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New Zealand’s Specialist
Project Lawyers

There is a marked difference

in the way Greenwood Roche operates. From the outset we have focused on clearly defined specialist areas, retaining highly respected legal experts in each field. We then take that further; ensuring clients have direct and regular access to the most senior partners and lawyers, in a cost efficient manner.

Close contact with experts and clear cost advantages

We advise on a range of significant public and private sector projects. To ensure our specialists are always where they’re needed, we operate as one office with hubs in Auckland, Wellington & Christchurch.

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Recent Projects

Projects

Hagley Oval - Section 71 Proposal

On 23rd December 2018 Hon Poto Williams, the Associate Minister for Greater Christchurch...

Hagley Oval - Section 71 Proposal

Recent Projects

Hagley Oval - Section 71 Proposal

Hagley Oval - Section 71 Proposal

On 23rd December 2018 Hon Poto Williams, the Associate Minister for Greater Christchurch Regeneration approved a proposal to amend the Christchurch District Plan provisions for Hagley Oval to enable it to host large international fixtures and meet modern day broadcasting requirements.


Greenwood Roche assisted Regenerate Christchurch in developing the proposal on behalf of the Canterbury Cricket Trust.

The proposal approved by the Minister amends the Christchurch District Plan through section 71 of the Greater Christchurch Regeneration Act 2016 (GCR Act). The approved proposal incorporates the current resource consent conditions into the Plan and amends certain aspects of those conditions, including:

  • Amending the current condition to increase the four, retractable light towers to allow six permanent light towers to meet international broadcast standards.

  • Allow more lenient pack in and out timeframes for temporary facilities associated with hosting cricket matches to improve health and safety and limit damage to the Oval grounds.

  • Increasing the number of fixtures allowed per season, including an allowance for hosting International Cricket Council events on years that they occur.

These changes will mean that Hagley Oval will be able to host day-night matches that are now required by top-tier teams, allowing Hagley Oval to be more competitive when bidding for games compared to its rival cricket grounds.  With the Women’s Cricket World Cup approaching in 2021, the changes will allow Christchurch City to bid for and host games in this tournament.

Through the public participation stage of the process, 1,253 written comments were received, of which 83 percent were in favour of the proposal.

The Minister’s decision can be viewed at the following link: https://dpmc.govt.nz/sites/default/files/2019-12/Hagley Oval - Section 71 Proposal - Signed Decision Paper_1.pdf


Specialist expertise

Key lawyers involved

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St Johns Retirement Village

Francelle Lupis and Amelia Alden recently assisted Summerset Villages (St Johns)...

Recent Projects

St Johns Retirement Village

St Johns Retirement Village

Francelle Lupis and Amelia Alden recently assisted Summerset Villages (St Johns) Limited in obtaining resource consent for a large retirement village in St Johns, Auckland.


The application was heard in the Environment Court, where Judge Smith, Commissioner Gysberts and Commissioner Prime held the consent as proposed “is appropriate and properly balances the interests of intensification with the need for compatibility with the residential environment and the impact on visual amenity”.
 
The village will range between two and six storeys and contain 328 units made up of independent living units, serviced units and care / dementia rooms.


Key lawyers involved

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City Rail Link

Greenwood Roche is acting for the Link Alliance on New Zealand’s largest ever...

City Rail Link

Recent Projects

City Rail Link

City Rail Link

Greenwood Roche is acting for the Link Alliance on New Zealand’s largest ever transport infrastructure project to deliver the country’s first underground railway, connecting Auckland’s existing train networks and transforming the city’s public transport system.


The City Rail Link is a 3.45km twin tunnel underground rail link that will run up to 42 metres beneath downtown Auckland to connect Britomart Station with a redeveloped Mount Eden Station.  The project also creates two new underground stations – Aotea Station, at Wellesley and Victoria Streets, and Karangahape Station near Mercury Lane and Beresford Square.

The Link Alliance consortium, who will deliver the main stations and tunnels for this project, comprises:

- City Rail Link Limited
- Vinci Construction Grands Projects S.A.S
- Downer NZ Limited
- Soletanche Bachy International NZ Limited
- WSP New Zealand Limited
- AECOM New Zealand Limited
- Tonkin + Taylor Limited

Amy Rutherford is fronting the Greenwood Roche team on this project, which is expected to run through until 2024 and will include the procurement of approximately 600 different packages with both domestic and international subcontractors, suppliers and consultants.  Greenwood Roche is advising the Link Alliance on various aspects of the City Rail Link Project, including providing strategic project delivery advice, preparing the procurement suite of contracts and assisting with downstream negotiations and engagements.

 


Specialist expertise

Key lawyers involved

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Ōtākaro Avon River Corridor Regeneration Plan Approved

On Friday 23 August, the Minister for Greater Christchurch Regeneration announced...

Recent Projects


Ōtākaro Avon River Corridor Regeneration Plan Approved

On Friday 23 August, the Minister for Greater Christchurch Regeneration announced her approval of the Ōtākaro Avon River Corridor Regeneration Plan.  The Plan was developed by Regenerate Christchurch under the Greater Christchurch Regeneration Act 2016.  It outlines the vision and objectives for the future of the 600ha Ōtākaro Avon River Corridor (the former residential red zone), and directs the inclusion of an accompanying planning framework to enable the realisation of that Vision. 


