Road User Charges Bill

Part 2 is the guts of this bill and it deals particularly with an issue that I have some concern about, which is the moving from calculating road-user charges based on nominated weights to one based on maximum gross weights. To put that in a nutshell, at the moment if somebody owns a fairly heavy truck, then basically they estimate what they are going to be carrying—let us say any sort of truck—and they might carry 3 tonnes one day and 5 tonnes another day. They will pay the road-user charges for the number of kilometres they are expected to do at a certain weight. This change means they will pay road-user charges for the maximum weight of the vehicle, regardless of the load that they are carrying. This is a significant departure in practice from what we currently have, and it is one that I am concerned about. Some trucking operators who have large vehicles that travel one way with a full load and return empty will end up paying significantly more. Under the present system they can travel one way with one set of road-user charges for the laden weight, carrying the full load, and they can return empty or with a lighter weight, and they can pay less. If we are talking about a truck travelling from, say, Wellington to Auckland, that is not an insubstantial distance—700 or 800 kilometres—and therefore they will buy their road-user charges at the different price for the different weights to reflect that. Under this rule change, if they take a big truck from Wellington to Auckland with a full load and they bring it back to Wellington empty, they will pay the same road-user charges, regardless, even though clearly the wear and tear on the road will be significantly less from an empty truck than from a very full one.

It will also mean that companies that have trucks that are used for a variety of different carrying purposes—some days they will be carrying a very large load and some days they will be carrying a smaller load—can accommodate that at the moment with the existing road-user charges regime. Under this regime they will not be able to do that. So we will see companies having to change the make-up of their fleets, which is potentially quite a significant cost for some trucking companies. I think we will see a move to more smaller trucks on the road, rather than a greater number of larger trucks on the road, and more distance being travelled by those smaller trucks, simply because if they are having to pay the full cost even when the truck is partially empty, many of the operators will decide that it is better to increase the number of journeys with a smaller truck rather than have a large truck that will end up being empty part of the time. So I am concerned about this particular change. Although I am concerned about the number of very heavy trucks that we have on the road—and I would like to see a reduction, potentially, in that number—goods have to get from A to B somehow, and this change potentially increases costs significantly for a large number of industries in our country that we rely on. I will give members an example of a cattle truck. A cattle truck fully loaded with cattle will weigh more than an empty cattle truck. Under the current road-user charges regime, that is allowed for; under this one it will not be. Operators of those trucks will be paying the maximum cost of the load for a full load of cattle, even if they are not carrying a full load of cattle.

💬 David Bennett: They have to pay anyway.

No, under the current regime there is provision that if they wanted to, they could prepay road-user charges for different weights for that truck. It is quite possible, under this law, that a number of trucking companies will end up—

💬 David Bennett: Book every truck one way, then the other way? Yeah, right!

I am looking forward to David Bennett’s contribution to this debate. He obviously was not paying any attention to the Transport and Industrial Relations Committee when we discussed it, even though he was chairing the meeting, but that would not be particularly unusual in the case of David Bennett, the member for wherever he is from.

💬 Darien Fenton: Not for much longer.

Not for much longer, no. That is right. I think the Government needs to explain and to justify in greater detail why it wants to potentially increase significantly the costs for a number of our trucking operators. The Government has not made the case for why it wants to make this change. Government members argue that it will be more administratively efficient; I am not entirely sure that it will be.

In fact, one of the other changes in this bill introduces an electronic system for booking road-user charges. That is a really welcome move, and we certainly support that. One of the reasons we support it is that it will make it more user-friendly and flexible for trucking companies, so that they will be able to more easily book the required number of road-user charges that they need to pay for the different weights that the vehicles may be carrying. It seems that on the one hand we are moving to a system that offers more flexibility, and, on the other hand, by moving the basis on which road-user charges are calculated from one that is quite sensible, in my view, based on estimated weights, to one based on maximum weights, we are actually taking that flexibility away again. That does not seem to make an awful lot of sense to me, and that is the main change in this particular part that Labour members have significant concern about.

The second aspect that we have significant concern about is the process by which these regulations will result in road-user charges rates being set. Road-user charges are, of course, a form of taxation. In the Labour members’ view, that should be set by a bill through the House, not by a regulation. The old saying, in our view, applies: no taxation without representation. Under this particular legislation, taxation can be applied by the Government without going through this House—the people’s House—as all other Budget taxation measures need to. So we are opposed to that particular provision.

There are many things in this bill that Labour members support. We want to see a crackdown on those who avoid paying their fair share of road-user charges. Trucking does result in significant wear and tear on our roads—possibly billions of dollars’ worth of wear and tear on our roads. It is only fair that those who are doing that pay their fair share. There is avoidance at the moment, and we want to see that cracked down on. In fact, I acknowledge that the Government wants to see that cracked down on. There are measures in this bill to do that, and we wholeheartedly support those. There are many measures in the bill that we support.

