After weathering the pandemic better than most countries, the New Zealand economy has begun to overheat. Net debt to GDP has increased from 19.5 percent prior to the onset of Covid restrictions to 34.5 percent at the end of 2021. The increase in debt has been due in part to spending measures the government has undertaken for Covid response and recovery. These measures were able to support economic activity during extensive Covid-related domestic lockdowns and travel restrictions, but along with supply chain disruptions, they have begun to contribute to higher inflation. Nationwide labor shortages across a variety of sectors have also had a sizeable impact on the economy. In response to war in Ukraine, the New Zealand government rapidly passed historic sanctions legislation targeting individuals, companies, and assets associated with Russia’s invasion. Sanctions are expected to have a limited direct impact on the investment climate in New Zealand.
While a swift border closure and the imposition of lockdowns originally helped stamp out community transmission of Covid, the appearance of the Omicron variant in January 2022 resulted in an outbreak that put pressure on the health system. At time of writing, border restrictions were being phased out in favor of a management approach to the pandemic. The government announced its plans to open the New Zealand border to travelers from visa-waiver countries on May 1. By October, it is expected that the border will fully reopen. Since 2020, the tourism sector has suffered the most, while primary exports and the housing market have helped to sustain the economy. Unemployment is currently 3.2 percent, a record low.
New Zealand has an international reputation for an open and transparent economy where businesses and investors can make commercial transactions with ease. Major political parties are committed to an open trading regime and sound rule of law practices. This has been regularly reflected in high global rankings in the World Bank’s Ease of Doing Business report and Transparency International’s Perceptions of Corruption index. New Zealand is party to a multitude of free trade agreements (FTA). In February 2022, the country signed its latest, an FTA with the United Kingdom.
Successive governments accept that foreign investment is an important source of financing for New Zealand and a means to gain access to foreign technology, expertise, and global markets. Some restrictions do apply in a few areas of critical interest including certain types of land, significant business assets, and fishing quotas. These restrictions are facilitated by a screening process conducted by a government agency.
The current Labour-led government welcomes productive, sustainable, and inclusive foreign investment, but since being elected in October 2017 and reelected in October 2020, there has been a modest shift in economic priorities to social initiatives while continuing to acknowledge New Zealand’s dependence on trade and foreign investment. Cabinet has agreed a whole-of-government framework that will drive climate change policy. This national initiative is currently underway to reduce the country’s emissions and is developing a pathway for farmers to reduce agricultural emissions. The rapidly developing digital and e-commerce landscape is supported by government initiatives that expand the knowledge base, while making a priority of digital inclusion. Along with its focus on post-pandemic recovery, the New Zealand government has invested in a digital, innovative future that aims to secure multilateral agreements with e-commerce rules that address the complexities of the evolving digital economy.
The 2022 Investment Climate Statement for New Zealand uses the exchange rate of NZD 1 = USD 0.70
|TI Corruption Perceptions Index||2021||1 of 180||https://www.transparency.org/en/cpi/2021|
|Global Innovation Index||2021||26 of 131||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2020||$12,900||https://ustr.gov/countries-regions/southeast-asia-pacific/new-zealand|
|World Bank GNI per capita||2020||$41,550||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
New Zealand has an open and transparent economy. Foreign investment is generally encouraged without discrimination. Some restrictions do apply in a few areas of critical interest including certain types of land, significant business assets, and fishing quotas. These restrictions are facilitated by a screening process conducted by the Overseas Investment Office (OIO), described in the next section.
New Zealand maintains an expanding network of bilateral investment treaties and free trade agreements that include investment components. New Zealand also has a well-developed legal framework and regulatory system, and the judicial system is generally effective in enforcing property and contractual rights. Investment disputes are rare, and there have been no major disputes in recent years involving U.S. companies.
The Labour Party-led government elected in 2017 and re-elected in 2020 has continued its program of tighter screening of some forms of foreign investment and has moved to restrict the availability of permits for oil and gas exploration by applying section 20B of the Overseas Investment Act 2005, which will be discussed in greater detail below for its discretionary aspect. The opposition National Party, gaining ground in early 2022 polling, wants to lift restrictions on exploration, as well as ease requirements for “responsible mining.” The current Labour government has also focused on different aspects of trade agreement negotiation compared with the previous government, such as an aversion to investor-state dispute settlement provisions.
New Zealand otherwise screens overseas investments to ensure quality investments are made that benefit New Zealand. The screening process is undertaken by the Overseas Investment Office (OIO), the government agency responsible for regulating foreign direct investment into the country. The Office is responsible for high value investments in “significant business assets,” investments in sensitive land, and investments in fishing quota. The Overseas Investment Act (OIA) 2005 was amended in 2021 with a package of reforms aimed at strengthening aspects of the OIA for high-risk investments, while also seeking to streamline the approval process for low-risk applications. Depending on the type of investment, overseas investors must pass one or more of a series of tests. They are as follows:
Benefit to New Zealand Test
National Interest Assessment
The Investor Test: The purpose of this test is to determine if an overseas investor is qualified to own or control assets considered sensitive to New Zealand. The Investor Test assesses the potential for the investor to be a risk to New Zealand by assessing the investor’s character and capability. Factors considered include past convictions, immigration or tax disputes, and any past probation on serving as a company director. More information can be found here:
Investors who have met the conditions of the screening process for the Investor Test, and whose circumstances have not changed, do not need to be reassessed for any subsequent approval. More information can be found here: https://www.linz.govt.nz/overseas-investment/discover/overseas-investment-tests/investor-test
The Benefit to New Zealand Test: The purpose of this test is to screen for the investment’s potential to benefit New Zealand. This test is applied to investments involving sensitive land or a fishing quota. Benefit is assessed against seven factors, including the potential for positive impact on the economy or the environment, enhanced public access, and protection of sacred indigenous land. The OIO considers the potential for economic benefit to be the most important of these factors. The Benefit to New Zealand Test also screens for participation in the investment by New Zealanders. Applications by overseas investors that include oversight or participation by New Zealanders are given greater weight. More information can be found here: https://www.linz.govt.nz/overseas-investment/discover/overseas-investment-tests/benefit-new-zealand-test/oversight-or-participation-new-zealanders
National Interest Test: In 2020, due to the stress placed on businesses by Covid, the Labour Government introduced a further National Interest Assessment. This threshold serves to potentially deny overseas investment that is at cross purposes with New Zealand’s strategic interests. The Minister of Finance, along with the OIO, reviews these applications. The National Interest Test is mandatory for applications that involve either land or assets that will be used for Strategically Important Businesses (SIBs) or land or assets that involve investment by a foreign government. SIBs include a wide cross-section of investment interests that impact national security, such as critical infrastructure or companies that are direct suppliers to the security agencies. More information can be found here: https://www.linz.govt.nz/overseas-investment/discover/overseas-investment-tests/national-interest-assessment
During the peak of the Covid pandemic in 2020, the Government put in place the Emergency Notification Regime (ENR), a temporary protocol requiring investments of any type to go through a screening process. The ENR aimed to protect New Zealand assets from fire sales during a period of heightened market uncertainty. It was lifted in 2021 when it became clear to the Government that the impact to the economy of Covid had been mitigated, though the ENR still applies to transactions entered into prior to June 7, 2021. The ENR was replaced with the National Security and Public Order notification protocol, which applies to overseas investments in SIBs or Significant Business Assets (SBAs). More information can be found here:
SIBs versus SBAs: The OIO screens for investments in both Strategically Important Businesses (see above), and for Significant Business Assets (SBAs). The vast majority (70-80 percent) of investor applications trigger the SBA screening. An SBA is defined as an investment in New Zealand securities, assets, or businesses worth more NZD 100 million (USD 70 million), or an investment that acquires 25 percent or more ownership or controlling interest in a New Zealand asset. For some investors, the dollar threshold is higher, such as those investors who are citizens of countries with whom New Zealand has an FTA. For Australian investors, the threshold is NZD 552 million (USD 386 million). Consent is needed for overseas investors who want to invest in a significant business asset or in New Zealand business assets worth less than NZ$
100 million if those assets involve sensitive land or fishing quota.
