Energy (Fuels, Levies, and References) Amendment Bill

2.1. Are there any publicly available inquiry, review or evaluation reports that have informed, or are relevant to, the policy to be given effect by this Bill?

YES

Fuel Security and Fuel Stockholding Costs and Benefits 2020, Hale and Twomey (commissioned by the Ministry of Business, Innovation and Employment), 16 December 2020. It is available at https://www.mbie.govt.nz/dmsdocument/15257-fuel-security-and-fuel-stockholding-costs-and-benefits-2020.

2.2. Does this Bill seek to give effect to New Zealand action in relation to an international treaty?

NO

Nevertheless, the reserve diesel stock arrangement, which is expected to be funded by the levy after amendment to the statutory purpose of the levy, can contribute to New Zealand’s compliance with its obligation under the International Energy Agreement (90-day reserve commitment).

2.3. Were any regulatory impact statements provided to inform the policy decisions that led to this Bill?

YES

MBIE completed a Regulatory Impact Statement on the fuel resilience policy package, which includes the proposal to amendment the statutory purpose of the PEFM Levy, on 15 August 2022. It is available at https://www.mbie.govt.nz/dmsdocument/25591-regulatory-impact-statement-fuel-resilience-policy-package-proactiverelease-pdf.

2.3.1. If so, did the RIA Team in the Treasury provide an independent opinion on the quality of any of these regulatory impact statements?

NO

The Treasury’s RIA team delegated the responsibility for providing comment on the quality of the regulatory impact statement (available at https://www.mbie.govt.nz/dmsdocument/25591-regulatory-impact-statement-fuel-resilience-policy-package-proactiverelease-pdf) to an internal review panel set up within MBIE. The panel considers that that the information and analysis summarised in the Impact Statement meets the criteria necessary for Ministers to make informed decisions on the proposals.

2.3.2. Are there aspects of the policy to be given effect by this Bill that were not addressed by, or that now vary materially from, the policy options analysed in these regulatory impact statements?

NO

2.4. Has further impact analysis become available for any aspects of the policy to be given effect by this Bill?

NO

2.5. For the policy to be given effect by this Bill, is there analysis available on:

(a)   the size of the potential costs and benefits?

YES

(b)   the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth?

NO

Due to expected levy surplus in the forecast period to 2025/26, the levy rate is not expected to increase significantly in this period. As a result, the policy change should have minimal impact in the forecast period. More explanation can be found in the aforementioned regulatory impact statement (available at https://www.mbie.govt.nz/dmsdocument/25591-regulatory-impact-statement-fuel-resilience-policy-package-proactiverelease-pdf).

2.6. For the policy to be given effect by this Bill, are the potential costs or benefits likely to be impacted by:

(a)   the level of effective compliance or non-compliance with applicable obligations or standards?

YES

(b)   the nature and level of regulator effort put into encouraging or securing compliance?

YES

To ensure that the Government can recover the cost of the onshore fuel resilience initiatives in line with the Bill’s policy intent, levy payers (namely fuel importers) need to pay the levy as required. The magnitude of the costs of such initiatives depends on how MBIE, the administrative department, spends the levy.

The New Zealand Customs Service can rely on the existing enforcement provisions under the Customs and Excise Act 2018 to ensure that the levy is paid. MBIE has procurement processes and financial systems in place to deliver value for money and keep track of how the levy is spent on various initiatives.

3.1. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with New Zealand’s international obligations?

New Zealand’s obligations under the International Energy Agreement were considered during the policy development process.

3.2. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with the principles of the Treaty of Waitangi?

When designing the approach to stakeholder engagements for developing the fuel resilience policy package, MBIE’s policy team discussed with internal advisors specialising in managing iwi and regional relationships. MBIE concluded that the policy proposals, which focus on increasing onshore fuel stocks, are unlikely to be of high interest to iwi. MBIE has not identified any inconsistencies between the policies in this Bill and the government’s Treaty of Waitangi obligations.

3.3. Has advice been provided to the Attorney-General on whether any provisions of this Bill appear to limit any of the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990?

YES

The Ministry of Justice’s advice to the Attorney-General will be publicly available at https://www.justice.govt.nz/justice-sector-policy/constitutional-issues-and-human-rights/bill-of-rights-compliance-reports/advice/ upon the Bill's introduction to the House.

