of this nascent growth because the economy’s performance will be affected by ominous global uncertainties over which New Zealand has no control.

We summarise the Government’s key policy workstreams in the run-up to polling day.

Competition law reform

The Commerce (Promoting Competition and Other Matters) Amendment Bill, which went through its first reading in the pre-Christmas rush, is directed toward modernising and strengthening New Zealand’s competition law settings. It contains wide-ranging changes, including material amendments to the merger control rules and measures intended to support pro-competitive collaboration.

Chapman Tripp has deep concerns with many aspects of this legislation and will be following its progress very closely. We have published the first two commentaries in what will be a series on the Bill’s contents. See also our snapshot summary here.

Timeline
Submissions on the Bill are due by 4 February.

Companies Act rewrite

The Government is preparing an amendment bill to modernise the Companies Act, including the introduction of director role-holder identification numbers.

Also on the cards is legislation to specify that day-to-day health and safety management will be the responsibility of managers, leaving directors free to focus on governance and strategic oversight.

Workplace Relations and Safety Minister Brooke van Velden announced the intention on 2 April last year but the detail is still being finessed so the policy decision has yet to appear in amendment bill form.

Timeline
The Companies Act amendments are expected to be introduced in the first half of this year.

This has been a high policy activity area for the Government over the first half of its term but most of the legislative work has now been done, including second round amendments late last year to the Fast-track Approvals Act. It should now be mostly a case of watching the new project applications tick through, more Public Private Partnerships (PPPs) join the two already in progress and the first City and Regional Deals reach completion.

These developments will be supported by the National Policy Statement for Infrastructure (NPS-Infrastructure), the thrust of which is encapsulated in the requirement that decision-makers, when considering a consent application, “must ensure that the national, regional or local benefits of infrastructure, relative to any localised adverse effects on the environment, are recognised and provided for”.

The newly amended NPS on Renewable Electricity Generation and the new NPS for Electricity Networks (previously confined to transmission but renamed to reflect the fact that it now extends to distribution) are also designed to promote faster expansion and improved asset management.

Also in progress are amendments to both the Local Government Act 2002 and the Infrastructure Funding and Financing Act 2020 (IFFA). The first will, among other things, replace the development contributions regime with a development levy system and the second will improve access to IFFA for a range of infrastructure projects.

The sector will also benefit from the modernisation and streamlining of the Public Works Act (PWA), see Chapman Tripp’s commentary here, and from the reforms to the resource management regime (refer below).

The other big initiative will be the creation of MCERT – the new super-ministry of Cities, Environment, Regions and Transport.

Timeline

NPS-Infrastructure and the two electricity NPSs came into force on 15 January.
Submissions on the PWA Amendment Bill closed on 27 January.
Submissions on amendments to the Infrastructure Funding and Financing Act and the Local Government Act 2002 close on 20 February.
The aim is to have MCERT fully operational by July this year.

Energy will be a key focus for the Government again this year as it continues to increase energy security and energy affordability. Ensuring medium and large commercial and industrial users of electricity have access to affordable power is vital to stave off suggestions that New Zealand is in an era of de-industrialisation.

Due for release soon is legislation to strengthen the role of the Electricity Authority, or as Minister Simon Watts puts it give it “real teeth”. Proposed changes include:

increased penalties for serious rule-breaking, from a maximum of $2m to up to $10m or three times the commercial gain, or 10% of a company’s turnover
instant infringement fines, and
greater ability by the Authority to update rules and monitor the market with a focus on competition and protection of customers.

To better enable the connection of new generation:

the Government has put the 29 electricity distributors on notice that they must make efficiency improvements and standardise processes, or face potential consolidation
the Authority is consulting on a new connection pricing methodology, and
is planning to consult on amendments to the Electricity Industry Participation Code covering distributed generation pricing (i.e. connection of injecting generation).

Further legislative changes addressing energy security may also be in prospect, including:

to facilitate the construction of an LNG import facility should the decision be made to proceed with this development
further expansions to the “Gas Security Fund” which opened for applications in January 2026 and was extended late last year to gas production and gas processing with the possibility that it might be further extended to other avenues that improve energy security.

Timeline

The first draft of changes to the Electricity Industry Act to enhance the Electricity Authority’s role are expected in Q2.
Submissions on the pricing methodology are due on 4 February and cross-submissions can be made until 23 February. We anticipate Code changes will be enacted shortly after that, meaning they are likely to be in force by end of Q1.
The Government’s aim is that, if an LNG import facility is developed, imports would be available from winter 2027.
Any further changes to the Gas Security Fund will likely depend on the volume and nature of the applications received. Given its widened availability to gas storage, we anticipate the $200m fund will be secured and used quickly.

