Offshore Renewable Energy Bill
The departmental disclosure statement for a government Bill seeks to bring together in one place a range of information to support and enhance the Parliamentary and public scrutiny of that Bill.
It identifies:
- the general policy intent of the Bill and other background policy material;
- some of the key quality assurance products and processes used to develop and test the content of the Bill;
- the presence of certain significant powers or features in the Bill that might be of particular Parliamentary or public interest and warrant an explanation.
This disclosure statement was prepared by Ministry of Business, Innovation and Employment.
The Ministry of Business, Innovation and Employment certifies that, to the best of its knowledge and understanding, the information provided is complete and accurate at the date of finalisation below.
13 November 2024
Part One: General Policy Statement
Renewable energy generated offshore, including from offshore wind farms, could support New Zealand to meet its long-term energy needs, including the transition to net-zero carbon emissions by 2050.
The Offshore Renewable Energy Bill (the Bill) establishes a legislative regime to govern the construction, operation, and decommissioning of offshore renewable energy developments. The regime aims to fill a gap in the current legislative environment, which does not provide potential developers with sufficient certainty to invest in offshore renewable energy projects. The Bill seeks to:
- give greater certainty for developers to invest in offshore renewable energy developments;
- allow the selection of offshore renewable energy developments that best meet New Zealand’s interests;
- manage the risks to the Crown and the public from offshore renewable energy developments.
A bespoke legislative regime is considered the most efficient way to achieve these objectives. The Government has committed to the introduction of this regime as part of its Electrify NZ work programme, which has the goal of doubling renewable energy generation by 2050.
Key functions of the Bill
The Bill meets the objectives by creating—
- a two-stage permitting regime designed to give potential developers greater certainty and to enable the selection of developments that best meet New Zealand’s interests;
- consultation requirements to ensure relevant interests are considered, including specific requirements for consultation with Māori groups;
- decommissioning and financial security obligations to ensure the decommissioning of offshore renewable energy infrastructure occurs at the expense of permit holders and owners of related transmission infrastructure;
- the ability to have safety zones around offshore renewable energy infrastructure to protect infrastructure and people; and
- provisions to enable the administration, monitoring, and enforcement of the regime and associated offences and penalties.
Feasibility and commercial permitting regime
The Bill creates the following 2 classes of permits, which will be awarded by the Minister for Energy (the Minister):
- A feasibility permit will give the holder the exclusive ability to apply for a commercial permit in an area, as well as the right to apply for relevant resource or marine consents in the same area. A feasibility permit will give the holder certainty that no other offshore renewable energy developers will be approved to develop the same site while they undertake feasibility studies. Feasibility permits will be subject to use it or lose it requirements and can be revoked if certain milestones are not met.
- A commercial permit must be obtained before construction begins. The Minister may impose conditions on the permit and it provides a mechanism for imposing, monitoring and enforcing key obligations on the permit holder for the operational life of the development.
The Bill provides for permits to be varied, transferred, surrendered and revoked, and for a change in significant influence over a permit holder to occur, provided relevant approvals are obtained.
The Bill does not replace or duplicate existing regulatory requirements. For example, the consenting requirements under the Resource Management Act 1991 and the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 will still apply.
Assessment of permit applications
The assessment of permit applications is intended to ensure that permits are awarded to the projects are likely to deliver benefits for New Zealand (and where there is competition, the permit is awarded to the application with the most merit) and that risks are identified and managed.
Feasibility permits
Feasibility permits may be awarded following an application round. Proposed projects must be likely to deliver benefits for New Zealand. Applicants will need to meet a minimum eligibility threshold and establish that they have the technical and financial capability to install, operate, maintain, and decommission the proposed infrastructure.
In considering feasibility permit applications, the Minister will be required to, among other things, have regard to:
- any significant risks to national security or public order posed by the applicant; and
- the impact on Treaty settlements; and
- the applicant’s approach to managing existing rights and interests in the area.
The Minister may launch an application round by giving public notice specifying the relevant geographic area (or areas) and any limitations that apply.