I mentioned briefly earlier the issue of electronic booking of road-user charges. I would like to see us, in time, get to the point where there is an online system, which is much more flexible for companies, where they can manage their own accounts online. That is where we could get to. I have a couple of trucking companies in my electorate, and I have had a little bit to do with them over the period of time that I have been a member of Parliament. I know that they would like to have much more control over this area of their business. They have struggled with some of the regulatory framework, and I think that many of the concerns that they have—

💬 David Bennett: You’re the mascot for the Irish rugby team.

—are being addressed by this bill. David Bennett would be well advised to calm down a little bit rather than interjecting and insulting me while I am speaking and giving credit to the Government for many of the provisions in this bill that I think are really good ones. He has gone all red, and I know he gets very excited when people are talking about him, because they do not talk about him where he comes from, so he likes coming to Parliament, where other people talk about him.

💬 Iain Lees-Galloway: The top of his head lights up.

He literally lights up when we are talking about him, and I know that he thoroughly enjoys that.

I hope that the Minister will outline the Government’s case for why it wants to make this change from a system of calculating charges based on estimated weight to one based on maximum weight. I think it would be good if the Minister in the chair engaged in this particular part of the debate, because that change is fundamentally the main point of contention in this bill. Most of the other provisions in the bill are ones that we support, and as for the ones that we have some reservations about, we would probably be willing to let them go if we could get some reasonable debate on this issue, which is the most fundamental issue in the bill. I certainly hope that the Minister in due course, as the debate progresses, will take a call or two on this issue and set out the Government’s case on why it wants to do this. Thank you.

The first comment I make about road-user charges in general is that earlier in the day I talked about the fact that the Manawatū Gorge has been closed for a great length of time and is likely to be closed all the way through to December, and that has resulted in significant additional costs to some businesses, and in lost productivity. One of the sources of those additional costs is the road-user charge, simply by way of the fact that vehicles have to travel a longer distance to take one of the two alternative routes to get round the Manawatū Gorge. Thus their road-user charges increase as a result of that extra distance travelled, mostly in getting between distribution points in Palmerston North over to the Port of Napier, or distribution points over in Hawke’s Bay. Another one of the effects is that these two roads are not really built for the type of traffic that is travelling on them currently. The normal traffic volumes are about 600 vehicles a day on those two roads; currently they are carrying 7,000 vehicles per day, and many of those vehicles are heavy diesel trucks carrying freight and goods between Palmerston North and Napier. The effect on both of those roads is now quite significant, and with that will come, obviously, additional costs in maintaining those roads. I just thought that was an important point to make about road-user charges.

What we are concerned about in Part 2 of the Road User Charges Bill is that the argument in favour of shifting from a system of nominated weights to gross weights for the setting of road-user charges has not really been set out. We have not heard it articulated by the Government why this change is necessary, and how it will improve the system of road-user charges. All we are clear on is the fact that for many operators this will increase costs. Again, going back to the example of goods that would ordinarily be carried through the Manawatū Gorge, should a vehicle have to go from one point to the other carrying those goods, then have to travel back empty, this change will significantly increase those costs. Yes, we could argue that it is an incentive for trucking firms to organise their logistics in a way that tries to ensure those trucks are not travelling without any cargo on board, but often that is simply not possible. Often the nature of the cargo and the nature of the points between which they are travelling means—especially when a vehicle is specifically designed to carry a particular cargo, particularly liquids and gases—it is not possible to ensure that a vehicle travels from point A to point B, and can then pick up more load at point B and travel back to point A or on to another point. It might be logistically possible for some firms to arrange their affairs in a way that is more efficient, but for many products, many loads, that is simply not possible.

One of the other arguments that I recall from one of the submitters—I do not remember which submitter it was—at the select committee was that the change to gross weights for setting road-user charges might be an incentive for transportation firms, trucking firms, to ensure that their vehicles are fit for purpose—that is, that they do not have a large vehicle carrying a small weight, a weight much less than that vehicle is capable of carrying. That again, I suppose, on the surface of it, sounds like a reasonably sensible argument, but for many trucking firms that would require a significant investment in capital, and it actually reduces flexibility for those firms. They have vehicles that are capable of carrying a range of weights so that those vehicles can be flexible in the goods they carry, and to require firms to have a range of different vehicles to be specific to the weight and volume of goods they need to carry would require a heck of a lot of investment. For many operators, I think, it would reduce their ability to be flexible, and to provide a flexible service to their customers. I suppose there needs to be an element of realism here, in terms of what transportation firms will actually be able to do, whether we put those incentives in place, or not. It is not clear in my mind whether that is the goal of this change, because, as I said, I do not think that the Government has particularly articulated the case for making the change. That suggestion, actually, came from one of the submitters.