This area is significant in many ways for Christchurch/Otautahi.  It has been and continues to be an area comprising sites and geographical features of cultural importance to Te Rūnanga o Ngāi Tahu and Te Ngāi Tūāhuriri Rūnanga.  The area also comprises various other sites of historical significance to Christchurch/Ōtautahi and is traversed by the Ōtākaro Avon River which is itself a key feature of the city’s identity and urban framework. In developing this Plan Regenerate Christchurch has therefore sought to acknowledge the significance of this area to the wider Christchurch/Ōtautahi community, as well as working with the environmental constraints and opportunities that it provides.  
 
The process has taken time and has not been without its challenges – the size and geographical constraints of the area, the various interests and feedback from stakeholders, community groups and members of the public, and the uncertainties particularly around future implementation have all been matters to carefully consider and address.  The Plan’s vision and objectives and the accompanying framework for the Area are broad.  While they have strong focus areas (including ecology, recreation, economic opportunity and community connection), they also seek to recognise that the regeneration of this Area will take time, and that new ideas, new technology and new activities which are not currently contemplated should be allowed to take place.  The vision and objectives therefore operate as a touchstone against which future decisions can be made – ensuring a clear aspiration for the area while still allowing flexibility to adjust to a changing future. 
 
The approval of the Plan by the Minister (and the Ombudsman’s recent finding as to its legal and evidential rigour) is a significant endorsement of the work done by the Regenerate Christchurch team on this project.   Greenwood Roche lawyers, Lauren Semple and Rachel Murdoch have been privileged to advise Regenerate Christchurch on the development of this Plan, the exercise of its powers under the Act in respect of this and other projects, and its general regeneration mandate.  It is extremely satisfying to see the Plan become operative and attention now turn to its implementation.


Key lawyers involved

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Kāinga Ora–Homes and Communities in Mount Cook, Wellington

Greenwood Roche recently secured resource consent to re-develop an existing complex...

Recent Projects


Kāinga Ora–Homes and Communities in Mount Cook, Wellington

Greenwood Roche recently secured resource consent to re-develop an existing complex for Kāinga Ora–Homes and Communities in Mount Cook, Wellington


The new development will replace the original structures that were built in the 1950’s, with four new fit-for-purpose buildings that will provide long-stay accommodation for up to 218 social housing tenants.
 
Twenty of the units are to be reserved to accommodate residents receiving support through the Housing First programme. This is a government-led programme to house and support people who have been homeless for a long time, or are homeless and face multiple and complex issues. The development will also include a community space, a residents support space and on-site staff.
 
This re-development comes as part of a nationwide $5.6 billon build programme being undertaken by Kāinga Ora to address the housing shortages across New Zealand, but particularly in the biggest urban centres where those shortages are most acute.

Greenwood Roche's team on this project was led by Lauren Semple and Rachel Murdoch.


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One Billion Trees Programme

Greenwood Roche is assisting the Crown in the preparation and registration of Forestry...

One Billion Trees Programme

Recent Projects

One Billion Trees Programme

One Billion Trees Programme

Greenwood Roche is assisting the Crown in the preparation and registration of Forestry Rights as part of the One Billion Trees Programme developed by the Government.


The Government has set a goal to plant one billion trees by 2028.  Progress towards achieving this target is well underway. 

The One Billion Trees Programme supports New Zealand’s commitment to mitigating the effects of climate change.  By absorbing carbon dioxide, tree planting reduces the impact of greenhouse gases.  As well as addressing the impacts of climate change, the Programme aims to create increased sustainable regional development, increased employment, optimise land use, support Māori values and aspirations, protect the environment and support New Zealand’s transition to a low emissions economy. 

The programme involves the planting of both permanent trees and plantation forests.  The Crown estimates that commercial foresters will plant 500 million trees by 2028.  The Crown is issuing direct landowner grants and entering into partnership projects to help plant the other 500 million trees.  For example, funding will be allocated to research and workforce initiatives.  To help achieve the target, Crown Forestry is also entering into joint ventures and forestry rights to plant commercial forestry on privately owned land.

Greenwood Roche is involved with the preparation and registration of Forestry Rights over privately owned land.  As at the end of November 2019, the Crown has entered into over 40 Forestry Rights covering over 20,000 hectares with more being negotiated and finalised.  Under the Forestry Rights, the Crown plants, manages and harvests trees on the land and pays an annual rental to the landowner.  An estimated 18,443,000 trees will be planted over the next two years under the Forestry Rights signed to date.


Key lawyers involved

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Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Greenwood Roche has assisted in the subdivision and transfer of Christchurch’s...

Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Recent Projects

Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Greenwood Roche has assisted in the subdivision and transfer of Christchurch’s largest and most central residential development – the East Frame.


Following the Christchurch earthquakes, land was compulsorily acquired by the Crown which gave us the unique opportunity of creating a vibrant, functional and liveable city.  The “East Frame” is an anchor project comprising a 14 hectare residential area located at the east of the Christchurch central business district.  Half of the East Frame development consists of medium density residential living for approximately 2,000 people.  The remainder comprises streets, open spaces and paved areas.  The East Frame holds the third largest open space in central Christchurch - Rauora Park.  
 
Greenwood Roche has assisted Ōtākaro Limited with the subdivision, transfer and other property related aspects of the East Frame including Rauora Park.


Specialist expertise

Key lawyers involved

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New Gas Transmission Access Code

Brigid McArthur and Will Hulme-Moir have recently acted as independent counsel to...

New Gas Transmission Access Code

Recent Projects

New Gas Transmission Access Code

New Gas Transmission Access Code

Brigid McArthur and Will Hulme-Moir have recently acted as independent counsel to the gas industry co-regulator, Gas Industry Company Limited, on approval of a new Gas Transmission Access Code.