Where there are competing feasibility permit applications, the Minister may award a feasibility permit to the application or applicant with the most merit. Where there are applications for overlapping permit areas, the Minister may also invite 1 or more applicants to revise their application(s).
Commercial permits
Only the feasibility permit holder may apply for a commercial permit for the permit area covered by the feasibility permit.
When considering commercial permit applications, the Minister must be satisfied, among other things, that the applicant:
- has the technical and financial capability to install, operate, maintain, and decommission the proposed infrastructure and is ready to carry out the proposed development plan; and
- is highly likely to comply with the requirements of the regime; and
- has, or will be able to, put in place an acceptable financial security arrangement for decommissioning.
The Minister will also consider whether there are any changes to the proposed development that are material to the benefits that were assessed at the feasibility stage and whether the applicant poses any significant risks to national security or public order.
Consultation requirements to ensure relevant interests are considered
The Bill includes consultation requirements, including requirements relating to consultation with relevant Māori groups.
Applicants for feasibility and commercial permits must consult with relevant Māori groups ahead of submitting their applications. The Minister must also consult those Māori groups before granting any permit.
The Minister must give public notice of all feasibility permit applications that are being considered and provide a reasonable opportunity for any person who wishes to make a submission on a feasibility permit application to do so. The Minister must also give public notice after accepting a commercial permit application but (beyond consultation with specific Māori groups) need not otherwise consult.
Decommissioning and financial security obligations will apply
The Bill creates obligations on permit holders and owners of related transmission infrastructure to decommission their offshore renewable energy infrastructure at the end of its life.
The Bill creates a related requirement to put in place and maintain financial securities, which cover the cost to the Crown of decommissioning the infrastructure in the event that the person with the obligation to decommission fails to do so.
Safety zones to protect infrastructure and people
The Bill will enable safety zones of up to 500 metres to be established around generation infrastructure and substations, which will prohibit unauthorised people or vessels from entering or undertaking certain activities in the area. Applicants for safety zones must have consulted Maritime New Zealand and anyone likely to be affected by the proposed safety zone.
Provisions to enable administration, monitoring, and enforcement of the regime and associated offences and penalties
The Bill enables the administration, monitoring, and enforcement of the regime by the Ministry of Business, Innovation, and Employment. It also provides for recovery of the costs of administering the regime through fees and levies.
The Bill provides for enforcement officers and safety zone officers who are empowered to undertake a wide range of compliance and enforcement actions. The Bill includes a range of offences and penalties for various breaches of the regime. Penalties include fines ranging from $3,000 to $10 million, pecuniary penalties, imprisonment for a term not exceeding 2 years, or the revocation of a permit.
Part Two: Background Material and Policy Information
Published reviews or evaluations
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? |
NO |
Relevant international treaties
2.2. Does this Bill seek to give effect to New Zealand action in relation to an international treaty? |
NO |
Regulatory impact analysis
2.3. Were any regulatory impact statements provided to inform the policy decisions that led to this Bill? |
YES |
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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 |
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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? |
YES |
Some changes have been made following further policy work since finalisation of the June 2024 Regulatory Impact Statement (RIS). These changes have been confirmed by Cabinet and are set out below: · The RIS recommended a division of responsibilities between developers and Transpower for transmission infrastructure, with these roles being expressed in primary legislation. It has since established that the Bill does not need to prescribe these roles. Instead this can be managed through Transpower’s existing systems, processes and guidance. The approach to decommissioning and trailing liability has been refined to reduce financial risks to the Crown: · The RIS initially recommended basing the cost of the financial securities developers must provide on the estimated cost for developers to decommission the offshore renewable energy infrastructure. MBIE subsequently recommended that it instead be based on the costs that the Crown would incur if it carried out the decommissioning, in line with the approach taken by Australia and the UK. Crown cost would likely be greater because developers may have access to preferential commercial pricing not available to the Crown, or plan to use their own employees or vessels rather than more costly outsourcing. · The RIS also recommended the regime should not include trailing liability. MBIE subsequently recommended a limited form of trailing liability, in line with the UK’s approach, that keeps previous permit holders liable for decommissioning until the new permit holder's security has fully accrued. |
