Crown’s obligation to convert eligible NZUs into AAUs

The bar-2 Bill specifies that the Crown’s obligation to convert eligible NZUs to assigned amount units (AAUs) applies only if designated AAUs are available in a Crown holding account (Part 1, inserting New Clause 17A into the Bill, amending Section 30E of the Act by inserting new paragraph (3A)).

Comment

The Act provides for New Zealand units to be converted into AAUs, which are a form of Kyoto unit that can be sold on international markets, so that they can be exported because NZUs are not yet accepted in other trading schemes. “However, such conversion would potentially diminish the Crown’s ability to square up its obligations for the first commitment period under the Kyoto Protocol, which is expected to be required in the second half of 2015” [3]   . This amendments is intended to resolve that problem.

Conversion of NZUs in the event that no further AAUs were issued in the future

The bar-2 Bill provides a regulatory power allowing the Minister for Climate Change Issues to specify other Kyoto units to which exportable NZUs could be converted if AAUs were not available in the Crown holding account (Part 1, amending Clause 18 of the Bill, inserting New Section 30G(1)(q) into the Act).

Permanent Forest Sink Initiative and AAUs

The bar-2 Bill allows NZUs allocated under the Permanent Forest Sink Initiative to be converted to AAUs and exported (Part 1, Clause 73, amending New Section 178C(2) by inserting new paragraph (c)).

Comment

“Under the Permanent Forest Sink Initiative, which operates outside the ETS, landowners who establish permanent new forests earn AAUs for carbon sequestered during the first commitment period (2008 to 2012). The type of unit they will receive for carbon sequestered after 2012 is yet to be specified in regulations, and will depend on consultation and decisions yet to be taken on the future Kyoto framework. Participants who were allocated NZUs in future would be disadvantaged, as the Act prohibits the export of NZUs or their conversion to another kind of unit”. The Select Committee therefore proposed amending the Bill in this way “to avoid this potential inequity, but without anticipating the decision as to which units participants would receive after 2012” [4]   .

Offsetting of pre-1990 forest land

The Bill as introduced provides for offsetting rules to allow a landowner to change the use of their land from forestry to an alternative use without incurring liability for deforestation, provided they plant a new forest in another location. A new offsetting forest must be established on land that was not forested at 31 December 1989 (Part 1, Clause 81, inserting New Section 186(1)(a)(ii)).

The bar-2 Bill amends the definition of “post-1989 forest land” to include land that was forest at 31 December 1989 but has since been deforested and any liabilities paid (Part 1, Clause 7(4) amending the definition of “post-1989 forest land”; amending Clause 81, by inserting new subparagraphs in Section 186B of the Act and amending Section 186D by repealing subsections (4) and (5)).

Comment

The Select Committee stated that there is “about 60,000 hectares fall into this category. We see merit from an environmental perspective in allowing this land to qualify as an offsetting forest should the landowners choose to replant it in forest”. “For example, it would remove deforestation liabilities where forest cannot be re-established because of erosion or other natural disturbance, and it would ensure that minor clearing of forest boundaries was not counted as deforestation. The bill would better allow for natural regeneration and re-establishment of poplars and willows, and support efforts to control tree weeds (wildings) by preventing tree weeds on post-1989 forest land from further participating in the ETS. Technical changes would also address eligibility issues for the less-than-50-hectare exemption for trustees, including the Maori Trustee and trustees appointed under the Te Ture Whenua Maori Act 1993” [5]   .

Trustee problems

The bar-2 Bill includes amendments to deal with a possible anomaly in relation to trusts. The definition of “landowner” is amended to allow unrelated trusts under the same professional trustee or

trustees to clear forest up to 2 hectare (“the de minimus deforestation threshold allowed under the Act” [6]   ) (Part 1, Clause 7(5), amending Section 4 of the Act by inserting new subsection (7)).

Large but insubstantial amendments

The Select Committee proposed “amending or deleting several clauses—such as Clauses 7(4), 15 to 17, 25, 37, and 60—in order to clarify their meaning or because they are unnecessary or inconsistent with international rules. Although such changes appear substantial, we are satisfied that their effect is not significant” [7]   .

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Regulatory impact statement

http://www.treasury.govt.nz/publications/informationreleases/ris

Prescribed minimum starting-out rates of wages

The Bill provides that the Governor-General may prescribe one or more minimum starting-out rates (which must not be set at less than 80% of the minimum adult rate) by Order in Council. These new rates are payable to one or more classes of workers who:

• are aged 16, 17, 18, or 19 years;

• are not involved in supervising or training other workers; and

• are defined in the order by reference to the age (or range of ages) of the workers and to one or more of the following,

• • the length of time, being a period of not less than six months, that the workers have been continuously paid one or more specified social security benefits

• • the length of time, being a period of not more than six months, that the workers have been in continuous employment with one employer

• • whether or not the workers are employed under contracts of service that require the workers to undergo training, instruction, or examination for the purpose of becoming qualified for the occupation to which their contracts of service relate.

The Bill provides that where a minimum starting-out rate is prescribed by reference to the length of time that workers have been continuously paid one or more specified social security benefits or the length of time workers have been in continuous employment with one employer, an employer of a worker to whom the rate applies may pay the worker in accordance with that rate only until the worker has completed six months' continuous employment or the worker ceases to satisfy the other criteria for the payment of the starting-out rate, whichever is earlier.

The Bill defines the term “continuous employment” as including any employment undertaken by the worker before he or she turns 16 and before the commencement of this Bill. The term “specified social security benefit” means the following benefits paid or payable under the Social Security Act 1964: domestic purposes benefit; emergency benefit; independent youth benefit; invalid’s benefit; sickness benefit; unemployment benefit; widow’s benefit; young parent payment; and youth payment.

The Bill also provides that in respect of workers who are aged 20 years or older and who are not involved in supervising or training other workers, that the minimum training rate must not be set at less than 80% of the minimum adult rate payment (Part 1, Clause 4, inserting New Sections 4A and 4B into the Act).

Comment

“In broad terms new s ections 4 to 4B [of this Bill] maintain the status quo in relation to the criteria for setting the adult minimum rate of wages, modify the criteria for setting the minimum training rate of wages, do not carry over the ability to prescribe a minimum new entrant rate of wages, and introduce the ability to prescribe 1 or more minimum starting-out rates of wages ” [4]   .

Transitional provisions

In relation to workers who, immediately before the commencement of the Bill, were being paid wages by their employers at the new entrant rate (which is not re-enacted by the Bill [5]   ) in accordance with Clause 5 of the Minimum Wage Order 2012, the Bill provides that on and after the commencement of the Bill, a worker:

• is entitled to continue to be paid at the minimum new entrant rate as if the Bill had not been passed or at the highest starting-out rate prescribed under new section 4A for workers aged 16 or 17 years (whichever rate is the higher); and

• after fulfilling the present conditions for the new entrant rate (which relate to completing 3 months or 200 hours of employment, whichever is completed first) is entitled to be paid at the minimum adult rate (as replaced by this Bill) (Part 2, Clause 7).

