The Government has faced a barrage of questions over a “levy” it’s planning to impose to fund a liquefied natural gas import facility, with the Opposition saying it’s an additional cost on New Zealand households.
Prime Minister Christopher Luxon and Energy Minister Simon Watts maintained the facility would ultimately lead to power bills coming down for Kiwis and dismissed criticisms of the levy being a “gas tax”, as it was labelled by Labour.
But some members of the coalition weren’t in sync. Winston Peters said a levy was a tax, David Seymour said there’s a difference, and Watts at one point suggested the “levy”, as it is described in Government documentation, was neither a levy nor a tax.
Megan Woods, Labour’s energy spokeswoman, resorted to asking the Speaker what she should call the levy as “we have had from the Government today that this is called a levy, this is a charge, this is a fee, we have been calling it a tax”.
The levy isn’t mentioned in the press release the Government issued yesterday announcing the construction of a liquefied natural gas (LNG) import facility, but it is found in a “fact sheet” provided alongside it by Watts’ office.
It states the infrastructure “will be paid for via a levy on electricity” and it is “appropriate that the electricity system bears this cost”.
“An indicative estimate of the levy on electricity to pay for the LNG facility is between $2 & $4/MWh [megawatt-hour],” the document says.
The Electricity Authority’s data show average annual residential consumption ranges from just under 5MWh to over 8MWh.
However, the Government argues there will be a net saving to New Zealanders due to having secure supply of gas during dry years. Currently there is a dry-year risk premium in prices reflecting the risk of not having supply. The Government expects this to reduce as a response to their LNG plan.
“The expected price reduction in forward prices is at least $10/MWh,” the Government says.
That saving is expected to be larger than the levy, which will be charged to electricity companies. The Government believes the net saving will be passed on, citing increased monitoring of the sector by the Electricity Authority.
“The Government has clearly signalled that we need to increase the powers of the Electricity Authority to be a more effective regulator,” Watts told the Herald.
“We’re already taking steps to do that, and we’ll make legislative change to give them those powers, such as the ability for them to fine and/or criminality, so absolutely giving a large, larger stick.”
But Labour’s Chris Hipkins tore into the Government, arguing it was “introducing a new gas tax that all New Zealand households will pay”.
That description – “gas tax” – was dismissed by Luxon as a “load of rubbish”.
“This is about lowering power bills across New Zealand. There will be lower power. Without this, New Zealanders will have higher power bills. What I’m interested in is lowering Kiwis’ power bills, and this does exactly that. Without it, New Zealanders will pay higher power bills.”
Luxon attempted to brush other questions from Hipkins in the House about the levy, alleging that if Hipkins didn’t support the LNG policy he was supporting higher prices.
One question Hipkins asked was: “Is it a tax, a levy, a fee, a charge, regardless of what he calls it, is it an extra cost every New Zealand household will pay every time they pay their power bill?”
Luxon responded: “Absolutely not. It will lead to lower power bills not higher power bills. That is why we are doing it.”
Meanwhile, Watts said he didn’t believe the “levy”, as it’s described in his own document, was either a tax or a levy on ordinary New Zealanders. He explained this by saying the levy would be imposed on the sector and New Zealanders would see a net benefit.
“It is neither because it is a net benefit to New Zealand households. The reality of what we have announced yesterday is a net saving to New Zealand households in regards to energy bills,” Watts said.
Peters said on The Platform that the levy wasn’t going to be imposed on households, who “should be making a considerable saving as a consequence”.
But he said the levy component was “being sold in a very confusing way”.
In response to a question about extra charges being added on households, he said: “There will be a levy right, but it doesn’t fall that way and I think that needs to be explained”.
He also said a levy was a tax.
“Of course, if you have to put your hand in the pocket, it’s a tax.”
David Seymour, the Deputy Prime Minister and Act leader, said a levy and a tax are different.
Citing policy, he said this was a levy, which is “something where the beneficiaries of the levy are the ones who pay it and the ones who pay are the beneficiaries”.
“In this particular instance, you are paying a levy. That is very clear. You are paying it in order that we can get more baseload for electricity and if you have got more baseload you are less likely to get price spikes that cost you a lot of money.”
Jamie Ensor is the NZ Herald’s Chief Political Reporter, based in the Press Gallery at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. He was a finalist in 2025 for Political Journalist of the Year at the Voyager Media Awards.