Extent of impact analysis available
2.4. Has further impact analysis become available for any aspects of the policy to be given effect by this Bill? |
NO |
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2.5. For the policy to be given effect by this Bill, is there analysis available on: |
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(a) the size of the potential costs and benefits? |
NO |
(b) the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth? |
NO |
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2.6. For the policy to be given effect by this Bill, are the potential costs or benefits likely to be impacted by: |
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(a) the level of effective compliance or non-compliance with applicable obligations or standards? |
NO |
(b) the nature and level of regulator effort put into encouraging or securing compliance? |
NO |
Part Three: Testing of Legislative Content
Consistency with New Zealand’s international obligations
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? |
MBIE consulted with the Ministry for Foreign Affairs and Trade (MFAT) as part of the policy design and drafting process. MFAT considered New Zealand’s international investment obligations in trade agreements. Overall, MFAT considers that this is a well-designed Bill that contains all the things expected in a robust regulatory regime. This means that the basis on which foreign investors will be seeking to invest in New Zealand’s offshore renewable energy infrastructure is clear from the outset, which helps to reduce investment risk. MFAT noted that the offshore renewable energy regime had United Nations Convention on the Law of the Sea (UNCLOS) interactions and consideration was given to whether an express clause was needed in the Bill. However, it was confirmed by MFAT and the Parliamentary Counsel Office that a specific clause was not needed. MFAT identified some concerns around the financial security for decommissioning and providing certainty around the level of security and when it changes. These matters will be further set out in regulations. MFAT also noted that the way in which some provisions may be implemented in the future may still give rise to investment law risks. MBIE will work with MFAT to manage any implementation risks, including in relation to investment law. |
Consistency with the government’s Treaty of Waitangi obligations
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? |
MBIE has taken steps to check that the offshore renewable energy regime is consistent with the Treaty of Waitangi. This has included: · Engagement with Māori groups during the policy development phase, including workshops with iwi in areas of interest for offshore wind developments (this will continue through implementation) · Incorporating experience from working with Māori in managing the Crown Mineral Estate in developing policy, legislation, and designing implementation of the regime · Discussion of specific provisions in the legislation with the Treaty Provisions Oversight Group. The Government has also directed that the approach in the legislation align with the Fast Track Bill. Specifically, the Bill will require that: · Developers engage with relevant iwi, and identify and understand their rights and interests in relation to any particular development. This includes in relation to Treaty settlements, [MACA], and similar agreements · The Minister for Energy consult with relevant iwi and Māori groups regarding a development’s impacts on their rights and interests. |
Consistency with the New Zealand Bill of Rights Act 1990
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 |
Advice provided to the Attorney-General by the Ministry of Justice, or a section 7 report of the Attorney-General, is generally expected to be available on the Ministry of Justice’s website upon introduction of a Bill. Such advice, or report, will be accessible on the Ministry’s website at https://www.justice.govt.nz/justice-sector-policy/constitutional-issues-and-human-rights/the-bill-of-rights-act/compliance-reports |
Offences, penalties and court jurisdictions
3.4. Does this Bill create, amend, or remove: |
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(a) offences or penalties (including infringement offences or penalties and civil pecuniary penalty regimes)? |