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Regulatory impact statement

A regulatory impact statement may be found here:

http://www.treasury.govt.nz/publications/informationreleases/ris

Free enrolment and free education at a partnership school kura hourua

The Bill extends the right to free enrolment and free education at any state school to partnership schools kura hourua. The term “partnership school kura hourua” is defined as a school in respect of which the Minister has approved a sponsor (see below) and a partnership school contract is in force (Part 1, Clause 5, amending Section 3 of the Act; Clause 4(1), amending Section 2(1) of the Act by inserting a new definition, that of “partnership school kura hourua”).

Partnership schools kura hourua, their characteristics, and who may enrol in them

The Bill makes provision for partnership schools kura hourua, which are a new form of registered school. The Minister is given power to approve by notice in the Gazette an incorporated body or limited partnership to be the sponsor of a partnership school kura hourua. The Minister must appoint a group to advise on the approval of sponsors and the educational performance of partnership schools kura hourua. The Minister may enter into a contract with a sponsor for the operation of a partnership school kura hourua. The contract must be for a fixed term and must contain specified provisions. A body must not operate or purport to operate a partnership school kura hourua unless it has been approved under the Bill and may not operate a partnership school kura hourua unless there is a partnership school contract in place (Part 1, Clause 31, inserting New Sections 158A-158E).

The Bill provides the sponsor of a partnership school kura hourua with the power to control the management of the school and may make rules for the purpose of the control and management of the school. A sponsor is also under a duty to perform its functions in such a way as to ensure that students are able to achieve their highest possible educational standards (Part 1, Clause 31, inserting New Sections 158G-158H). A sponsor is a body approved by the Minister by notice in the Gazette to be a sponsor of a partnership school kura hourua (Part 1, Clause 31, New Section 158B).

The Bill provides a power of intervention in a partnership school kura hourua if the Secretary for Education has reasonable grounds to believe that there is an emergency, or an imminent threat of an emergency, affecting the education or welfare of the students. In such a case, the Secretary may take over the management of the school for as long as the Secretary considers necessary (Part 1, Clause 31, inserting New Section 158L).

In relation to enrolment, the Bill makes provision for enrolment in partnership schools kura hourua by setting out the order of priority for applicants if there are more applications than there are places (Part 1, Clause 31, inserting New Section 158M). Students who have special educational needs are given the same rights to be enrolled at a partnership school kura hourua as students who do not and they may (subject to the agreement of the parents and the Secretary) continue to be enrolled at partnership schools kura hourua despite being over the upper age limit for the schools. The Bill also enables a sponsor of a partnership school kura hourua to run multiple timetable arrangements (Part 1, Clause 31, New Sections 158N, 158O and 158P) (Part 1, Clause 31, inserting New Part 12A, inserting New Sections 158A-158X into the Act).

Discipline and attendance at a partnership school kura haurua

The Bill provides that domestic students at partnership schools kura hourua will not be required to pay tuition fees from correspondence schools (as applies to other schools) (Part 1, Clause 6, amending Section 7A of the Act). A sponsor of a partnership school kura hourua may be directed to enrol a student under the age of 16 who has been excluded from a State school, provided that there has been appropriate consultation and the parents of the student consent (Part 1, Clause 7, amending Section 16 of the Act). State school boards are given the power to refuse to enrol a student who has been excluded or expelled from a partnership school kura hourua and the Secretary for Education is given power to direct a sponsor of a partnership school kura hourua to enrol a student aged 16 or over who has been expelled from a State school, provided there has been appropriate consultation and the parents of the student consent (Part 1, Clause 8, amending Section 17D of the Act; Clause 31 inserting New Sections 158Q and 158R into the Act).

The Act places duties on students and boards with regard to school attendance. The duty is modified for the sponsors of partnership schools kura hourua to attend school whenever the school is open for those students who are subject to a multiple timetable arrangement under New Section 65DA (see below). They will instead be required to attend school for the period or periods when their timetables are in operation (Part 1, Clause 9, amending Section 25 of the Act).

Multiple timetable arrangements

Clause 15 inserts a new section 65DA. This new section enables State schools to run multiple timetable arrangements, with the Minister's authority. These are arrangements where more than one timetable per day is run at the school. The timetables might run concurrently or consecutively. The school may run such arrangements only if it has consulted appropriately, and the Minister considers that the arrangements are appropriate. The board of the school must notify affected students and their parents of the arrangements and the time periods when the students will be required to attend school. (Part 1, Clause 15, inserting New Section 65DA into the Act).

Surrender and retention of property

The Bill creates a power for teachers to require students to surrender items in their possession or control if the teacher has reasonable grounds to believe that a student has hidden or “in clear view” on or about the student’s person, or in any bag or other container under the student’s control, an item that is likely to endanger safety or detrimentally affect the learning environment. Teachers may retain and dispose of items surrendered, if appropriate. Teachers may require students to reveal items that are stored on electronic devices, and to surrender the electronic devices, which may be retained for a reasonable period. Items and electronic devices retained must be stored appropriately, and at the end of the period of retention they must be returned to the student or passed onto another agency. However, teachers will not be permitted to use physical force to search a student or his or her bag, to require a bodily sample, or to use a dog for the purpose of the search. Nor will teachers be permitted to carry out blanket requests for students to surrender items, unless there are reasonable grounds to believe that each student has a relevant item in his or her possession (Part 1, Clause 28, inserting New Sections 139AAA-139AAF into the Act).

Merging schools

The Bill makes new provision for the merger of State schools by allowing the Minister to give notice that the continuing school's board is to have an alternative constitution which has effect from a date specified by the Minister (Part 1, Clause 30, substituting Section 156A of the Act by New Sections 156A-156AC).

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Benefits of the Bill

A media release accompanying the introduction of this Bill states that it “overhauls financial reporting rules and cuts compliance costs for small and medium-sized companies”.

Hon. Mr Foss, the Minister of Commerce, said that “these smaller companies shouldn’t necessarily have to produce the same complex financial statements that are required from large companies.” The media release also states that the Bill “simplifies compliance obligations for charities, and includes a new power which allows the External Reporting Board to issue accounting standards for registered charities”

Mr Foss said that “this power will provide clarity for charities that are required to file financial statement” and that it would “remove uncertainty, improve the quality of reporting and increase comparability between charities” [1]   .

Notable features of the Bill are:

• the removal of a requirement for “non-large”, “non-issuer” companies to prepare general-purpose financial reports;

• giving power to the External Reporting Board to issue financial reporting standards for a range of entities, including registered charities;

• the placing of the substantive reporting requirements in their relevant Acts under the following principles:

• “all substantive reporting requirements and the related offence provisions will be included in sector, industry, and entity-specific Acts” [2]   ;

• core financial reporting principles and definitions that are intended to apply to all reporting entities (for example, the meaning of generally accepted accounting practice) or to some classes of reporting entities (for example, the meaning of large) are consolidated in this Bill which repeals and replaces the 1993 Act. “This will include retaining or modifying some existing 1993 Act principles and definitions, adding new ones, and transferring standard provisions relating to auditing from the Companies Act 1993 to the new Financial Reporting Act. There will be cross-references to those principles and definitions in sector, industry, and entity-specific legislation” [3]   .