Land is considered “sensitive” if it is residential, larger than five hectares (12 acres) of farmland, or if it is any land that is used for commercial or industrial purposes. Sensitive land is also located on some domestic islands, where there is no size threshold. In marine and coastal areas, there is no minimum size to meet the sensitivity threshold. For a detailed table explaining the different types of sensitivities and what land may be subject to greater restrictions, please visit:
Crown entity New Zealand Trade and Enterprise (NZTE) is New Zealand’s primary investment promotion agency. In addition to its domestic presence, NZTE has 41 international offices, including four in the United States. The NZTE helps investors develop investment plans, access opportunities, and facilitate connections with private sector advisors based in New Zealand. They also offer ongoing support once an investment has been made. https://www.nzte.govt.nz/investment-and-funding/how-we-help .
Under certain conditions, foreign investors can bid alongside New Zealand businesses for government funding for research and development (R&D) grants. For more see: https://www.mbie.govt.nz/science-and-technology/science-and-innovation/international-opportunities/new-zealand-r-d/ . Most of the programs that are operated by NZTE, the Ministry of Business, Innovation, and Employment (MBIE), and Callaghan Innovation, provide financial assistance, and support through skills and knowledge, or supporting innovative business ventures in the early stages of operation. For more see: https://www.business.govt.nz/how-to-grow/getting-government-grants/what-can-i-get-help-with/ .
The New Zealand-United States Business Council, established in 2001, is a non-partisan organization funded by business and the government. It fosters a strong and mutually beneficial relationship between New Zealand and the United States through both government-to-government contacts, and business-to-business links. The American Chamber of Commerce in Auckland provides a platform for New Zealand and U.S. businesses to network among themselves and with government agencies. To visit Council’s and the Chamber’s websites, please visit:
The New Zealand government does not discriminate against U.S. or other foreign investors in their rights to establish and own business enterprises. It has placed separate limitations on foreign ownership of strategic businesses, such as airline Air New Zealand and telecommunications infrastructure provider Chorus Limited.
While waivers are granted, in some cases for investment of “significant economic value,” they are limited and subject to a technical, bespoke process that requires direct contact with the OIO: https://www.linz.govt.nz/overseas-investment/contact
The 2022 OECD Economic Survey of New Zealand offered a number of key recommendations, particularly around growth sustainability and the Government’s response to Covid-19. Link to the OECD Survey here: https://www.oecd-ilibrary.org/economics/oecd-economic-surveys-new-zealand-2022_a4fd214c-en
The most recent WTO Trade Policy review was in 2015. Linked here: https://bit.ly/35uMLDq
In 2022, the NZUS Business Council, along with economics consultancy Sense Partners, produced a report on New Zealand’s bilateral trade relationship with the United States. The report highlighted a trade relationship in the services sector (e.g., computer services, gaming) that is becoming increasingly important: the United States is now New Zealand’s largest services export market. The report’s key takeaway is that the bilateral relationship is strong and presents ample opportunity for future growth. To read the report, please visit: https://www.nzuscouncil.org/wp-content/uploads/2022/03/REPORT-NZUS-trade-relationship-Stability-and-diversity-in-a-time-of-change.pdf
The New Zealand government has shown a strong commitment to continue efforts to facilitate business. There are no restrictions on the movement of funds into or out of the country. Overseas investors are required to adhere to legislation that applies equally domestic businesses. The global trend to tighten anti-money laundering laws has increased the reporting requirements of the banking sector. To prevent the increasing use of New Zealand-based shell companies for illegal activities, legislation was introduced in 2014 that requires a New Zealander to serve as company director. For more information:
The Companies Office maintains a business registry of publicly available information on company directors. The website is accessed by creditors and those interested in doing business with the company or its directors. Registration is completed online. Those registering a new company typically register with the Companies Office, along with the Inland Revenue Department (IRD):
The New Zealand Business Number (NZBN) Act 2016 allocates unique identifiers to eligible businesses to allow them to conduct business efficiently. Tax registration is required if a company is an employer or if the company pays the Goods and Services Tax (GST), which is currently 15 percent. The threshold for GST registration is NZD 60,000 (USD 42,000) of turnover over a one-year period. For more information about New Zealand and taxation, including the 2016 extension of GST registration to overseas suppliers of “remote services” to New Zealanders, please visit: https://www.ird.govt.nz/gst/registering-for-gst
The New Zealand government does not place restrictions on domestic investors to invest abroad.
NZTE is the government’s international business development agency. It promotes outward investment and provides resources and services for New Zealand businesses to prepare for export and advice on how to grow internationally. The Ministry of Foreign Affairs and Trade (MFAT) and Customs New Zealand each operates business outreach programs that advise businesses on how to maximize the benefit from FTAs to improve the competitiveness of their goods offshore. They also provide information on how to meet requirements such as rules of origin.
3. Legal Regime
New Zealand laws governing competition are transparent, non-discriminatory, and consistent with international norms. The country ranks high on the World Bank’s Global Indicators of Regulatory Governance, scoring 4.25 out of a possible 5.0, but is marked down for lack of transparency at some government departments responsible for communicating regulatory plans that are in the pipeline. Draft bills and regulations, including those related to FTAs and investment law, are generally made available for public comment through a consultation process. The Treaty of Waitangi – New Zealand’s founding document that commits to protect the indigenous Māori culture and to enable Māori to live in New Zealand as Māori – is foundational to public policy in the country. Governing the Crown’s relationship with Māori, the Treaty’s impact on regulation and investment has resulted in a focus on equitable outcomes for Māori in relevant sectors. For more information on Treaty principles, please visit:
More information about regulations, including The Overseas Investment Regulatory System and a regulatory timeline can be found here: https://www.treasury.govt.nz/information-and-services/regulation
Most standards are developed through Standards New Zealand, a business unit within MBIE. And most standards in New Zealand are set in coordination with Australia. Regulations are developed by “Order in Council,” or law made by someone other than Parliament, that give effect to the government’s decisions. Orders in Council are the main method the Government uses to put into action the decisions that need legal force, such as new or amended regulations.
MBIE is responsible for the stewardship of 16 regulatory systems covering about 140 statutes. In June 2019, MBIE released a discussion paper on the proposed IP Laws Amendment Bill, an omnibus bill that is intended to make technical amendments to the Patents Act 2013, the Trademarks Act 2002, and the Designs Act 1953 to ensure that they remain workable. In November 2019, the Regulatory Systems (Economic Development) Amendment Act 2019 passed and amended about 14 Acts including laws regarding business insolvency, takeovers, trademarks, and limited partnerships. More information about these proposed amendments can be found here: https://www.mbie.govt.nz/have-your-say/proposed-intellectual-property-laws-amendment-bill/
Accounting, legal, and regulatory procedures are transparent and widely available online. New Zealand accounting standards are issued by the New Zealand Accounting Standards Board. International Financial Reporting Standards (IFRS) are adopted via New Zealand equivalents, which fully adhere to IFRS. These Standards are developed by the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB). Foreign companies whose securities are publicly traded in New Zealand are required to apply NZ IFRS, although the Registrar of Companies and the Financial Markets Authority can give exceptions in certain circumstances. For more information, please visit: https://www.ifrs.org/use-around-the-world/use-of-ifrs-standards-by-jurisdiction/view-jurisdiction/new-zealand/
New Zealand does not have a government-mandated Environmental, Social, and Governance (ESG) sustainability reporting framework or standard. In October 2021, the government approved legislation for a mandatory climate disclosure law that will require financial entities with assets greater than NZD 1 billion (USD 700 million) to report the expected impact of climate change on businesses, such as how they will manage climate risks.
Draft bills and regulations including those relating to FTAs and investment law, are generally made available for public comment, through a public consultation process. In a few instances there has been criticism of New Zealand governments choosing to follow a “truncated” or shortened public consultation process or adding a substantive legislative change after public consultation through the process of adding a Supplementary Order Paper to the Bill.
