Land Transport (Clean Vehicles) Amendment Bill

Members, we now come to Part 2, and this is the debate on clauses 13 to 26, “Amendments to other enactments”. The question is that Part 2 stand part.

Thank you, Madam Chair. As has been indicated, this Part 2 relates to the amendments to the principal Act, the Land Transport Management Act of 2003, and other enactments. There are a number of quite technical changes that need to be implemented to give the new legislation effect that will impact on other pieces of legislation. There are a couple of matters that I want to raise with the Minister and seek his guidance and clarification on, because that will not only, I think, help me understand the rationale for the changes that are required to the principal Act but also I think it will help the sector and people who have to deal with the new regime on a day-to-day basis.

I want to, first, turn to new section 9A, inserted by clause 16, which relates to “Accounting for clean car vehicle discount”. Now, this sets up a requirement for the agency in its annual report to, in the financial year to which it relates, contain the following information concerning the clean vehicle discount scheme. It will require the agency to report on “(a) the revenue received from charges paid … (b) any positive amount from a previous year … (c) the expenses and capital expenditure for the purpose of administering the scheme, including—(i) rebates provided … (ii) actual and reasonable costs incurred by the Agency in relation to the administration …; and (iii) any funding provided to the Agency by the Crown for the purposes of the scheme and repayment of that funding.” And it’s to that last point that I want to particularly draw attention to: “any funding provided to the Agency by the Crown for the purposes of the scheme and repayment of that funding.”

On my simple reading of it, it sounds like there is an expectation that, for a period of time, there will need to be a top-up provided by the Crown in order to make good the payments that have already been made in terms of people who have bought vehicles under the scheme, because the paying out of subsidies has already taken place. But what is not already taking place is the collection of revenue from people who, for instance, want to buy vehicles that are required for their work, for their farming, for their trade, or for their business. They can’t buy a vehicle that is going to fit into the criteria that would warrant for them an option to receive a subsidy under the scheme.

So my question is: what does the Minister anticipate the range and funding underwrite that will be required by the Crown? And when does he think that that will get into positive territory? What are the numbers? What is, essentially, the break-even point for the scheme in terms of the dollars and cents involved?

I want to, also, speak to matters in new section 101A, inserted by clause 19, “Monitoring matters relating to clean car vehicle discount scheme”. It says that “(1) The Secretary, for the purpose of evaluating the performance of the clean vehicle discount scheme, may monitor and review” and then there are a range of things, including “(a) the revenue used by the Agency for the purposes of administering the scheme; … (b) the number and nature of rebates provided in relation to the carbon dioxide emissions….”, and then there are several others. It then in subsection (2) says, “The Secretary may, in writing, request the Agency to provide any information that is reasonably required and relevant to enable the Secretary to carry out the monitoring specified in subsection (1).” So I’m keen to know from the Minister, what will be, in his view, matters that may be reasonably required and relevant to enable the secretary to carry out the monitoring specified. It’s been my experience over years, both in business and also in this House, that where the term “reasonably” is used in legislation or regulation that’s open to a wide range of interpretation and what is reasonable to one person may be completely unreasonable to another.

Then, the other quick matter that I want to raise is in relation to style, really, and maybe the Minister can seek some guidance from officials. I’m referring to clause 23, which relates to section YA 1 amended, its definitions, and it says in section YA 1, “insert in its appropriate alphabetical order: clean vehicle discount scheme means the clean vehicle discount scheme administered by the New Zealand Transport Agency”.

Now, members of the public and members of this House will know that a vast amount of taxpayer money has been spent on promoting and rebranding the New Zealand Transport Agency as Waka Kotahi, and, in fact, that is now their preferred terminology. And yet in the legislation, there appears to be no mention of the expensive and well-promoted new branding. I’m wondering what the style guide—and maybe the Minister has sought advice from Parliamentary Counsel as to what the style guide is. Are we in a situation where the new branding should be included in the regulations and legislation? Or, indeed, is that something that just applies to members of the public and to TV advertisements and radio advertisements and the comms team at the New Zealand Transport Agency, which is not small by any manner of means? So it’s really a question about drafting style and what is the Minister’s preference in that regard.

Thank you, Madam Chair. Thank you for the opportunity to take a call on Part 2 of the Land Transport (Clean Vehicles) Amendment Bill, which is probably the least significant part, but also still very significant in that this amends other legislation, including the Land Transport Act. And, I guess, there’s a number of questions I’ve got, and the first one is in relation to clause 15, which amends section 9. In new section 9(1E) it says, “The Crown may, without further appropriation than this subsection, incur expenses or capital expenditure in a financial year up to an amount equal to the revenue for that financial year received from charges paid pursuant to regulations made under section 167(1)(j) of the Land Transport Act”.

And so my question there is in regards to the overs and unders, which we’ve had a number of discussions about, but the question I’ve really got for the Minister is: are we here limiting the amounts that can be effectively paid out in a financial year in terms of subsidies or in terms of administering the scheme to the amount of revenue that has been received in that particular year to fund the clean vehicle discount scheme?

