Land Transport and Road User Charges Legislation Amendment Bill

Labour is very happy to help the Government on the passage of this Land Transport and Road User Charges Legislation Amendment Bill. There is no doubt that, in speaking to Part 1, the Government needs our assistance with this bill because of the mess that it has created going right back to when this road-user charges legislation was reviewed. It was passed in 2012, but debated in 2011. I remember—and I have recalled in several contributions I have made to the House—speaking to the first reading of this bill under urgency last August, in 2013. It seems to be a very unfortunate trait of this Government that whenever we are talking about anything to do with roads, either it is a mess or it is about putting petrol tax up and hitting the people who are struggling out there in the pocket.

But, as I said, Labour did warn the Government way back in 2012, when this legislation was passed, that the regulation-making process in this legislation that would allow the Minister to sign it off without public debate would cause problems, and that indeed is what happened. What we told the Government then was that it broke the basic democratic principle that there should be no taxation without representation. There were no final numbers available for scrutiny in advance of the 2012 bill being passed into law. The actual changes were apparently going to be set by officials at some later date—and I will get into what did actually happen—and there were a number of submissions suggesting that this regulation-making power was outside the role of legislation like the 2013 Road User Charges Act and that, in fact, it broke that basic principle of good lawmaking.

Indeed, what happened was that a mess was created. The Road User Charges Act turned out to have some minor anomalies that this bill seeks to correct. Apparently, they affect only a small number of vehicles and their owners. But what happened was that the Minister tried to pass a regulation that would allow this particular issue to be resolved through regulation. The Regulations Review Committee did a very good job of scrutinising those regulations. It recommended to the House back in 2012 that the regulations be disallowed because the Government had not followed the process. It had allowed excessive regulation-making decision-making that was outside the comfort zone of this Parliament and, in fact, of the tradition of this Parliament.

The Minister then did something unprecedented by reinstating the regulations in 2013.

💬 Andrew Little: Nothing would surprise us from this Government.

Well, that is true. Minister Gerry Brownlee did not surprise us with that, but he reinstated those regulations, and that was an unprecedented process in this Parliament. He reinstated these regulations. Off they went to the Regulations Review Committee, again, and what did the Regulations Review Committee say? It said that the regulations were outside the parameters of good lawmaking in this Parliament and that they should be disallowed. So twice the Government has tried to sneak through the regulations that are proposed in this bill—the “minor” reform, the “minor anomalies” with the road-user charges—using its regulation-making power. Thank goodness for the good chairpersonship of Charles Chauvel, who was the chairman of the Regulations Review Committee at the time when it made the first disallowance, and then also the Hon Maryan Street, another hard-working member, who was on the ball and actually recommended to this House that these regulations be disallowed. That is why we ended up in this House under urgency in August 2013 with the Land Transport and Road User Charges Legislation Amendment Bill.

It is interesting when you think about what we could be doing if we were not having to waste our time doing this. The bill talks about “minor anomalies” with the Road User Charges Act. There are many more anomalies than this minor anomaly with the Act, and I wanted to take the opportunity in the context of Part 1 to talk about some of those, because they are anomalies that have been around for some time. Take the anomaly of light diesel vehicles—those under 3,500 tonnes—whose owners have to pay road-user charges. People up and down the country who have light diesel vehicles, who have purchased them because they want to contribute to sustainable transport in New Zealand, are having to purchase road-user charges in addition to purchasing their vehicles. This issue has been raised time and again as road-user charges have been debated in the Transport and Industrial Relations Committee, and time and again the Government has turned its back on those people who use light diesel vehicles. These are not freight vehicles. The Government has turned its back on those people and said: “We’re not interested in that. We would rather try to sneak through regulations to deal with the issue of fast tractors and other farm vehicles.” That is one anomaly, and I would say that it is not a minor anomaly; I would say that it is a major anomaly.