A Planning Bill and a Natural Environment Bill to replace the Resource Management Act (RMA) are now before Parliament. The Bills are expected to pass before the end of 2026, with the RMA remaining in place on a transitional basis until key documents under the new regimes are in place (anticipated to be ~2029).

The Planning Bill will focus on land use activities and proposes to reorganise planning documents into 17 regional combined plans, the content of which will be standardised through a mesh of national instruments. Private property rights will be enhanced by narrowing the scope of what needs to be consented (by as much as 46% according to one estimate), reducing the sorts of effects that can be considered, and through other more controversial proposals, including one that would require councils to provide some form of compensation to landowners should a council plan impose certain restrictions on their land (e.g. ecological or landscape protections).

The Natural Environment Bill will “establish a framework for the use, protection and enhancement of the natural environment”, essentially covering the functions of regional councils under the RMA. It creates the architecture to impose a network of environmental limits relating to both human and ecosystem health, and to significantly restrict activities that would breach those limits (with limited exceptions for certain infrastructure).

These are complex reforms. The whole structure relies on the progressive development of national instruments and regional spatial plans and local plans, which will commence in 2026 and are expected to take three (or more) years to bed in. Those who have land and major asset interests will want to get involved in the development of that documentation.

How the roll-out will be affected by the proposed replacement of regional councils with Combined Territories Boards (made up of the mayors of the component city and district authorities) is yet to be seen. The Government is proposing that decision-making be through a population-based voting system, except for resource management decisions, which would require a majority both on a population-weighted basis and among the board members.

Timeline

Submissions on both Bills close on 13 February, with a select committee report back due on 26 June 2026.
Three new RMA NPSs and seven amended ones came into effect on 15 January. Along with the NPS-Infrastructure, they included NPS-Highly Productive Land, revised to allow more development on Land Use Capability (LUC) Class 3 land.
A second tranche of RMA national direction, relating to primary sector, telecommunications and freshwater, and electricity network activities is expected to be considered by Cabinet in early 2026.
Consultations on the regional governance changes will close on 20 February so the Government can confirm the final reform proposals in March, allowing legislation to be drafted.

Financial services reform package

Three Bills affecting the financial services sector are winding their way through the House for expected passage this year. Their collective effect will be to streamline regulation, create a single licence regime (while maintaining separate prudential arrangements), simplify minimum fair conduct programme requirements, and introduce new powers for regulators.

Timeline

The Financial Markets Conduct Amendment Bill is due for report back on 30 January.
Both the Financial Service Providers (Registration and Dispute Resolution) Amendment Bill and the Credit Contracts and Consumer Finance Amendment Bill (CCCFA Bill) are awaiting second reading.
The CCCFA Bill transfers regulator responsibility from the Commerce Commission to the Financial Markets Authority (FMA) and requires providers of credit under a consumer credit contract to be licensed under the Financial Markets Conduct Act.

AML/CFT

Key developments this year include shifting to a single supervisor model, clearer monitoring frameworks for suspicious activities, and consultations on various proposed changes.

Timeline

The move to a single AML/CFT supervisor is expected on 1 July 2026.
The consultation on the updated identity verification code of practice closed on 19 January 2026.
Consultations on the AML levy proposals are expected in the first quarter of 2026, and on the AML infringements regime and other matters in the second quarter.

Insurance

Preparations for the commencement on 15 November 2027 of the Contracts of Insurance Act 2024 will continue. An exposure draft of the Insurance (Prudential Supervision) Amendment Bill is also expected for public consultation.

Timeline

Consultation on the regulations to support the Contracts of Insurance Act is expected in early 2026.
The exposure draft of the Insurance Bill is expected in the first quarter of 2026.

KiwiSaver

Default contribution rates for employees and employers will rise from 3% to 3.5%, and 16–17-year-olds will qualify for employer contributions. Guidance on applying for temporary rate reductions is expected soon.

Timeline

The changes come into force on 1 April 2026. They are the first increase in what the Government plans will be a phased programme to raise the employer and employee contribution rate to 6% each by 2032.

The legislation to create a more investor-friendly regime was passed in the pre-Christmas rush last year. All that remains to be done is some of the accompanying regulations and practical improvements to how applications are processed and assessed.

The legislative changes will not reduce the proportion of transactions that will need to be notified to the Overseas Investment Office (OIO). Rather, they are intended to give investors a greater sense of assurance that the answer will be “yes” and that the path to that answer will relatively easy to negotiate.