Supplementary Order Paper No 93

Supplementary Order Paper No 93 (released by the Minister on 31 July 2012) “aligns breaches of financial reporting requirements for financial markets participants with the liability regime in the Financial Markets Conduct Bill” [4]   . The Financial Markets Conduct Bill 2011, reported from the Commerce Select Committee on 7 September 2012, is described in Bills Digest No 1963.

SOP No 93 proposes particular reporting provisions in relation to issuers and other financial market participants to be inserted into the Financial Markets Conduct Bill.

Regulatory impact statements

• http://www.med.govt.nz/business/business-law/pdf-docs-library/financial-reporting-framework/RIS-RFRF.pdf

• http://www.med.govt.nz/about-us/publications/publications-by-topic/regulatory-impact-statements/ministry-of-economic-development-regulatory-impact-statements

• http://www.treasury.govt.nz/publications/informationreleases/ris

The Bill applies to reporting entities

The Bill largely applies to any “reporting entity”. A reporting entity is an entity whose financial statements or group financial statements are required by any enactment to comply, or be prepared in accordance, with generally accepted accounting principles (i.e. GAAP standards) or non-GAAP standards [5]   . The term “non-GAAP standard” means a financial reporting standard that is stated in the standard to be a non-GAAP standard (Part 1 Clause 5(1), definitions of “reporting entity” and “non-GAAP standard”; Clause 8).

External Reporting Board

The Bill continues the existence of the External Reporting Board which is an independent Crown entity. The functions of the Board are:

• to prepare and issue financial reporting standards and auditing and assurance standards;

• to issue authoritative notices, which provide for matters not covered by standards for the purposes of the definition of GAAP (a new function);

• to develop and implement strategies for the issue of standards; and

• to liaise with international or national organisations that perform functions that correspond with, or are similar to, those conferred on the Board (Part 2, Clauses 10-11).

Financial reporting standards and auditing and assurance standards

The Bill includes detailed provisions relating to the issue of financial reporting standards and assurance standards (Part 2, Subpart 2, Clauses 14-32).

Standard provisions relating to auditor qualifications and access to information

The Bill provides for the qualifications of auditors for the purposes of various enactments. The obligations of entities to provide information to auditors are set out and the rights of auditors to obtain information are described (Part 2, Subpart 3, Clauses 33-38).

Amendments to other Acts

Amends many other Acts in relation to the particular financial reporting requirements of entities subject to each Act (Part 4, Subparts 1-11, Clauses 61-162; Schedule 1 and Schedule 2).

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Legal status of official version - reprints

Clause 18 of the Bill provides that an official version of legislation that is a reprint:

• is taken to correctly state, as at the date at which it is stated to be reprinted, the law enacted or made by the legislation reprinted and by the amendments (if any) to that legislation; and

• is evidence that any changes made in the reprint are authorised by the provisions in the Bill dealing with reprints (i.e. Part 2, Subpart 2, Clauses 23-27).

Supplementary Order Paper No 127 proposes a new subclause providing that where legislation is reprinted under Subpart 2 with changes authorised by that subpart, those changes have effect as if enacted or made, as the case may be, expressly by other legislation having effect immediately before the reprint date (amending Clause 18 of the Bill, inserting new subclause (5)).

Comment

“The new provision is based on similar Australian legislation, for example, section 9 of the Reprints Act 1992 (Qld) and will enable legislation as reprinted to be amended, incorporated, or referred to by other legislation as if authorised changes made by the reprint had been enacted by legislation. For example, if an Act is reprinted with authorised renumbering, the new numbering can be cited and relied on in any subsequent amending legislation” [2]   .

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The Crown Minerals Act 1991 and the Schedule 4 stocktake

The Act sets out the legislative framework for prospecting, exploration and mining of Crown minerals in New Zealand. It also sets out the process for permit holders to negotiate land access arrangements to Crown lands. In 1997, the National Government added Schedule 4 to the Act to prohibit most access for exploration and mining of Crown minerals to particular tracts of conservation land and marine reserves on the basis of the high conservation values of those areas.

In August 2009, the Minister of Energy and Resources and the Minister of Conservation directed officials to carry out a stocktake of Schedule 4-listed land. The purpose of the stocktake was to identify areas where current knowledge of the geology of the area indicated that the potential high economic value of the minerals to New Zealand warranted a case-by-case consideration of proposals for exploration and mining in the area within the context of a discussion about the conservation, tourism, cultural and other values of the area.

After an extensive public consultation, the Cabinet agreed [2]   that:

After an extensive public consultation, the Cabinet agreed [3]   that:

• no areas be removed from Schedule 4 of the Crown Minerals Act 1991;

• newly created or classified areas equivalent to those currently listed in clauses 1 to 7 of Schedule 4 (national parks, nature and scientific reserves, wilderness areas, sanctuary areas, wildlife sanctuaries, marine reserves, and Ramsar [4]   wetlands) should automatically be included in Schedule 4;

• the classification decisions for the classes of conservation area listed in clauses 1 to 7 of Schedule 4 of the Crown Minerals Act 1991 that are currently the sole responsibility of the Minister of Conservation instead be made by Order in Council (subject to Cabinet consideration);

• in principle, significant applications to mine on public conservation land should be publicly notified;

• because of “current provisions in the Crown Minerals Act 1991 for mineral related access arrangements do not enable full account to be taken of the potential national significance and economic benefits of a proposal to explore or mine Crown-owned minerals, or recognise that the Crown has different interests in the surface values of Crown land and in any subsurface minerals, both of which it manages on behalf of, and for the benefit of, all New Zealanders” that Section 61(2) of the Crown Minerals Act 1991 be amended to provide for:

• • joint decision making on access arrangements under the Act by the landholding minister and the Minister of Energy and Resources; and

• • specific economic, mineral and national significance-related criteria to be considered in making a decision on mineral-related access under the Act”.

Main policy decisions behind the Bill

Crown Minerals Act 1991

Conservation Act 1987

Purpose

The bar-2 Bill restates the purpose of the Bill, without changing its meaning, as being to:

• empower the creation of the National War Memorial Park (Pukeahu) on the Park land that includes the National War Memorial, in the area of the City of Wellington known to Māori as Puke-ahu; and

• ensure its completion by April 2015, the centenary of the commencement of the Gallipoli Campaign of the First World War; and

• ensure the integration of the Park and roading networks with the wider City of Wellington (Part 1, substituting Clause 3 (1)).

Resource consents and designations

The bar-2 Bill specifies that resource consents which would be granted by the Bill would not lapse on 31 July 2015 if, before that date, they had been given effect or “substantial” work relevant to the consent had been commenced, or an extension of the lapsing period had been granted. The bar-2 Bill also specifies that when considering an application to extend the period until a consent lapses, the consent authority would have to take into account whether substantial progress was being made towards giving effect to the consent and whether approval had been obtained from persons who might be adversely affected (Part 2, Subpart 1, amending Clause 7).