Another anomaly that has come through at the select committee when we have talked about road-user charges is the issue of road-user charges on motorhomes and campervans. I have had a number of older people ring me in the last little while since the road-user charges changed. They tell me they are paying for 11 tonnes when their vehicle is actually only 7 tonnes. Somehow, with the changes that were made under the Road User Charges Act, they are paying $50 more a year. We are talking about retired people on minimal incomes, on restricted incomes, who have bought a campervan or converted a van into a holiday bus and who are now finding that they cannot go on holiday because, first, they are not earning enough money, because it is really, really tough out there, and, second, $50 is a lot of money for them. That is a minor anomaly. Maybe it is a major one, because I certainly know that the Motor Caravan Association has been to our select committee and expressed its concerns about this on a number of occasions.

In Part 2 I will talk a little bit more about some of the anomalies, because there are some particularly bad ones that I have come across in the adjournment that I want to bring to the attention of the Committee. But I would say that Labour is supporting this because we think it is the right thing to do. It is the right thing to do to correct anomalies when they are made. It is just a pity we have to waste House time on doing this—House time on something that was urgent back in August 2013.

💬 David Bennett: You don’t have to; you can sit down. Sit down.

David Bennett might not think it is important to debate these issues properly, but, actually, the Labour Party does think it is enormously important.

The proposals under this bill are to exempt fast tractors—which I found quite amusing, really—tractors that operate over 40 kilometres per hour on the road, from road-user charges and subject them to an annual charge in lieu of road-user charges to cover the costs they impose on the road network. The bill proposes to exempt all unregistered vehicles—that is, vehicles exempt from registration or not required to be registered or operating under trade plates—from road-user charges and apply to them an annual charge as well. That is all very reasonable. It should not have been missed out in the first place. The Minister should not have tried to sneak this through by way of regulation, and he should not have tried to trick those on the Regulations Review Committee by reinstating the disallowed regulation and tried to sneak it in that way, because he made a mess, he made a stuff-up, and here we are in this Parliament debating Part 1—

💬 Andrew Little: Expensive time.

At great expense, actually—great expense. Those who drive fast tractors will be looking forward to having this legislation go through. It actually should never have happened in the first place. Thank you.

I rise to speak on the Land Transport and Road User Charges Legislation Amendment Bill, Part 1. The Green Party is supporting this bill and the principal changes that it is making, which establish an annual charge in lieu of a road-user charge for some vehicles that are exempt from road-user charges and create a new regulation-making power to exempt from road-user charges vehicles that are not required to be registered. That is an obvious amendment that was overlooked when the original legislation was passed. The principal legislation was the Road User Charges Act 2012, which was a major overhaul of the road-user charges scheme, which was passed in 2012. The Green Party can support these minor changes. We do think it is unfortunate, but it does happen with the overhaul of a system as complex as our road-user charges system that there would be oversights and there would be things to rectify that would come back to this House, and we can understand that. What is important is that it is following the principle of user pays, and so it makes sense that if there are vehicles that are not using the road, they should not have to pay road-user charges. That makes sense.

But there are some missed opportunities, obviously, both with the principal legislation and this amendment bill, to further rectify anomalies in the legislation—for example, those using light diesel vehicles, which Darien Fenton referred to. Those passenger vehicles are actually being charged perhaps a little bit too much, given that they have greater fuel efficiency and that we want to incentivise greater fuel efficiency in our passenger fleet. Road-user charges are a way of applying fees in an economically rational way that will incentivise the purchase of vehicles that are going to be more efficient. So that is something that we could have looked at that was not looked at. Instead, we just provide an exemption for fast tractors, which are not usually using the road, and exemptions for unregistered vehicles, which is fair enough.

One of the things that came about as a result of the principal legislation, the Road User Charges Act 2012, is that the total contribution to the National Land Transport Fund from heavy commercial vehicles using diesel has now actually declined significantly, whereas the contribution from petrol vehicles—passenger vehicles, by and large—has increased. It used to be closer to a 50:50 split; now it is getting down to only about a third that is coming from these heavy vehicles. I suppose there is some cause for concern that at a time when we are allowing bigger and heavier trucks on the road, which has consequences in terms of road maintenance and the requirement for ratepayers to invest in stronger bridges and what not, there is a bit of a subsidy going on.

We do want road freight to be as efficient as possible, and the current system probably is not getting that outcome.

