Competitive business settings

With 97% of New Zealand businesses being small enterprises, reducing regulatory burdens will unleash their potential and foster a more dynamic, competitive economy. Competitive markets lower costs for consumers and drive business innovation.

When businesses have to jump through endless hoops just to operate, all New Zealanders pay the price in higher costs, fewer choices, and slower growth.

Improving competition settings to boost productivity and living standards

Well-designed regulatory settings that promote competition and protect consumer interests have a positive effect on productivity by putting downward pressures on costs, promoting efficient allocation of resources, and incentivising innovation and investment.

While competition generally boosts productivity, there are some exceptions, particularly in infrastructure, where there are large economies of scale and network efficiencies. In these infrastructure monopolies, regulation can incentivise these entities to innovate, invest, and increase productivity.

New Zealand lags behind its international counterparts in its competition settings and these need updating. To address this, the Government has consulted on a review of New Zealand’s core competition rules – in particular, merger settings. Mergers can improve market efficiencies but can also entrench market power and create monopolies. New Zealand’s merger regime has not been reviewed in over 20 years and the economic landscape has changed significantly. Market power has consolidated in a number of sectors.

Seeking feedback to improve competition in New Zealand

In order to have robust, genuinely competitive markets, New Zealand needs fit-for-purpose laws and a regulator that has the tools and commercial nous to oversee the law. This is why the Government has appointed Dame Paula Rebstock to lead a review of the governance and effectiveness of the Commerce Commission. The review will be completed by May 2025.

Terms of Reference – Governance and effectiveness review of the Commerce Commission [PDF, 133 KB]

New Zealand also has inadequate competition in key markets such as the banking, grocery and electricity sectors. Work is underway to address the issues identified in the Commerce Commission’s competition study into the banking sector. A Parliamentary Select Committee is also inquiring into banking competition and will make recommendations on potential action to improve competition.

Delivering more competitive banking for Kiwis(external link) — Beehive.govt.nz

Inquiry into banking competition(external link) — New Zealand Parliament

The Commerce Commission published its first Annual Grocery Report in September 2024. It is now investigating a range of matters, including land banking and possible changes to regulations such as the Grocery Supply Code.

Annual Grocery Report(external link) — Commerce Commission New Zealand

Supply shortages and a period of sustained high wholesale energy prices have been a major challenge for households and businesses – with negative impact on growth and productivity performance. The Government wants to encourage more and faster investment in new electricity generation to boost competition and lower prices. This would enable homes and businesses to better manage their electricity use and costs, and it would put downward pressure on prices.

The Government is progressing legislation through the Customer and Product Data Bill to facilitate competition, innovation and productivity. This would allow consumers and businesses to share their data with trusted third parties, enabling digital providers to offer new services and products.

‘Open banking’ and ‘open electricity’ a step closer(external link) — Beehive.govt.nz

Enabling economic growth and reducing complexity and costs

In order to enable economic growth, the administrative burden placed on those who drive growth must not be excessive.

Tax is a key area where the Government has heard concerns about complexity of rules and the incentives for businesses to invest and innovate. The Government will look at how tax settings can deliver better outcomes for New Zealanders, be less complex, and support growth.

Work is also progressing on health and safety reforms and employment relations reforms. These will make it clearer what employers need to do to manage health and safety at their workplaces, and simplify rules around holidays and other leave because the current system is too complex and adds to business costs.

Employment Relations Act 2000 amendments

The reforms aim to reduce the compliance burden for employers and to ensure settings are proportionate.

The Government has already extended 90-day trials to give employers more confidence to take a chance with a new employee and scrapped Fair Pay Agreements, which reduced flexibility and increased costs for employers. Reducing costs for employers will enable them to grow and invest more in their businesses.

Streamlined financial services regulations (including consumer credit) are also being worked on by the Government to reduce red tape, and the modernisation of key legislation such as the Companies Act will support businesses.

2024-25 financial services reforms

The Government will be updating the patents process so certain applications without merit can be refused more quickly, providing certainty, reducing risks and delivering costs savings for businesses.

Proposed Intellectual Property Laws Amendment Bill

Capital markets settings are being reformed by removing barriers to listing, reducing costs to firms, and enabling greater investment in private assets (e.g. unlisted infrastructure, growth businesses) from KiwiSaver providers.

Invigorating New Zealand’s capital markets(external link) — Beehive.govt.nz

Lifting the productive capability of Māori land is another area the Government is examining, with concerns raised by Māori about legislative and institutional impediments to more productive use of their land. These include limitations on the exercise of property rights. Lifting the productive capability of Māori land could result in potentially billions of dollars more in annual revenue generation from primary Māori freehold land.

The Ministry for Regulation is conducting sector reviews into early childhood education, agricultural and horticultural products, and hairdressing and barbering, with further reviews to be announced throughout the year. These reviews will make recommendations to drive more effective and efficient regulation. This will reduce the regulatory burden on businesses and unlock opportunities for competition and growth.

Regulatory reviews(external link) — Ministry for Regulation

The New Zealand public sector spends around $51.5 billion each year purchasing goods, services and infrastructure to support the delivery of public services. A review of the Government Procurement Rules is underway to ensure government procurement activities support the New Zealand economy by promoting responsible spending and competition, reducing red tape, and providing targeted support for local New Zealand businesses.

Government's actions

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