Orders in Council

The bar-2 Bill provides that for a Minister to recommend the making of an Order in Council, he or she must have considered all other reasonably practicable ways relevant to the particular circumstances to achieve the purpose of the legislation. The Review Panel is required to report to the Minister every six months on the use of the power to make Orders in Council under the Bill, and to require the Minister to present a copy of each report to the House of Representatives. The bar-2 Bill also provides that an Order in Council does not come into force until twelve sitting days after the day on which it was presented to the House (Part 2, Subpart 6, amending Clause 24 by inserting new subclause (4); inserting New Clause 27A; substituting Clause 31, and deleting Clause 32).

Comment

The Select Committee suggested that the amendment requiring the Minister to present a copy of each six-monthly report to the House of Representatives would allow the House to consider implementing a process, perhaps adopted by sessional order, for specific consideration of these reports [3]   .

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Information matching

The Bill provides for information-matching between the Customs Service and Inland Revenue to allow the Commissioner of Inland Revenue direct access to departure and arrival information in order to locate, when they enter or leave New Zealand, borrowers who are in “serious default” of their repayments when they enter or leave New Zealand. The term “serious default” means the state of having an unpaid amount due and owing, and satisfying criteria established by the Commissioner (Part 1, Clauses 44, 45 and 46, amending Sections 280H and 280I of the Customs and Excise Act 1996; Clause 47, amending Section 103(1) the Privacy Act 1993).

Definition of “Income” for student repayment purposes

A New Zealand-based borrower’s non-salary and wage income repayment obligation is based on their adjusted net income. Section 76 of the Act requires the Commissioner to assess the amount (if any) of a borrower's pre-taxed repayment obligation for a tax year as soon as practicable after the borrower makes his or her declaration of pre-taxed income.

The Bill extends the type of income which must be included in net income for student loan repayment purposes. Students’ net income must now include:

• income from a trust and companies owned by trusts when the borrower is the settlor;

• tax-exempt salary and wages, and certain overseas pensions that are exempt from New Zealand tax;

• distributions from superannuation schemes that relate to contributions made by a person’s employer within the last two years, when the person has not retired (excluding KiwiSaver and locked-in superannuation schemes);

• distributions from a retirement savings scheme when the person has retired early;

• income kept in a closely held company;

• fringe benefits received by shareholder-employees who control the company;

• PIE income that is not “locked in”;

• 50 percent of non-taxable private pensions and annuities;

• main income equalisation scheme deposits; and

• payments from trusts, not being beneficiary income, when the borrower is not the settlor (Part 3, (headed: “Amendments to principal Act that apply for 2014-2015 and later tax years”), Clauses 63-66; inserting New Schedule 3 (clauses 1-13) into the Act).

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Regulatory statements

Regulatory statements for this Bill may be found at:

http://www.treasury.govt.nz/publications/informationreleases/ris

New benefit categories

The Bill provides for three new benefits:

Drug testing

The Bill provides for the application of drug testing to apply where undertaking and passing a pre-employment drug test is required as part of a job application, or as part of a training programme to which beneficiaries are referred by the chief executive. Beneficiaries who fail a pre-employment or training programme drug test (or fail to apply for a drug-tested job they are referred to) without good and sufficient reason will have their benefit “sanctioned”. “In the first instance, their benefit will be cut by 50%, but they can re-comply with the obligation by agreeing to stop using drugs and receive their full benefit. If they fail a drug testing obligation a second time within 12 months, they can re-comply by undertaking to pass a drug test within 30 days (to allow any drugs they have taken to leave their system). Where they fail or refuse this test, their benefit will be cancelled with a stand down period of 13 weeks. Employers will be reimbursed for the cost of failed drug tests for beneficiaries sent to them by Work and Income, which will be recovered from the beneficiaries themselves (as will the cost of any re-compliance drug test)” [3]   (Part 1, Clauses 42-48).

Social obligations

The Bill provides for social obligations that beneficiaries with dependent children must meet in order to continue receiving Government assistance. Beneficiary parents must take all reasonable steps to ensure that their dependent child:

• aged 3 years or over, is enrolled in and attending early childhood education until they start school;
• enrolled in and attending school from age of 5 (or 6) years depending on when the child first starts school;
• enrolled with a primary health care provider; and
• up-to-date with the core Well Child checks.

These obligations will apply universally to all beneficiaries with dependent children (including spouses or partners, if any). (Part 1, Clause 25, inserting New Section 60RA into the Act).

Beneficiaries with warrants to arrest

The Bill provides for the effect on a benefit of a warrant to arrest a beneficiary. A person affected by the provision is a beneficiary who is not a young person (as defined in section 2(1) of the Children, Young Persons, and Their Families Act 1989) and where the chief executive is satisfied (based on information available to the chief executive) that:

• criminal proceedings have been commenced against the beneficiary in a New Zealand court for an offence (other than certain excluded offences);
• a New Zealand court has in, or in connection with, those criminal proceedings, issued a warrant for the beneficiary's arrest; and
• at least 28 days have elapsed since the date on which the warrant was issued.

The chief executive must give the beneficiary a notice that:

• allows a period of 10 working days within which the beneficiary may dispute that he or she is the person to whom the warrant to arrest applies or take steps to resolve the warrant;
• specifies the steps that the beneficiary may take to dispute that he or she is the person to whom the warrant to arrest applies or to resolve the warrant; and
• specifies the consequences of the beneficiary's not resolving the warrant within that 10-working-day period.

The chief executive may suspend immediately the benefit of such a beneficiary if satisfied that:

• the department has received from the New Zealand Police a written request to suspend the beneficiary's benefit on the ground that the Commissioner of Police on reasonable grounds considers the beneficiary to be a risk to public safety;
• that request is signed by the Commissioner of Police or a constable who is of or above the level of position of inspector.

The Bill provides in detail for procedural matters related to the exercise of these powers (Part 1, Clause 30 inserting New Section 75B into the Act).

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Present provision

Section 142 of the Act (headed: “Obligation to provide free membership of libraries”) provides that “if a local authority or a council-controlled organisation provides a library for public use, the residents in the district or region are entitled to join the library free of charge”.

Purpose

The purpose of the Bill is to “expand the public library services that local authorities are required to provide for free” (Clause 4).

Obligation to provide free public libraries

The Bill provides that a local authority must provide for a library and library services for public use on the following minimum terms:

• the residents in the district or region of the local authority are entitled to join the library free of charge;

• the library shall not charge any resident of the authority’s district or region for the use of library material, including books, non-print resources, and digital information;

• the library shall not charge any resident of the authority’s district or region for access to the internet, in accordance with requirements for reasonable use (Clause 5, amending the Act by substituting Section 142, inserting new subsection (1)).

Comment

The obligation is reposed on every local authority. A local authority may be a regional council or territorial authority. A territorial authority is a city or district council listed in Part 2 of Schedule 2 of the Local Government Act 2002. The obligation must be satisfied directly and not through a council-controlled organisation (i.e generally a company or other entity controlled by one or more local authorities) (cf. Sections 5(1) and 6 of the Local Government Act 2002).