While regulations are not in a centralized location in a form similar to the United States Federal Register, the New Zealand government requires the major regulatory departments to publish an annual regulatory stewardship strategy.
The Regulatory Quality Team within the New Zealand Treasury is responsible for the strategic coordination of the Government’s regulatory management system. Treasury exercises stewardship over the regulatory management system to maintain and enhance the quality of government-initiated regulation. The Treasury’s responsibilities include the oversight of the performance of the regulatory management system as a whole and making recommendations on changes to government and Parliamentary systems and processes. These functions complement the Treasury’s role as the government’s primary economic and fiscal advisor. New Zealand’s major regulatory departments are the Department of Internal Affairs, IRD, MBIE, Ministry for the Environment, Ministry of Justice, the Ministry for Primary Industries, the Ministry of Transport, and the Financial Markets Authority.
In recent years, there has been a revision to the Regulatory Impact Assessment (RIA) requirements in order to help New Zealand’s regulatory framework keep up with global standards. To improve transparency in the regulatory process, RIAs are published on the Treasury’s website at the time the relevant bill is introduced to Parliament, or the regulation is published in the newspaper, or at the time of Ministerial release. An RIA provides a high-level summary of the problem being addressed, the options and their associated costs and benefits, the consultation undertaken, and the proposed arrangements for implementation and review.
In 2018, the government introduced three omnibus bills that contain amendments to legislation including economic development, employment relations, and housing: https://www.mbie.govt.nz/cross-government-functions/regulatory-stewardship/regulatory-systems-amendment-bills/ . The government’s objective with this package of legislation is to ensure that they are effective, efficient, and accord with best regulatory practice by providing a process for making continuous improvements to regulatory systems that do not warrant standalone bills. In November 2019, the Regulatory Systems (Economic Development) Amendment Act 2019 passed and amended about 14 Acts including laws regarding business insolvency, takeovers, trademarks, and limited partnerships. In June 2019, MBIE released a discussion paper on the proposed IP Laws Amendment Bill, an omnibus bill that is intended to make technical amendments to the Patents Act 2013, the Trademarks Act 2002, and the Designs Act 1953 to ensure that they remain workable.
The Resource Management Act 1991 (RMA) has drawn criticism from foreign and domestic investors as a barrier to investment in New Zealand. The RMA regulates access to natural and physical resources such as land and water. Critics contend that the resource management process mandated by the law is unpredictable, protracted, and subject to undue influence from competitors and lobby groups. In some cases, companies have been found to exploit the RMA’s objections submission process to stifle competition. Investors have raised concerns that the law is unequally applied between jurisdictions because of the lack of implementing guidelines. The Resource Management Amendment Act 2013 and the Resource Management (Simplifying and Streamlining) Amendment Act 2009 were passed to help address these concerns. In 2020, the Resource Management Act was amended under the RMA Act 2020. The objectives of the amendment were to reduce the complexity of the RMA, increase certainty, restore public participation opportunities, and improve RMA processes. For more information: https://environment.govt.nz/acts-and-regulations/acts/resource-management-amendment-act-2020/#overview-of-the-changes
The Covid pandemic has encouraged New Zealand’s efforts to boost the digitization of government services. In 2022, the Digital Identity Program was introduced, which aims to incorporate the country’s long-term strategy for a digital public service. The Program offers a regulatory framework that sets out rules for the delivery of digital identity services. It modernizes the digital identity system by innovating how people access and share their information. And under the concept of mutual recognition, it aligns with other likeminded countries such as Australia and Canada in its provision of digital identity services. The Program also touches on free trade agreements by considering a digital trust framework that promotes privacy and security, and allows for easier electronic transacting, thereby reducing barriers in digital trade. For more information, please visit: https://www.digital.govt.nz/digital-government/programmes-and-projects/digital-identity-programme/about-the-digital-identity-programme/
The Government of New Zealand is generally transparent about its public finances and debt obligations. The annual budget for the government and its departments publish assumptions, and implications of explicit and contingent liabilities on estimated government revenue and spending.
In recent years, the Government of New Zealand has introduced laws to enhance regulatory coordination with Australia as part of their Single Economic Market agenda. In February 2017, the Patents (Trans-Tasman Patent Attorneys and Other Matters) Amendment Act took effect creating a single body to regulate patent attorneys in both countries. Other areas of regulatory coordination include insolvency law, financial reporting, food safety, competition policy, consumer policy and the 2013 Trans-Tasman Court Proceedings and Regulatory Enforcement Treaty, which allows the enforcement of civil judgements between both countries.
On December 1, 2020, the Privacy Act 2020 came into force, replacing the Privacy Act 1993. The Privacy Act 2020 provides the rules in New Zealand for protecting personal information and puts responsibilities on agencies and organizations about how they must go about fulfilling this statutory requirement. The Act has 13 Information Privacy Principles and requires agencies to report to the Privacy Commissioner if they have a “notifiable privacy breach.”
New Zealand is a Party to the WTO Agreement on Technical Barriers to Trade (TBT). Standards New Zealand is responsible for operating the TBT Enquiry Point on behalf of MFAT. From 2016, Standards New Zealand became a business unit within MBIE administered under the Standards and Accreditation Act 2015. Standards New Zealand establishes techniques and processes built from requirements under the Act and from the International Organization for Standardization.
New Zealand ratified the WTO Trade Facilitation Agreement (TFA) in 2015 and it entered into force in February 2017. New Zealand was already largely in compliance with the TFA which is expected to benefit New Zealand agricultural exporters and importers of perishable items to enhanced procedures for border clearances.
New Zealand’s legal system is derived from the English system and comes from a mix of common law and statute law. The judicial system is independent of the executive branch and is generally transparent and effective in enforcing property and contractual rights. The highest appeals court is a domestic Supreme Court, which replaced the Privy Council in London and began hearing cases July 1, 2004. New Zealand courts can recognize and enforce a judgment of a foreign court if the foreign court is considered to have exercised proper jurisdiction over the defendant according to private international law rules. New Zealand has well-defined and consistently applied commercial and bankruptcy laws. Arbitration is a widely used dispute resolution mechanism and is governed by the Arbitration Act of 1996, Arbitration (Foreign Agreements and Awards) Act of 1982, and the Arbitration (International Investment Disputes) Act 1979.
Legislation to modernize and consolidate laws underpinning contracts and commercial transactions came into effect in September 2017. The Contract and Commercial Law Act 2017 consolidates and repeals 12 acts that date between 1908 and 2002. The Private International Law (Choice of Law in Tort) Act, passed in December 2017, clarifies which jurisdiction’s law is applicable in actions of tort and abolishes certain common law rules, and establishes the general rule that the applicable law will be the law of the country in which the events constituting the tort in question occur.
Overseas investments in New Zealand assets are screened only if they are defined as sensitive by the Overseas Investment Office (OIO). The OIO, a dedicated unit located within Land Information New Zealand (LINZ), administers the Overseas Investment Act, which sets out the criteria for assessing applications for foreign investment. The government ministers for finance, land information, and primary industries are responsible for assessing OIO recommendations and can choose to override OIO recommendations on approved applications. Ministers’ decisions on OIO applications can be appealed by the applicant in the New Zealand High Court. Ministers have the power to confer a discretionary exemption from the requirement for a prospective investor to seek OIO consent under certain circumstances. For more see: http://www.linz.govt.nz/regulatory/overseas-investment .
The OIO monitors foreign investments after approval. All consents are granted with reporting conditions, which are generally standard in nature. Investors must report regularly on their compliance with the terms of the consent. Offenses include: defeating, evading, or circumventing the OIO Act; failure to comply with notices, requirements, or conditions; and making false or misleading statements or omissions. If an offense has been committed under the Act, the High Court has the power to impose penalties, including monetary fines, ordering compliance, and ordering the disposal of the investor’s New Zealand holdings.
