|
Consultation is now closed, and we thank you for your feedback. Any changes to our fees and charges to pay for better regulation will be implemented on or before October 2023. |
We’re asking for your feedback on our proposed changes now because any changes would take time to put into place - they wouldn’t happen until the end of 2023, and economic conditions may well be different then.
We need to find a sustainable way to pay for the regulatory work we do, because the costs of providing our services like vehicle licensing and registration and administration of RUC, and of regulating people in the land transport system, are currently more than the money we’re bringing in.
Without sustainable funding, Waka Kotahi can’t do a good job as regulator. In 2019, two independent reviews found system weaknesses at Waka Kotahi, and a lack of adequate funding, had contributed to the 2018 death of a passenger travelling in a vehicle that had just received a warrant of fitness. They found we had failed to prioritise public safety, and concluded that serious problems with our regulatory function had developed since the agency was established, resulting in regulatory failure.
The improvements we have been able to make since then were funded by government loans. If we are to continue to make those improvements we need to change our funding system to one that is more sustainable so we can regulate properly into the future.
CloseThis announcement does not impact on our consultation, because we’re consulting on changes that would not happen until October 2023.
CloseRegulation ensures drivers and the vehicles they’re using are safe to be on our roads.
Waka Kotahi is New Zealand’s lead land transport regulator. It’s our job to make sure people and organisations comply with the rules, so we’re all safe on the roads.
We provide services that support people and organisations to follow and enforce the rules that sustain a safe, fair and sustainable land transport system.
We not only regulate driver licencing, vehicle registration, and collect road user charges, but we are also responsible for regulating the people and companies who do vehicle inspections, and who provide driving lessons and driving tests – we make sure the people who are certifying that vehicles and drivers are safe to be on our roads are doing a good job. That’s why our work as regulators is so important.
If we don’t properly regulate the system, the system is less safe and that increases the likelihood of people being injured or killed.
CloseWaka Kotahi, and our agents like VTNZ, AA, VTNZ, New Zealand Post and your local WoF mechanic (who are legally empowered to act on our behalf), provide services like:
We monitor and audit the performance of our agents and other businesses in the regulatory system, like vehicle certifiers, TSL holders, to ensure they’re meeting the required regulatory standards.
This involves:
Our work as regulators is funded through fees and charges for our services (like driver and vehicle licensing, and regulating people and businesses in the system) and minor contributions from the National Land Transport Fund.
Funding should cover the full cost of providing users safe access to the land transport system, and of ensuring regulated parties comply with the rules and meet the various standards.
Because costs aren’t static, it’s essential that funding is reviewed regularly to ensure fees and charges remain appropriate and that the assumptions they’re based on (like cost and volumes) are valid and relevant.
CloseWaka Kotahi has lots of costs it has to meet when providing regulation. The funding and fees review established how much it costs us to provide and monitor regulatory services, including the agents, individuals and companies we use to do some of this work (like AA and your local mechanic).
For Proposals 2 to 8, these costs fall into eight general categories:
|
Personnel |
The cost of frontline staff involved in delivering services, including monitoring and auditing of parties in the land transport system, processing licencing applications and vehicle registration, and ensuring the data in our registers is accurate. |
|
Training and development |
Making sure our staff have the skills and the working environment to perform required regulatory services. |
|
Agent fees |
Fees Waka Kotahi pays organisations that perform frontline services on our behalf, including AA, VTNZ, and VINZ, for example. |
|
Service delivery costs |
Direct costs to deliver a service that isn’t staff time or agent fees. Includes postage and printing, the manufacture of registration plates, credit card fees etc. |
|
Operational support costs |
Non-frontline regulatory support functions required to make sure the regulatory system is and remains fit for purpose, including executive managers, project management, administrators, change, risk and assurance and intelligence functions. |
|
Business support costs |
Wider shared corporate costs associated with Waka Kotahi, including human resources, IT platforms, financial services, communications and information services. |
|
Core business loan repayment |
The cost to repay the $80m government loan to rebuild the regulatory function in Waka Kotahi, hire additional staff to fill critical frontline roles, strengthen governance and leadership through the development of our regulatory strategy Tū ake, tū māia, and to increase compliance and enforcement in critical areas. |
The Funding and Fees Review was done to establish exactly what our financial situation is and to ensure our regulatory products and services can be appropriately and sustainably funded.
