Key Projects and Priorities
Introduction
This annual report shows how the Ministry has worked to deliver against the supporting goals and strategic priorities identified in its strategic outcome framework. It does not document all our work across all outputs, but instead highlights some of the more significant projects and initiatives the Ministry was engaged in.
Our outcome framework was articulated in the Ministry's Statement of Intent
2002-05. We adopted as our major outcome working to ensure that New Zealand's business environment actively promotes and enables a higher rate of sustainable economic development.
We developed two supporting outcomes. The first focused on ensuring the regulation of economic activity is effective and low cost. This recognises that an open and competitive micro-economy is a crucial foundation for New Zealand's economic growth and business success. The management and regulation of New Zealand's micro-economic environment are key roles for the Ministry.
The second supporting outcome focused on ensuring that regional development, business growth and innovation are actively facilitated and encouraged. As the Ministry of Economic Development, we have a responsibility to ensure that all our activities support and enable business growth, innovation and sustainable economic development in New Zealand.
To realise these supporting outcomes we developed a series of supporting goals and strategic priorities. These are shown in the diagram on page 6.
The next section of this report shows how the Ministry has worked to deliver against these goals over the 2002/2003 financial year.
Strategic Outcome Framework Diagram
Outcome: The Regulation of Economic Activity is Effective and Low Cost
1. Transaction costs are minimised for consumers and businesses in domestic and international markets
Strategic Priority: Improve the analysis of regulatory impacts on business
The Regulatory Impact Analysis Unit provided cross-departmental training for over 200 officials in Regulatory Impact Statements/Business Compliance Cost Statements analysis. It also provided both individual and small group training for authors of specific RIS/BCCSs.
The Government undertook to report back on implementation of each of the Ministerial Panel on Business Compliance Costs' 162 recommendations by 30 June 2003. The Ministry co-ordinated the whole of government report back on implementation of the panel's recommendations on ways to reduce compliance costs for business. These spanned a wide range of areas, including the Resource Management Act, tax law, employment related legislation and ACC. Of the recommendations initially agreed to by government (at least partially or in principle), more than 80% have been implemented or are in the process of implementation.
Strategic Priority: Lower the Cost of the Ministry's Services to Business
The Ministry manages a number of databases and provides a range of information to help clients make well-informed business decisions. During the year, more Ministry business services were made available on-line. Notable among these were the on-line trade mark application capability, the ability to file a proof of debt on-line with the Insolvency and Trustee Service, on-line re-licensing of electrical workers and mobile phone text searches of motor vehicle securities on the Personal Property Securities Register.
Delivering more services electronically has resulted in easier access to information and a reduction in the cost of compliance for clients. There will be further benefit in 2003/2004 by way of lower fees and charges for some services.
The Ministry developed and introduced new ''public park'' radio licences for aeronautical services, maritime services and wireless broadband services at 5.8 GHz. Such ''public park'' licences do not require licences to be processed for individual users, which means that regulatory costs are reduced.
Other Activities
The Ministry commissioned a study by the New Zealand Institute of Economic Research on the impacts on cost and innovation of the Hazardous Substances and New Organisms Act (HSNO). This contributed to the release of the Hazardous Substances strategy by the Minister for the Environment, and decisions to reduce the level of Environmental Risk Management Authority fees for applicants by around 20%.
The Ministry has worked closely with the Ministry for the Environment on measures to improve the operation of the Resource Management Act for major projects, and on amendments to recognise renewable energy and climate change issues.
The Ministry of Consumer Affairs has supported the passage of a range of consumer legislation:
- The Consumer Credit Bill makes changes necessary to modernise New Zealand consumer credit law. The Ministry has also initiated a Government-wide programme to deal with problems facing consumers arising from property buy-back schemes, including work on a Supplementary Order Paper to include buy-back schemes in the scope of the Bill.
- The Consumer Protection (Definitions of Goods and Services) Bill aims to bring utility goods and services, as well as computer software, under the Consumer Guarantees Act.
- The Fair Trading Amendment Act increases fines across the board for offending against the Fair Trading Act, puts in place a new regime for fines for pyramid selling schemes and enhances the ability of the Commerce Commission to take action under the Fair Trading Act.