YES |
(b) the jurisdiction of a court or tribunal (including rights to judicial review or rights of appeal)? |
YES |
Clauses 144-164 of the ORE Bill create new offences, penalties and civil pecuniary penalties. Detail on the offences and penalty framework and jurisdiction of the court in Appendix 1. |
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3.4.1. Was the Ministry of Justice consulted about these provisions? |
YES |
The Ministry of Justice (MOJ) has been consulted throughout the policy development and drafting process. Its feedback has been taken into account in the design of the offences and penalties regime or the Bill. Further detail is provided in Appendix 1. |
Privacy issues
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? |
YES |
Clauses 104, 115-116 and 118 relate to the collection, storage, use and disclosure of information. Further information is provided in Appendix 1. |
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3.5.1. Was the Privacy Commissioner consulted about these provisions? |
YES |
The Office of the Privacy Commissioner was engaged on the policy as part of seeking Cabinet decisions for the design of the regime. Further information on this engagement is provided in Appendix 1. |
External consultation
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 |
There have been two rounds of public consultation on the policy given effect by this Bill, which can be accessed below: · https://www.mbie.govt.nz/dmsdocument/25828-enabling-investment-in-offshore-renewable-energy · https://www.mbie.govt.nz/dmsdocument/26913-developing-a-regulatory-framework-for-offshore-renewable-energy-pdf Summaries of the feedback can be found at: · https://www.mbie.govt.nz/assets/summary-of-submissions-developing-a-regulatory-framework-for-offshore-renewable-energy.pdf MBIE has also engaged with industry, iwi and other stakeholders on key policy proposals and regulatory design issues during the development of the regime. |
Other testing of proposals
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? |
NO |
Part Four: Significant Legislative Features
Compulsory acquisition of private property
4.1. Does this Bill contain any provisions that could result in the compulsory acquisition of private property? |
NO |
Charges in the nature of a tax
4.2. Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax? |
NO |
It is intended that the system be fully cost-recovered which will cover the costs of implementing the system only (and therefore is not a charge in the nature of a tax). |
Retrospective effect
4.3. Does this Bill affect rights, freedoms, or impose obligations, retrospectively? |
NO |
Clause 175 and 179 of the Bill mean that applications for resource or marine consents lodged but not determined before the legislation is in force must be declined if a feasibility permit covering the area is not granted to the applicant in the first round (first permits intended to be granted in 2026). Any open consent applications could continue to be considered, but could only be granted if the applicant obtains a feasibility permit. This provision is not legally retrospective, but it could be perceived as changing the rules for anyone who has lodged a consent application before the legislation is in force. |
Strict liability or reversal of the usual burden of proof for offences
4.4. Does this Bill: |
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(a) create or amend a strict or absolute liability offence? |
YES |
(b) reverse or modify the usual burden of proof for an offence or a civil pecuniary penalty proceeding? |
NO |
The Bill creates the following strict liability offences: · Clause 145, which relates to where a person makes a change (or permits a change) of significant influence over a permit holder without the Minister’s approval. It’s a defence if the defendant proves that they did not know, or could not reasonably be expected to have known, that the person obtained or ceased to hold significant influence over the permit holder. The defendant is in the best position to justify what they knew or didn’t know when the offence occurred. · Clause 147, which relates to a person failing to notify the Minister of a change of significant influence over a permit holder. It’s a defence if the defendant proves that they did not know or could not reasonably be expected to have known, that the person obtained or ceased to hold significant influence over the permit holder. The defendant is in the best position to justify what they knew or didn’t know when the offence occurred. · Clause 148, which relates to entering in or carrying out a prohibited activity in a safety zone. It’s a defence if the person proves they had a reasonable excuse for the contravention, which includes that doing so was necessary to save a life or ship, or to secure the safety of offshore renewable energy infrastructure or equipment, or the person took all reasonable steps to avoid the contravention. The defendant is in the best position to know why they were in the safety zone.