Whether they will spark more investment will be hard to judge because investor appetite will be driven by global economic and political factors over which the Government has little control.

Adaption

The Government has signalled its intention to introduce legislation to operationalise key policies in the National Adaptation Framework (published in October 2025). It is expected that the Bill will start to address the critical question of who pays in the aftermath of severe weather events.

Timeline
The Bill is expected to be introduced in the first half of 2026.

Mitigation

Amendments to the Climate Change Response Act 2002 (CCRA) were announced last year some of which were passed in 2025, with others anticipated to be passed in a yet to be seen omnibus Bill this year. They include:

unhooking the CCRA’s emissions budgets and ETS settings from New Zealand’s international Paris Agreement commitments (passed into law in late 2025)
narrowing the role of the Climate Change Commission away from providing independent advice to becoming a “system monitor”
changes to the way industrial allocation is managed under the ETS aimed at reducing decarbonisation disincentives and providing more certainty for allocation recipients
creating a pathway to generate ETS units and voluntary market credits for new non forestry carbon removal activities
commitments to update government guidance on voluntary carbon and to bring in a new Assessment Framework for Carbon Removals, and
additional flexibility for foresters and other ETS participants following significant disruptions (e.g., severe weather).

See our commentary here.

Timeline

Cabinet signed off the proposed policy changes in September last year. No timeline has been provided for when the amending legislation will be introduced.
The Government has also been running pilot programmes to support the expansion of a voluntary nature credit and carbon market to support potential future options for investors to generate tradeable credits related to voluntary environmental projects on privately-owned land. No timeline has been specified for resulting policy decisions but we expect a progress report this year.

This has been another busy area for the Government and will reach a crescendo this year with the passage of the Employment Relations Amendment Bill and the Employment Leave Bill to replace the unloved Holidays Act 2003 and with a rebalancing of the health and safety (H&S) regime.

The Employment Relations Amendment Bill will increase labour market flexibility by:

creating more certainty around whether a worker is or is not an employee (a response to the Uber drivers’ decision)
introducing more accountability for an employee’s behaviour into the personal grievance process
establishing a remuneration threshold above which access to personal grievances for unjustified dismissal will be denied. This will be set at $200,000 initially but will be reviewed each year on 1 July, beginning in 2027, and
removing the requirement on employers to extend the terms of any applicable Collective Employment Agreement to new hires for the first 30 days of employment.

The Employment Leave Bill is aimed at reducing complexity and cost for both employers and employees. Initial reaction to it from business and unions and employers has been broadly positive.

Key changes include:

a shift to hours-based accrual for sick and annual leave, enabling workers to take off only the hours they need rather than a whole day
a pro rata sick leave system under which entitlements are proportionate to hours actually worked
an upfront leave compensation payment for casual workers of 12.5% for each hour worked
access to bereavement and family violence leave from the first day of employment
full pay for annual leave for new parents on their return from parental leave
a requirement on employers to provide clear pay statements for each pay period, itemising pay and leave in a way that’s transparent and easily understood, and 
the ability, with the employer’s assent, for workers with large annual leave balances to cash up 25% each year. The current limit is one week per year.

Proposed amendments to the Health and Safety at Work Act 2015 will:

specify that day-to-day H&S management will be the responsibility of managers, leaving directors free to focus on governance and strategic oversight, and
provide a “carve-out” for small, low-risk businesses so that they “will only have to manage critical risks and provide basic facilities to ensure worker welfare”. (The Minister says they will “still need to provide first aid, emergency plans, and basic facilities, such as suitable lighting, but wouldn’t need to have a psychosocial harm policy in place”).

Timeline

A 24-month implementation period will be provided for the leave changes to enable a smooth transition for employers and payroll providers.
For more detail on these pieces of legislation, refer to our Employment Law Changes commentary, published on 17 December 2025.

Tax changes in the pipeline of interest to business include:

on the Government’s tax policy work programme
- a review of thin capitalisation settings for infrastructure
in legislation before the House
- taxation of Foreign Investment Fund (FIF) interests (broadly, portfolio investments in foreign equities and similar), and
- changes to the tax treatment of employee share schemes, including providing an alternative taxing option for schemes provided by unlisted companies and some “clarifications” to how the existing rules apply (e.g., the timing of deductions for employers)
recently consulted on by Inland Revenue
- proposals to alter the tax treatment of company loans to shareholders (potentially material, and retrospective, with an adverse impact on taxpayers), and
- amendments to the GST treatment of fees charged by managers of retirement schemes (link here).