- The Motor Vehicle Sales Act 2003 introduces a modernised regime to regulate motor vehicle sales. The former regime was overly prescriptive and no longer met the needs of consumers and businesses.
The Ministry of Consumer Affairs continued to be involved in policy initiatives, locally and internationally, aimed at building consumer confidence in e-commerce. This work covers domestic law issues and self-regulatory initiatives, and also involves leading and contributing to developments internationally through APEC and the OECD.
2. Markets, Businesses and Consumers have Access to and use Information Held by the Ministry that Enables them to Conduct Business Effectively
The Ministry's enterprising use of technology to provide world-class operational services to clients won several awards during the year. The Companies Office won the 2002 NetGuide Web Award for the best government website, and the Personal Property Securities Register won both the Central Government and IT categories of the 2002 Bearing Point Innovation Awards.
The Personal Property Securities Register (PPSR) enables on-line registration of security interests over almost all types of personal property. It creates greater certainty for secured parties and debtors by bringing together in one place all personal property securities, and by enabling priorities to be clearly determined.
Operational from 1 May 2002, PPSR has brought significant cost and risk reduction for businesses and the Ministry. During the six-month transitional period 932,000 financing statements were registered, of which 250,000 were new registrations. The register recorded its one millionth search in April 2003.
The Ministry published a range of information on energy issues to assist businesses and consumers to make investment and consumption decisions. These included electricity information disclosure statistics, petrol and diesel statistics, electricity retail price statistics, greenhouse gas emissions and energy data files. Electricity security of supply issues came to the fore, and for the first time the Ministry published security of supply forecasts.
The Ministry co-ordinated publication of a Five-Step Electric Fence Check brochure designed to assist rural Internet services users overcome interference problems caused by poorly installed and maintained electric fences.
The Powerswitch database on the Consumers' Institute website, which is funded by the Ministry, continued to provide comparative information for domestic electricity consumers. The Ministry delivered two publicity campaigns covering Powerswitch.
A major achievement for the Ministry of Consumer Affairs has been development and publication of Guidelines for Consumer Representation. These will assist boards and committees in developing their consultation and consumer representation practices. This will improve the way in which consumers' interests are included in decision-making processes impacting on consumers.
3. New Zealand's International Connections Enhance and Increase Business Opportunity
Strategic Priority: Deepen Economic Integration with Australia
The Ministry has been working with government agencies, industry and the Productivity Commission to develop New Zealand's strategic position in relation to the review of the Trans-Tasman Mutual Recognition Arrangement (TTMRA). This involved co-ordinating a whole of government submission to the Productivity Commission about the operation of the TTMRA and its strategic importance for New Zealand.
Significant progress was made on the TTMRA for radiocommunications products. The compliance framework has been finalised and agreement has been reached on nine out of 12 specific product categories.
The Ministry gained Australian support for some liberalising measures in relation to CER Rules of Origin (ROO), including a commitment by Australia to New Zealand's key long-term objective of a more fundamental review of the ROO, in accordance with agreed principles and a specific timetable.
The broad objective in trans-Tasman integration is to obtain greater harmonisation of industry and other policies, to the extent that this is beneficial for business and economic development.
A scoping report incorporating a preliminary review of Australian industry policy approaches was completed during the year. The ultimate goal is to provide information about how Australian Federal and State industry policy facilitates industrial and economic growth, and what insights this will provide for the further development of industry policy within New Zealand.
In the industry policy area, the Ministry has continued to develop closer working relationships with our Australian counterparts. We have undertaken documentation reviews covering key Australian industry policy initiatives. The Ministry provided briefings for Ministerial meetings focusing on the common elements of Australian and New Zealand growth and innovation policies.
Some Ministry work units have entered into specific agreements/work programmes with their Australian counterparts. Radio Spectrum Management and the Australian Communication Authority have agreed to jointly undertake a number of programmes, for example developing an Australasian best practice model, developing common minimum standards for electromagnetic susceptibility/harmonisation, and developing a fees model with a standard formula for spectrum pricing.