National Librarian’ role

The Bill provides that the National Librarian must present an annual report to Parliament on the implementation by local authorities of the above requirement and make any recommendations with regard to that implementation. Local authorities must furnish such information as is reasonably required by the National Librarian to complete his or her annual report to Parliament (Clause 5, amending the Act by substituting Section 142, inserting new subsections (2) and (3)).

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Primary function of the Reserve Bank

Section 8 of the Act currently provides that “the primary function of the Bank is to formulate and implement monetary policy directed to the economic objective of achieving and maintaining stability in the general level of prices.”

Need for the Bill

“This Bill amends the Reserve Bank of New Zealand Act 1989 to ensure that the primary function of the Reserve Bank is broadened to include other critical macro-economic factors such as the rate of growth, export growth, the value of the dollar, and employment as well as price stability. This would then have the flow-on effect of altering the Policy Targets Agreement between the Minister of Finance and the Governor of the Reserve Bank to reflect the impact of interest rates on these other critical factors” [1]   .

Purpose

The Bill provides that its purpose is to “broaden the economic factors that are considered as part of the primary function of the Reserve Bank” (Clause 4).

New primary function of the Bank

The Bill provides that “the primary function of the Bank is to formulate and implement monetary policy directed to the economic objective of maintaining stability in the general level of prices while maintaining an exchange rate that is conducive to real export growth and job creation” (Clause 5, substituting Section 8 of the Act).

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Area of interest

The Preamble to the Bill sets out the claim in detail: ”Waitaha are an ancient iwi descended from the waka Te Arawa. Their area of interest extends from Waimapu to Mauao along the coastline to Maketu, and inland to Ōtanewainuku. By the 1840s, Waitaha primarily occupied the land between Tauranga harbour and Te Puke”. The Preamble describes the activities of the Crown and Crown agencies (such as the Māori Land Court) with the effect that “by the end of the 19th century Waitaha had insufficient land and resources to sustain the tribe. According to Waitaha, this forced some members of the iwi to follow other tribal affiliations. Waitaha express this impact in the whakataukī, “Kō Waitaha te iwi, he tangata ngākaurua”: Waitaha was once a powerful tribe, but because of the loss of land they became fragmented and have never been able to unite again” (Preamble, Clauses 2 and 12).

Waitaha

In the Bill the term Waitaha means the collective group composed of individuals who are descended (by birth, legal adoption, or by whangai (i.e. Māori customary adoption)) from a tupuna of Waitaha. Such a tupuna is an individual who exercised customary rights by virtue of being descended from Hei and Waitaha (an individual) and who exercised the customary rights predominantly within the Waitaha area of interest on or after 6 February 1840. The term “customary rights” means rights according to the tikanga of Waitaha and include rights to occupy land and rights in relation to the use of land or other natural or physical resources, rights to affiliate to specified marae and rights of burial (Part 1, Subpart 2, Clause 10).

Settlement

The Bill records the Crown acknowledgements and apology offered by the Crown to Waitaha and provides that the settlement of the Waitaha historical claims is final. It removes the jurisdiction of judicial bodies in respect of the historical claims of Waitaha or the redress provided under the deed of settlement or the Act (but not their interpretation), and deals with related issues including consequential amendments to the Treaty of Waitangi Act 1975, the removal of certain resumptive memorials and the modification of the rule against perpetuities” (Part 1, Subparts 1-4, Clauses 3-18).

Cultural redress

The Bill sets out the cultural redress provided to Waitaha, including the Crown's acknowledgement of the cultural significance of certain statutory areas for Waitaha and the issuing of Protocols by appropriate responsible Ministers. The Protocols specifically provided for in the Bill are: a Conservation Protocol; a Crown Minerals Protocol; and a Taonga Tūturu Protocol (the last issued by the Minister for Arts, Culture and Heritage). The Bill deals with the provisions of the above-mentioned Protocols, makes provision for statutory acknowledgements and provides for the vesting of a certain cultural redress property. The Bill provides that certain sites (i.e. Ōtawa and Te Ara a Hei) are to be subject to an overlay classification called “Te Whakairinga Kōrero”. The Crown acknowledges the statements of Waitaha values relating to these sites. The purposes of the declaration of Te Whakairinga Kōrero in relation to the sites is to require the New Zealand Conservation Authority and relevant conservation boards to have particular regard to Waitaha values (defined in the Bill) and certain protection principles and to allow the trustees to make submissions. Provision is made for the vesting of cultural properties in the trustee, some to be administered as reserves (Part 2, Subparts 1-6, Clauses 19-80; Schedules 1-3).

Commercial redress

The Bill provides for the transfer to the trustees of commercial redress and deferred purchase properties listed in the deed of settlement. Contingent provision is made to the transfer of two properties to the trustees. If the Crown settles the historical claims of Ngā Pōtiki without providing for transfer of Te Houhou to Ngā Pōtiki, it is authorised to transfer the area to Waitaha [1]   . Similar provision is made for the Te Puke properties (in relation to the settlement of the Tapuika historical claims) (Part 3, Clause 81-86).

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Regulatory impact statement

http://www.dia.govt.nz/diawebsite.nsf/wpg_URL/Resource-material-Regulatory-Impact-Statements-Index?OpenDocument

Next election changed from 2013 to 2016

The Bill replaces the definition of “2013 election” with a definition of “2016 election” and also amends the definition of “next election” to replace the reference to the “2013 election” with a reference to the “2016 election” (Part 1, Clause 4, amending Section 4 of the Act; Part 2, Clause 7, amending Section 22 of the Act) .

Review of ECan

The Bill provides that the responsible Ministers must begin a review of ECan on 1 March 2014 to cover the “governance structure of ECan”, “the membership of ECan” and “ECan’s powers and functions under Part 3” (Part 2, Clause 5, inserting New Section 17A into the Act).

Comment

Part 3 of the Act is headed “Additional functions and powers of ECan” and deals with: Moratoria on specified applications; Water conservation orders; and the Process for approval of proposed regional policy statements or plans (Sections 29-69 of the Act).

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Advanced Technology Institute

The Bill provides that ATI is a Crown entity and provides for the appointment and membership of ATI's board which is to consist of at least five, but not more than nine, members appointed by the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is for the time being responsible for the administration of the Bill (the Minister). The main objective of ATI is to support science and technology-based innovation and its commercialisation by businesses, primarily in the manufacturing sector and services sector, in order to improve their growth and competitiveness. Its functions are described (as set out broadly above) (Part 2, Subpart 1, Clauses 6-14).

Industrial Research Limited (IRL)

The Bill provides that Industrial Research Limited (IRL) ceases to be to a Crown Research Institute and is deemed to be a subsidiary of AT (Part 2, Subpart 2, Clause 15).

Employees of state organisations are transferred to ATI

Certain employees of the Ministry of Business, Innovation, and Employment (MBIE) and New Zealand Trade and Enterprise (NZTE) employees whose duties are, overall, more closely connected with the functions of ATI and whose positions will, as a result of the establishment of ATI, cease to exist within MBIE or NZTE are transferred to ATI. These employees are identified by the chief executives of those organisations. The identified employees must be offered equivalent employment by ATI. The Bill restricts an employee's entitlement to compensation for technical redundancy if the employee's position ceases to exist because the duties of the position are more closely connected with the functions of ATI and the employee is offered “equivalent employment” (which term is defined) in ATI (whether or not the employee accepts the offer). Similar provision is made for IRL employees (Part 2, Subpart 2, Clauses 16 and 17).

