Road User Charges Bill — In Committee 
Text is incorporated into the Bound Volume 
Road User Charges Bill — In Committee 
[Sitting date: 07 February 2012. Volume:677;Page:133. Text is incorporated into the Bound Volume.] 
Road User Charges Bill 
In Committee 
Debate resumed from 5 October 2011. 
Clauses 1 and 2  ( 
continued 
)  
DARIEN FENTON (Labour) 
: 
 It seems like a long time ago but before the last Parliament rose I was reflecting on the title and commencement clauses of this bill the Road User Charges Bill. I was observing that the title of the bill is the Road User Charges Bill 2010 and now we are in 2012. However I mean I think I predicted rather unkindly that the chairperson of the Transport and Industrial Relations Committee from the last Parliament Mr David Bennett would not be back and certainly would not be back in his role as chair so I do want to congratulate him and say that I said that with all kindness in my heart David Bennett because I really thought you would be a Minister should the National Government be re-elected. So I do congratulate you on taking on the role of the chair of the Transport and Industrial Relations Committee again and I look forward to playing my usual really helpful role particularly when it comes to industrial relations. I think we are going to have a very interesting time.  
So in debating the title of the bill and the commencement date I wish to reiterate that Labour does have a problem with two parts of this bill. We have addressed that in the second reading and we have addressed it through the Committee stage. That is because the changes to gross vehicle weights does disadvantage many operators and we continue to hear from them and I am sure other members have. There is real fear about the impact of increased costs on what is already a struggling sector.  
The problem is that operators do not know what is ahead. They are rightly fearful because this bill does enable changes to be made and charges to be made by regulation so they have no idea. So although the title might be relatively straightforward in that it is called the Road User Charges Bill it does hide some mischief that I think will be visited on many transport operators.  
Worse still the commencement clause provides for this bill to be enacted still leaving the industry in the dark about what the actual costs are going to be or what the increase in costs is going to be because of the provision in the bill that provides for charges to be set by regulation. We had many examples of that in the select committee and we have as I have said discussed that during the second reading and during the Committee stage of this bill. And I was hoping that over the— 
DAVID BENNETT (National—Hamilton East) 
: 
 Thank you Darien for those very kind words. The Transport and Industrial Relations Committee approached this issue in a very committed and universal way in that we were genuinely looking at the issues that arose for truck drivers and other users and we were looking for a solution that was viable but also a solution that brought the industry along with the Government in making change. I think lessons had been learnt from the last time there was a road-user charges bill when demonstrations resulted from the industry not being part of the consultation and not feeling aligned with the Government changes. So the Minister and the Government made sure and ensured the role of the industry in the way that this bill was handled. I would like to thank members of the Opposition who were on that committee for the way that they assisted in that process as well. 
This bill the Road User Charges Bill has a very simple title as you would expect and it is commonly called “RUC” for those non-transport believers. Essentially it is a change in the system whereby vehicles will be accountable to pay their road-user charges by moving to one based on the maximum permissible on-road weight. The problem we had in the past is that drivers and companies often had to estimate the load. There were a number of compliance costs involved in that. It was hard to enforce and led to difficulties as people challenged what they perceived the weights to be. It was something that was a more difficult process than it needed to be. Now this process here moves it to a much simpler regime which everybody will understand and it will be very visible to people as they engage in this industry. It is one where the actual costs as the Opposition has said will be determined through regulation but that is the only way it can be done. You cannot expect this Parliament to set the costs here. That is why we have regulations and this is a prime example of an opportunity where regulations should be used and are being used by the Minister. 
Hon Shane Jones 
: Why? 
DAVID BENNETT 
: Mr Jones asks why. Well if Mr Jones is the expert in this area and can dictate those figures now to the Committee we would like to see that but I am sure he cannot. The regulations will enable the ministry and also some fluidity if things have to change rather than having to change legislation every time. So Mr Jones there are some very good practical reasons. 