The Intellectual Property Office of New Zealand (IPONZ) has included a representative of the Australian Institute of Patent Attorneys on its Client Liaison Board.
The Crown Minerals group and Queensland officials are looking at how coal bed methane is most appropriately managed. Crown Minerals is also working with the Australasian Institute of Minerals and Mining on a number of initiatives, including marketing of mineral and petroleum assets, opportunities for investment by Australian firms, and participation on the Ministerial Council on Minerals and Petroleum Resources.
The Electricity Workers Licensing Group made a submission to the Australian Productivity Commission to extend the occupational licensing registry aspects of the TTMRA.
Strategic Priority: Build Stronger International Economic Connections
Methods used in pursuing international economic linkages include the establishment of formal links with overseas agencies; secondment to such agencies (e.g. to Ireland's Department of Enterprise, Trade and Employment, and Norway's Ministry of Trade and Industry); attendance at international meetings (e.g. the OECD policy forum and APEC SME meetings); collaboration with international bodies (e.g. OECD, WTO and APEC country review teams); and working through research contracts and contacts with New Zealand's overseas posts (e.g. Singaporean growth and innovation policy research work).
The Ministry worked on a report on post-2005 tariff policy. This consultative review is assessing the impacts of various tariff options on consumers, manufacturers and exporters. It is also considering the industry, regional and employment impacts of these options. Tariffs remain a key economic instrument for the government and directly effect the level of competition in New Zealand, which in turn influences innovation, entrepreneurial performance and the international competitiveness of firms.
The Ministry also worked with the Industrial Supplies Office and the Ministry of Defence to develop an approach to maximising opportunity for domestic industry in defence procurement, within existing competitive Government Procurement policy.
A budget initiative to fund full New Zealand membership of the International Organisation of Legal Metrology (OIML), which is charged with developing and harmonising regulations amongst its 58 member states, was approved. New Zealand business will benefit from our ability to influence international standards and provide a New Zealand perspective, and to provide advance notice to our manufacturers of draft standards through the development process.
The Ministry led a New Zealand delegation to the ITU World Radio Conference in Geneva. This conference reviewed and updated the International Radio Regulations that New Zealand is a signatory to.
Ministry officials supported the Minister of Energy at a number of international energy meetings, including the International Energy Agency and APEC.
4. Anti-competitive Behaviour, Abuse of Market Power and Barriers to Market Entry are all Minimised
A major review of the gas sector was completed and a policy package announced in November 2002, designed to ensure appropriate market arrangements for the post-Maui era. A Government Policy Statement was issued in March 2003, and the gas industry formed a Gas Industry Steering Group to facilitate industry self-governance. The Ministry prepared a draft paper for Cabinet on back-stop regulation-making powers for delivering the Government's objectives for the gas sector. Decisions on this will be made in the next financial year 2002/2003.
In 2003, the Ministry advised the Minister of Commerce on control of airfield activities following a major study by the Commerce Commission of Auckland, Wellington and Christchurch international airports. Following this, the Minister decided that control of airfield activities was not required. The Ministry (along with the Ministry of Transport) also commissioned a study to assess the extent of market power of port companies. Following this study, the government decided that a full Commerce Commission control study was not required in this area.
The Ministry's work on reviewing all minerals programmes and the Crown Minerals Amendment Bill is particularly significant. The underlying aim is to make the business regime more competitive and efficient. This will be done by improving and enhancing the accessibility of data on New Zealand's mineral and energy resources (by transforming paper data to various digital and scanned media), informing the market of New Zealand's business regime and investment opportunities, and providing operational advice.
The Ministry monitored the Commerce Commission's progress in making determinations on disputes over services regulated under the Telecommunications Act 2001.
5. Regulation Promotes Accountability and Responsibility in Business Practice
The Ministry supported enactment of the Securities Markets Amendment Bill, which aims to strengthen confidence in New Zealand markets. It does this by, among other things, introducing a continuous disclosure regime and a co-regulatory model, with securities exchanges as the frontline regulator and the Securities Commission as the back-up regulator.