The GTAC governs the terms of access to the high pressure North Island gas transmission pipeline systems owned by First Gas Limited, previously known as the Vector and Maui pipelines.  Access to these pipelines has since the early 2000s been governed by separate industry codes.  This separation has created operational inefficiencies particularly around capacity reservations, offtake management, gas balancing, reconciliation and liability for non‑specification gas, amongst others.  With the pipelines now under common ownership has come the opportunity for a rationalisation and reset in accordance with the Gas Act objectives.

Gas Industry Co’s sanction of the new GTAC as “materially better” than the existing codes, comes after a lengthy period of engagement, consultation and extensive debate between different sectoral levels.  The industry is presently engaged in IT systems and implementation processes.


Specialist expertise

Key lawyers involved

Similar projects
Tariki, Waihapa, Ngaere petroleum production assets and infrastructure

Recent Projects

Tariki, Waihapa, Ngaere petroleum production assets and infrastructure

Tariki, Waihapa, Ngaere petroleum production assets and infrastructure

Greenwood Roche advised L&M Energy on its acquisition of a 50% stake in the Waihapa Production Station and related petroleum producing and infrastructure assets. This was a joint acquisition with New Zealand Energy Corp.


Specialist expertise

Key lawyers involved

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News & Insights

Insights

Report suggests NZS Conditions of Contract overdue for an overhaul

In September 2019 the Government passed legislation creating the New Zealand Infrastructure...

News & Insights

Report suggests NZS Conditions of Contract overdue for an overhaul

In September 2019 the Government passed legislation creating the New Zealand Infrastructure Commission, Te Waihanga (Commission). The Commission seeks to lift infrastructure planning and delivery to a more strategic level and by doing so, improve New Zealand’s long-term economic performance and social wellbeing.

In August 2019 the Commission (then the Infrastructure Transactions Unit of Treasury) published a report by Urban Outcomes entitled ‘An examination of issues associated with the use of NZS Conditions of Contract’ (Report).  The Report found that the standard form contract governing many of these infrastructure projects is not operating as effectively or efficiently as intended.


The New Zealand Standard Conditions of Contract for Building and Civil Engineering Construction (NZS Conditions of Contract) is designed to provide comprehensive, balanced and readable contract forms that are widely understood by industry players and can be used for a variety of projects. NZS 3910:2013 is the most widely used construction contract in the New Zealand market.

While NZS 3910 has benefited from ‘limited scope reviews’ in 2003 and 2013, the contract has not undergone significant revision since 1987. The Report indicates that further significant revision may be required or, at the very least, that a change in the broader contracting culture surrounding the contract needs to take place.

The overarching finding of the Report is that there exists a ‘culture of mistrust’ between the public and private sectors. The Report identifies several issues with public sector procurement and contracting of major infrastructure projects that have led to this, namely:

  • that a skills gap is evident within most public sector agencies;

  • the perception that the public sector prioritises lowest price over value for money;

  • that special contract conditions are difficult to read and understand;

  • that time bars are being used as a means for the public sector to get “something for nothing”;

  • that there is no provision in the NZS Conditions of Contract for caps on contractors’ liability;

  • the impartiality of the Engineer to the Contract; and

  • that use of risk transfer is unsustainable and aggressive.

Skills Gap within the Public Sector
Given that the primary role of most public sector agencies is to deliver services to the public, infrastructure investment takes on a subsidiary role. As a result, there is a lack of experience and expertise in construction at an executive level within the public sector which inhibits the potential for informed and proactive approaches to the resolution of issues during construction projects. The Report suggests that ‘unworkable bureaucracy’ is then required to get a project complete.

The Report recommends that executive level governance is encouraged to call on independent industry experts to advise on project dynamics alongside legal advisors.  Such support would assist executive members’ understanding of key success and risk factors as well as advising on the feasibility of project timelines.

Lowest Price Procurement Practices
There is a view within industry that the Government follows a ‘lowest-price-wins’ culture. The fourth edition of the Government Procurement Rules (Rules), which came into force on 1 October 2019 (after the Report was released), aims to change this perception. The Rules require public sector agencies to undertake a holistic assessment of the public value of a tender during the procurement process. Whether the Rules result in a change to this culture will be known in time. Ultimately, poor procurement processes can lead to poor documentation, poor supply chain performance, and an increased risk of contractor failures.

In order to rebuild confidence in public sector processes, the Report proposes agencies strive for greater transparency, publish high quality tender documentation, and actively pursue and resolve examples of poor internal procurement processes.

Difficult to Understand Special Conditions
Special conditions are often added to the NZS Conditions of Contract to provide contractual flexibility for different operating environments. Accordingly, contracts can become long and highly technical. General, specific and special conditions, as well as schedules and often annexures together form contracts consisting of multiple documents that need to be pieced together.
The Report recommends following other international standards by allowing the tracking of changes into the general conditions of contract. This would allow parties to create one succinct but comprehensive document.

Unreasonableness of Time Bars
Time bars are a common special condition that provide the public sector with cost and time certainty in relation to variations. Time bars disentitle the contractor from claiming for the cost and time impact of variations that are instructed and completed on site, if the contractor has not submitted its claim within a set time.

The contractual timeframe is often limited to 10 working days. If a contractor fails to meet the timeframe or fails to provide the level of detail required, it may be ineligible for payment despite still having to complete the works required by the variation. This conduct heightens the culture of mistrust between parties and creates an expectation that the condition will be used as a disentitlement regime.

Among its proposals, the Report recommends time bars be adjusted to a minimum of one month or, alternatively, fixed for the final account and linked to the retention release.