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Maritime Transport Act 1994

The Bill amends the MTA to make:

• changes relating to port and harbour safety, including the transfer of provisions from the Local Government Act 1974 to the MTA regarding local regulation of navigation safety;

• amendments to enable New Zealand to accede to three international maritime conventions,

• • the Convention on the Limitation of Liability for Maritime Claims (LLMC Convention),

• • the Convention on the Limitation of Liability for Maritime Claims (1976),

• • the LLMC Convention as amended by the Protocol of 1996 to the Convention (LLMC Protocol) (see Schedules 8 and 9 (Schedule 1, inserting new schedules 8 and 9 into the MTA);

• amendments implementing changes to another international maritime convention to which New Zealand is a party;

• changes relating to the making of maritime and marine protection rules; and

• other miscellaneous amendments [1]   .

Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012

This Bill amends the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (the EEZ Act) in order to transfer from Maritime New Zealand (MNZ) to the Environmental Protection Authority (EPA) the regulation of:

• discharges of production and displacement water, and offshore processing drainage;

• discharges of chemicals involved in drilling, production, and maintenance activities;

• discharges of oily waste and garbage from offshore installations;

• discharges from production facilities on board mineral mining ships; and

• dumping of waste (except emergency dumping) [2]   .

Two further international conventions are added to the Act: the International Convention for the Prevention of Pollution from Ships, 1973 (MARPOL) and the Convention on the Prevention of Marine Pollution by Dumping Wastes and Other Matter, 1972 (the London Convention).

There are many amendments made to the Acts. The following appear to be the more noteworthy.

Maritime Transport Act 1994

Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012

Functions

Section 8 of the Act provides that the principle function of the Service is: “to promote te reo Māori me ngā tikanga Māori through the provision of through the provision of a high quality, cost-effective Māori television service”.

The Bill changes the principal function of the Service to the protection and promotion of te reo Māori me ōna tikanga (defined in the Bill as the Māori language and its accepted and customary usage) for an audience which includes people whose first language is Māori, people who have a high level of proficiency in te reo Māori, and young people (Part 1, Clause 7, substituting Section 8).

Comment

This is intended to provide greater protection for “te reo Māori's linguistic integrity” [3]   .

Spectrum management rights

The Bill requires the Crown to transfer management rights to Te Pūtahi Paoho over 16 MHz of UHF spectrum for the establishment of a digital terrestrial television network over a 20 year period (from 1 December 2013-30 November 2033). The responsible Ministers must execute a deed setting out the terms and conditions under which Te Pūtahi Paoho must exercise the spectrum management rights. The deed may provide that if Te Pūtahi Paoho breaches one or more specified terms or conditions, the responsible Ministers may direct Te Pūtahi Paoho to transfer the spectrum management rights to the Crown, and Te Pūtahi Paoho must transfer the spectrum management rights as directed (Part 1, Clause 10, inserting New Subpart 2A (headed: “Provisions relating to spectrum management rights”) into Part 1 of the Act, inserting New Sections 24A-24G).

What is Te Pūtahi Paoho?

The Act established Te Pūtahi Paoho. Each of 11 named organisations [4]   (which are listed in Part 1 of Schedule 1 of the Act) could appoint one representative to be a member of Te Pūtahi Paoho. There is provision for adding or removing organisations (by Order in Council on the recommendation of the Minister of Māori Affairs).

In general, the functions of Te Pūtahi Paoho include:

• to appoint 4 of the 7 directors of the Service;

• provide direction to the chairperson of Te Pūtahi Paoho in the performance and exercise of his or her functions;

• safeguard the spectrum management rights in accordance with Section 23 of the Act (basically, if the Service does not require the UHF right transferred by the Crown, it must transfer the UHF right to Te Pūtahi Paoho and if the Service proposes to transfer the spectrum management rights to a third party, or to create spectrum licences for, or to transfer spectrum licences to, a third party (other than Te Pūtahi Paoho), it must prepare and present to Te Pūtahi Paoho a business plan on the proposal and obtain the agreement of Te Pūtahi Paoho to the proposed transfer).

The responsible Ministers and the chairperson of Te Pūtahi Paoho, acting jointly:

• must appoint one director to be the chairperson of the board and another director to be the deputy chairperson;

• must determine the remuneration and other benefits for the board; and

• other specified functions (Sections 12-16 of the Act).

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Cost recovery

The Bill provides that the Ombudsman may recover from an agency that is the subject of a complaint any costs associated with the investigation of that complaint. For the purposes of this provision, an agency is a department or organisation named in Schedule 1 of the Act or a holder of official information in terms of the Official Information Act 1982 or the Local Government Official Information and Meetings Act 1987 (Clause 5, inserting New Section 17D, subclauses (1) and (4)).

Guidelines

The Bill requires the Ombudsman to issue guidelines specifying the costs that can be recovered from agencies, and the circumstances under which charges will be imposed (Clause 5, inserting New Section 17D, subclause (2)).

Exceptions

The Bill provides that the power to recover costs does not apply to investigations initiated by an Ombudsman on their own motion (under Section 13(3) of the Act), or referred by the House of Representatives (under Section 13(4) of the Act), or by the Prime Minister (under Section 13(5) of the Act) (Clause 5, inserting New Section 17D, subclause (3)).

Comment

The provisions related to the excepted investigations are as follows:

• “Each Ombudsman may make any such investigation either on a complaint made to an Ombudsman by any person or of his own motion; and where a complaint is made he may investigate any decision, recommendation, act, or omission to which the foregoing provisions of this section relate, notwithstanding that the complaint may not appear to relate to that decision, recommendation, act, or omission” (Section 13(3));
• “Without limiting the foregoing provisions of this section, it is hereby declared that any committee of the House of Representatives may at any time refer to an Ombudsman, for investigation and report by an Ombudsman, any petition that is before that committee for consideration, or any matter to which the petition relates. In any such case, an Ombudsman shall, subject to any special directions of the committee, investigate the matters so referred, so far as they are within his jurisdiction, and make such report to the committee as he thinks fit. Nothing in section 17 [(headed: “Ombudsman may refuse to investigate complaint”)] or section 22 [headed “Procedure after investigation” – this sets out the mechanisms for enforcing compliance by the department or organisation)] or section 24 [(headed “Complainant to be informed of result of investigation”)] shall apply in respect of any investigation or report made under this subsection” (Section 13(4));
• “Without limiting the foregoing provisions of this section, it is hereby declared that at any time the Prime Minister may, with the consent of the Chief Ombudsman, refer to an Ombudsman for investigation and report any matter, other than a matter concerning a judicial proceeding, which the Prime Minister considers should be investigated by an Ombudsman. Where a matter is referred to an Ombudsman pursuant to this subsection, he shall, notwithstanding anything to the contrary in this Act, forthwith investigate that matter and report thereon to the Prime Minister, and may thereafter make such report to Parliament on the matter as he thinks fit. Nothing in section 22 shall apply in respect of any investigation or report made under this subsection” (Section 13(5).

