Apr 9, 2025
Going For Growth: new procurement rules submission

We support the role that government procurement can play in benefitting every community across the motu. We agree that simplifying and streamlining the procurement process is important, and reducing rules is a logical starting point. However, this should not undermine key considerations and past efforts in ensuring government spending supports long-term positive outcomes. Government procurement can support us to go for growth by increasing productivity of energy, which is a fundamental economic input

To: MBIE  

Consultation: Going For Growth: new procurement rules submission 

About Rewiring Aotearoa: 

Rewiring Aotearoa represents everyday New Zealanders in the energy transition and is working to build an electrified future where every Kiwi saves money on energy bills, reduces their carbon emissions and has the resilience to keep their lights on and homes warm.

Our submission: 

Thank you for the opportunity to provide feedback on MBIE’s Going For Growth: new procurement rules. We support the role that government procurement can play in benefitting every community across the motu.

We agree that simplifying and streamlining the procurement process is important, and reducing rules is a logical starting point. However, this should not undermine key considerations and past efforts

in ensuring government spending supports long-term positive outcomes.

Given our limited time and resources as an independent non-profit with a small team, we have decided to keep this submission brief. It consists of two sections: 

1.0 General context 

2.0 Answers to selected consultation questions (specifically Rules 1-5, Rule 7 and Rule 8)

1.0 General context 

This section provides a general overview of our high level concerns with this plan, in which we aim to support with insights from across our work.  

1.1 Growth 

Energy productivity of electrification 

Electrification shifts fossil fuel-based systems to electric alternatives, significantly improving efficiency and reducing costs across sectors. Electric machines (e.g., EVs, appliances, and heating) convert energy much more efficiently than fossil fuel counterparts - making better use of resources and reducing waste. For example, EVs convert 87-91% of electrical energy into motion, whereas petrol vehicles only convert 16-25%, with the rest lost as heat and vibrations. This efficiency reduces energy consumption, emissions, and operational costs.  

One of the underappreciated points about electrification is that while it does involve consuming more electricity, it consumes less overall energy. Fossil fuels need to be burned to create useful energy, but this conversion process is incredibly inefficient. Most of the primary energy is lost as heat during combustion, and even more is lost in distribution. In fact, it is estimated that the global energy system currently only converts about 35% of primary energy into useful energy. Electric alternatives, powered by renewable sources, drastically improve this conversion efficiency.

Electrification not only improves energy efficiency but also optimises material usage. Unlike fossil fuel systems, which are resource-intensive and wasteful throughout their lifecycle, electric systems use materials that are more readily available and highly recyclable. While some electric products have higher manufacturing emissions, these are outweighed by their much lower operational emissions, resulting in a net reduction in lifetime emissions. Moreover, electrification reduces the overall energy and material demands of our system. While building renewable infrastructure does require resources, the impact of fossil fuel systems (through extraction, transportation, consumption, and waste) is far greater. Technologies like rooftop solar and home batteries, for example, provide decentralised, local energy solutions that require less land and materials compared to large-scale power stations, enabling us to meet our energy needs more efficiently and sustainably.

Electrification is about doing more with less. It offers a pathway to a better energy system through greater efficiency, lower impacts, and higher energy productivity. By switching to electric technologies powered by renewable energy, we create a more efficient, resilient, and sustainable energy system – one that reduces waste, lowers costs, and decreases environmental impacts. Electrification describes a journey and not necessarily a single event. It’s a transition that not only makes economic sense but is essential to meeting our climate goals and securing a cleaner, more resilient future for all.

Government procurement can support us to go for growth by increasing productivity of energy, which is a fundamental economic input

As Aotearoa NZ’s economy transitions, it will face both contradictions and growth in various sectors due to the physical impacts from climate change as well as the impacts of future adaptation strategies. The uptake of electrification is not a deadweight cost to the New Zealand economy, it is rather an investment into a more credible pathway to future economic prosperity. 

Climate change is fundamentally a cumulative emissions problem. Small annual emission reductions turn into large cumulative savings over time. Furthermore, these small machines in aggregate make up more emissions than the big supply side machines. The faster fossil fuel machines are removed from the economy, the greater the avoided cumulative climate emissions. Understanding which machines are both technically and economically feasible to electrify now provides a roadmap for rapid emissions reduction while generating economic benefits. 