Chris Hipkins also mentioned EROAD, or the electronic registering of the road-user charge. What I have heard from a number of operators is that specifically because this legislation mandates the change from nominated weights to gross weights, they are less inclined to take up the electronic road-user charge option because it is a cost. It is a cost outlay for them, which would make sense if they were able to reap the rewards of electronically monitoring a change in weight, and their road-user charge could be purchased as they went, according to the weight they were carrying. But it makes no sense to make that investment in those electronic devices if they are not going to get that benefit—if their road-user charge is going to be based on the gross weight of the vehicle. There would be no advantage whatsoever in monitoring the weight of the vehicle, and using an electronic system for doing that. If we are trying to encourage transportation companies to shift into the electronic age and to make use of those sorts of systems, the change to gross weights is precisely the opposite thing to what we should be doing to achieve that—and that is direct feedback from the industry, which is interested in innovation. Industry members are interested in improving their efficiency, but they have to see a reasonable cost benefit from the investment they would have to make.

There is also some concern that driving trucking fleets down to smaller and smaller vehicles will mean we have a greater number of smaller vehicles on the road, and that could have impacts in terms of emissions and also of vehicle congestion on the road. So given all the concerns related to what, perhaps, some of the unintended consequences of this change may be, I think it would be really useful for the Minister to articulate what the purpose is of this change. I think that would be welcomed by members of the Opposition, and then we could have a conversation about that once the Minister has explained it. So I will take my seat and, hopefully, the Minister will get to his feet.

We have had good discussion on Part 2 this evening, on this very important bill. I think it is worthwhile mentioning a few things in terms of what Part 2 covers, which is basically the administration of the road-user charge system: the requirement, of course, to pay road-user charges, which includes obligations on the owner or operator of a vehicle; distance recorders; the issuing of licences; and the management of refunds, which is an important point. It also covers the approval of service providers dealing with electronic methods, and the approval and management of hubodometers, which is included in Subpart 6.

It has been interesting to hear the debate this evening from Opposition members. I think that Chris Hipkins gave an example of a trucking firm that could be operating from Wellington to Auckland. Statistics show us that most of those operators that travel those long distances are indeed licensed for their maximum combined weight, and that example would be 44 tonnes if they were doing a long haul from Wellington to Auckland. Some choose to operate at their tare weight, which some have called the naked weight—that is, not loaded, at all. Then they choose to purchase a supplementary road-user charge licence. Not many operate in that area. Some indeed operate at the tare weight, and then we are left wondering whether they travel with any loading on their axles. Of course, we can all safely presume that they do carry a load from time to time. We do not have a clue as to how much revenue the Government is missing out on. So, in essence, this will tighten that bit of a loophole for those who choose to game the system. That might be a small number of operators; it might, indeed, be a larger number than we are aware of.

I guess, to conclude, the reasons for the change are a reduction in the evasion, and also a reduction in the administration and overall compliance costs of the current system. There was also a comment made in terms of the electronic road-user charge system, from the member for Palmerston North. Indeed, the voluntary use of an electronic system will make it a lot easier to claim back those distances travelled off the road. In essence, it will be a lot easier to claim a refund than it currently is.

I am happy to take a call on Part 2 of the Road User Charges Bill. I thank the Minister in the chair, the Associate Minister of Transport, for his contribution. Part 2 is about road-user charges, and the first clause, clause 7, which is about the requirement to pay road-user charges, has been an ongoing debate. Thirty years on, key players in the road transport industry still say that we should be looking at charges related to diesel, and that we should be looking at a diesel tax. So I am really pleased that the Minister and the Government seem to have accepted that our road-user charges system is actually very innovative.

One of the interesting things for me during the select committee process, and in meeting some of the players in this industry, was having people report to us that the road-user charges system we have in New Zealand is extremely innovative. It is new and it is different. Even though it has been around for 30 years in New Zealand, in Europe and other countries that are starting to consider how they get people to pay their fair share—particularly for heavy vehicles on roads, with all the damage they do—they are starting to consider New Zealand’s system of road-user charges. They have had a system based on a petrol or diesel tax, and it does not work.

As innovation occurs, as we get more and more electronic use, and as we get more efficiency in the trucking industry, the truth is that the system we have in New Zealand is now a great innovation that is being made available to the world, but not through this Government, of course—not through this Government. That was one of the very, very interesting things from the Transport and Industrial Relations Committee, apart from the fact that there are issues around the calculation of road-user charges, which will continue to be a thorn in the side of this Government. Its friends in the heavy transport industry will continue to agitate about this. It will continue through the election and beyond.

