And if I recall correctly, you have to get three notices within 9 months.
So basically if you manage to spend less than 1/3rd of your time "On Notice" you should be sweet as.
DISCLAIMER: IANAL
EDIT: Actually, fence-post error. The correct figure is ~2/9ths, as penalties trigger on the receipt of the third notice (so we can't count its period).
None of the big ISP's enforce it AT ALL.
I've heard a couple of small ISP's kick a couple of people off back when it was first introduced but since then there's been nothing.
Considering most of my friends here all torrent everything off The Pirate Bay (They don't use private trackers :p), I don't think I've heard of a single person I know get in trouble.
Telecom NZ would see that enforcing that law as a cost to them (they are pretty anal about spending money on things other than marketing), so they would probably not do anything until the government takes them to court.