Hon Shane Jones 
: Under urgency again. 
DAVID BENNETT 
: It will not be done under urgency because at this time we are not sitting under urgency Mr Jones and you see this bill is progressing through the Committee. With it being set by regulation that is a very important but vital and practical way of doing this. 
Hon Shane Jones 
: When will this man be a Minister? 
DAVID BENNETT 
: Well Mr Jones is sitting there and asking questions like that. Mr Jones we look forward to your input in this Committee going forward. Are you going to be involved and assist? 
Hon Nathan Guy 
: We know what he got up to. 
DAVID BENNETT 
: Maybe there were some regulations that were needed then but in essence this is a good bill. It is one that is necessary for the industry. It is something that the industry has been supportive of. There is never going to be anything perfect in these things; there is always going to be a little bit of room for movement. But that is why we have regulations. These look like they will be in the best interests of everybody going forward so that the Government gets its fair share of costs allocated to the industry for the use of the roads but also it gives certainty and simplicity to the industry so that they can carry on their business knowing full well what their costs will be doing it in a manner that they understand and being able to comply as easily as possible. Thank you. 
Hon SHANE JONES (Labour) 
: 
 Kia ora ano tatou. Firstly let me acknowledge the new Minister of Transport Mr Brownlee. It is a complicated area transport but with the experience of his parliamentary years the skill and the Job-like patience he is showing to his task in Christchurch I am sure that with the minimum amount of effort he will eclipse the deeds of Mr Joyce on this point.  
We actually support this bill but there are a number of points that unfortunately I will be unable to make as I am no longer likely to grace the committee David Bennett chairs the Transport and Industrial Relations Committee. My services have been called on by Shane Ardern in the primary produce sector. We need to get back to that sector and strip the red tape that this Government has unwisely allowed to grow like some sort of noxious weed through that part of the economy. But that is for another matter.  
Yes modernisation of the road-user charges system is important but why it is important is because that is the basis of the revenue we actually rely upon for the ongoing upkeep and advancement of the infrastructure that we call our transport system. There are a couple of areas. Consultation unwisely by the Government has been deprecated and diminished in status in this legislation. Now really what one of the most sophisticated transport operators in the country actually wanted—Toll New Zealand—I hope Mr Brownlee does have the opportunity to go and meet with the chief executive officer of Toll who I have found to be a very non-partisan chap. He spreads the tickets for rugby around on a very fair and even basis. I am not entirely sure whether or not we are going to reach the threshold as to whether they have to be declared in this irksome process—which has become more and more petty—otherwise known as pecuniary interest. But that is another matter. That is another matter.  
I would say that Toll transport and I think it is a proxy for a host of other companies is bothered by the fact that yes subsidiary legislation will be used—that is regulatory-making powers—but there is no duty on the Minister to go through essentially our justiciable process of consultation with the affected parties prior to the promulgation of the regulations and that is not unreasonable. So that was an area that we pushed quite extensively in our—I would not call them debates—discussions and differences of opinion in the select committee. But by and large the select committee when it dealt with this bill because it is partly technical and partly political found a lot of common ground. We actually did find a lot of common ground. The thing to bear in mind is that there was no overwhelming evidence put before us that the current system was creaking to the point of collapse. There was a sense from the bureaucrats that there was a case for modernisation. There was a case that as the technology improved and people could actually rely upon more efficient ways to ensure that they were being legal we should not stand in the way of this process of actually modernising how we charge revenue collect revenue from the heavy haulage fleet in particular within the country.  
Now we need to be mindful—and we call upon the Minister—in this policy as it becomes law and as it moves through the process of subsidiary legislation that where it is evident that either there are egregious omissions or it is actually not working how the bureaucrats thought it might work there is a willingness and a level of courage on the part of the Minister to actually improve matters as it goes along. Far be it for me to want to spare the Minister the agony but no one actually wants to see what Minister Annette King faced in 2008 as I recall when she increased the costs of road-user charges. It led to something akin to a large truck strike in places like Whangarei and other large urban areas were congested as people were enraged about the way in which the costs were changed at that particular point in time.  