3.4. Does this Bill create, amend, or remove:

(a)   offences or penalties (including infringement offences or penalties and civil pecuniary penalty regimes)?

NO

(b)   the jurisdiction of a court or tribunal (including rights to judicial review or rights of appeal)?

NO

3.5. Does this Bill create, amend or remove any provisions relating to the collection, storage, access to, correction of, use or disclosure of personal information?

NO

3.6. Has there been any external consultation on the policy to be given effect by this Bill, or on a draft of this Bill?

YES

Public consultation on onshore fuel stockholding proposals, which culminated in the fuel resilience policy package, was conducted in early 2022 (see https://www.mbie.govt.nz/have-your-say/onshore-fuel-stockholding-consultation/). The consultation paper discussed options for the target level of onshore fuel stocks, and how to meet the target level, such as a minimum onshore fuel stockholding on the fuel importers, and the option of setting up a standalone government agency for managing fuel stocks and fuel emergency planning. The consultation paper also sought comments on whether the levy should be used for funding such a government agency, and if so, how the calculation method for the levy should be amended. Twenty-one submissions, mainly from the fuel and transport sectors, were received.

During the public consultation, submitters focused on the minimum stockholding obligation proposal. Many submitters did not make substantive comments on the levy-related options, although the majority of those who commented on these options were opposed to setting up a standalone government agency for managing fuel stocks and fuel emergency planning. Some fuel companies submitted that the Government should consider entering into a reserve stock arrangement with the fuel sector if it wishes to increase onshore fuel stocks.

3.7. Have the policy details to be given effect by this Bill been otherwise tested or assessed in any way to ensure the Bill’s provisions are workable and complete?

YES

MBIE had internal discussions between policy staff, finance staff and legislation staff regarding the ability to have the accounting system in place to ensure that spending on new items to be funded by the PEFM levy after the Bill is passed can be recorded transparently.

4.1. Does this Bill contain any provisions that could result in the compulsory acquisition of private property?

NO

4.2. Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?

YES

Section 14 of the Energy (Fuels, Levies, and References) Act 1989 sets out the statutory purposes of the levy. The existing statutory purposes include meeting some of the costs of the Energy Efficiency and Conservation Authority (EECA), as well as the “reasonable costs” of:

·         compliance with the 90-day reserve commitment obligation under the International Energy Agreement (IEA)

·         inspection and monitoring of liquid fuels

·         information dissemination regarding the fuel industry’s safety.

The Bill introduces an additional statutory purpose of promoting onshore engine fuel resilience. This will enable the Government to fund initiatives such as an arrangement for procuring reserve diesel stock to be held onshore.

While these onshore fuel resilience initiatives could contribute to New Zealand’s IEA obligation, there is uncertainty as to whether the existing statutory purposes would allow such initiatives to be funded. These initiatives may not pass the “reasonable cost” test, given there are there is a much cheaper alternative for meeting the IEA obligation—purchasing offshore oil tickets.

When making funding decisions on onshore fuel resilience initiatives, MBIE will assess the business case, applying selection criteria and standard procurement principles. Cabinet approval will be sought before any onshore fuel resilience initiatives are funded. Should there be any significant change to the calculation method for the rate of the levy, which is set out in section 5 of the Energy (Petrol, Engine Fuel, and Gas) Levy Regulations 2017, there will also be public consultation.

4.3. Does this Bill affect rights, freedoms, or impose obligations, retrospectively?

NO

4.4. Does this Bill:

(a)   create or amend a strict or absolute liability offence?

NO

(b)   reverse or modify the usual burden of proof for an offence or a civil pecuniary penalty proceeding?

NO

4.5. Does this Bill create or amend a civil or criminal immunity for any person?

NO

4.6. Does this Bill create or amend a decision-making power to make a determination about a person’s rights, obligations, or interests protected or recognised by law, and that could have a significant impact on those rights, obligations, or interests?

NO

4.7. Does this Bill create or amend a power to make delegated legislation that could amend an Act, define the meaning of a term in an Act, or grant an exemption from an Act or delegated legislation?

NO

4.8. Does this Bill create or amend any other powers to make delegated legislation?

NO

4.9. Does this Bill contain any provisions (other than those noted above) that are unusual or call for special comment?

NO