In 2017 the Government announced a reform of the Overseas Investment Act shortly after being elected and has already implemented Phase One reforms with strengthened requirements for screening foreign investment in residential houses, building residential housing developments, and farmland acreage. Screening for investments in forestry were eased slightly to help meet the Government’s One Billion Tree policy. Phase Two began in 2019 when the Government consulted on and released details for the introduction of a National Interest test to the screening process to protect New Zealand assets deemed sensitive and “high-risk.” In 2020, in response to the economic impact of COVID-19, the Government agreed to further changes to the OIA. Measures were introduced to reduce the regulatory burden of the screening process for inward foreign investment and implementations from Phase Two reforms were delayed. In February 2022, the private sector called on the OIO to remove its “Forestry Pathway” exemption due to over-investment in the sector by foreign investors who are reportedly sidelining farmland for forestry, a situation that is also impacting New Zealand’s access to domestic carbon credits.
In February 2020 New Zealand reported its first conviction under the Overseas Investment Act. The offender was charged for obstructing an OIO investigation that was initiated because he had not obtained OIO consent for his property purchase and for later submitting a fraudulent application. A second criminal conviction was reported in June 2020 after the offender was found to have submitted a fraudulent loan agreement.
The Land Information New Zealand (LINZ) website reports on enforcement actions taken against foreign investors, including the number of compliance letters issued, the number of warnings and their circumstances, referrals to professional conduct body in relation to an OIO breach, and disposal of investments. For more see: https://www.linz.govt.nz/overseas-investment/enforcement/enforcement-action-taken .
The Commerce Act 1986 prohibits contracts, arrangements, or understandings that have the purpose, or effect, of substantially lessening competition in a market, unless authorized by the Commerce Commission, an independent Crown entity. Before granting such authorization, the Commerce Commission must be satisfied that the public benefit would outweigh the reduction of competition. The Commerce Commission has legislative power to deny an application for a merger or takeover if it would result in the new company gaining a dominant position in the New Zealand market. The Commerce Commission also enforces certain pieces of legislation that, through regulation, aim to provide the benefits of competition in markets with certain natural monopolies, such as the dairy, electricity, gas, airports, and telecommunications industries.
The Dairy Industry Restructuring Act of 2001 (DIR) established dairy co-operative Fonterra Co-operative Group Limited (Fonterra). The DIR is designed to manage Fonterra’s dominant position in the domestic dairy market, until sufficient competition has emerged. A review by the Commerce Commission in 2016 found competition insufficient, but the findings from a subsequent review in 2018 resulted in the introduction of the DIR Amendment Bill (No 3) which passed its first reading in August 2019 and was finalized and passed on August 6, 2020.
This amendment aims to ease the requirement that Fonterra accept all milk from new suppliers, allowing the cooperative the option to refuse milk if it does not meet environmental standards or if it comes from newly converted dairy farms. The bill will also limit Fonterra’s discretion in calculating the base milk price. It also requires Fonterra’s dairy companies to enable supplying shareholders to transfer their shares to share milkers by agreement.
The Commerce Commission is also charged with monitoring competition in the telecommunications sector and motor fuel market. It has a regulatory role to promote competition within the electricity industry, which has natural monopolies in the transmission and distribution businesses. In March 2020, the Commission completed a project that set a default to determine price caps that will apply to the 17 electricity distributors in New Zealand from April 2020 to March 2025.
The Commerce (Criminalization of Cartels) Amendment Act was passed in April 2019 to align New Zealand law with other jurisdictions – particularly Australia – by criminalizing cartel behavior. The Commerce Commission has international cooperation arrangements with Australia since 2013 and Canada since 2016, to allow the sharing of compulsorily acquired information, and provide investigative assistance. The arrangements help effective enforcement of both competition and consumer law. In May 2020, the Commerce Commission issued guidance easing restrictions on businesses to collaborate in order to ensure the provision of essential goods and services to New Zealand consumers during the COVID-19 pandemic.
In January 2019, the Government announced proposed amendments to section 36 of the Commerce Act, which relates to the misuse of market power. The government is seeking consultation on repealing sections of the Commerce Act that shield some intellectual property arrangements from competition law, to prevent dominant firms misusing market power by enforcing their patent rights in a way they would not do if there were a more competitive market. It also seeks to strengthen laws and enforcement powers against the misuse of market power by aligning it with Australia and other developed economies, particularly because New Zealand competition law currently does not prohibit dominant firms from engaging in conduct with an anti-competitive effect. Section 36 of the Act only prohibits conduct with certain anti-competitive purposes.
Expropriation is generally not an issue in New Zealand, and there are no outstanding cases.
The government’s KiwiBuild program aims to build 100,000 affordable homes by 2028, with half being in Auckland. The NZD 3.8 billion (USD 2.7 billion) Housing Acceleration Fund also targets the national housing shortage with an infrastructure fund of public and private developments. Recent and legacy legislation has made it easier for the government and developers to acquire and develop land, particularly in high-density urban areas.
Under the Public Works Act 1981, the New Zealand government has the ability to force landowners to sell in order to facilitate public works projects. There is little public dissent over the issue; New Zealanders are generally satisfied with the Act’s provisions for fair market value compensation, although there have been high-profile disputes over sacred Māori land that have been litigated in court. In August 2020, the Urban Development Act (UDA) was passed into law. The Act established powers for Kainga Ora, a newly created Crown Agency that provides rental housing for families in need and facilitates urban development through residential building projects. Under the UDA, compulsory acquisition powers were created for Kainga Ora, who can theoretically make a forced acquisition of residential land after meeting critical thresholds, such as the establishment of a Special Development Project process that has government oversight. In December 2021, the Resource Management Act was amended, weakening the consent process required in order to build residential developments in medium- to high-density urban areas. While the aim of the Act was to urgently address the housing shortage, for which there is bipartisan agreement, there was some concern that the consultation process was overly swift. Overall, the thrust of all three pieces of legislation is to support needed development. The most recent legislation makes this process easier for residential development. To date, there have been no cases involving compulsory acquisition of residential property, nor has the issue been of great concern.
The lack of precedent for due process in the treatment of residents affected by liquefaction of residential land caused by the Canterbury earthquake in 2011 resulted in prolonged court cases against the Government based largely on the amount of compensation offered to insured home and/or landowners and the lack of any compensation for uninsured owners. One offer made by the government to uninsured Christchurch landowners for 50 percent of the rated value of their property was deemed unlawful in the Court of Appeal in 2013. A later offer was made by the government to uninsured residents, but only for the value of their land and not their house.
In 2018, the government opted to settle with a group of uninsured home and landowners, but some objected to the compensation because it was based on 2007/08 rating valuations. There were also reports some insurance companies paid out less to policy holders than the full value of some houses if they found based on the structural characteristics of the house that it was repairable, even though the repairs would be legally prohibited if in the RRZ. LINZ currently manages Crown-owned land in the Christchurch Residential Red Zone (RRZ) and can temporarily agree short-term leases of this land under the Greater Christchurch Regeneration Act 2016. For more see: https://www.linz.govt.nz/crown-property/types-crown-property/christchurch-residential-red-zone .
Bankruptcy is addressed in the Insolvency Act 2006, the Receiverships Act 1993, and the Companies Act 1993. New Zealand bankrupts are subject to conditions on borrowing and international travel, and violations are considered offences and punishable by law. The registration system operated by the Companies Office within MBIE, is designed to enable New Zealand creditors to sue an overseas company in New Zealand, rather than forcing them to sue in the country’s home jurisdiction. An overseas company’s assets in New Zealand can be liquidated for the benefit of creditors. All registered ‘large’ overseas companies are required to file financial statements under the Companies Act of 1993. See: https://www.companiesoffice.govt.nz/companies/learn-about/overseas-companies/managing-an-overseas-company-in-new-zealand
The government has recognized the need for more insolvency law reform beyond the 2006 Act which repealed the Insolvency Act 1967. The Regulatory Systems (Economic Development) Amendment Act which passed in November 2019 included amendments to the Insolvency Act that strengthened some regulations and assigned more powers to the Official Assignee. After the previous government established an Insolvency Working Group in 2015, MBIE published a proposed set of reforms in November 2019, based on the group’s recommendations from 2017. The current government plans to introduce an insolvency law reform bill in early 2020. The omnibus COVID-19 Response (Further Management Measures) Legislation Bill passed on May 15 included provisions to provide temporary relief for businesses facing insolvency, and exemptions for compliance, due to the COVID-19 pandemic.