1.2  Electric vehicles 

We are concerned about the decisions to remove the requirements for government agencies to purchase battery electric or hybrid electric vehicles, though do note that if designed and implemented well Rule 8, Economic benefit to New Zealand, can achieve the same outcome.

Domestic transport accounted for 17.5% of Aotearoa NZ’s total emissions in 2022 and household vehicles represent the largest component of household emissions.  This is unsurprising as Aotearoa NZ has one of the highest rates of motor vehicle ownership globally. Despite this, only 1.8% of the total fleet are EVs. 

Cars of all varieties are the highest-emission machine type nationwide due to widespread usage.
Emission considerations aside, the costs involved with owning and operating an ICE vehicle have been rising considerably and will continue to do so. And while EVs do offer a cleaner and cheaper alternative (over the long run), their high upfront cost remains a barrier to widespread adoption.
As more electric models become available, they offer significant lifetime cost savings for most drivers, especially when purchased second hand. In terms of operating costs, they are cheaper to run from day one. Therefore, enabling widespread electrification of light vehicles requires swapping fuels for finance. Petrol vehicles lock owners into decades of costly fuel bills. EVs may cost more, but will have significantly lower operating costs. Finance can bridge this gap, with running cost savings used to pay off the upfront cost.

This has led to what is now referred to as ‘dual energy hardship’ - that is the combination of energy hardship and transport hardship. Energy hardship has been defined by the affordability challenges of maintaining a comfortable and healthy home temperature. However, transport-related hardship is becoming an increasingly important issue, especially with rising fuel and vehicle maintenance costs aforementioned. While less visible, transport hardship affects social mobility and limits access to opportunities, particularly for those in rural areas or with lower incomes who rely heavily on their vehicles. 

Electrification of transport, through the adoption of EVs, would help address both of these energy and transport hardships. The potential to generate power through consumer energy resources (CER) would reduce household energy costs, while also offering a lower-cost alternative for fueling EVs compared to ICE vehicles. As EV prices decrease and charging infrastructure expands, this transition would alleviate key financial pressures related to both energy and transport, improving access for more people across the country. In tangible terms, transitioning to EVs means we can power our transport on renewable energy instead, and spend that $20 billion (average annual household and business spending on fossil fuels) within our country and communities. Some of that spending will go to local solar generators, including households, some of it to trades to install that solar; most of it is savings for consumers and businesses on their petrol bills, meaning more money for everyone to spend in the local economy, and lower supply chain costs for goods moved across Aotearoa NZ. 

Putting the costs and emissions savings potential of EVs aside, making a sizable investment into EVs  represents a huge opportunity to strengthen Aotearoa NZ’s energy security and resilience. To this end, and to speak to the recommendation more specifically, this (often overlooked) benefit was recently highlighted in MBIE’s Fuel Security Study (2025). The study (written by Castalia and Envisory) analysed a range of options for enhancing Aotearoa NZ’s energy security – examining potential strategies to diversify and strengthen fuel supply chains, focusing on reducing the country’s reliance on imported fossil fuels and increasing the resilience of the energy system. The study’s findings underscore the importance of accelerating the country’s energy transition. It concluded that investing approximately $130 million annually into accelerating the energy transition of our vehicles would yield approximately twice the positive impact on fuel security compared to reinstating the Marsden Point refinery, which would cost approximately $750 million per year.

2.0 Answers to selected consultation questions

Part one - Core values - Rules 1-5

This part is focussed on the values or behaviours expected of agencies and suppliers when conducting all procurement activities. These core values, which include integrity, accountability, transparency and fairness, are critical for creating and maintaining public confidence in how government uses public money. Key new elements are requirements to publish agency procurement policies and clear expectations on acting with integrity and being accountable.

1.   Are these the core values that contribute to improved public trust and confidence?

2.   Are there other values, requirements or applications that should be added?

The core values included in the consultation document - integrity, accountability, transparency and fairness - we agree, are important and should be included. However, in our opinion, these reflect a relatively short-sighted vision and ignore some key considerations that we believe are much more important in “creating and maintaining public confidence in how the government uses public money”. These are as follows: 

  • Environmental responsibility / kaitiakitanga. As outlined in the consultation document, ‘environmental’ is listed as a key aspect of public value (p. 7). Though, this is not adequately reflected in the procurement plan itself, as it lacks sufficient environmental safeguards that ensure government spending is aligned with both legislated domestic climate targets and international climate commitments.

