A Year in Review: Milestones and Challenges of the 54th New Zealand Parliament

The first year of the 54th New Zealand Parliament has marked a significant turning point in the country’s political landscape following the 2023 General Election.

This edition of Nexus APAC Insights examines the key developments and achievements during this transformative period, highlighting the major shifts in governance, legislative changes, and the implications of these policies on various sectors.

Overview of the 2023 Election: A New Coalition Era

New Zealand has a mixed-member proportional (MMP) voting system which was introduced in 1996. Under this system, 72 MPs are elected directly in electorates, and the remainer of seats are assigned to list MPs based on each party’s share of the total party vote.

The 2023 General Election, held on 14 October 2023, marked a pivotal moment for New Zealand, determining the composition of the 54th Parliament. Voters elected 122 members to the unicameral House of Representatives. Out of 72 electorates, 71 seats were filled, with the Port Waikato electorate pending resolution through a by-election due to the passing of ACT Party candidate Neil Christensen.

In a historic outcome, the incumbent Labour Party led by Chris Hipkins MP, was defeated at the polls, with the centre-right National Party led by Christopher Luxon MP becoming the largest party in the new parliament. The election saw the worst defeat of a sitting government in New Zealand since the introduction of the MMP voting system, with Labour going from 65 seats in the first-ever outright majority any party had won under MMP to winning just 34 seats.

The election concluded with a by-election in the electorate of Port Waikato in which the National Party’s Andrew Bayly MP secured victory. Under the New Zealand system, this switched Mr Bayly from a list MP to an electorate MP, allowing the National Party to gain an additional list MP. Nancy Lu MP was added to the party’s ranks, increasing its representation, and resulting in 123 members of parliament.

The election campaign was marked by heightened political polarisation, particularly regarding Indigenous rights and co-governance—the shared decision-making framework between Maori and the Crown.

Following the election, Mr Hipkins conceded, paving the way for a National-led government. After three weeks of negotiations, Mr Luxon announced the formation of the “Sixth National Government” in coalition with ACT and New Zealand First on 24 November 2023. Mr Luxon was sworn in as Prime Minister by Governor-General Dame Cindy Kiro on 27 November 2023. This marks New Zealand’s first three-party coalition government, and represents a significant shift in governance.

Legislative Developments: Industrial Relations and Finance

In a concerted effort to foster economic flexibility, recent legislative changes in industrial relations and finance have aimed to streamline business regulations and modify tax policies, despite opposition concerns regarding potential negative impacts on workers’ rights and wages.

Key developments include:

• The repeal of key legislation from the previous Labour government, including the Single Inflation Mandate and the Fair Pay Agreements Act 2022.
• The reinstatement of 90-day work trials for all employers to encourage hiring.
• Property Investment Tax Reform which restored interest deductibility for residential investment property and reduced the bright-line test for residential property to two years.
• A mandated minimum three-year expiry date for gift cards, aligning New Zealand with international standards.

New Zealand remains in the midst of an economic crisis, with spending above pre-Covid levels, sharply rising public debt, and budget deficits looming in coming years. Prime Minister Luxon, a long-time corporate senior executive, has committed to quarterly reporting. To date, his approach to economic recovery has centred on tax cuts and cutting government spending.

In addition, the Government’s approach to foreign affairs and trade has been marked by a reaffirmation of support for the United States-led rules based system, a desire to deepen ties with Australia and Pacific Islands neighbours, and maintaining a strong trade relationship with China.

Legislative Developments: Energy and Environment

Legislative changes in energy and environmental policy have reflected a shift towards reducing regulatory burdens while prioritising economic considerations. Advocacy groups have raised concerns regarding potential impacts on environmental protections.

Key developments include:

• The repeal of key environmental initiatives, including the Water Services Reform Programme and the Clean Car Discount. The National Party and ACT Party campaigned on repealing the latter, arguing that it unfairly increased costs for groups such as farmers with no viable low-emission alternative to utes.
• Legislation mandating that light electric vehicles and plug-in hybrids pay road user charges. The fees (set at $76 per 1000 kilometres for electric vehicles and $38 for plug-in hybrids) aim to ensure contributions to road funding from all vehicle owners.

Legislative Developments: Health and Indigenous Affairs

Recent legislative changes in health aim to streamline healthcare administration, while adjustments in Indigenous affairs reflect commitments made during the election campaign to modify representation structures.

Key developments include:

• The disestablishment of Te Aka Whai Ora (the Maori health authority), and the transfer of its functions and staff to the Ministry of Health and Health New Zealand. The Government argued this would streamline healthcare administration and ensure resources were allocated based on need rather than ethnicity. This decision has since faced legal challenges from Maori health providers citing breaches of the Treaty of Waitangi.
• The passing of legislation reinstating the local referendum requirement for the establishment of Maori wards and constituencies. Nearly all 45 councils that established Maori wards without a public referendum chose to retain them but must now hold referendums to confirm public support.
• Allowing eleven cold and flu medications containing pseudoephedrine to be purchased over the counter at pharmacies following consultation a pharmacist. This is intended to provide relief to New Zealanders suffering from colds and flu during winter.
• Repealing parts of the previous government’s plan to regulate smoked tobacco, in particular, denicotinising cigarettes, reducing the number of tobacco retail outlets, and implementing a generational ban on smoked products.

In addition, the 54th New Zealand Government has significantly increased investment in Pharmac, allocating a record $6.294 billion over four years to improve medicine access. This includes a $604 million funding boost announced in October 2024 to expand access to cancer treatments and other medicines, benefiting an estimated 175,000 people annually.

One Year On: Government Priorities Shaping the Path Forward

Throughout its first year, the Government has addressed a broad spectrum of priorities, including industrial relations, financial policy, energy reform, health initiatives, and Indigenous affairs.

According to Roy Morgan’s New Zealand Poll for September 2024, support for the National-led Government was at 55 percent, increasing its lead over the Opposition on 41 percent.

Looking ahead, Nexus APAC has identified the key priorities set to drive New Zealand Parliament as it enters its second year.

Industrial Relations and Finance

• Streamlining processes for foreign investment to attract overseas investors in large rental developments.
• Passing the Taxation (Annual Rates for 2024-25, Emergency Response and Remedial Matters) Bill, which contains introduce taxpayer-friendly measures aimed at reducing compliance costs and increasing productivity.

Energy and Environment

• Passing legislation establishing a permanent fast track approvals regime for a range of infrastructure, housing and development projects. This is intended to address New Zealand’s housing crisis, infrastructure deficit, and climate targets.
• Promoting petroleum exploration and production by passing legislation reversing the ban on new oil and gas exploration beyond onshore Taranaki.

Health and Indigenous Affairs

• Pursuing sweeping reforms in healthcare regulation, focusing on reducing red tape for low-risk medical devices and natural health products.
• Combating youth vaping through banning disposable vapes, increasing fines for sales to minors, restricting retailer visibility outside specialist vape shops, and limiting proximity to early childhood education centres.

Conclusion

In its first year, the 54^th New Zealand Government has demonstrated a remarkable commitment to expediting legislative change, setting a record by passing more bills under urgency in its first 100 days than any New Zealand government since 1996.

While this approach has enabled the Government to fulfil multiple campaign commitments in a timely manner, it also raises concerns regarding adequate stakeholder consultation and policy development.

Moving forward, the Government will face increasing pressure to balance its ambitious legislative agenda with more comprehensive consultation.

Stay tuned on the Nexus APAC Insights page for more political updates.