EV mandates to be canned

The coalition plans to scrap requirements for government agencies to buy zero or low-emitting vehicles.

The proposal is among the changes it wants to make to procurement rules so that it becomes easier for businesses to win government contracts, which are collectively worth more than $50 billion a year. 

Under current procurement rules, mandated agencies must opt for a battery electric vehicle – or a plug-in hybrid if a fully electric model is inappropriate. 

The regulation was introduced by the previous government to support the fleet’s switch to low-emissions models and the aim of achieving a net-zero emissions economy in 25 years.

If it comes to fruition, the proposal to change the procurement regulations will be seen as another blow for the electric-car sector. 

The clean car discount was canned at the end of 2023 after the current government came into power, road-user charges are now payable on EVs and there have been ACC levy hikes.

Nicola Willis, the Minister for Economic Growth, says the changes to the procurement rules include introducing an economic benefit test and scrapping 24 regulations that put “unnecessary obstacles” in the way of Kiwi companies.

“This is part of our plan to increase jobs and incomes by shifting New Zealand to a faster growth track,” she says.

“The economic-benefit test will require government agencies to consider the wider benefit to New Zealand of awarding contracts to New Zealand firms when making procurement decisions.

“Doing so will create export and employment opportunities, and help New Zealand businesses to grow.

“Businesspeople are innovative and resourceful, and the government wants to give them every opportunity to build scale so they can take on the world. 

“Reducing the number of rules will streamline and simplify the process for businesses.

“Currently, there are 71 rules that agencies must follow when tendering contracts. We are proposing to reduce that number to 47 by scrapping rules that are redundant or unnecessary, duplicate content, repeat statutory and regulatory requirements or have never been applied in practice.

“[Many] businesspeople find the paperwork involved in bidding for government contracts daunting. This will reduce the barriers that smaller and medium-sized New Zealand businesses face bidding for government contracts.”

The government is proposing to ditch requirements for its agencies to build new non-residential government buildings to five-star rating standards, to purchase office supplies that produce low amounts of waste and or are recyclable, and pay the living wage in contracts for cleaning, catering and security guard services.

Willis says: “Many of these requirements will be replaced by the economic-benefit rule. This will apply to all goods, services and refurbishment contracts worth more than $100,000 and all construction works worth more than $9 million.

“For contracts below these levels, agencies will be expected to award contracts to New Zealand businesses that have the capability to deliver.”

Public consultation on the draft rules closes on April 8, after which the proposals will be considered by cabinet.