One of the rationale for the changes to the road-user charges system was that we could increase compliance and reduce avoidance. So, by and large, the contribution from heavy commercial vehicles and trucks has declined, but the argument was that there would be increased compliance. In fact, from the financial review we saw, that was not the case. So there is about the same amount of avoidance of paying road-user charges, from what I can tell from the documents from the ministry and the New Zealand Transport Agency, as there was before, but, by and large, the road freight industry is paying less in its contribution to our national transport budget. Of course, this cannot continue infinitely. Unless we invest in alternatives to the roads, we are going to have a problem in the future of funding the transport budget, because this Government has got some pretty ambitious plans to spend billions of dollars on just a couple of really expensive motorways that do not actually carry many of our freight tonne kilometres or many of our passenger trips.

The Government’s decision to spend most of the transport budget on these few motorways, and in particular to debt fund some of them, as it is proposing in the case of Transmission Gully, which is to be funded from private debt, means that New Zealanders 20 to 25 years from now, or even 30 years from now, will still be paying back the money that was spent by this National Government on one motorway that carries, you know, a tiny percentage—less than 1 percent—of all vehicle trips in New Zealand. That is not a rational use of transport budget.

But what is concerning is that we have seen that vehicle kilometres travelled on our road network have declined or sort of stalled since 2006. Vehicle kilometres travelled particularly by passenger vehicles have declined per capita. They have stagnated overall. This is a phenomenon that has been observed in other countries comparable to New Zealand. Australia, the United States, Canada, and all other OECD countries really are seeing the same peak vehicle use, and, because of that, we are having less revenue coming into the National Land Transport Fund than we anticipated. Over time we are going to have a serious funding shortfall between what the Government wants to spend on very expensive motorways, what the Government needs to spend to maintain our existing road network at a high standard and ensure that it is safe, and the amount of money that we actually have coming in from petrol tax and road-user charges.

What is inevitably going to happen, if the Government does not reprioritise its spend and cut some of the more superfluous spending, and hopefully not take on this additional billions of dollars’ worth of debt to fund one particular project that has a very poor business case, is that future Governments are going to have to put up road-user charges and the petrol tax. It is ironic that at a time when there is declining demand for our road network, we are spending so much money on new, redundant projects that are going to put us into debt, and we are then going to have to raise money afterwards and charge people even more for the use of the roads while they are using them less. This is not a rational policy outcome, in my opinion.

Although the Green Party is happy to support this bill, we think New Zealanders need to be aware that in the future we are going to be seeing increases to the petrol tax and increases to road-user charges to fund this National Government’s outrageous plans to spend billions on a few very low-value motorways. It is going to be bad for the country, and it is going to be bad for road users most of all. I have said this to the Road Transport Forum and I have said it to the Automobile Association. This Government is not spending petrol tax dollars and the road-user charges money in a way that is best for road users. I think it has been very easy for the Government to make the claim that because it is spending money on roads, it is good for road users. But if we take a rational analysis of it and take an objective look at where the money is going, what the benefits are going to be, and whether or not it is actually going to benefit freight or road users, then the answer is that it is not.

In the future we could have higher petrol prices and higher diesel prices, and, at the same time, while people are looking for alternatives to the roads so that we can move our freight at a lower cost and avoid the high cost of diesel, and while passengers are looking for an alternative to sitting in traffic in Auckland, for example, because they need to get to work and there has not been the investment in the passenger rail network that was needed, they are going to have to be spending even more because we will be paying back the debt on Transmission Gully. Thank you.

New Zealand First has expressed concern about a number of amendments to road-user charges made during this term of Parliament. The Land Transport and Road User Charges Legislation Amendment Bill seeks to correct some of the stuff-ups made so far. We will support the bill on that basis, as far as it goes. But there are many more stuff-ups that are not being addressed at all in this bill. One is some of the provisions of the 2012 amendment Act, which made many changes to the road-user charges system. New Zealand First then had, and still has, concerns for the 22,000 motorhome owners registered with the Motor Caravan Association, although the total number affected is, of course, many more than that. We have similar concerns about the horse trucks that have been caught by those changes, and which should have been exempt from the 2012 regime.

Vehicle operators in those categories justifiably oppose having their road-user charges increased—mostly doubled, and in some cases trebled—because of new bandwidths and maximum permissible on-road weight charges, when their weight is constant and in most cases considerably less than their maximum chassis weight. There are a great number of motorhomes that are built on a chassis that have a greater gross vehicle mass rating than the actual on-road weight of the motorhome. The changes made in 2012, which we think should have been corrected as part of this particular stuff-up’s correction bill, result in the owners of these vehicles being required to purchase road-user licences for a greater laden mass than the actual laden mass.