The Review included a stocktake of all regulatory services to understand our true costs. We established how much it costs us to do our work as regulators, and to monitor the agents, individuals and companies we use to do some of this work (like AA, VTNZ, and your local mechanic).
This was the first review of our funding and fees since Waka Kotahi was established in 2008. Most fees we charge for our services haven’t changed in 13 years – we haven’t even adjusted for inflation in that time.
CloseIn 2018, a person was killed when the front passenger seatbelt they were using failed in a car crash. The car they were travelling in had passed a warrant of fitness (WoF) just a month before the crash.
Following this incident, the Waka Kotahi Board raised public concerns about the regulatory performance of Waka Kotahi, including a backlog of 850 historic non-compliance cases that weren’t properly addressed.
This led to two independent reviews, published in 2019, that found Waka Kotahi had failed as a regulator, that we hadn’t prioritised public safety, and that we didn’t have enough funding to properly regulate the land transport system.
Waka Kotahi NZ Transport Agency regulatory performance reviews
Ministerial review (2019) - commissioned by the Ministry of Transport(external link)
Kristy McDonald QC review (2019) - commissioned by Waka Kotahi Board [PDF, 909 KB]
Waka Kotahi borrowed $95 million from the Government to pay for urgent work after independent reviews found we were underfunded for our regulatory work, which contributed to regulatory failure. Since then we have implemented a back-to-basics plan, stabilising the regulatory function within Waka Kotahi and shifting our focus to deliver firm and fair regulation, consistent with our core purpose. We used these interest-bearing government loans to:
More information
The review has shown us our current model isn’t working, and that some road users have paid too much, while others haven’t paid enough. Safety needs regulation, regulation costs money and these costs must be met fairly.
The review has found our current funding situation is unsustainable:
All New Zealanders have a part to play in helping make our roads safe – it’s important people, groups and organisations pay their fair share for better regulation to ensure drivers and vehicles are safe on our roads.
CloseThe current funding model is unfair and unsustainable because it doesn’t support robust regulatory performance or address the issues outlined in the two independent reports:
We need to change our funding and fees to make them fair, and to ensure we have enough money to properly regulate the land transport sector. Doing nothing leaves us with a broken regulatory system.
CloseOur key delivery partners (agents) offer a wide range of products and services on behalf of Waka Kotahi. They are paid agent commissions that must be covered by our funding model.
Industry agents are not paid commission for the services they provide. Industry agents tend to offer motor vehicle services that complement their main business offerings. They don’t provide the breadth of services our key delivery partners provide. They also do their own administration around fees and so this does not create costs for the regulator.
CloseIt means breaking even on providing a service – not making a profit and not making a loss. In a cost recovery funding model, the costs of providing a service are covered by the amount of money charged for it (eg if it costs $25 to deliver a service, the user should pay $25 for it).
CloseWe’re proposing to introduce new fees for services we’ve previously provided for free because there was no way to recover the costs of providing the service when they were set up.
We’re proposing to increase fees where the cost of providing the service is greater than the fee paid for it.
We’re proposing to reduce fees where the cost of providing the service is less than the fee paid for it.
Each of these proposed changes reflects our need to accurately recover our costs for providing regulatory services.
If fees or charges are not changing, they are not included in this consultation.
CloseWaka Kotahi has agents who are legally empowered to act on our behalf to provide services and compliance activities. Our agents include large organisations like AA, VTNZ, VINZ, and New Zealand Post, companies like eRoad who are agents for RUC, and smaller businesses like local Warrant of Fitness (WoF) providers. We monitor and audit the performance of our agents to ensure they’re meeting the required regulatory standards.