4. Industrial Policies
New Zealand has no specific economic incentive regime because of its free trade policy. The New Zealand government, through its bodies such as Tourism New Zealand and NZTE, assists certain sectors such as tourism and the export of locally manufactured goods. The government generally does not have a practice of jointly financing—or issuing guarantees—for foreign direct investment projects. It does provide some opportunities and initiatives for foreign investors to apply for joint financing if the projects involve R&D, science, or innovation that will benefit the economy.
Callaghan Innovation is a stand-alone Crown Entity established in February 2013. It connects businesses with research organizations offering services, and the opportunity to apply for government funding and grants that support business innovation and capability building. Callaghan Innovation requires businesses applying for any of their research and development grants to have at least one director who is resident in New Zealand and to have been incorporated in New Zealand, have a center of management in New Zealand, or have a head office in New Zealand. For more information see: http://www.business.govt.nz/support-and-advice/grants-incentives .
Through Business.Govt.NZ, an agency in association with MBIE, NZTE, and Callaghan Innovation, targeted support is offered for underrepresented investors such as Māori. For more information about grants and funding or mentoring, see: https://www.business.govt.nz/how-to-grow/getting-government-grants/grants-and-help-for-your-new-business/
New Zealand does not have any foreign trade zones or duty-free ports. New Zealand does not have any Special Economic Zones, although the government asked MBIE to investigate the possibility in 2017.
The government of New Zealand does not maintain any measures that violate the Trade Related Investment Measures text in the WTO. There are no government mandated requirements for company performance or local employment, and foreign investors that do not require OIO approval are treated equally with domestic investors. Overseas investors that require OIO approval must comply with legal obligations governing the OIO and the conditions of its approval.
Investors are generally required to report annually to the OIO for up to five years from consent, but if benefits are expected to occur after that five-year period, monitoring will reflect the time span within which benefits will occur. Failure to meet obligations under the investors’ consent can result in fines, court orders, or forced disposal of their investment.
Businesses wanting to establish in New Zealand and seeking to relocate their employees to New Zealand will need to apply for and satisfy the conditions of the Employees of Relocating Business Resident Visa: https://www.immigration.govt.nz/new-zealand-visas/apply-for-a-visa/about-visa/relocating-with-an-employer-resident-visa .
New Zealand supports the ability to transfer data across borders, and to not force businesses to store their data within any particular jurisdiction. While data localization and cloud computing is not specifically legislated for, all businesses must comply with the Privacy Act 1993 to protect customers’ “personal information.” However, under certain circumstances, approval is required from the Commissioner of Inland Revenue to store electronic business and tax records outside of New Zealand, and under Section 23 of the Tax Administration Act 1994. Alternatively, taxpayers can use an IRD-authorized third party to store their information without having to seek individual approval. It remains the taxpayer’s responsibility to meet their obligations to retain business records for the retention period (usually seven years) required under the Act.
Indigenous data sovereignty is highly topical in New Zealand. The principles of Māori data sovereignty refer to the inherent rights that the indigenous peoples of New Zealand have in relation to the collection, storage, and usage of Māori data. This is particularly relevant for those public and private sector entities sharing data via cloud applications across borders. In November 2021, the Waitangi Tribunal in Wai 2522 determined that CPTPP breaches the Crown’s obligations to Māori by failing to protect Māori rights and interests in data sovereignty and in the digital domain. The Waitangi Tribunal is a permanent commission of inquiry established under the Treaty of Waitangi Act of 1975 that makes recommendations on claims brought by Māori to the courts around issues relating to Māori rights that are in breach of the original Treaty of Waitangi. The Tribunal opted to refrain from making formal recommendations and is planning to put processes in place after mediation between claimants and the Crown. Going forward, free trade agreements will be subject to greater scrutiny as they pertain to the rights of the indigenous.
Under the CPTPP trade agreement, the New Zealand government has retained the ability to maintain and amend regulations related to data flows with CPTPP countries, but in such a way that does not create barriers to trade. These rules come with a “public policy safeguard” that gives CPTPP governments the discretion to control the movement and storage of data for legitimate public policy objectives to ensure governments can respond to the changing technology in areas such as privacy, data protection, and cybersecurity. As part of CPTPP, New Zealand has committed not to impose ‘localization requirements’ that would force businesses to build data storage centers or use local computing facilities in CPTPP markets in order to provide certainty to businesses considering their investment choices. Another provision requires CPTPP countries not to impede companies delivering cloud computing and data storage services.
The Digital Economy Partnership Agreement (DEPA), which came into effect on January 7, 2021 for Singapore, New Zealand and Chile, includes a series of modules covering measures that affect the digital economy. Module 4 on Data Issues includes binding provisions on personal data protection and cross-border data flows that build on the CPTPP. In addition to the CPTPP obligations, DEPA encourages the adoption of data protection trust-marks for businesses to verify conformance with privacy standards. The agreement is an open plurilateral one that allows other countries to join the agreement as a whole, select specific modules to join, or replicate the modules in other trade agreements.
In March 2018, the government introduced the Privacy Bill that replaced the Privacy Act 1993. The bill aims to modernize privacy regulations and came into effect on June 30, 2020. It incorporates provisions in the European General Data Protection Regulation (GDPR). The provisions of the bill extend the law’s reach to apply to agencies located outside of New Zealand if that agency is doing business in New Zealand. The bill also introduces a requirement to report serious privacy breaches.
New Zealand does not have any requirements for foreign information technology (IT) providers to turn over source code or provide access to encryption, although there may be obligations on individuals to assist authorities under Section 130 of the Search and Surveillance Act 2012. This Act will be reviewed in 2022 as part of the Government’s response to Royal Commission of Inquiry into the 2019 terror attack on the Christchurch mosques.
There is not a particular government agency that enforces all privacy law, however the Office of the Privacy Commissioner is empowered through the Privacy Act 1993 and has a wide ability to consider developments or actions that affect personal privacy. Separately, New Zealand courts have developed a privacy tort allowing individuals to sue another for breach of privacy.
The government encourages businesses to switch from fossil fuels to cleaner power to fuel their industry. In October 2021, the government announced 23 new projects that will receive government co-investment from Round Two of the Government Investment in Decarbonizing Industry (GIDI) Fund. The recipients will receive NZD 28.7 million (USD 20 million) and will match this with NZD 54.5 million (USD 38.2 million) of their own funding. The approved projects cover a range of sectors including meat, dairy, and other food production, as well as timber, energy supply, and chemical manufacturing. All applicants had to demonstrate significant economic and employment impact from their projects, have carbon reduction plans, and be ready to complete projects by October 2023. The first two rounds of the GIDI Fund supported projects that will deliver lifetime emissions cuts of 6.6 million tons. This equates to 14-18 percent of the gross long-lived emission reductions required from the Climate Commission’s first carbon budget for the period 2022-2025.
5. Protection of Property Rights
New Zealand recognizes and enforces secured interest in property. Most privately owned land in New Zealand is regulated by the Land Transfer Act 2017. These provisions guide the issuance of land titles, the registration of interest in land against land titles, and guarantee of title by the State. The Registrar-General of Land develops standards and sets an assurance program for the land rights registration system. New Zealand’s legal system protects and facilitates acquisition and disposition of all property rights. Mortgages are widely available and liens are used as security. For more information: https://www.treasury.govt.nz/information-and-services/other-services/bona-vacantia-ownerless-property/standard-requirements/liens
Land leasing by foreign or non-resident investors is governed by the OIO Act. About eight percent of New Zealand land is owned by the Crown. The Land Act 1948 created pastoral leases which run for 33 years and can be continually renewed. Rent is reviewed every 11 years, basing the rent on how much stock the land can carry for pastoral farming. The Crown Pastoral Land Act 1998 and its amendments contain provisions governing pastoral leases that apply to foreign and domestic lease holders. Holders of pastoral leases have exclusive possession of the land, and the right to graze the land, but require permission to carry out other activities on their lease.