Lack of Contractors’ Liability Caps
Clients and contractors have starkly contrasting views on the inclusion of liability caps and, if included, how they should operate.

An apprehension to bearing all liability is based on the industry’s perception that such liability may extend far beyond what could otherwise be earnt for the work. Clearly an unsustainable approach. Conversely, principals face a potential risk highlighted in the Report where, if a project is going badly, and the contractor is approaching a liability cap, it may decide to walk away rather than completing the project.

There is opportunity to contribute to a sustainable construction sector by providing guidance to public sector agencies outlining when a liability cap is appropriate and what that limitation might look like.

Impartiality of the Engineer to the Contract
The Engineer to the Contract (Engineer) is expected to act, simultaneously, as an impartial intermediary between parties, an independent certifier and expert advisor and representative of the principal, giving directions to the contractor on the principal’s behalf. The Engineer undertakes all of these roles while generally being on the principal’s payroll. The potential for conflict issues to arise is clear.

The role of the Engineer is critical for both parties under a construction contract, which is why it is vital that the actual independence (as well as the perceived independence) of the role remains. The Report advocates for the establishment of a panel of individual experts who can be procured by the public sector for a specific project. These panel members would be agreed on upfront by public sector agencies and industry.

Unsustainable Risk Transfer
The transfer of specific risk should only occur if the recipient is best placed to manage the risk and its cost. In some cases, the Report found risks that were entirely out of the contractor’s control were nonetheless transferred despite the contractor having no viable means to mitigate that risk. In other cases, where risk has not been transferred, contractors have been unwilling to assist in managing risks because they were not directly affected by them.

The Report suggests that guidance be issued in relation to risk transfer, detailing the purpose of risk, as well as the potential impacts of misplaced risk. Business cases should include a transparent risk transfer table together with cost and time implications so that informed decisions can be made as to whether a risk is retained, shared, or transferred.

New Zealand’s public sector spends up to $10 billion annually on the procurement of infrastructure.

The Report concludes that addressing the highlighted issues will enable the NZS Conditions of Contract to function as intended and provide a contractual foundation for infrastructure where both the public and private sectors feel that their interests are protected. This in turn will increase the performance of the sectors in procuring and delivering infrastructure projects.

Our Construction team prepares a number of NZS 3910 contracts for infrastructure projects throughout New Zealand and we are dedicated to developing and maintaining strong partnerships between the public and private sectors.  We contributed to the Report (through a client) and participated in a subsequent workshop led by the Infrastructure Transactions Unit to discuss its findings.


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New standard sale and purchase agreement

27 November 2019 marked the release of the latest version of the commonly-used agreement...

New standard sale and purchase agreement

News & Insights

New standard sale and purchase agreement

New standard sale and purchase agreement

27 November 2019 marked the release of the latest version of the commonly-used agreement for sale and purchase of real estate.


While the new version released by Auckland District Law Society Incorporated and Real Estate Institute of New Zealand Incorporated is intended to be easier to read and incorporates some useful changes, the most significant changes relate to the vendor’s warranties, compensation claims by purchasers, Good and Services Tax and toxicology reports.

The agreement introduces a new standard warranty given by vendors that, at the date of the agreement, the vendor has no knowledge of any fact that might result in legal proceedings (including referral to mediation or arbitration) other being brought in relation to the property. This is a broad warranty, and vendors will need to consider whether anything exists that might give rise to proceedings before they enter the agreement.

The procedures for a purchaser to claim compensation now include a two step process in situations where the vendor disputes the purchaser’s claim to compensation. Previously, a vendor could pressure a purchaser into settling for the full amount as the consequences for the purchaser for failing to settle would be significant if the purchaser was later found to be wrong. The new agreement allows for the dispute about the purchaser’s right to claim compensation to be dealt with in advance of determining the interim amount to be withheld on settlement, but does not deal with the substantive claim.
The GST provisions have been updated to protect the vendor where the agreement provides for a GST-inclusive price with the expectation of a zero-rated sale, and the purchaser changes its status before settlement so that the vendor needs to account for GST from the purchase price. This is intended to ensure that the vendor does not lose out due to the purchaser’s actions.

A new optional condition has been inserted which allows for the agreement to be entered into conditional on the purchaser obtaining a satisfactory toxicology report. The purpose of the report is to test contamination from the preparation, manufacturing or use of drugs with specific reference to methamphetamine. The report must be completed objectively and in good faith, and must be in writing.

The finance clause has also been amended so that the purchaser is able to select what financial institution the purchaser wants to seek funding from. If the purchaser seeks to avoid the agreement for non-satisfaction of this condition, the purchaser must give the vendor reasonable evidence confirming that finance is not available.

There remains no standard solicitor’s approval as to title condition, valuation condition or due diligence condition. Purchasers (and vendors) should therefore consider adding other conditions before signing an agreement.

The new agreement for sale and purchase coincides with the release of the New Zealand Law Society’s Property Transaction Guidelines, which were developed with the assistance of Julian Smith, from Greenwood Roche.


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The Emissions Trading Scheme – time for an update

New Zealand takes its place on the global stage with its efforts to combat the effects...

News & Insights

The Emissions Trading Scheme – time for an update

New Zealand takes its place on the global stage with its efforts to combat the effects of climate change.  The Emissions Trading Scheme is at the centre of these efforts.  Improvements to the Emissions Trading Scheme were announced on 31 July 2019. 


Climate change is arguably one of the most pressing threats to the planet.  According to the United Nations, climate change “is the defining issue of our time and we are at a defining moment”. 
 