CloseA fee is charged where someone gets an individual benefit from a service, eg driver licence, vehicle rego, driver licence endorsement to be able to carry passengers or goods.
Charges are applied when averaging the costs of an overall service (eg safety systems like monitoring, auditing, and industry engagement) across a group of users (eg everyone who holds a transport service licence, or all vehicle certifiers).
CloseThe costs to provide these services are different according to how you apply. Each of the fees accurately reflects how much it costs us to provide the service.
Postage and printing costs have been increasing at a rate higher than the cost of inflation, and we need to recover these costs.
Our current online services are not necessarily automated processes and, although an application may be available to do online, people are still required to do manual processing in the background. Like other channels, the fees reflect the cost to provide each service.
CloseThe aim of this review is to rebuild the regulatory system in a way that’s fair, with the right people paying for the right things. This means that costs are transparent and that the right people are responsible for paying the right fees and charges. We cannot control whether those people recover those costs for themselves by charging their customers more (this is called ‘pass through’).
We have modelled pass through to give people an idea of the potential impact on households – the estimated increase in average household spend over a year for lower income households is around $10.
CloseNobody is getting something for free. All the costs of each of our services is covered under this proposed funding mode. Re-sit fees, for example, are now included in the cost of each stage of a driver licence, and application fees for certifiers are incorporated into certifier charges.
CloseWe used the following cost recovery principles:
At that time costs were calculated, the 2% inflation rate was the accepted typical inflation rate to use in our modelling. We will continue to monitor inflation rates and will take advice on the best rate to use when we re-run the numbers as part of our submission analysis. The proposed changes are not scheduled to be implemented until late 2023.
CloseThis review establishes a better system where the right people are paying the right amounts for the right things. The regulatory fees and charges for specific services relate to the costs to deliver those services and the individual or group benefits from those services.
Some of the work we do isn't to provide a specific service, but to make sure the system works well and provides the right safety framework. These functions are called ‘public goods’, because they benefit all users of the land transport system more so than individuals or specific groups. These costs have not been fully funded in the past.
Public goods are appropriately provided through government funds. Instead of adding another cost to all fees, we are suggesting these be funded by money that is already collected from road users.
CloseLand transport revenue currently funds:
Previously we have borrowed money from the government to pay the costs of providing public good services. We did this to pay for urgent work to tackle a backlog of 850 unsafe vehicle cases, to address urgent gaps, and to stabilise the regulatory function. We’ve called these the ‘rectification loans’, and they need to be repaid.
Under a new section of the Land Transport Management Act, the Minister of Finance and Minister of Transport can now allocate land transport revenue to fund certain regulatory functions of Waka Kotahi.
Because the allocation of land transport revenue is a redirection of existing money that’s already been paid by transport users, it wouldn’t cost these users anything extra.
We’re asking for this allocation:
There would be an opportunity cost (the cost of spending on one thing when it could have been spent on another) for land transport revenue and the NLTF, but:
The cost of getting or renewing a licence is currently higher than the cost of providing the service. Drivers should only pay the cost to provide the service.
Incorporating the driver licence tests fees as part of the application fee and removing re-sit fees makes the process simpler, removing agent and Waka Kotahi costs from multiple fees. It makes the fee more consistent across applicants, and provides price certainty and transparency.
Making licences more affordable should encourage applicants to continue to move through the licensing system and lead to fewer people driving without an appropriate licence, with an aim to increasing overall road safety.
CloseCurrent driver licence fees are made up of an application fee and a test fee for each stage of a driver licence. If you fail your test, you have to pay again.
We’re proposing that the driver test fee becomes part of the driver licensing fee (which still decreases) that reflects the average costs for people at each stage in their licence.
We know the majority of applicants don’t pass one or more tests the first time, and re-sit fees may discourage people from continuing to move through the licensing system to get a full driver licence.
