The penalties for farmers who fail to comply with rules around the proper movement of animals will increase ten-fold, in response to the M. Bovis outbreak.
A proposed law change will see the Government cracking down on farmers who don't properly adhere to the National Animal Identification and Tracing (NAIT) scheme.
NAIT is New Zealand's national animal identification and tracking system which records the location and movement of animals.
Under the new rules, not complying with NAIT could cost an individual up to $100,000 and a body corporate up to $200,000.
The previous penalty regime meant fines were capped at $10,000 and $20,000 respectively.
The changes have been proposed to improve the NAIT scheme which a review last year found was "significantly flawed".
Minister for Biosecurity Damien O'Connor today unveiled a range of proposals which would "create the animal tracing scheme New Zealand needs to keep our primary sectors and economy safe".
As well as the new increased penalties, the Government also proposed a tightening of the rules for handling untagged animals and an improvement of the use of data.
"I have heard the calls from industry for common sense changes to make NAIT an effective business and biosecurity tool," O'Connor said.
"The proposed changes will ensure there is proper oversight of the agency managing the scheme, and gives the Government the ability to deal with any performance issues that affect biosecurity or food safety."
Last year, the Government earmarked $890 million towards eradicating the cow disease Mycoplasma bovis, which had been detected in New Zealand the year before.
A summary, by a technical advisory group which was overseeing the Government's response to M. bovis, said there was a low level of farmer compliance when it came to NAIT before the outbreak.
But O'Connor said today that NAIT compliance has improved in recent months.
But he also warned that when there is wilful non-compliance with the NAIT scheme, the entire sector is put at risk.
"This is unacceptable and I know MPI is focusing on holding those people to account."
O'Connor said legislation, giving effect to the new rules, would be introduced later this year.
"The proposed changes will ensure there is proper oversight of the agency managing the scheme and gives the Government the ability to deal with any performance issues that affect biosecurity or food safety."