The Kyoto Protocol requires its members to monitor their actual greenhouse gas emissions and precise records of trades have to be kept.  It has set the framework for numerous policy, legislative and environmental initiatives.  New Zealand has the unique opportunity of playing its part in reducing greenhouse gas emissions through forestry.  Forestry exports are worth around $5 billion a year and forestry directly employs approximately 20,000 people.  It is a crucial part of our climate change response.
 
With that in mind, it is imperative that New Zealand implement a sufficient, robust and effective Emissions Trading Scheme (ETS).  On 31 July 2019, improvements to the ETS regulations were announced to reach that goal.  An Amendment Bill to the Climate Change Response Act 2002 will be introduced to Parliament later this year.  Four changes in this Amendment Bill are worth noting:
 

  1. the introduction of “averaging accounting” for foresters;
  2. the reduction of free allocation to major industrial emitters;
  3. the cancellation and replacement of units from the first commitment period of the Kyoto Protocol; and
  4. the introduction of a “stand down period”.
 
Averaging Accounting
 
The original carbon stock accounting provides that foresters must surrender their ETS units at deforestation (even if forestry is planted elsewhere).  Now, averaging accounting provides that a forest owner will not surrender its emissions units provided the deforested land is replanted (regardless of its location).  Given new forestry can be planted in a different location, farm land can be converted to other uses.  Foresters are given more flexibility.  Under the new regime, the ETS units accumulate as the forest grows up to a determined average level of long term carbon storage.
 
Previous accounting measures required foresters to repay their emissions units in the event of a natural disaster.  The latest changes to the ETS remove the obligation to repay provided replanting is done within 4 years. 
 
Averaging accounting will be optional for forests registered under the ETS from 2019 and will be mandatory for forests registered from 2021 onwards.  It will not apply to forests registered under the ETS prior to 2019.
 
Industrial Allocation
 
There are currently 26 industrial activities within New Zealand that are eligible to receive free industrial allocation.  This allocation reduces their expenses under the ETS which provides an incentive for businesses not to go offshore.  These activities are estimated to be responsible for up to 14 percent of New Zealand’s greenhouse gas emissions.  From 2021, changes to the ETS will phase down the industrial allocation.  During the time period of 2021-2030, industrial allocation will be reduced at 1 percent per year.  The reduction will then increase to 2 percent from 2030-2041 and increase again to 3 percent from 2041-2050.
 
Industrial businesses will be encouraged to invest in clean energy alternatives that reduce emissions.  The Government has said it will review rates from 2031.
 
Cancellation and Replacement of Units  
 
There are currently privately held units issued from the Kyoto Protocol’s first commitment period (2008-2012).  The ETS now require these units to be cancelled and replaced with an equivalent number of New Zealand units.  Currently, a host country and the country buying the units could both claim a credit for the emission reductions.  Cancelling these units avoids double-counting.  The units will be cancelled on 30 November 2020.
 
Stand Down Period
 
Previously, forests planted after 1989 outside of the ETS (and some inside the ETS) could deforest and not be liable under the ETS.  If replanted, these forests would earn more units under the ETS and would therefore achieve a windfall.  This should be avoided since there is technically no increased benefit as the number of trees planted has not changed.
 
Changes to the ETS now create a “stand down period”.  If the described land is deforested, the land cannot be replanted (and joined to the ETS) for a period of time. 
 
Commentary
 
The above recent changes to the ETS are aimed at more effectively capturing the purpose of the ETS.  The introduction of the stand down period and removal of industrial allocations create a more universally comprehensive scheme.  However, major industrial emitters will continue to point to the wider economic and fiscal implications of their becoming fully subject to the scheme (and lack of any net environmental benefit in a global context).  The issues here are indeed vexed.
 
The new averaging accounting regime favours foresters.  It improves the ETS’s flexibility and creates a more appealing system.  Forestry land can be replanted in different locations and foresters are also more adequately protected from natural disasters.  Encouragement to plant forestry must be met with a realistic scheme that recognises farming and forestry are not static or predictable.  Rotating land use enables farmers and foresters to productively work their land without ETS liabilities arising.  There are currently concerns over productive farm land being turned into forestry permanently.  It is arguable that workable farm land could be lost, reducing New Zealand’s agricultural industry.  The ability to convert forestry land back to farm or cropping land (with forestry planted elsewhere) helps address these concerns. 
 
Having an effective ETS helps New Zealand to more accurately monitor and work towards reducing its greenhouse gas emissions. These new changes take us one step further to reaching that goal.


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Chief Ombudsman releases final opinion on East Lake Trust/Regenerate Christchurch case

Greenwood Roche lawyers, Lauren Semple and Rachel Murdoch, have been working with Regenerate...

News & Insights

Chief Ombudsman releases final opinion on East Lake Trust/Regenerate Christchurch case

Greenwood Roche lawyers, Lauren Semple and Rachel Murdoch, have been working with Regenerate Christchurch on the development of the draft Otakaro Avon River Corridor Regeneration Plan which is the subject of this review case.


In response to a complaint, the Chief Ombudsman’s opinion confirms that Regenerate Christchurch acted lawfully and in an administratively reasonable manner in the development of the draft plan.  The draft plan is currently with the Minister for Greater Christchurch Regeneration for her approval or decline. For more information and to review the case note please click here.


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Productivity Commission - LG funding and financing

On the 4th of July the New Zealand Productivity Commission released a draft report on...

News & Insights

Productivity Commission - LG funding and financing

On the 4th of July the New Zealand Productivity Commission released a draft report on Local Government Funding and Financing.
 