The purpose of road-user charges legislation is to continue the road-user charges system by imposing charges on heavy vehicles and certain other vehicles for their use of the roads that are in proportion to the costs that the vehicles generate. We believe that there should be a provision to enable motorhome-type vehicles, which are never likely to operate at near the maximum permitted laden weight, to be assigned a road-user charge weight that would be sufficient to cover their actual laden mass. An example is a motorhome with a gross vehicle mass of 12,000 kilograms but an actual on-road mass of 8,500 kilograms. Under the 2010 road-user charge, their charge was $120.24. Under the 2012 changes the owner is now required to purchase a road-user charge licence for 12 tonnes at a cost of $246.26. That, of course, is an increase of $126.02, or over 104 percent, which we think is outrageous.

The requirement to have all heavy vehicles operating with a road-user charge licence to cover the maximum permissible laden mass as the lesser of the rated gross vehicle mass or the vehicle’s dimension and mass—rule 2002—has resulted in some excessive increases in costs to the owners, such as that I have already mentioned. The greater percentage of private motorhome owners in New Zealand are retirees. These people have limited income and in many cases will not easily be able to absorb such large increases in their costs. This bill should have included a provision to allow motorhomes to have a road-user charge licence weight allocated that covers the actual on-road mass of the vehicle. The current regime, which captures motorhomes and horse trucks and hugely increases their road-user charge liability, is grossly unfair and should have been addressed as one of the Government’s many stuff-ups where road-user charges legislation has been concerned.

Although this bill is supportable as far as it goes, New Zealand First places on record our strong objection to the way motorhome and horse truck operators have been treated—not even considered as part of these amendments, which we think they should have been.

It is a pleasure to take a call in the Committee stage of this very important piece of legislation, the Land Transport and Road User Charges Legislation Amendment Bill. This bill has a unique characteristic to it and that is that as a transport bill from this Government it makes some sense, but that is about the only redeeming feature of it. It is here because of a failure of process and a failure of the integrity of process by the Minister of Transport—not only the current one but the previous one—that has caused this House to have to devote time to use its legislative powers to correct the previous piece of legislation and the regulatory failure of the Minister. It is important—and that is the reason why Labour will support the bill—that the costs of heavy vehicles to the taxpayer, as the primary funder of our roading system, are properly shared and met and collected. So this bill plays a very important role in ensuring that that small number—but nevertheless a very important category—of heavy vehicles that do not spend a lot of time on our roads, and that would otherwise be exempt from road-user charges, do, in fact, face a levy to properly reflect the burden that they place upon our roads and the cost to the taxpayer of maintaining them to the extent that these vehicles cause undue wear and tear, or, indeed, any wear and tear. That is a good thing and for that reason we support the bill.

But underlying this is a more serious proposition that this Government still does not get, and that is that not only our roads ought to be properly funded but the funding that is collected or is derived from these user charges is properly and fairly distributed across our roading network, because that is not the case at the moment. As my and there is a vast array of roads—thousands of kilometres of roading—that gets no attention at all.

💬 David Bennett: State Highway 3.

I know that David Bennett understands that because he is an electorate member and his electorate is very close to, and, indeed, comes at the end of, one of the most important roads in this country and that is my very favourite State Highway 3—the northern route out of Taranaki. It is the northern route out of Taranaki, which takes you up the beautiful roads, the beech-laden roads out to the north before you get to Awakino Gorge, just after you have come down the winding Mount Messenger. The road on Mount Messenger could be rerouted, could be set in a more stable area, and could save the taxpayer with a bit of upfront investment now. If we managed these new road-user charges under this bill, it could enable us to fund a better road on Mount Messenger.