I think it is very exciting, actually, that we have an innovative system in New Zealand that we are now starting to see picked up throughout the world. It has been picked up throughout Europe. It has been picked up and is being considered in Australia. People understand that with the increasing freight that now goes from one country to another in Europe, and with what happens in Australia, the charges that have been laid on heavy trucks are not working. New Zealand is an example. It is great that we have an example here.

The other very exciting thing that we heard during the select committee process was the innovation. We heard from innovators such as EROAD and others. In fact, I have visited many of them in this industry. The innovators are determining that there is a market not only in New Zealand but internationally. And they are marketing not only the road-user charges system that we have in New Zealand but actually the innovation we have through things like electronic road-user charges.

This bill touches on that. It is very much a voluntary system, and there was quite a lot of suspicion, I have to say, from what I might call the backward-leaning parts of the industry. But the forward-looking parts of the industry are demonstrating to New Zealand and the world that we can do things in the road transport industry that are saleable to the world. It is about not only our system and not only road-user charges, but also how we monitor them and how we charge for them.

We heard in the select committee from EROAD, and I have to say again that there was a lot of suspicion from the National members. They were suspicious about EROAD’s motives and its opposition to the calculation of gross vehicle weights. But I have been to see EROAD and I have looked at the product it is producing. This is one of the firms—along with others, actually—that we should be celebrating in New Zealand. This is one of the firms that is actually developing things in New Zealand that are saleable to the rest of the world. It is out in Australia, and in Denmark too, selling its product and doing a wonderful job, and I think we need to be encouraging that. It was a bit disappointing to see some of our leading companies like EROAD treated with what I thought was disrespect during the select committee process.

I encourage members in the Committee to support Part 2, “Road user charges”. There are concerns about the calculation of gross vehicle weights. As I said, there will continue to be agitation about that. I talked about that matter in debate on Part 1. I think there is a lot of discontent in the industry about the fact that there has been so little consultation about the change from driver-nominated weights to gross vehicle weights. There have been concerns about what it means in terms of road safety in New Zealand, and also concerns about good firms being penalised for trying to do the right thing and big trucks getting an advantage. As other colleagues have said, the right of no taxation without representation is a considerable concern.

I am also really concerned because, although we support road-user charges, a whole part of this bill does not exist. That is the part that relates to what happens for people who drive through the Manawatū Gorge, who get up at 4 o’clock in the morning, who drive on a 13-hour day as they are able to do at the moment, who buy their vehicles, who mortgage themselves in an unsustainable way, who speed through the gorge, who falsify logbooks, and who breach work-time regulations. I know that the Minister of Police over there is saying that the police are on to that. Yes, they are.

💬 Hon Judith Collins: No, no, no. They’re blocked at the moment—the Manawatū Gorge. They’re not speeding; no one’s speeding.

OK; it is blocked. I am sure there are plenty of other highways that we can talk about.

💬 Chris Hipkins: I thought the Government would have cleared that mess by now.

That is true. That is right. We would have thought the Government would fix that up, especially that Minister over there because she fixes everything. She takes credit for everything and—

💬 Hon Judith Collins: No, I don’t. Phil Goff takes credit for stuff that I’ve done.

Ha, ha! That is right! Going back to what I was saying about Part 2, there is a problem that this bill does not address, and previous bills brought forward by this Government did not address it either. That problem is in respect of truck drivers in our industry who—OK, they have to pay road-user charges, but all that does is add to the burden that they have of unsustainable contracting. They are required to sign up to agreements with providers that mean that they mortgage their homes and themselves, and they have absolutely no way of making a sustainable living, because they have no rights. So although there are some regulations about speeding, work-time regulations, and so on, we have a trucking industry where we are seeing every week one or two people killed in a truck-related accident. I am disappointed that Part 2 does not deal with that issue.

I am pleased that it deals with some other things about building sustainability and modernising our fleet. I am pleased about that, but I do not think the Government is addressing the fundamental issue of the link between rates of pay and safety in this industry. There is a link between rates of pay and safety in this industry, where truck drivers are not getting full cost recovery, including in respect of things like paid waiting times, fuel reimbursement, and, for that matter, road-user charges. They are being pushed to make a living. We have had a dreadful few weeks on New Zealand roads. I do not want to blame the truck drivers; they are just trying to make a living. They are just trying to get on and do a job and do their best. But I think this Government is letting us down and letting the industry down by not addressing those issues in this bill.

Although we support the provisions in Part 2, we think that the Government continues to not go far enough. Until there is an examination and an understanding of the link between pay and road transport safety, all of the things that are in this bill will not solve the problem.

I move, That the question be now put.