This report is the result of the Government’s request for the Productivity Commission to undertake an inquiry into local government funding and financing; and where shortcomings in the current system are identified, to examine options and approaches for improving the system.


While there were a number of suggestions made, the draft report found the current framework is broadly sound. The Commission Chair stated “The current framework measures up well against the principles of a good funding and financing system for local government. It is clearly separated from the central government’s tax base which is an important feature. It is relatively simple and economically efficient. It also provides a high degree of flexibility for councils to shape how they raise their revenue.”
 
Existing tools
The report notes that councils can make better use of the tools they already have access to, and there is room to improve organisation performance, transparency and decision making that will help to relieve cost pressures. These existing tools include rates, fees are user charges, development contributions, central government funding and debt.
 
The Commission favours the “benefit principle” as the primary basis for deciding who should pay for local government services. Those who benefit from a service should pay for its costs. Additionally, where local services benefit national interests, central government should contribute. User charges or targeted rates should also be utilised.
 
The Commission found that there is no clear evidence that rates have become less affordable over time, despite this being one of the key reasons the inquiry was undertaken. Overall, rates have continued to broadly align with population and income growth over the past 3 decades, but have not become relatively more burdensome.
 
Cost pressures and new tools
The report noted some new tools are needed to help councils deal with some specific cost pressures. The highest priority pressures have been identified as:
 

  • Supply of infrastructure to support rapid urban growth: the failure of high growth councils to supply enough infrastructure to meet demand is a serious social and economic problem.
  • New tools: special purpose vehicles; central government funding; tax on vacant land; volumetric charging of wastewater; road congestion pricing; and value capture for property owners who enjoy “windfall gains”.
 
  • Climate change: rising sea levels and more intensive rain events threaten infrastructure, particularly roads and waste / storm water infrastructure. These risks are large and unevenly distributed across the country.
  • New Tools: Extended NZTA model; Local Government Resilience Fund and Agency; and more national leadership in developing and providing high-quality and consistent data, information, guidance and legal frameworks.
 
  • Tourism: the increasing number in tourists has led to pressure on several types of services and infrastructure in districts that are popular tourist destinations. Tourists are using mixed-use facilities without making a direct contribution.
  • New Tools: A tourist accommodation levy; and provide local councils with a share in the new international tourist border levy.
 
  • New standards and requirements from central government: e.g. meeting health and environmental standards in the three waters sector is a major challenge for many councils, and the Commission makes the case for significant reform of the sector.
  • New tools: development of a “Partners in Regulation” protocol to improve the state of relations between central and local government.
Submissions on the draft report are open until 29 August 2019. The final report is ultimately a recommendation to the Government and will not be bound by the results of the report. It is set to be released on 30 November 2019.


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Infrastructure Commission Bill Released

As part of its broader focus on the construction and infrastructure sectors, the Government...

News & Insights

Infrastructure Commission Bill Released

As part of its broader focus on the construction and infrastructure sectors, the Government is proposing a bill which would establish a Crown entity tasked with providing strategic independent advice and oversight on the planning, co-ordination and delivery of public sector-led infrastructure projects in New Zealand. 


Summary
The establishment of Te Waihanga – New Zealand Infrastructure Commission as a Crown entity is one of the more significant actions taken by the Government towards addressing the major infrastructure deficit in New Zealand, and the existing challenges with the planning, co-ordinating and delivery of infrastructure projects which have contributed to New Zealand’s current position.  Taking lead from similar initiatives in Australia, the UK and elsewhere, the Commission will provide strategic oversight and leadership over the way in which infrastructure projects are planned, co-ordinated and procured.  Critically, its functions are advisory only.  Any decision-making regarding infrastructure projects (including investment in those projects, or the timing for or manner in which they are procured and delivered) will remain with the relevant Ministers/departments.  

Specifics
Under the bill, Te Waihanga would be established as an autonomous Crown entity, governed by a board of up to 7 members.  The entity will largely take shape from the existing Infrastructure Transactions Unit currently within Treasury which will be incorporated into Te Waihanga once it is established (anticipated for October 2019).

The overarching function of the Commission is to co-ordinate, develop, and promote an approach to infrastructure and resulting services that improve the well-being of New Zealanders.  The bill authorises the Commission to carry out that function through two main ways:

1.  Strategy and planning through:

b. Providing advice on infrastructure including the current state of infrastructure, current and future infrastructure needs, infrastructure priorities, and matters which may prevent the effective delivery of infrastructure.

a. Promoting a strategic and coordinated approach to the delivery of infrastructure projects;

c. Providing support services to those projects, including advice, services or staff to assist in the delivery of a project.

While not specifically included as a provision in the bill, the explanatory note identifies that Te Waihanga would be empowered to, and will be expected to, promote best practice infrastructure delivery as part of its supporting function.  To that end, it is expected that the Commission will:

e.  Publish a pipeline identifying existing and upcoming infrastructure projects (the first of these can be accessed on the Treasury website);

f.  Produce best practice guidance on infrastructure procurement and delivery.  This function will be part of its role as the “centre of expertise to assist infrastructure projects to be delivered efficiently and effectively”.  To that end, where requested by the relevant department/Minister, the Commission will also provide advice on business cases for proposed projects. 

