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Election 2017 - An agenda for change

November 06, 2017

Contacts

Partners Sally McKechnie
Special Advisors David Cochrane, Tony Ryall

Public law Election 2017

An agenda for change binds New Zealand’s new minority Labour-NZ First government and its support partner, the Greens. A long absence from office for the three governing parties will ensure they stick together for at least the next three years. They can however expect some strong challenge from the opposition National Party.

While the new government’s agenda continues to develop and emerge, their coalition and cooperation agreements signal change particularly in economic settings, overseas investment, fiscal policy, climate change, regional development and employment relations. Make no mistake:  Labour will dominate policy making and leadership.

Economic settings

The budget impact of the various coalition and cooperation agreements will be released by year’s end. The “responsible budget rules” both Labour and the Greens released before the election will hold, with the government targeting surpluses over the economic cycle. But the projected surpluses will be thinner as spending commitments are honoured.

Changes to the Reserve Bank inflation target and decision-making process will be more in nuance, as you can expect the Reserve Bank to in practice maintain price stability as the best way to achieve the new government’s full employment and export competitive currency objectives.

Overseas investment

The new government has committed to “strengthen the Overseas Investment Act” and to “tighten discretion” around residential home and farm sales in particular. A comprehensive register of foreign owned land and buildings is being established. The sale of logging rights, dairy and meat interests are in the sights of various ministers. The Greens hold the Land Information portfolio.  Consideration timelines will not get shorter.

Fiscal policy

Fiscal policy will loosen as significant additional funds are pumped into education, health, and income support. The much talked about Tax Working Group will be announced shortly.

Climate change

Climate change is being taken very seriously. A new national net zero carbon emissions by 2050 target will drive significant change as the government establishes a Climate Commission, most likely brings agriculture into the ETS, decarbonises its fleet, and establishes major public sector oversight and reporting.

Employment relations

Closing the gender pay gap will assume some prominence. Coupled with significant pay expectations in the public sector - school teachers want a 14% rise - wage inflation and pay relativity will become an issue for the both the public and private sectors.

Employers will also have to deal with a much watered down 90 day grievance free period, and the reintroduction of national awards called “fair pay agreements”. The minimum wage will increase to $20 per hour by 2021.

Trade

On trade, despite a firmer line on inwards investment, trade access will continue as a non-partisan priority. While not much has been said by the new government on the vital China relationship, New Zealand will continue its 40 year focus on the economic powerhouse and aligning with the Belt and Road strategy of President Xi.

Immigration

The crackdown on migration - 20-30,000 fewer visas - will hit the export education sector, and tighten the availability of skilled migrants. An exception will be made for the Kiwibuild workforce supporting an ambitious home building programme outlined by the government.

Regional development

Regional development will get a major boost from a new dedicated $1 billion per annum fund. There are only so many tourist restrooms that can be built around the country, so this will be used to boost business projects and infrastructure in the regions. Local and regional governments are gearing up with their bids now.

Infrastructure

Rail is back big time. The regions and Auckland will also see significant investment in light rail, along with freight and passenger lines. Decarbonisation of the main trunk line is on the way. Rail will no doubt be part of the “port study” around Ports of Auckland.

The infrastructure pipeline will get fuller with major rail, hospital and home building pledges added to an already busy programme.

Further reviews

As with all changes in government there will be “reviews”: of Commerce Commission powers, of the Electricity Authority, of retail power prices, of employment statistical measures ...

Simpson Grierson’s public law and public policy team are well-placed to offer clients insights and advice on government policy, procedures and decision-making.