  • Foresight - we are concerned that these changes, in trying to “increase jobs and incomes by shifting New Zealand to a faster growth track”, will favour short-term costs over long-term value. Economic efficiency is an important principle, but this needs to be dynamic efficiency across time and across a range of variables, not static efficiency applied in the present. Procurement decisions should consider the long-term economic, social, and environmental impacts of contracts, rather than only focusing on short-term gains or reducing costs. Further, strengthening the foresight in this plan would contribute positively to the adoption of new products and practices, which would foster innovation and growth.  

Part two - Procurement lifecycle steps - Planning Rules 6-9

Planning is critical to achieving good outcomes. The Rules in this section set out requirements focused on enabling agencies to realise the best possible public value from government contracts. This includes a requirement to undertake appropriate planning for the size, risk and complexity of the procurement, and detail on the elements to be addressed when planning a good procurement. A new Rule requiring agencies to include economic benefits to New Zealand in every procurement replaces the Broader Outcomes Rules. The new Rule enables agencies to consider a wide range of matters that contribute economic benefit to New Zealand. There is also a new requirement to award below threshold procurements to capable  New Zealand suppliers.

3. Tell us what you think about these proposed changes?

Rule 7: Estimating the monetary value of a procurement.

While 7(2a) does consider the “total value over the whole of life of all the contract/s (excluding GST) that result from the procurement, including costs associated with disposal of the goods”, we believe that how this is to be interpreted and implemented must be made very clear, and the rule could potentially go further. 

Our research has shown that despite the long-term economic advantage of electric alternatives, consumers often make purchasing decisions based on immediate affordability rather than lifetime costs. For example, new gas water heaters continue to be installed because the upfront cost of heat pump alternatives is prohibitive for many households, even though they are cheaper over their lifetime. Similarly, petrol vehicles are purchased when suitable electric options would cost significantly less to run over their lifespan. These purchases lock in emissions and higher bills for years to come. 

While much of our research to date has focused on household machines, our forthcoming report The Machine Count: Building an actionable pathway to an electrified zero-emission energy system for Aotearoa New Zealand to be published later in April, includes more information on machines beyond households, including their economics and availability.

We recommend Rule 7 to be strengthened to make it explicitly include assessment of total ownership costs of contracts - i.e. including all significant operational costs. This could be achieved through an addition to 7(2b) of “required inputs for the expected life of the good, such as petrol, diesel or electricity."

The example of EVs is included on the next page. Accounting for energy costs by tenants in new social housing and energy costs for schools for any new schools and refurbishments are very relevant other examples.

Example: EVs vs ICE vehicles  

Fossil fuel machines often have a lower upfront capital cost, but a much higher operational cost. For example, an electric car might be $5,000 to $20,000 more than a similar petrol car, yet if that extra upfront cost is divided over the lifetime of the car, then it will often be lower than the refuelling costs of a petrol vehicle. This includes the charging costs of the electric vehicle. These annual running costs are shown in the below graph, followed by energy prices per kwh used and overall lifetime costs of petrol versus electric cars.

Rule 8: Economic benefit to New Zealand 

Rule 8: Economic benefit to New Zealand should be strengthened to consider the impact of procurement decisions on the balance of trade, energy resilience and fuel security. 

In our Investing in Tomorrow report, we considered the effects of household electrification on the balance of trade by contemplating the impact of more domestically produced energy on Aotearoa NZ’s existing energy mix. For example, the electrification opportunity could save Aotearoa NZ households around $10.7 billion a year by 2040, save 10 million tonnes of emissions annually, and 105 million tonnes cumulatively between 2024 and 2040. This represents a significant opportunity (and consequently significant impacts if overlooked) for our balance of trade. The cumulative procurement decisions of government will have a big impact on this.

There are also significant economic impacts associated with the energy resilience and fuel security benefits that result from the electrification of homes, farms, businesses, and vehicles. The impact (whether positive or negative) of procurement decisions on energy resilience and fuel security should be included in Rule 8’s criteria.

Read moreDownload the document here

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