In support of its functions (and in addition to its general powers as a Crown entity), the bill both grants powers to, and imposes obligations on, the Commission, including:

  • The requirement to publish a strategy report setting out the Commission’s views on the ability for existing infrastructure to meet community expectations over the next 30 years, and the priorities for infrastructure over that same time period.  The report (which will be issued at least once every five years) may also include any other matter the Commission considers relevant.  The Minister for Infrastructure has the opportunity to comment on the report before it is finalised, but once finalised, the Government will then be required to provide a formal response to it which must be made public.
  • The Minister may also direct the Commission to provide a report on any matter relating to infrastructure.
  • Where necessary and desirable to enable the performance of its functions, the Commission is also empowered to require the provision of specific information from specified government departments, agencies, statutory entities and the New Zealand Defence Force. 

Comment
This proposal has generally received strong support and input from industry and experts within both the public and private sector, and represents a critical step towards a more informed, strategic and coherent approach to infrastructure planning, procurement and delivery.  Perhaps the biggest potential shortcoming is the general lack of any strong levers which would at least encourage action/compliance by other government departments with the advice of the Commission.  For example, while the Government would be required to issue a response to the Commission’s strategy reports, government departments are not obliged to consider the findings of the reports in reaching any decisions relating to procurement or planning of capital projects, nor consult with the Commission.  Consequently, to successfully effect change at the decision making level, the Commission will need to build a narrative around the positive impacts of sound planning and procurement, and the role that it can play in supporting other departments in achieving those outcomes.  Even if it is able to do so, there is still the risk that the Commission could be sidelined.

Among the options to mitigate this risk, there is the opportunity to expand the Commission’s mandate to include monitoring and reporting on the Government’s progress in addressing New Zealand’s infrastructure challenges.  While under the current proposal it would be required to provide “state of the nation” assessments, there is no explicit directive to undertake on-going monitoring of how the Government is responding to the findings of the Commission’s assessments, including how it is addressing identified constraints on the effective delivery of infrastructure.  Expanding the Commission’s mandate to include monitoring and reporting on the Government’s response to the identified challenges and opportunities (which would also, as a first step, require the development of some form of metric) would strengthen the Commission’s ability to keep the Government accountable for effecting improvements in the planning, procurement and delivery of infrastructure.

For further information on the Commission or if you are interested in receiving further updates on this matter, please do not hesitate to contact us.


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Climate Change Response (Zero Carbon) Amendment Bill Released

The Government’s most significant legislative response to the climate crisis was...

Climate Change Response (Zero Carbon) Amendment Bill Released

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Climate Change Response (Zero Carbon) Amendment Bill Released

Climate Change Response (Zero Carbon) Amendment Bill Released

The Government’s most significant legislative response to the climate crisis was released ahead of its first reading in Parliament earlier this week.  Taking its lead from the UK’s climate change legislation, the bill seeks to provide a framework for developing and implementing climate change policies that will contribute to the international effort to limit the global average temperature increase to 1.5 degrees Celsius above pre-industrial levels.


Utilising the existing emissions trading scheme, the bill proposes the allocation of emissions budgets (issued every five years) designed to enable a “just and fair” transition of New Zealand’s industry and economy towards meeting the 2050 target.  The target adopts a “split-gas” approach, where by 2050:

• Biogenic methane emissions will have reduced by 24 – 27% below 2017 levels.  By 2030, they will have reduced by 10%.
• All other net greenhouse gas emissions will have reduced (through reductions, removals and offshore mitigation) to zero.

Under the bill, the relevant Minister must ensure that net emissions do not exceed the emissions budget for the relevant emissions budget period.  Along with setting the budget, the Minister will also be required to prepare an emissions reduction plan which will set out the policies and strategies for meeting such a budget.  There is however no legal remedy or relief available for failing to meet an emissions budget or for failing to meet the overall 2050 target, other than the issuing of a declaration and an award of costs.  Similarly, meeting the emissions budgets and the 2050 targets are only permissive considerations for those exercising public functions.  A failure to take a budget or the 2050 target into account will not invalidate the action.  Consequently, as with the UK legislation, much of the success of this legislation will therefore rely on political and industry pressure to achieve compliance with the emissions budgets.

In addition to requiring the preparation of emissions budgets and ensuring that they (and as a result the 2050 target) are met, the bill would establish the Climate Change Commission.  The Commission is an independent Crown entity tasked with both advising the Government on its emissions budgets and reductions and adaption plans, and monitoring and reporting on progress towards meeting emissions budgets and the 2050 targets.  In particular, the Commission will be required to recommend the quantity of emissions permitted for each period, how the budget will be met including pricing and policy methods, and the indicated proportion of reductions, removals and offshore mitigation.  While the Minister is not required to accept its advice or recommendations, the Minister is required to present the Commission’s reports to the House and issue a public response to that assessment.  Critically, the bill is prescriptive in the skillsets required for the Commission which include expertise in climate science, matauranga Māori and Te Ao Māori, central and local government policy and decision making, and experience from a range of sectors and industries. 

As mentioned, the bill anticipates that emissions budgets will be met through some combination of emissions removal (sequestration of some form), reduction and, in limited circumstances, offshore mitigation.  Offshore mitigation would allow the purchase of emissions reductions and removals, or allows from international emissions trading schemes.  While the use of offshore mitigation is generally discouraged under the bill, the ability to utilise that method provides some further flexibility to both industry and Government in seeking to meet the emissions budgets.  Unlike the UK legislation, there is no mention of whether and how New Zealand’s contribution to international aviation and shipping emissions will be accounted for, though this may be a matter that is subject to consideration by the Commission once it is established.