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· Clause 154, which provides that it’s an offence if an officer holder breaches the requirement not to have a pecuniary interest in a permit. It’s a defence if the person did not know or could not reasonably have expected to have known, that they had the interest. The defendant is in the best position to explain why they had knowledge of their pecuniary interest. · Clause 155, which provides that it’s an offence for contravening (or permitting the contravention of) a compliance notice without reasonable excuse. The defendant is in the best position to explain why they couldn’t comply in the time required. · Clause 151 (offence for failing to provide requested information), clause 153 (failing to comply with requirements of a safety zone officer) and clause 156 (contravening an enforceable undertaking) are strict liability offences that apply once the person fails to comply with a request, requirement or undertaking (i.e. there is a mens rea element to the offence around being aware about the request, requirement or undertaking). The Bill creates the following absolute liability offence: Clause 144, which relates to where a person gives effect to a resource or marine consent by undertaking offshore renewable energy generation activities unless the person is a holder of a commercial permit. Giving effect to a consent without a commercial permit undermines the permitting regime (by potentially taking up areas where a permit holder has been granted a permit or limiting the use of that area). |
Civil or criminal immunity
4.5. Does this Bill create or amend a civil or criminal immunity for any person? |
YES |
Clause 111 contains civil and criminal immunity for enforcement officers, safety zone officers or people called to assist enforcement officers or safety zone officers when doing an act, or omitting to do an act, when performing a function or exercising a power under the Bill, unless the person acted (or omitted to act) in bad faith. This immunity does not apply when exercising powers of inspection or search. This approach is consistent with the approach taken under the Crown Minerals Act, which parts of this Bill has been modelled off, and ensures the same treatment between the similar permitting regimes. This immunity does not extend to the employer of those officers (or the employer of people called to assist), an important protection noted by the Law Commission. |
Significant decision-making powers
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 |
Powers to make delegated legislation
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 |
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4.8. Does this Bill create or amend any other powers to make delegated legislation? |
YES |
Regulation empowering provisions There are enabling provisions throughout the Bill. Clause 167 sets out situations where regulations may be made, including prescribing: - matters relating to the grant of a permit, including for example, additional matters that the Minister must have regard to when determining whether to grant a permit. - the manner in which things may be done (for example, who, when, where and how the thing must be done i.e. who can apply to for a permit, when, where and how). - information that must be included or provided for the purposes of this act or for anything else that is necessary for carrying out or giving full effect to the act. Clause 168 of the Bill sets out that regulations may be made in relation to fees and levies to recover the costs of the offshore renewable energy regime (for example, specifying the amount of the fee or levy and how the fee or levy is to be paid). These regulations are matters of detail for which it wouldn’t be appropriate to use Parliamentary time (i.e. matters of procedure and implementation, forms and fees). It is generally accepted that these types of matters should sit within secondary legislation and not primary legislation. Safety Zone notices A commercial permit holder or a person who builds, owns, or operates a substation may apply for a safety zone around the relevant offshore renewable energy infrastructure. The safety zone may prohibit access to the area or prohibit certain activities in the area to protect people and the infrastructure. The Act empowers the Minister to issue a notice declaring a safety zone of up to 500 metres around the offshore renewable energy infrastructure (clause 63). This notice is secondary legislation and may be disallowed in accordance with the Legislation Act 2019. |
Any other unusual provisions or features
4.9. Does this Bill contain any provisions (other than those noted above) that are unusual or call for special comment? |
NO |
Appendix One: Further Information Relating to Part Three
Offences, penalties and court jurisdictions – question 3.4
The most serious offences in the regime relate to:
- undertaking offshore renewable energy generation infrastructure activities (building or operating ORE infrastructure) with a resource or marine consent, but without a commercial permit (clause 144)
- knowingly failing to decommission or retain the appropriate financial security arrangements (clause 149).
For more information on this response, see Appendix 1.
These offences are important because the actions associated with them create risk to the Crown of either undermining the regime (by subverting the need for a commercial permit) or through creating financial risk to the Crown of decommissioning (either through failing to decommission or by not retaining the appropriate financial security needed to decommission).
If a person commits an offence against clause 144, they are liable on conviction, if they are an individual, to imprisonment for a term not exceeding 2 years or to a fine not exceeding $1 million (or both), or in any other case, a fine not exceeding $10 million.
The penalty is the same for individuals under clause 149. However, for other cases (like a body corporate) the level of the fine is the greater of up to $10 million or 3 times the cost of decommissioning, or in the case of a contravention of the financial security obligation, 3 times the amount by which the contravention reduced the required amount of financial security. A director may be personally liable, subject to certain defences applying, if they were a director at the time the permit holder committed the breach.