Setting a combined fee for each stage of the system provides transparency and cost certainty for applicants. Improved affordability should encourage applicants to continue to move through the licencing system and lead to fewer people driving without an appropriate licence, with an aim to increasing overall road safety.
CloseWe worked out the costs of driver licence applications and testing for each stage of the licence process (learner, restricted and full).
Testing fees make up the majority of those costs – the average pass rate (over 10 years) for each stage of a driver test is:
In terms of costs, the restricted test takes an hour; the full test takes 30 minutes.
We calculated a set combined fee for the application and testing that reflects the average costs for people at each stage in their licence.
CloseP endorsement – needed if you carry passengers for hire or reward. You also need a P endorsement if you drive a large passenger service vehicle (more than 12 seats), even if you’re not being paid for it. A small passenger service vehicle has 12 seats or less, including the driver, eg taxi, shuttle, app-based service, private hire service. You also need a P endorsement if you drive for a dial-a-driver service and are driving the customer’s vehicle.
V endorsement – Tow truck and car transporter drivers are the most common drivers who need an endorsement for vehicle recovery. If you operate a vehicle recovery service of any kind, you’ll need a V endorsement.
I endorsement – Teaching people to drive for your business, or any kind of payment, requires you to have a driving instructor (I) endorsement on your licence.
O endorsement – Needed to conduct practical driving tests. To conduct practical driving tests, you must be employed by the NZ Transport Agency, a testing agent contracted to Waka Kotahi, or the NZ Defence Force.
CloseUntil now, 1-year P, V, I and O endorsements have been cheaper than 5-year endorsements. But the same amount of work is required to process the 1-year or 5-year endorsements, so the cost of providing both services is the same.
We’re proposing to increase the fee to accurately reflect what it costs us to provide this service.
CloseWe worked out the costs of processing an alcohol interlock licence application and found that current fees are much higher than needed to cover those costs.
Alcohol interlock licences are used only after a driver has completed other penalties or restrictions for alcohol-related driving offences. These drivers can only operate a vehicle fitted with an approved alcohol interlock device, so Alcohol interlock licences are considered to contribute to managing risk on our roads.
CloseSome vehicle licence fees will go down and some will go up – it all depends on what it actually costs to provide each service.
Each of these changes reflects our need to accurately recover our costs for providing regulatory services.
We’re:
Because this is how much it costs us to provide this service.
CloseBecause this is how much it costs us to provide this service.
CloseMotor vehicle licence and regulatory services are provided through our teams internally and our agents. Motor vehicle licence and regulatory fees and charges cover the costs of trained personnel, agent fees and costs, things like data management, policy development and normal government business costs to support the system to operate well, and repayment of our government loans.
More information about these costs
Fees and funding consultation document [PDF, 4.4 MB]
We need to recover these costs for providing these services - we do not make a profit. We have been undercharging for certain services, and not charging at all for others previously. We’re introducing new fees for services we’ve previously provided for free because there was no cost recovery mechanism established when they were set up. We’re increasing fees where the cost of providing the service is greater than the fee currently paid for it.
CloseRUC administration services are provided through Waka Kotahi and our agents. These fees and charges will cover the costs of trained personnel, agent fees and costs, things like data management, policy development and normal government business costs to support the system to operate well.
We need to recover our costs for providing these services, we do not make a profit. We have been undercharging for certain services, and not charging at all for others previously. We’re introducing new fees for services we’ve previously provided for free because there was no cost recovery mechanism established when they were set up. We’re increasing fees where the cost of providing the service is greater than the fee paid for it.
More information about these costs
Fees and funding consultation document [PDF, 4.4 MB]
There is currently no ability to identify who is carrying dangerous goods in rental vehicles. We do know that you might if you were moving house and rented a moving van, or rented a car to head off on holiday etc. Things like gas bottles, cleaning chemicals, aerosol canisters, and flammable liquids like meths and turps are all considered dangerous goods.