6. Property Rights over Crown-Owned Resources are Well Managed and Allocated Efficiently
Twenty-one new petroleum exploration permits were awarded under the Onshore and Nearshore Taranaki Bidding Round. This reflects the need to identify and develop further gas resources given the early depletion of the Maui gas/condensate field. Two other block offers were opened during the year - the Deepwater Taranaki Basin Blocks Offer (bids close September 2003) and the Canterbury Petroleum Blocks Offer (bids closed in May and permits will be awarded shortly).
The Ministry has started work on a strategic plan for the future allocation of the radio spectrum resource from 2003-07. A workshop on this subject was held with industry to start the consultation process. The Ministry also provided advice and received agreement from Cabinet for the allocation of spectrum in the upper FM band for public broadcasting. We also advised on the allocation of spectrum for digital television and Māori television services.
Radio Spectrum Management's Auction 5 was held in July and attracted a number of bids and sales of $9.08m. On offer were wireless local loop and local multi point distribution services and lots suited to cellular services.
7. The Allocation and Registration of Intellectual Property Rights Supports Innovation and Business Activity
The Government is reforming a number of New Zealand's key intellectual property statutes. These include the Patents Act, the Plant Variety Rights Act and the Copyright Act. Many of these reforms have been driven by recent developments in technology. For example, the Copyright Act is being reformed to take account of developments in the digital environment, including the Internet.
Other reforms are intended to make New Zealand's regime more compatible with those in other countries, particularly Australia. This should allow New Zealand businesses to capture the benefits of genuine innovations and to commercialise these innovations more readily, in both New Zealand and overseas markets.
The Trade Marks Act 2002 was passed into law, coming into effect on 20 August 2003. This represents the first comprehensive update of trade mark legislation for nearly 50 years. It is particularly important for clients because it simplifies the registration process and reduces the cost of obtaining a trade mark.
The Intellectual Property Office (IPONZ) has worked to raise awareness of the importance and benefits of intellectual property protection. It has therefore been involved in initiatives such as supporting World Intellectual Property Day, making addresses to inventors' groups, and participating in the Field Days event at Mystery Creek.
8. New Zealand's Regulatory Institutions can Effectively Monitor and Enforce Business Regulations
The Ministry's National Enforcement Unit (NEU) and the Companies Office have introduced measures to inform and remind companies of their statutory obligations under the various business statutes the Companies Office administers. Of particular significance was monitoring and enforcement of the Financial Reporting Act, which has seen higher levels of compliance - particularly by companies with an overseas shareholding. The NEU has successfully engaged in prosecutions relating to breaches of the Insolvency, Companies, and Securities Acts, which have underlined the presence of an effective response to serious departures from commercial standards.
The Ministry closely monitored the Commerce Commission's work in setting up the electricity lines regulation regime. The Commission's final decisions on the electricity lines thresholds' regime were announced in June 2003, and the first assessment of lines companies against the thresholds will be made in 2003/2004.
Outcome: Regional Development, Business Growth and Innovation are Actively Facilitated and Encouraged
1. Regions have the Capability to Make the Most of their Economic Potential
Strategic Priority: Engage with Regions to Implement the New Zealand Tourism Strategy
The Ministry of Tourism had two areas of focus when implementing the New Zealand Tourism Strategy (NZTS) during the year. First, simplification of the approval process for administration of the Strategy Implementation Fund; and second, preparation and publication of a strategy update booklet. We also provided support to a Ministerial round-table intended to review implementation of the NZTS and to discuss development of a three-year implementation plan.
Other Activities
The Ministry designed, and monitors and evaluates, the Regional Partnerships Programme, which is intended to facilitate the development of regional economic development strategies, the development of capability in regions, and works towards regional projects that are aligned with the strengths regions have identified in strategies.
The Ministry undertook a comprehensive review of the Regional Partnerships Programme. This resulted in a report to the Minister which outlined potential policy and programme changes, as well as formulating key recommendations and detailing consultations with stakeholders and departments.
The Ministry also supports regional initiatives that build the base for economic development in regions through the Regional Initiatives Fund.