So let us be confident as we move through the latter stages of this that this bill does not represent inadvertently an additional impost on our transport fleet because rest assured that will add an intolerable burden on the tradable sector. It will decrease the efficiency in terms of price and quality of service in respect of our exports and it may also have the effect of chasing more Kiwis out of this industry as they think about going to Australia where unfortunately they are able to earn better amounts of money etc.  
There is an additional area where we were criticised as a committee. People felt that the larger firms with their vested interests and their ability to absorb cost through a larger essentially armada or a fleet of vehicles would actually slowly but surely marginalise the smaller firms and put them out of business. That is not good. No firm actually wants to see a system and no citizen should want to see a system where it becomes calcified it becomes inefficient and the large players have the ability to game the market. So I think it is important that the smaller firms—after all that is the genius of competition; the smaller firms—that are a wee bit more nimble a little bit more flexible hold the larger ones to account. We need to bear in mind that during the process where we received lobbying we received advocacy and we received submissions there was a concern that the smaller perhaps undercapitalised firms would not be able to make the process or the transition.  
I do not think it is unreasonable that those of us who are parliamentarians on this committee or who will be coming on to this committee are mindful not only of the large powerful vested interests but also of the smaller firms. In particular in the areas where I hail from where there is forestry aquaculture and a host of pastoral industries not all the firms in those areas are large nationally spread enterprises. It is important that we have a view about the importance of competition the importance of innovation and ensure that as this modernisation system begins to bite it does not have the perverse impact of actually reducing the ability of some firms to stay in business as a consequence of an ill-conceived and poorly executed new bout of red tape.  
Far be it for me to apply red tape to Gerry Brownlee in relation to what the man has already got to deal with in Christchurch and I am sure I speak for my colleagues on this side of the Chamber. I personally wish the man well in expediting the process to help our fellow citizens down in that part of Aotearoa but please I make a plea. When we implement changes of this nature let us ensure that we hold our bureaucrats to account and that as the process unfolds where they find examples that the policy is developing and creating anomalies and poor results we have got the courage to change it and ensure that our transport fleet remains efficient and competitive because that is going to have a significant impact on our ability to pay our way in expanding the tradable sector or growing our international revenue. Thank you. 
PHIL TWYFORD (Labour—Te Atatu) 
: 
 I want to highlight in these closing stages a group of people who will be severely disadvantaged by the passage of the Road User Charges Bill. A number of them made submissions to the Transport and Industrial Relations Committee and their concerns have not been alleviated and they fear that with the passage of this legislation the provisions that shift the charging of the road-user charges from a nominated weight to a gross weight will threaten the viability of their businesses. In the case of one of the submitters the New Zealand Motor Caravan Association it believes that a substantial number of the 40000-odd members who travel around this country in motor caravans are going to be paying substantially more because they typically have vehicles that have a heavy gross weight and those vehicles are very rarely if ever laden to their full capacity.  
In its submission it points out that typically a vehicle of a mass of about 19600 kilograms would currently be paying $121 for 1000 kilometres and under these changes it will be up for an increase of about $330 on top of those charges—according to the submission by the Motor Caravan Association. That is an outrageous increase—270 percent. It believes there is no justification for it and this will weigh very heavily on as I said the 40000-odd individuals who are members of the New Zealand Motor Caravan Association.  
There were also a number of submitters principally small-business owners who submitted that this change would have the effect of making their businesses no longer viable and I want to read the Committee one or two quotes from the submission by Southern Trucking Ltd which operates four six-by-four tractors and two eight-by-four truck and trailers around the country: “If this law passes the company that my wife and I started with one truck 7 years ago and have poured our heart and soul into will no longer be viable.” 