Commentary

Informed by extensive public consultation and a range of technical (including environmental and economic) analysis, the bill has of course already attracted a wide ranging response across different sectors.  While applauding the framework for action, climate scientists and environmentalists have generally voiced concerns around the absence of enforcement/accountability for failing to meet targets.  While similarly applauding the intent, other industries have voiced concerns over how realistic the targets are given the available technology. 

From the analysis in support of the bill, it is clear that if the targets are to be reached then significant investment in innovative technologies to support industry towards more carbon neutral operations, and planting of trees (or use of other devices) that effectively sequester carbon will be critical. It is also clear that if the bill passes, there is a great deal of work ahead for particularly the Climate Change Commission in its role as an advisor to, and watchdog of, the Government in its response to the climate crisis.  As has been illustrated by the UK Commission, critical success factors for this agency will be strong credibility and influence generated by well-rounded and in-depth expertise (including in policy making, business and industry), independence and transparency.  Partnership with Māori at all levels of decision-making will also be vital.  

There appears to be strong (albeit not complete) consensus across industry and political parties alike that taking action to reduce New Zealand’s carbon footprint is critical if we are to contribute to the global effort to slow the rate of our changing climate.  How extensive that action is, how quickly it can be taken, and of course who pays for it remains to be seen.  However this bill provides a strong framework for ambitious decisions to be made – ambitious decisions which will be required if the 2050 target is to be met.  The (largely equivalent) UK legislation is highly regarded, having been replicated in a number of other countries.   That Commission has been identified as having an excellent reputation, producing reports that carry “immense authority” and influence over Government.  

Notwithstanding the absence of any obligation on other facets of Government to consider the Commission’s advice, it is clear that both the Commission and the Act itself has influenced policy development across sectors.  Reports on the Act have also noted that the planning and reporting obligations on Government and the Commission have added value in “produc[ing] a kind of transparent dialogue that invites political accountability”.  Moreover, as a result of the work undertaken by the Commission, Government and industry, the UK has met its first emissions budget and looks set to meet its second and third.  It is however acknowledged that “low-hanging fruit” in the early years have made this task more straightforward, and more ambitious, controversial decisions are ahead if the UK is to continue its path of emissions reductions. 

The Zero Carbon bill has a way to go before it passes, and we may well see some changes as it moves through the House.  With National supporting the bill through its first reading earlier this week, it will now progress to select committee stage where the public will have the opportunity to share its views on the bill.

Our team is following this closely, so please do not hesitate to contact us if you have any questions about the bill.  We have also prepared a more detailed summary of how the bill operates and we are more than happy to provide this to you and your team should you wish.

________________________________________

1.  New Zealand Productivity Commission Te Kōmihana Whai Hua o Aotearoa Note: Examining the UK Climate Change Act – Research Note, Teresea Weeks, September 2017 at p.20.
2.  Macroy, R. (2014).  “The UK Climate Change Act – Towards a Brave New World? (2012)” in Regulation, enforcement and governance in environmental law (2ed), 261-274.  Oxford: Hart Publishing, p 267
3.  Church, J. (2016). Mind the Gap – Reviving the Climate Change Act.  October 2016. London: ClientEarth, p.13.
 


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Disagreeing Minister Leads to a Decline of OceanaGold OIO Application

OceanaGold (New Zealand) Ltd (OceanaGold) has recently had declined an application under...

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Disagreeing Minister Leads to a Decline of OceanaGold OIO Application

OceanaGold (New Zealand) Ltd (OceanaGold) has recently had declined an application under the Overseas Investment Act 2005 (OIA) to acquire 178 hectares of rural land for the purposes of use as storage of mine tailings (the Application).  The establishment of the additional mine tailings capacity was to extend the life of the Waihi mine from 2028 until 2036 by allowing OceanaGold to proceed with its new mining project “Project Quattro”. The decline came as a surprise to the applicant and the industry and does raise some question marks.


As the application was in respect of the purchase of land, section 24(1)(a) of the OIA required a decision to be made by the two Ministers.  Minister Clark granted the Application but Minister Sage declined it, meaning that of necessity the Application was declined.  The Overseas Investment Office itself had recommended the Application be granted.
 
Under section 16A of the OIA, the Ministers must consider whether the Application meets the Benefit to New Zealand test.  As the Application involved rural land, it was subject to the higher standard of a ‘substantial and identifiable’ benefit having to be shown, as against other counterfactual uses.
 
When making their respective decisions, both Ministers considered a number of factors identified to be of high relative importance, including jobs; new technology or business skills; increased exports receipts; increased processing of primary products; and the oversight and participation of New Zealanders’.  Minister Sage, in declining the Application, determined that converting the land into a waste-storage area for the by-product of a non-renewable extractive industry reduces any economic benefit from the Application.  This determination led the Minister to conclude that the overall short term financial benefits are inconsistent with sustainable economic interests.
 
The assessment of a net negative benefit to New Zealand is novel in the sense that here, the Minister has effectively deducted points for a use of the land that is contrary to government policy.
 
Two different decisions by Ministers of the same coalition government will always raise questions of impartiality in decision making, but in this instance in particular questions have been raised by the mining industry body Straterra and the Hauraki District Council about the Minister’s history of activism against mining and have questioned whether she should have recused herself and delegated the decision making power, an option available under section 32 of the OIA.  She has previously done so, on other grounds.
 
As with any decision made by a Minister, OceanaGold has the option of judicial review of the decision. Predetermination of an outcome of a decision, or bias, can be grounds for a decision to be judicially reviewed as can an incorrect application of the Benefit to New Zealand test under the OIA. These are both avenues OceanaGold may look to take as it assesses the impacts this decision will have on its future expansion plans.


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