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Ngāti Whātua o Kaipara

In the Bill the term Ngāti Whātua o Kaipara means the collective group composed of individuals who are descended (by birth, legal adoption, or by whangai (i.e. Māori customary adoption)) from the ancestor of Haumoewaarangi and a recognised ancestor of at least one of Ngāti Whātua Tūturu, Te Tao Ū, Ngāti Rongo, Ngāti Hine, or Te Uri o Hau who exercised customary interests predominantly in relation to the area of interest of Ngāti Whātua o Kaipara at any time after 6 February 1840. The term “customary rights” means rights according to tikanga of Ngāti Whātua o Kaipara and include rights to occupy land and rights in relation to the use of land or other natural or physical resources, rights of burial and rights to affiliate to specified marae (Part 1, Subpart 2, Clause 12).

Settlement

The Bill records the Crown acknowledgements and apology offered by the Crown to Ngāti Whātua o Kaipara and provides that the settlement of the Ngāti Whātua o Kaipara historical claims is final. It removes the jurisdiction of judicial bodies in respect of the historical claims of Ngāti Whātua o Kaipara or the redress provided under the deed of settlement or the Act (but not their interpretation), and deals with related issues including consequential amendments to the Treaty of Waitangi Act 1975, the removal of certain resumptive memorials and the modification of the rule against perpetuities” (Part 1, Subparts 1-4, Clauses 3-19).

Cultural redress

The Bill sets out the cultural redress provided to Ngāti Whātua o Kaipara, including the Crown's acknowledgement of the cultural significance of certain statutory areas for Ngāti Whātua o Kaipara. Provision is made for the vesting of cultural properties in the trustees of the Tari Pupuritaonga Trust. Those cultural properties are to be administered as reserves. Makarau (which ceases to be conservation area under the Conservation Act 1987) is vested in the Ngā Maunga Whakahii o Kaipara Development Trust (the Development Trust) and is not a reserve. The Parakai Recreation Reserve which is to be vested in the Development Trust and the Auckland Council as tenants in common as to an undivided half share each to be operated as a recreation reserve. The Bill provides that the trustees and the Crown must enter into Te Kawenata Taiao o Ngāti Whātua o Kaipara and for the issue of a culture and heritage protocol issued by the Minister for Arts, Culture and Heritage. Provison is made for the making by the Crown of statutory acknowledgements to which relevant consent authorities must have regard. The Bill also provides for the assignment and alteration of official geographic names (Part 2, Subparts 1-5, Clauses 20-81; Schedules 1-3).

Commercial redress

The Bill provides commercial redress and authorises the Crown to transfer commercial properties to give effect to the deed of settlement. In particular, the Bill contains provisions relating to the transfer of transfer properties (namely the commercial redress properties, any purchased non-forest commercial redress properties, any purchased Riverhead Forest property, and the Auckland Prison Housing Block) to the trustees of the Development Trust and provides for the creation of computer freehold registers for the properties and other related matters. The Bill provides for the status of land subject to Crown Forestry licences under the Crown Forest Assets Act 1989, particularly of Woodhill Forest and Riverhead Forest. The provisions set out the respective rights and obligations of the Crown and the trustees of the Development Trust in relation to the licensed land. A right of access to certain protected sites on the licensed land is provided for Māori for whom the sites are of special cultural, spiritual, or historical significance. The Bill also gives a right of first refusal to Ngāti Whātua o Kaipara in respect of any future sale of certain other properties. The land concerned is called right of first refusal land (or RFR land). For “exclusive RFR land” (defined in Clause 97), rights are provided to the trustees of the Development Trust; and for “non-exclusive RFR land” (defined in Clause 97), to the Marutūāhu and Te Kawerau ā Maki governance entities. The owner of RFR land must not dispose of the land to a person other than the governance entities (i.e. the trustees of the development trust, Marutūāhu governance entity and Te Kawerau ā Maki governance entity) without first offering it to the appropriate governance entity on terms that are the same as, or more favourable to the relevant governance entity than the terms of disposal to the other person, unless a specified exception applies. The right of first refusal lasts for 170 years for the Auckland Prison (Paremoremo Prison) and 169 years for all other RFR land, in each case dating from the defined RFR date (provided for in Clause 98) (Part 3, Clauses 82-127; Schedule 4 (“RFR notice requirements)).

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New principles of fiscal responsibility

The Bill introduces “three new principles of responsible fiscal management” which are:

• that governments should formulate fiscal strategy with regard to its interaction with monetary policy;

• that governments should ensure that resources are managed effectively and efficiently;

• that governments should formulate fiscal policy with regard to its likely impact on present and future generations [2]   .

Regulatory impact statement

http://www.treasury.govt.nz/publications/informationreleases/ris

Fiscal responsibility

Section 26G(1) of the Act provides that the Government must pursue its policy objectives in accordance with the “principles of responsible fiscal management” which are stated to be:

• “reducing total debt to prudent levels so as to provide a buffer against factors that may impact adversely on the level of total debt in the future by ensuring that, until those levels have been achieved, total operating expenses in each financial year are less than total operating revenues in the same financial year” (Section 26G(1)(a)); and

• “once prudent levels of total debt have been achieved, maintaining those levels by ensuring that, on average, over a reasonable period of time, total operating expenses do not exceed total operating revenues” (Section 26G(1)(b)); and

• “achieving and maintaining levels of total net worth that provide a buffer against factors that may impact adversely on total net worth in the future” (Section 26G(1)(c)); and

• “managing prudently the fiscal risks facing the Government” (Section 26G(1)(d)); and

• “pursuing policies that are consistent with a reasonable degree of predictability about the level and stability of tax rates for future years” (Section 26G(1)(e)).

The Bill replaces Section 26G(1)(e) with the following

• “formulating revenue strategy with regard to efficiency and fairness, including the predictability and stability of tax rates” (Section 26G(1) substituted Paragraph (e));

and adds the following three new principles;

• “formulating fiscal strategy with regard to its interaction with monetary policy” (Section 26G(1) new paragraph (f));

• “formulating fiscal strategy with regard to its likely impact on present and future generations” (Section 26G(1) new paragraph (g));

• “ensuring that the Crown’s resources are managed effectively and efficiently” (Section 26G(1) new paragraph (h)) (Part 1, Clause 4, amending Section 26G of the Act).

Fiscal strategy report

The Act requires the Minister, in each financial year, to present to the House of Representatives a report on the Government’s fiscal strategy on the day of the introduction of the first Appropriation Bill for the financial year to which the report relates and after the introduction of that Bill. The fiscal strategy report must contain the Government’s long-term objectives and its short-term intentions.