Hon Shane Jones 
: Off to Aussie! 
PHIL TWYFORD 
: Yep that is right. Off to Aussie; off to Aussie. McLean Road Services which specialises in transporting large loads like fibreglass swimming pools which are up to 5 metres wide around the country has large vehicles to do this but they are never fully laden. Therefore the impact of this change which will hit it up for road-user charges calculated on the gross weight of the truck will amount to it believes a huge increase. I quote from Don McLean the proprietor: “Our margins are thin now and if I have to pay RUCs for the GVM it probably won’t be viable.”  
Finally Mike Hermansen says: “The method currently [proposed] would disadvantage operators carrying lighter loads and would … negate the use of multi axle units that operators have currently in their fleets these units have been specifically built with more axles to be easier on our roads. If you [move] to gross weights these units will be disadvantaged and operators will no longer use them.”  
So it is a great shame that these objections were not listened to by the majority on the select committee. The Government has ridden roughshod over the concerns that Opposition members on the committee raised throughout the process through all readings to this point. The Government has failed to take on board those concerns and the passage of this bill will impose a terrible burden on many small businesses around this country that cannot sustain the kinds of costs that this bill will add to their bottom line. So I do not believe that the Government and the majority on the select committee have adequately considered the consequences albeit unintended of this change— 
Hon GERRY BROWNLEE (Minister of Transport) 
: 
 I feel I need to respond to Phil Twyford’s concerns. Firstly I will acknowledge that Labour members are supporting the Road User Charges Bill so obviously they will be speaking from a very genuine and concerned perspective. But one of the things I would point to is Appendix 1 of the consultation document that went out for consideration by all parties who pay road-user charges. The example that the member gave us was of a 1960 I think kilogram vehicle where I think the suggestion was that the road-user charge was going to go from $121-odd to something in excess of $450 by the time you add two things. That would be a rate per 1000 kilometres meaning that in that case someone would be paying close to 50c per kilometre. That is patently ridiculous and not something that is going to happen.  
The consultation document gives the example of a vehicle of up to 4 tonnes twice the weight of the vehicle that Mr Twyford was using as an example. Currently that vehicle would pay somewhere between $44 and $49 per 1000 kilometres. The consultation document gives a range—remember it is up to 4 tonnes so there will be various gross weights below that. The new range is somewhere between $45 and $87 per 1000. That is a long long way from the $460-odd that the member was speaking of. The mid-point I guess in that range is something like about $60 which represents a gross increase of about $11 per 1000 for people in that category. I am just working off the bands that I have put here. They are certainly not rates that are struck at this stage but they are substantially less than the very big figures that the member gave before.  
I think the issue of gross laden weight and trucks is really the problem with the mileage. If you are just charging on a mileage rate that truck is doing some wear and tear on the road at all times that it is on the road whether it is at its gross laden weight or not. If we are going to have efficiency in transport something that the Green Party certainly requires of us as a point of policy then having some road-user charges that actually encourage inefficient use is not particularly helpful. I think also that even at the upper end I would like to say—so you might have vehicles up to 44 tonnes—the increases in the road-user charges are not likely to be anywhere near as substantial as the member spoke of. In that case for the current ranges between $250 and $409 depending on the weight that they put on to that vehicle under the gross system it would be around about $276. That is encouraging efficiency as you get bigger units able to take larger loads.  
I think the Transport and Industrial Relations Committee has done a good job in considering all of these aspects and I appreciate the efforts that the committee has made to get a good bill. No one likes passing bills that increase charges. This I think is a bill that may increase some charges but by and large it will improve the efficiency of that large chunk of the transport system and also make it much fairer for those who participate in it at all levels. 
Clause 1 agreed to. 
Clause 2 agreed to. 
Bill to be reported with amendment presently. 
House resumed. 
The Chairperson reported the National Animal Identification and Tracing Bill with amendment and the Road User Charges Bill with amendment. 
Report adopted.