Actually, that is a dangerous part of State Highway 3, but the most dangerous part was exposed not 2 weeks ago in a tragic accident on State Highway 3 on another very unstable part of the road where a large rock and cliff face fell from the road and crushed the front passenger in a vehicle travelling up it. On a sunny and otherwise pleasant day the passenger and the driver in this motor vehicle met a dreadful fate. That was on State Highway 3 and that illustrates the problem. Questions will be asked and an inquiry is under way as to what happened in that particular case and whether enough money has been spent on monitoring the unstable roads, the very important roads but the unstable ones like State Highway 3. The question will be asked as to whether roads like State Highway 3 receive the due attention that they ought to get, not because of where they are and the fact that they may not carry the same amount of traffic as the southern motorway in Auckland, but because they are unstable and they are in difficult areas. They may well service an area of an important population, which is the people of Taranaki and New Plymouth, but they are in difficult areas. They are roads that are difficult and costly to maintain, but nevertheless they must be maintained. So this bill is important because it starts to signal that at least, when Parliament gets hold of an issue like this, we as a whole in Parliament can see that we need to make sure that the levies that are collected are properly collected and properly reflect the wear and tear and the burden placed upon the road by different users. The next big challenge—and really a challenge that only the Government can meet—is to make sure that it is properly spent.

It is a pleasure indeed to speak to the Land Transport and Road User Charges Legislation Amendment Bill in Part 1 of the Committee stage of this bill. The purpose of this bill is, of course—as others will know, but just for those listening—to amend the Road User Charges Act to enable regulations to be made exempting road-user charge vehicles that are not required to be registered from road-user charges. Most of the vehicles that are exempt will make very little use of roads and make a sufficient contribution to the cost that they impose on the road network through the vehicle licence fee. In fact, the first part of this bill, Part 1, amends the Land Transport Act 1998 to enable an additional fee for certain road-user charge vehicles. So that provision is essentially making that additional fee payable in respect of all road-user charge vehicles that are operated on roads and that are exempt from paying road-user charges. That additional fee is to be treated as land transport revenue for the purposes of the Land Transport Management Act. It is meant to be set having regard to the extent of the use of the vehicles on the road and the likely cost that the vehicles will generate when they use that road.

This is important, and I do not want to relitigate the history, but it is an interesting bill, this one. We support it. I mean, getting the legislation clear and getting it right is important. However, it has got an interesting history, which I did comment on in my second reading speech, so I will not go into it here. The fact of the matter is that we are fixing up a bit of legislation, to get it right, and that is fine. The actual amendments to the Land Transport Act in Part 1, as I said, make sense.

But one of the issues that we have got is a question of strategic transport direction. That is what I want to talk about. This is about revenue we collect from vehicles using roads, and making sure that it is done in a fair manner that makes sense. But we do need to think about what we are doing overall with our transport system. Our transport system is fundamental both to ensuring that people can get from A to B as they need to but also to ensuring that goods and services can get from A to B as we need them to, and it is a significant part of our economic system. We need legislation that makes sure that the costs are shared clearly and equitably, but we also need to make sure that this transport system that we have actually enables our economy to grow and that it serves the people of this country.

The question we really have is about the revenue being generated from the fees that can be set under this part, from road-user charges generally, and from petrol tax. All of this is about income that is generated that can then be used on land transport. How that is used is, I think, a point of great political significance, and one on which we have a very significant difference with the Government, which has essentially concentrated its thoughts almost exclusively on roads of national significance. From our perspective, we need to think about the rail network being the backbone of our transport system. We need to think about local roads as part of the infrastructure that is essential in terms of regional development.

I think that whole strategic transport direction question is a really important one, which the Government across the Chamber fails to take account of. In fact, even in question time today—and I raise this point even though it was not a transport issue—illustrative of this problem was the fact that the Government will not deal with any of the hard questions. We were talking about issues of superannuation, about money to invest in New Zealand businesses, and about the extent to which we use the income we generate and the money that we need to invest in our businesses, and how we do that. Honestly, the answers to those questions around superannuation today were a disgrace. Likewise, we need the money that is being generated through our road-user charges—through the fees that are flagged in Part 1 of the bill—to be used in a much more strategic manner than the current Government is using them.

Members on this side of the Chamber will, as I have said, be voting for this bill. We do think that transport and getting it right in the transport portfolio is critical, and we understand the need to correct the mistakes that have been made. But we think that the Government is going in the wrong direction.

Part 1 agreed to.

Part 2 Amendments to Road User Charges Act 2012