The Bill requires a fiscal strategy report to state the Government's priorities for allocating the Crown's resources and to explain how those priorities have affected and will affect the Government's decisions about allocating the Crown's resources. The report must include:

• an assessment of the extent to which the Government's fiscal performance, in the period since the most recent substantial change in the political party composition of the administration, is consistent with the Government's fiscal strategy for that period; and

• details of the Government's revenue strategy, including the Government's objectives for the tax system and tax policy (Part 1, Clause 5, inserting New Section 26KA into the Act; Clause 6, amending Section 26L of the Act; cf. Sections 26I and 26J of the Act).

Budget policy statement

The Bill requires the annual Budget policy statement to indicate priorities for the allocation of the Crown's resources that have changed from those stated in the most recent fiscal strategy report (as required by New Section 26KA (described above) (Part 1, Clause, 7 amending Section 26M of the Act).

Regular investment statements

The Bill requires the Minister to present to the House of Representatives regular investment statements prepared by the Treasury. The first investment statement must be presented before the end of 2017. Subsequent investment statements must be presented at intervals not exceeding four years. An investment statement must describe the Crown's significant assets and liabilities, state their current and future value, and identify any significant changes since the previous investment statement

(Part 1, Clause 8, inserting New Section 26NA into the Act).

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Outline

The main objectives of the Bill are described as being to:

• “ensure that the ETS more effectively supports the Government's economic growth priorities”;

• “ensure that the ETS is flexible enough to cater for a range of international outcomes in the period 2013 to 2020”;

• “improve the operation and administration of the ETS”; and

• “change the current treatment of the synthetic greenhouse gases sector in the ETS” [2]   .

The main measures in the Bill are described as being to:

• “maintain the 1-for-2 surrender obligation after 2012, without specifying an end date in legislation”;

• “maintain the $25-a-unit fixed price option after 2012, without specifying an end date in legislation”;

• “remove a specified entry date for surrender obligations on biological emissions from agriculture”;

• “introduce offsetting within the ETS as an option for pre-1990 forest landowners”;

• “claw back the second tranche of allocation to pre-1990 offsetting forest landowners from those who ultimately take up offsetting”;

• “introduce an express regulation-making power to allow auctioning within an overall limit on the amount of New Zealand units (NZUs) allocated (excluding the second tranche of allocation to pre-1990 forest landowners) or provided under a negotiated greenhouse gas agreement”;

• “extend the ban on the export of NZUs from non-forestry sectors, whilst the fixed-price option remains in place”;

• “remove the requirement to ‘back’ all NZUs issued with a Kyoto unit”;

• “align the ETS with international greenhouse gas accounting standards by adopting the latest internationally accepted global warming potentials”;

• “remove the ETS obligation on the importation of synthetic greenhouse gases (SGG) in motor vehicles, and replace it with a motor vehicle levy”;

• “remove the ETS obligation on the importation of SGG in goods, and replace it with a goods levy”;

• “move the ETS obligations relating to sulphur hexafluoride from importers and manufacturers to users”;

• “prohibit wilful release of SGG”;

• “create criteria for gaining NZUs for the export and destruction of SGG to prevent stockpiling” [3]   .

The Bill also makes a number of other changes to the ETS which are described as “technical and operational”, including:

• “adding fugitive coal seam methane to the list of emissions sources eligible for allocation for coal users”;

• “adding liquid fossil fuels used in stationary equipment to the list of emissions sources eligible for allocation”;

• “clarifying that the Minister for Climate Change Issues has discretion on whether to make regulations prescribing a new activity eligible for allocation”;

• “suspending the phase-out of industrial allocation until the relevant participants face full surrender obligations, and phasing out industrial allocation at a rate of 1.3% per annum on a straight line basis (rounded to 2 decimal places) once full surrender obligations for the relevant participants begin”;

• “amending the sections of the Act relating to the formal review of the operation of the ETS, to allow for more flexibility in the timing of future reviews”;

• “clarifying that the Environmental Protection Authority (the EPA) can issue guidelines or standards for the collection of forestry data and information”;

• “specifying that the reporting period for the EPA’s annual reporting under section 89 should be 1 July of one year to 30June of the following year, and the publishing date should be as soon as practicable thereafter”;

• “adding the own-use of crude oil and other liquid hydrocarbons to the list of activities facing emissions obligations from 1 January 2014”;

• “adding, from 1 July 2013, the ability to purchase other types of obligation fuel to the optional activities in Schedule 4”;

• “ensuring, when removing the obligation for the Crown to purchase and surrender units on behalf of insolvent participants, that the Crown can still pursue through a court the cost of units not surrendered”;

• “introducing a level of flexibility to some provisions in the Act that cross-reference to the Kyoto Protocol (the Protocol) and other elements of the international framework (given uncertainty regarding the international framework and New Zealand’s future relationship to it)”;

• “removing egg producers from the ETS and clarifying the definition of meat processors;

• “making minor forestry changes, including,

• • clarifying where deforestation liabilities do not apply; and

• • changes to continue efforts to control tree weeds; and

• • ensuring that unrelated holdings of trustees are not counted towards the less-than-50 hectares exemption threshold” [4]   .

Regulatory impact statements

Copies of regulatory impact statements may be found at:

http://www.treasury.govt.nz/publications/informationreleases/ris

Sale of New Zealand units by auction

The Bill provides a power for the Minister for Climate Change Issues to sell New Zealand units by auction or to appoint an agent to do so, if regulations are made for that purpose. The regulation-making power is provided in respect of selling New Zealand units by auction within a prescribed overall limit, including the power to update and extend the duration of those regulations on an annual basis. The Minister must have regard to certain matters before recommending that auction regulations be made. Any proposals to amend such regulations must be notified in the Gazette a year ahead of the date proposed for such regulations to take effect. Regulations must not prevent the number of allocated units from exceeding the overall limit set by regulation, but must ensure that units are not auctioned if that overall limit is exceeded (Part 1, Clause 9, inserting New Section 6A into the Climate Change Response Act 2002; Clause 18, amending Section 30G of the Climate Change Response Act 2002).

Agriculture

The Bill delays the application of the ETS to Agriculture indefinitely [5]   (Part 1, Clause 36, amending Section 85(2) of the Climate Change response Act 2002; Clauses 37 (inserting New Sections 85A and 85B into the Climate Change response Act 2002); Clause 38, amending Section 86 of the Climate Change Response Act 2002; Clause 95, Clause 95, replacing Section 217(1)(d) of the Climate Change Response Act 2002).

Forestry

The Bill introduces off-setting for pre-1990 forest land owners and allocates the full second tranche of compensation where off-setting is not taken up (Part 1, Clause 73, inserting New Sections 178A-178D into the Climate Change Response Act 2002).

Synthetic greenhouse gases

The Bill removes the ETS obligation on the importation of synthetic greenhouse gases in motor vehicles and replaces it with a motor vehicle levy. The Bill sets out the functions of the EPA in relation to informing about and monitoring the levy. The Registrar of Motor Vehicles is given the function of receiving payment of the levy. The role of New Zealand Customs in relation to imports is also set out (Part 1, Clause 100, inserting New Part 7 (“Synthetic greenhouse gas levy”), New Sections 226-267 into the Climate Change Response Act 2002).

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