There are several types of land ownership in New Zealand: freehold title, leasehold, unit title, strata title, and cross-lease. Most of the land in New Zealand is freehold, also referred to as “fee simple,” or absolute ownership of the land and anything built on it. Unit titles make up the most common form of ownership for apartment developments and for commercial multi-unit developments. For more information on types of property ownership: https://www.settled.govt.nz/
Prior to purchasing property or land in New Zealand, prospective buyers are encouraged to perform due diligence by accessing a report from Land Information New Zealand (LINZ): https://www.linz.govt.nz/
Unoccupied, legally purchased property has historically been subject to adverse possession, a legal method allowing squatters to take ownership of a property after 20 continuous years of occupation. The method, a narrow exception to a legal principle under the Land Transfer Amendment Act of 1963, has been used in more than 200 applications since 1993. The Act was repealed in 2017 and replaced with the Land Transfer Act, which still provides for some squatters’ rights. More information on the Land Transfer Act 2017 can be found here:
New Zealand has a strong record on intellectual property rights (IPR) protection and is an active participant in international efforts to strengthen IPR enforcement globally. In 1984, New Zealand joined the World Intellectual Property Organization (WIPO) and is a member of a multitude of WIPO bodies and treaties. New Zealand participates in the Trade Related Aspects of Intellectual Property Rights (TRIPS) Council. The country operates on a common law legal system and enjoys a strong and independent justice system. The Intellectual Property Office of New Zealand (IPONZ) assists those whose copyright has been infringed upon. There are both civil and criminal enforcement options. These options are administered through a variety of agencies, including MBIE and the Customs Service. Though there have been isolated incidents of IP theft, it is uncommon. https://www.iponz.govt.nz/about-ip/copyright/enforcing-copyright/
In 2018, the government began a public consultation to review the Copyright Act. This is the first step in making changes to copyright law and regulations, which were last reviewed in 2004. In 2019, MBIE published the results of the public consultation that outlined revised objectives for copyright law in New Zealand. In 2020, based on advice from stakeholders, the results of the consultation were withdrawn from the public. The government is now publicly consulting on potential changes to the objectives themselves. While the particulars of these revisions are unclear, the overarching theme is to ensure New Zealand’s copyright laws and regulations are fit for purpose in a rapidly changing technological environment. For more:
New Zealand does not publish specific statistics on seizures of counterfeited goods. The country has a robust procedure for the prosecution of IPR violations. New Zealand Police are authorized to investigate and prosecute trademark counterfeiters.
New Zealand is not listed in USTR’s Special 301 report. It is not mentioned in the Review of Notorious Markets for Counterfeiting and Piracy.
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/
6. Financial Sector
The New Zealand government has a generally positive attitude toward foreign portfolio investment, provided the investment is not considered to be sensitive in nature by the screening body, the Overseas Investment Office (OIO). New Zealand welcomes sustainable, productive, and inclusive investment.
The New Zealand Exchange, or the NZX, is the country’s securities and futures exchange. The Financial Market Authority (FMA) is the government agency responsible for regulating investments and financial markets. The regulatory system is effective, transparent, and supportive of inward flows. In 2020, the market capitalization of listed domestic companies in New Zealand was 63 percent of GDP, at USD 132 billion. The small size of the market reflects in part the risk averse nature of New Zealand investors, preferring residential property and bank term deposits over equities or credit instruments for investment. As of year-end 2021, New Zealand’s stock of investment in residential property is valued at NZD 1.7 trillion (USD 1.2 trillion).
New Zealand adheres to International Monetary Fund (IMF) Article VIII and does not place restrictions on payments and transfers for international transactions.
Credit is allocated on market terms for a variety of instruments, but foreigners and non-residents find difficulty in securing lending in New Zealand. To open a bank account, the applicant must be a permanent resident. Bank deposits are currently not guaranteed. In 2022, the Labour government plans to introduce a bill that will guarantee deposits up to NZD 100,000 (USD 70,000) from 2023.
Banking services in the country are robust; bank account penetration is nearly 100 percent. The sector is dominated by Australian banks; by total assets, three of the country’s four largest banks are Australian owned. Overall, the banking sector is worth NZD 644 billion (USD 450 billion) by total assets, small by global standards. Loans and advances account for the vast majority (80 percent) of bank assets. Derivatives are held mainly for hedging purposes. The RBNZ estimates that the non-performing loans ratio is 0.4 percent – out of a total loan portfolio worth NZD 522 billion (USD 350 billion).
The banking sector has undergone reforms to better withstand shocks. In 2019, the RBNZ proposed a significant increase to banks’ capital requirements to safeguard them from shocks to the financial system. Increased capital requirements will now be phased in over a five- to seven-year period. By the end of the transition period in 2028, all registered banks in the country will have to meet the new requirements, which will be some of the most stringent in the world and may squeeze access to credit.
Worth NZD 60 billion (USD 42 billion), the New Zealand Superannuation Fund (NZ Super) is the country’s sovereign wealth fund. 85 percent of the fund is invested offshore in both developed and emerging markets, the bulk of it in passive funds in North America. 4 percent of the fund is invested domestically in timber, bonds, private companies, rural land, and infrastructure. NZ Super is a member country of the International Forum of Sovereign Wealth Funds (IFSWF) and assesses the performance of the fund against the Santiago Principles. The fund has historically ranked as fully compliant with the Principles.
7. State-Owned Enterprises
The Treasury monitors 12 State-Owned Enterprises (SOEs), three mixed-ownership-model entities, and 29 Crown entities. Together, these entities make up the broader SOE sector in New Zealand, which is concentrated in the energy and transportation sectors. In the year to June 2021, the asset base of the 12 SOEs was NZD 50.7 billion (USD 35.5 billion). While figures for net income are not available, the operating balance for the sector was NZD 184 million (USD 129 million). In the same period, mixed ownership companies reported an asset base of NZD 28.8 billion (USD 20.2 billion) and an operating balance of NZD 410 million (USD 287 million). For more information on the financial performance of the SOEs and Crown entities, please visit https://www.treasury.govt.nz/publications/year-end/financial-statements-2021-html where a partial list of SOEs is available.
The Treasury’s Governance & Appointments team provides advice to Ministers on board appointments, which typically involve local personnel. Legislation of SOEs falls under the State-Owned Enterprises Act 1986, which sets up processes to improve efficiency in the sector. All SOEs are registered as public companies and are bound by the Companies Act and the Fair Trade Act, which clearly define the relationships between companies and their directors/shareholders, and the market. In the late 1990s, competition law under the Commerce Act was strengthened to provide for penalties for misuse of a dominant position. The Commerce Commission “ComCom” sets out guidelines and policies for anti-competitive behavior. A suspected breach of the Commerce Act, inclusive of those involving an SOE, is reported to ComCom’s website at https://comcom.govt.nz/contact-us and is immediately investigated.
Beginning in the mid-1980s, the government began a rapid course of deregulation and privatization that lasted through the late 1990s. The Ports of Auckland were partially privatized in 1988. The government sold its holdings in Bank of New Zealand, one of the country’s largest banks, in 1992 to National Australian Bank. Air New Zealand was sold to a consortium in 1988. Other telecoms, and energy and transportation companies were sold off. Some of these interests were re-purchased by the government, such as Air New Zealand moving back to into government ownership in 2001.
In 2014 the government completed a program of asset sales to raise funds to reduce public debt. It involved the partial sale of three energy companies and Air New Zealand, with the government retaining its majority share in each. The bulk of the initial share float was made available to New Zealand share brokers and international institutions, and unsold shares were made available to foreign investors. Foreign investors are free to purchase shares on the secondary market.