2. Increased Māori and Pacific Island participation in New Zealand's Economic Development
The Ministry worked to improve partnerships between iwi, Pacific peoples, local government and business through the Regional Partnerships Programme, by encouraging participation of these groups in regional development work. Measures taken to address the specific economic development needs of Māori groups included the development of funding assistance for collectively based business projects through the Te Kapainga partnership programme.
The Ministry has worked with the Ministry of Pacific Island Affairs (MPIA) to define priorities for Pacific economic development. The Ministry has also been asked to work with the New Zealand Agency for International Development and the Niue Government on economic development initiatives to assist the Niuean economy. A scoping study of issues affecting the economic progress of Pacific peoples in New Zealand was commissioned and support given to MPIA, both in running a Pacific youth economic development consultation forum and in developing a Pacific workforce development strategy.
In conjunction with the Ministry for Culture and Heritage, the Ministry developed advice and obtained agreement from Cabinet on the allocation of spectrum in the upper FM band for Māori and Pacific Island nation-wide radio networks.
Work commenced on the review of the Minerals Programme for petroleum, including Māori participation in the management of the resource.
3. New Zealand has Greater Enterprise Capability in its Businesses and the Wider Community
The Ministry co-ordinated government-wide policy development under the Growth and Innovation Framework (GIF), covering innovation, talent and skills, global connectedness and infrastructure.
We also led the policy report back process on the GIF Taskforce reports, working closely with a number of government agencies. In particular, the Ministry took the lead in compiling two overview papers dealing with financial, communications and generic issues, plus responses to the Screen Production, ICT and Design Taskforce reports. We also provided significant input into the Biotechnology Taskforce report.
The Ministry developed policy advice on a digital television spectrum allocation framework that will assist industry to plan the introduction of digital television services.
We provided an update for the Minister on regional development priorities and policy/programme implications as part of the review of the Regional Partnerships Programme.
The Ministry's Statement of Intent commitment to report to the Minister on business opportunities associated with the efficient and environmentally sustainable use of resources was met through:
- the preparation of an analysis and recommendations on such opportunities associated with climate change;
- the initiation of projects aimed at increasing such opportunities through waste minimisation and environmental technologies; and
- the conclusion of scoping work for a possible Sustainable Business Framework
During the year we provided two companion reports to the Minister analysing the efficiency and effectiveness of industry and regional development programmes. A separate research study investigating standard business practices in private firms was completed and officially launched.
The Ministry continued to review and report on Industry New Zealand and Tourism NZ programmes, on a quarterly, annual and as required basis.
4. New Zealand has High Quality and Effective National and Regional Infrastructure
Strategic Priority: Promote Broadband Access and the Environment for E-commerce
The Ministry, in partnership with the Ministry of Education, commenced implementation of Project Probe, to provide broadband access to all schools and their communities by 2004. Following a regional tender round process, supplier decisions have been made relating to six regions. The suppliers for the remaining nine regions will be announced later in the year.
In conjunction with the inauguration of Project Probe, the Ministry has promoted the environment for electronic commerce. Key elements were enactment of the Electronic Transactions Act and support for key promotional events such as e-farming at Fieldays and the Telecommunications Users Association of New Zealand broadband applications conference.
Strategic Priority: Improve the Functioning of Electricity and Gas Markets
Monitoring of lake levels and managing thermal fuel for winter security was a key issue during 2002/2003. Significant work was undertaken in facilitating coal availability for Huntly, and officials actively participated in the Grid Security Committee and generation chief executives forum.
Options for delivering security of supply were also investigated, and Cabinet decided to implement a ''one in 60 dry year'' reserve generation capability. As part of this policy, work was undertaken on investigating a proposal by Contact Energy for a new reserve generation plant at Whirinaki. Decisions to purchase new reserve plant to improve security of supply for winter 2004 and beyond were announced in early 2003/2004.
The Government decided to establish a Crown entity, to be known as the Electricity Commission, to govern the electricity industry. An Electricity Commission Establishment Unit has been set up within the Ministry, and work on developing a statutory rule book has commenced.