CloseUntil now, new TSL cost the same whether they were for a single applicant or multiple applicants. But more work is required to process multiple applicants – more paperwork to check, more fit and proper checks, for example - so it costs Waka Kotahi more to process an application for multiple applicants.
We’re proposing to increase the fee to accurately reflect what it costs us to provide this service.
CloseThe increase to fees covers the cost of providing the service through our teams internally and service partners externally. We need to recover our costs for providing these services, we do not make a profit.
The increase to charges covers the cost of ensuring the system operates as it is supposed to. TSL holders are high risk users and monitoring of TSL holders is undertaken by Waka Kotahi. This will cover compliance activity including auditing, education etc. It will cover the costs of trained personnel and things like data management, policy development and normal government business costs to support the system to operate well. It will also contribute to repaying our government loans.
More information about these costs
Fees and funding consultation document [PDF, 4.4 MB]
Because much of the regulatory failure occurred in this part of the industry, Waka Kotahi did consider charging this group for the rectification component of the loans repayments (see Proposal 1). But our review identified risks across the whole system that need better regulation and so it wouldn’t be fair for certifiers to pay for all those improvements.
This industry is also very different from the way it was in 2018, as it has been working closely with Waka Kotahi to lift its capability and performance and to eliminate poor practices. Charging the whole certifier group for the failings of a small number of operators who are no longer in the system is also not fair.
CloseCertifiers perform a critical safety function, and there are limited numbers of them, particularly Heavy Vehicle Specialist Certifiers. If we don’t retain and grow this group, there could be significant safety and economic consequences in the land transport sector. A reduced capacity to certify heavy vehicles would impact on the ability of the commercial vehicle sector to operate safely.
These industries have aging workforces and a reducing number of businesses. Reducing the barriers to entry to the industry as much as we can should allow the industry to grow and strengthen.
CloseBecause this is how much it costs us to provide this service – these are areas where we have invested and intend to invest more in significant improvements to regulating this industry.
CloseThe charges covers the cost of regulating the certifier industry. We need to recover our costs for providing these services. We do not make a profit.
The increase to charges covers the cost of compliance activity including monitoring and auditing of certifiers to reduce the risk of unsafe motor vehicles being driven on New Zealand’s roads. This means more trained staff, better information and better systems. We intend to invest in a more sophisticated risk-based intelligence system to better understand risks and monitor performance, along with a new standard setting framework, and a shift from prescriptive standards to outcomes-based standards. It will also contribute to repaying our government loans which funded urgent improvements to the regulation of the certifier industry.
More information about these costs
Fees and funding consultation document [PDF, 4.4 MB]
When councils issue tickets for parking or other infringements, they access the Motor Vehicle Register for free to properly address and serve an infringement notice (‘ticket’). Money collected from these tickets goes to the councils and does not contribute to the costs of providing data – such as keeping data current and in a format that is accessible to various IT systems.
Other organisations that receive financial benefit from accessing MVR data pay a charge. This review ensures that all people and organisations, including councils, who access and make money using the data pay their fair share of the cost to provide that service.
CloseYes. No changes are proposed for central government agencies and the wider state sector or entities acting on their behalf using data for law enforcement purposes, such as the NZ Fish & Game Council and SPCA around the country, and their nominated persons.
CloseThese are the people and organisations that can make revenue using our data, either by using it to provide their own services or to ensure they can apply their own charges. They have different IT systems that need to be provided for so that they can access the data. We consider it is fair that they contribute to ensuring the register is current and robust. We will continue to assess our data users cost every three years to ensure it is fully cost recovered.
CloseCharging per request means that the highest volume users contribute the highest to the system. This is fair as it reflects costs falling on those with the highest benefits.
CloseFor these organisations, it will be critical that the data and system is robust. If these organisations make revenue using the data, either by using it to provide their own services or to ensure they can apply their own charges, then it is fair that they contribute to the system upkeep.
Close