Subsequent “public private partnerships” in the infrastructure space in the mid-2000s offered the public a chance to participate in government-sponsored projects. In 2019, the Infrastructure Transaction Unit was created within Treasury as an interim measure to provide support to agencies and local authorities in planning and delivering major infrastructure projects. The New Zealand Infrastructure Commission Act was passed in September 2019, to create Crown Entity InfraCom, and it will be responsible for delivering New Zealand’s Public Private Partnership (PPP) Program https://infracom.govt.nz/major-projects/public-private-partnerships/ . The government is increasing its focus on PPP due to its significant NZD 15 billion (USD 10.5 billion) funding package announced in December 2019 and May 2020.
MBIE administers the procurement process. In October 2019, MBIE issued substantive changes to the New Zealand Government’s Procurement Rules. The Procurement Rules contain a specific section on non-discrimination, which in part states, “All suppliers must be given an equal opportunity to bid for contracts. Agencies must treat suppliers from another country no less favorably than New Zealand suppliers. Procurement decisions must be based on the best value for money, which isn’t always the cheapest price, over the whole-of-life of the goods, services or works. Suppliers must not be discriminated against because of a) the country the goods, services or works come from; or b) their degree of foreign ownership or foreign business affiliations.” Where applicable foreign bidders who are ultimately successful, may still be required to meet tax obligations and approval from the Overseas Investment Office. More information can be found here: www.procurement.govt.nz
8. Responsible Business Conduct
The New Zealand government actively promotes corporate social responsibility (CSR), which is widely practiced throughout the country. There are New Zealand NGOs dedicated to facilitating and strengthening CSR, including the New Zealand Business Council for Sustainable Development, the Sustainable Business Network, and the American Chamber of Commerce in New Zealand.
New Zealand is committed to both the OECD due diligence guidance for responsible supply chains of minerals from conflict-affected and high-risk areas, and the OECD Guidelines for Multinational Enterprises. Multi-national businesses are the main focus, such as a New Zealand company that operates overseas, or a foreign-owned company operating in New Zealand. The guidance can also be applied to businesses with only domestic operations that form part of an international supply chain. Individuals wishing to complain about the activity of a multi-national business that happened in another country, will need to contact the National Contact Points of that country. In New Zealand, MBIE is the NCP to carry out the government’s responsibilities under the guidelines.
To help businesses meet their responsibilities, MBIE has developed a short version of the guidelines to assess the social responsibility ‘health’ of enterprises, and for assessing the actions of governments adhering to the guidelines. If further action is needed, MBIE provide resolution assistance, such as mediation, but do not adjudicate or duplicate other tribunals that assess compliance with New Zealand law. MBIE is assisted by a liaison group that meets once a year, with representatives from other government agencies, industry associations, and NGOs.
As reported over the past five years in the Trafficking in Persons report, human traffickers exploit domestic and foreign victims in New Zealand. Foreigners from South and East Asia, the Pacific, and some countries in Latin America are vulnerable to working as forced laborers in several of New Zealand’s tourist, construction, and agribusinesses. Temporary migrant workers in sectors most negatively affected by pandemic, such as hospitality and tourism, are increasingly vulnerable to exploitation.
Department of State
- Country Reports on Human Rights Practices;
- Trafficking in Persons Report;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
- Xinjiang Supply Chain Business Advisory
Department of the Treasury
Department of Labor
New Zealand is renowned for its efforts to ensure a transparent, competitive, and corruption-free government procurement system. The country consistently achieves top ratings in Transparency International’s Perceptions of Corruption Perception Index. Stiff penalties against bribery of government officials as well as those accepting bribes are strictly enforced. The Ministry of Justice provides guidance on its website for businesses to create their own anti-corruption policies, particularly improving understanding of the New Zealand laws on facilitation payments. U.S. firms have not identified corruption as an obstacle to investing in New Zealand.
New Zealand supports multilateral efforts to increase transparency of government procurement regimes. The country joined the WTO Government Procurement Agreement (GPA) in 2012, citing benefits for exporters, while noting that there would be little change for foreign companies bidding within New Zealand’s totally deregulated government procurement system. New Zealand’s accession to the GPA came into effect in August 2015.
New Zealand also engages with Pacific Island countries in capacity building projects to bolster transparency and anti-corruption efforts. The country has signed and ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and the UN Convention against Transnational Organized Crime. In 2003, New Zealand signed the UN Convention against Corruption and ratified it in 2015.
The legal framework for combating corruption in New Zealand consists of domestic and international legal and administrative methods. Domestically, New Zealand’s criminal offences related to bribery are contained in the Crimes Act 1961 and the Secret Commissions Act 1910. If the acts occur outside New Zealand, proceedings may be brought against them under the Crimes Act if they are a New Zealand citizen, resident, or incorporated in the country. Penalties include imprisonment up to 14 years and foreign bribery offences can incur fines up to the greater of NZD 5 million (USD 3.4 million) or three times the value of the commercial gain obtained.
The New Zealand government has a strong code of conduct, the Standards of Integrity and Conduct, which applies to all State Services employees and is rigorously enforced. The Independent Police Conduct Authority considers complaints against New Zealand Police and the Office of the Judicial Conduct Commissioner was established in August 2005 to deal with complaints about the conduct of judges. New Zealand’s Office of the Controller and Auditor-General and the Office of the Ombudsman take an active role in uncovering and exposing corrupt practices. The Protected Disclosures Act 2000 was enacted to protect public and private sector employees who engage in “whistleblowing.”
The Ministry of Justice is responsible for drafting and administering the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) legislation and regulations. The AML/CFT Amendment Act 2017 extends the 2009 Act to cover a wider group of professionals, such as lawyers and accountants, along with businesses that deal in high-value goods. The New Zealand Police Financial Intelligence Unit estimate that NZD 1.3 billion (USD 910 million) of criminal proceeds is laundered in New Zealand annually, driven in part by the ease of forming a business in the country. The Department of Internal Affairs is working on a solution for businesses that are facing difficulty meeting their AML/CFT obligations during COVID-19.
After a standard review of the 2017 general election and 2016 local body elections, the Justice Select Committee conducted an inquiry in 2019 on the issue of foreign interference through politicized social media campaigns and from foreign donations to political candidates standing in New Zealand elections. New Zealand intelligence agencies acknowledged political donations as a legally sanctioned form of participation in New Zealand politics but raised concerns when aspects of a donation are obscured or are channeled in a way that prevents scrutiny of the origin of the donation, when the goal is to covertly build and project influence. In December 2019 the government passed the Electoral Amendment Act under urgency to ban donations from overseas persons to political parties and candidates over NZD 50 (USD 35) down from the previous NZD 1,500 (USD 1050) maximum, to reduce the risk of foreign money influencing the election process.
The Serious Fraud Office and the New Zealand Police investigate bribery and corruption matters. Agencies such as the Office of the Controller and Auditor-General and the Office of the Ombudsmen act as watchdogs for public sector corruption. These agencies independently report on and investigate state sector activities.
Serious Fraud Office
P.O. Box 7124 – Wellesley Street
Transparency International New Zealand is the recognized New Zealand representative of Transparency International, the global civil society organization against corruption.
Transparency International New Zealand
P.O. Box 5248 – Lambton Quay
10. Political and Security Environment
New Zealand is a stable liberal democracy with almost no record of significant political violence.
The New Zealand government raised its national security threat level for the first time from “low” to “high” after the terrorist attack on two mosques in Christchurch on March 15, 2019. One month later it lowered the risk to “medium” where a “terrorist attack, or violent criminal behavior, or violent protest activity is assessed as feasible and could well occur.” The incident led to wide-ranging gun law reform that restricts semi-automatic firearms and magazines with a capacity of more than ten rounds. An amnesty buy-back scheme of prohibited firearms administered by the NZ Police ran until December 20, 2019.