There is also a civil pecuniary penalty for failing to carry out or meet the costs (or both) of decommissioning (clause 157). There are defences available if the contravention was due to a reasonable mistake or due to events outside the person’s control and the contravention was remedied or compensation provided (clause 159).
Other offences relate to breaches of obligations under the Bill, for example failing to provide information, failing to comply with the requirements of a safety zone officer or contravening a compliance notice or enforceable undertaking. These are necessary to incentivise compliance with the obligations in the Bill.
Appeal rights and judicial review
Under clause 165 of the Bill, a person may appeal to the High Court on a question of law, for any of the following decisions of the Minister:
- rejecting an application for a commercial permit, or for a minor extension to a permit area, or to extend the duration of a permit
- declining to give approval for a transfer or change in significant influence
- revoking an approval for a change in significant influence or revoking a permit.
Full judicial review rights are available.
Offences, penalties and court jurisdictions – question 3.4.1
On the advice of the Ministry of Justice, MBIE did not recommend:
- accruing penalties – because accruing penalties can lead to large financial sanctions with no maximum, which can undermine the principle of the certainty of law.
- an infringement regime – because infringement offences are used where there is a low-level offence occurring at volume and on a regular basis, and where identifying the actual offender isn’t practicable e.g., parking fines. The maximum fee advised is $1000. The offshore renewable energy regime would only apply to a small number of participants who are expected to be large multi-national companies, meaning an infringement regime would not be an effective tool to use for lower-level offences.
- a broad offence around failing to comply with the act, regulation or permit conditions – because the Ministry of Justice advises against these broad offences, especially where other levers are available (like warnings, compliance notices etc).
Privacy issues – question 3.5
Clause 104 of the Bill gives the Minister, the chief executive or an enforcement officer the power to require information. This information is unlikely to involve an individual’s personal information and is more likely to be provided about the operation of a permit or any commercial agreements which relate to the permit or to an offshore renewable energy development or any transmission infrastructure activities.
A permit holder is required to keep records under clause 115. Again, this information is unlikely to contain an individual’s personal information. The information required to be kept includes financial records, commercial records, feasibility studies and scientific and technical records.
Clause 116 provides how the Minister, the chief executive or any enforcement officer may use any information supplied under the Act and includes protections around the disclosure of information. Information cannot be disclosed except in certain circumstances, for example, unless the person to whom the information relates or to whom the information is confidential, consents or where disclosure is required by a court or by legislation.
The Bill contains information sharing between agencies for the purposes of exercising the agency’s functions, duties or powers under any legislation. This is set out in clause 118. The agencies can impose conditions relating to the provision of the information, including in relation to the storage, use and access of the information provided and in relation to the copying, returning or disposing of the information.
Clause 113 of the Bill requires the chief executive to main a register of permits. The register could have personal information, including the name and contact details of the permit holder. It would also contain the permit and a record of any variation, transfer, change of significant influence and partial surrender approved in relation to the permit. The chief executive must make the information publicly available unless the information is commercially sensitive or disclosure is prohibited under the Privacy Act 2020.
Privacy issues – question 3.5.1
The Office of the Privacy Commissioner (OPC) acknowledged that the level of individual information being disclosed was likely to be low and said any potential privacy issues would relate to the release of personal information in the context of MBIE as the regulator (i.e. through information sharing provisions) and via the public register of permits.
The OPC said that agencies would need to abide by the collection, use and disclosure provisions of the Privacy Act 2020. The OPC also mentioned that the public register may create privacy risks and noted that it is important to carefully consider whether personal information needs to be included in the register, and if so whether it needs to be made publicly available.
The OPC recommended carefully considering how to limit the sharing of personal information on the proposed public register to avoid unnecessary privacy impacts. The details of what level of information will be required on the register will be worked through during the implementation of the Bill, but OPC’s concerns, and best practice, will be considered.
OPC did not consider it needed to be engaged further on the drafting of the Bill.