In partnership with Treasury, the Ministry assisted the Minister of Energy to make significant progress towards reaching agreement amongst Maui parties on commercial arrangements that will ensure gas from the Maui field is optimised and the Government's security of supply, as well as commercial interests, are fulfilled.
A Government Policy Statement on the importance of Pohokura gas for security of supply was developed and issued to the Commerce Commission. The Ministry monitored the Commission's consideration of joint marketing of Pohokura gas, and made a submission to the Commission on the importance of Pohokura gas being marketed and developed as quickly as possible.
The Ministry has developed terms of reference for an inquiry into gas pipeline services as part of the decisions on the review of the gas sector. These have been forwarded to the Commerce Commission.
Other Activities
Work commenced on a comprehensive infrastructure stocktake, designed to establish New Zealand's infrastructure needs for sustainable development, and to identify an appropriate policy framework. This work is being financed as part of the Government's Growth and Innovation Framework.
5. New Zealand's Culture Promotes and Supports Innovation and Entrepreneurship
Innovation and entrepreneurship are critical drivers of economic growth and are key priorities for the Ministry. Our ability to deliver credible and evidence-based policy advice in this area is significantly driven by the Ministry's stock of knowledge and expertise. In this context the following projects have been completed:
- Firm Foundations (Business Practices and Performance Survey);
- Enterprising Intellectual Property research project;
- Promotion of Enterprise Culture research project;
- Stocktake of Industry and Regional Development Assistance Programmes; and
- Policy Forum on Drivers of Growth and OECD Working Party on SMEs and Entrepreneurship annual meeting.
A Ministry of Economic Development/Ministry of Foreign Affairs and Trade integration team completed the core policy phase of the process for integration of Industry New Zealand and Trade NZ. Cabinet approved a suite of six papers detailing the services to be provided by the new Crown entity New Zealand Trade and Enterprise (NZTE), accountability and governance arrangements, transition costs and an overview paper picking up longer term themes and setting in place a series of policy reviews.
6. Government Action to Encourage and Facilitate Sustainable Economic Development is Based on Robust and Well-Researched Policy Advice
Strategic Priority: Enhance the Evaluation of Economic Development Policies and Programmes
The continued development of the Growth and Innovation Framework, and its implementation across the public sector enabled the Ministry to ''look over the horizon'' in both policy and strategic terms.
The Ministry has continued to build its research and evaluation capacity over the year. Projects undertaken included:
- Investment Ready Scheme review;
- Regional Partnerships Programme review;
- Stocktake of Industry and Regional Development Programmes;
- Sector Implementation review; and
- Fast Forward Implementation review.
Work commenced on taking forward the Government's objectives on sustainable energy under the sustainable development programme of action.
The Ministry published a study of more than 2,700 firms from across the economy, called Firm Foundations. This is the most comprehensive survey of business practices and performance to be undertaken in New Zealand. It provides important insights into New Zealand business practices, and hence shows where policy may be best targeted to improve business capability and performance.
Both Firm Foundations and the statistical report SMES in New Zealand: Structure and Dynamics help to paint a picture of the underlying practices and structure of New Zealand businesses. Together with the compliance costs perceptions study, they provide government with a better understanding of businesses and the business environment.
7. Activities that Stimulate Economic Development are Co-ordinated Across the Whole of Government
Strategic Priority: Implement the Growth and Innovation Framework
During the first half of 2002/2003 Cabinet agreed to the growth and innovation indicators which, together with a qualitative update on implementation of GIF across the public sector, form the basis of the Growth and Innovation Indicators Report. Preparation of the report was a collective effort across the public sector.
The Ministry led the policy report back process on GIF Taskforce reports, working closely with a wide range of government agencies.
Other Activities
A number of the Ministry's business units have been working with other departments/agencies to ensure that their activities are co-ordinated. IPONZ, for example, has established networks with the Ministry of Research, Science and Technology on patent process developments; and is working with the Ministry of Foreign Affairs and Trade to ensure that the Ministry's international intellectual property obligations are fulfilled.
The Crown Minerals group has been working with other agencies on issues such as oceans policy, the Marine Reserves Bill, and Treaty claims for petroleum, minerals, harbours and foreshore, and access to land.
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