A series of anti-vaccine mandate protests in Wellington commenced February 8, 2022, and lasted for 23 days. Although not overtly violent, they included groups that blocked roads, trespassed, and caused general disruption. The issue has not been politicized, however, with complete cross-aisle agreement from all parties in Parliament not to respond to the demands of the protestors – who remain a tiny minority in a country that is among the most completely vaccinated in the world.
11. Labor Policies and Practices
Following restrictive Covid-related immigration policies, the New Zealand labor market tightened further from already-tight levels pre-Covid. Unemployment is currently 3.2 percent. Labor shortages are reported across a multitude of sectors but are most pronounced in construction and agriculture, where specialty skills and migrant workers are impacted by immigration regulations.
New Zealand’s informal economy is considered to be relatively modest, contributing approximately one-tenth of GDP. The relatively small size of the informal economy can be explained by low levels of corruption, along with respect for the rule of law and regulations.
New Zealand operates a Recognized Seasonal Employer (RSE) scheme that allows the horticulture and viticulture industry to recruit workers from the Pacific Islands for seasonal work to supplement the New Zealand workforce. There have been prosecutions and convictions for the exploitation of migrant workers, with reports that the hospitality, agriculture, viticulture, and construction industries are most effected. New Zealand recruitment agencies that recruit workers from abroad must use a licensed immigration adviser. Impacted by Covid, the RSE scheme underwent changes during the pandemic. While immigration was heavily restricted between 2020 and 2022, the RSE was eventually expanded in early 2022 with an announcement by the Government that the cap would be increased for Pasifika workers in the horticulture sector.
New Zealand has consistently maintained an active and visible presence in the International Labour Organization (ILO), being a founding member in 1919, and its representatives have attended the annual International Labour Conferences since 1935. The ILO and the government of New Zealand have collaborated on several initiatives, including the elimination of child labor in Fiji, employment creation in Indonesia, and the improvement of labor laws in Cambodia.
The government has taken a more proactive approach to enforcing employment law in New Zealand, because the migrant worker population has increased rapidly in recent years and the resources to protect those workers have not kept up with the increase. The government has been steadily increasing the number of labor inspectorates – situated within MBIE – to double the number in 2017.
There is no stated government policy on the hiring of New Zealand nationals, however certain jobs within government agencies that handle sensitive information may have a citizenship requirement, minimum duration of residency, and require background checks.
Labor laws are generally well enforced, and disputes are usually handled by the New Zealand Employment Relations Authority.
MBIE provides guidance for employers on minimum standards of employment mandated by law, guidelines to help promote the employment relationship, and optional guidelines that are useful in some roles or industries. Agreements on severance and redundancy packages are usually negotiated in individual agreements. For more see: https://www.employment.govt.nz/
After a three-year review and consultation, the government introduced the Screen Industry Workers Bill in February 2020. The previous government passed the Employment Relations (Film Production Work) Amendment Act 2010 – commonly referred to as the “Hobbit law” -which put limits on the ability of workers on film productions to collective bargaining.
New Zealand law provides for the right of workers to form and join independent unions of their choice without previous authorization or excessive requirements, to bargain collectively, and to conduct legal strikes, with some restrictions. Contractors cannot join unions, bargain collectively, or conduct strike action. Police have the right to organize and bargain collectively but sworn police officers do not have the right to strike or take any form of industrial action. In November 2019 MBIE sought feedback on a discussion document entitled “Better protections for contractors” to strengthen legal protections for contractors. They aim to ensure that contractors receive their minimum rights and entitlements, reduce the imbalance of bargaining power between firms and contractors who are vulnerable to poor outcomes, and ensure that system settings encourage inclusive economic growth and competition. Submissions closed in February 2020.
The ERA requires registered unions to file annual membership returns with the Companies Office. MBIE estimate total union membership at 380,659 for the March 2020 quarter, representing 16.4 percent of all employees in the New Zealand labor force.
Industrial action by employees who work for providers of key services are subject to certain procedural requirements, such as mandatory notice of a period determined by the service. New Zealand considers a broader range of key “essential services” than international standards, including: the production and supply of petroleum products; utilities, emergency workers; the manufacture of certain pharmaceuticals, workers in corrections and penal institutions; airports; dairy production; and animal slaughtering, processing, and related inspection services.
The number of work stoppages has been on a downward trend until the Labour-led government took office in 2017. The number of work stoppages increased from 3 in 2016 (involving 430 employees causing 195 lost workdays), to 143 in 2018 (involving 11,109 employees causing 192 lost workdays and NZD 1.2 million (USD 780,000) in lost wages), to 159 in 2019 (involving 53,771 employees causing 142,670 lost workdays and NZD 9.2 million (USD 6 million) in lost wages). In 2020 there were 112 work stoppages involving 595 employees causing 613 lost workdays and NZD 120,000 (USD 84,000) in lost wages. (While figures have not been released for 2021, health care and rail workers voted on strike action during 2021 and 2022.)
Work stoppages include strikes initiated by unions and lockouts initiated by employers, compiled from the record of strike or lockout forms submitted to MBIE under the Employment Relations Act 2000. The data does not cover other forms of industrial action such as authorized stop-work meetings, strike notices, protest marches, and public rallies which have also increased in recent years. Several strikes during the year involved employees of United States businesses or franchises particularly within the fast-food industry. The New Zealand government does not get involved in individual work disputes unless the striking employees violate their legislated responsibilities.
The Labour-led government campaigned on a promise to lift the minimum wage to NZD20 (USD 13) by April 2021. From April 1, 2022, the minimum wage for adult employees who are 16 and over and are not new entrants or trainees is NZD 21.20 (USD 14.84) per hour. The new entrants and training minimum wage is NZD 16.96 (USD 11.87) per hour. In recent years some local government agencies have raised minimum wages for their staff up from the government mandated rate to a “living wage” of nearly NZD 22.75 (USD 15.93) as of 2021. All businesses in New Zealand affected by COVID-19 have been eligible to receive from the government a wage subsidy from March, to pay their employees 80 percent of their salary to stem job losses.
The Health and Safety at Work Act 2015 sets out the health and safety duties for work carried out by a New Zealand business. The Act contains provisions that affect how duties apply where the work involves foreign vessels. These provisions take account of the international law principle that foreign vessels are subject to the law that applies in the flag state they are registered under. Generally New Zealand law does not apply to the management of a foreign-flagged vessel but does apply to a New Zealand business that does work on that vessel. The Fisheries (Foreign Charter Vessels and Other Matters) Bill 2014 has required all foreign charter fishing vessels to reflag to New Zealand and operate under New Zealand’s full legal jurisdiction since May 2016.
In March 2017, the New Zealand government’s ratification of the ILO’s Maritime Labor Convention (MLC) came into effect. While New Zealand law is already largely consistent with the MLC, ratification gives the Government jurisdiction to inspect and verify working conditions of crews on foreign ships in New Zealand waters. More than 99 percent of New Zealand’s export goods by volume are transported on foreign ships. About 890 foreign commercial cargo and cruise ships visit New Zealand each year.
The Maritime Transport Amendment Act 2017 implements New Zealand’s accession to the intergovernmental International Oil Pollution Compensation’s Supplementary Fund Protocol, 2003. The fund gives New Zealand access to compensation in the event of a major marine oil spill from an oil tanker and exercises New Zealand’s right to exclude the costs of wreck removal, cargo removal and remediating damage due to hazardous substances from liability limits. Accession to the Protocol was prompted in part by New Zealand’s worst maritime environmental disaster in October 2011 when a Greek flagged cargo ship ran aground creating a 331 ton oil spill resulting in NZD 500 million (USD 350 million) in clean-up costs.
On April 4, 2022, the Public Health Response Order 2021 requiring mandatory Covid vaccinations was removed for some workers. Mandatory vaccines remain in place for those employed in health and disability sectors, prison staff, and those working at the border. Border restrictions to enter New Zealand are also currently being eased. From May 1, travelers from visa waiver countries will be permitted to enter the country. From October, the border is expected to fully reopen. For more information, please visit:
14. Contact for More Information
U.S. Embassy Wellington
PO Box 1190