And, as my colleague Hon Scott Simpson was referring to, obviously there is Crown contributions which are thought of in part as the scheme is up and running. And my question is in relation to the timing of how long does the Minister expect this scheme to rely upon Crown contributions to continue to be able to operate? At what point does the scheme, effectively, pay for itself? And does this clause, effectively, require the scheme to be able to pay for itself?

And then the second question I’ve got is actually in relation to the second tabled amendment which the Minister has brought to the House this evening, which amends clause 26. Again, I believe—and please correct me if I’m wrong—that, effectively, this is about making sure that the language is consistent in that it did say in the current drafting “if the charges prescribed for the vehicle under section 167A of the Act have not been paid.”, so it’s referring to when the fees are paid, and it amends that to the “the fees or charges prescribed for the vehicle under section 167A(1)(J) for the purpose of section 167”. So my understanding—and please correct me if I’m wrong, Minister—is the purpose is to make it consistent right through the Act. And does that consistency also include referring to fees or charges? Because that is what Part 1 refers to in the clause in new section 167, giving the Minister the ability to create regulations to authorise fees or charges.

And the subsequent question from that is—because if it is meant to be referring to fees or charges, then in clause 15 we’ve got an instance here where it’s only referring to charges. So it says here in new section 9(1E) “revenue for that financial year received from charges paid pursuant to regulations”. So we’ve got an instance here where the clause is referring to exactly the same empowering provision from Part 1, but it is only in this particular clause, in clause 15, only referring to charges and not fees. And so the question I’ve got, and he may want to answer, is: whether this particular clause should also include reference to fees or charges, since the empowering provision actually allows the Minister to be able to actually charge a fee or a charge?

And, I guess, that brings me to the question of what’s the difference between a fee or a charge? I’m not sure if that’s actually defined in this particular piece of legislation. And then the question is whether that needs amending, because, I note, in clause 15, new section 9(1G), it refers to charges paid. So, again, does that need to refer to fees or charges? And if it doesn’t need to refer to fees or charges in those particular clauses, why are we referring to fees or charges in some clauses and then in other clauses we’re only referring to charges? And if that’s something which the Minister is preparing tabled amendments to fix some particular clauses, does that mean that we may need to have other tabled amendments to fix those other clauses? I look forward to the Minister’s response to those questions.

Just in answer to the member’s final set of questions around the fees and charging language, I can confirm that everything is accurate in terms of what has been described—and the amendment, which I have tabled, some of this relates to the fact that, mostly in Part 1, we were dealing with provisions that related to both the standard and the discount, whereas in Part 2 we’re primarily dealing with matters that relate to the discount scheme only where “charges” is the correct term. So everything is as it should be in that respect.

I want to respond to questions from both Mr Simpson and Mr Brown that related to the funding of the scheme. And so just to confirm, this is a self-funding scheme that doesn’t net out at any overall cost. It’s funded by a repayable loan the Crown made in Budget 2021, of around about $300 million, and, over the course of the scheme, revenue coming in and money going out will balance up. So it’s not envisaged that there’ll be further Crown funding that needs to go into that and then that loan will be repaid within approximately a 10-year period.

The provisions that Mr Brown referred to are simply about ensuring that the boundaries of that are kept to and that the scheme can’t pay out more than money is going in, to make sure that it keeps within that overall principle of fiscal neutrality. In respect of the role of the Secretary for Transport in monitoring the scheme, I wouldn’t venture down too far into Mr Simpson’s question about what might be reasonably required. The nature of the relationship here is quite important. Waka Kotahi is the Crown agency at, somewhat, arm’s length from the Crown and the Minister. The Ministry of Transport is the Crown monitor that provides the Minister with advice to make sure that taxpayer funding is being used appropriately in accordance with legislation, and so that will be up to the secretary at the time to make sure that they are satisfied with the information that they receive in order to be able to advise the Minister. So that is a matter that I would leave to the judgment of the secretary.

Finally, I appreciate the Minister’s interest in bilingual matters in this piece of legislation. It is important to note that across the—of course, we’re making amendments to a number of pieces of parent legislation, all of which currently refer to the New Zealand Transport Agency, and so to ensure that we have consistency and a lack of confusion, we’ve kept the language consistent there with “New Zealand Transport Agency”, but, yeah, possibly, at some point in the future, there could be an exercise to change all of those references to “Waka Kotahi”, but it wouldn’t be good practice to have both names threaded through a piece of legislation.

I’ll just ask this question of the Minister on behalf of my colleague Simon Court, who’s currently absent. How much will be spent, he asks, on developing the scheme? What is the initial capital expenditure? What will be the annual operating expenses? And will the Minister consider outsourcing the admin, to, i.e., the private sector, considering such likes as VTNZ and the AA do warrants of fitness, and have them do their licensing for these vehicles?

I answered this in the previous part of the debate: approximately a $6 million capital set-up cost and approximately $8 million per annum ongoing.

Thank you, Madam Chair. I’ve got a question that relates to clause 21. That’s a clause that seeks to amend the Energy Efficiency and Conservation Act 2000. And, specifically, it seeks to amend that legislation by, “prescribing requirements in relation to the labelling of vehicles in terms of their carbon dioxide emissions and any financial rebates receivable or charges payable relating to those emissions”. And so my question is: what exactly does the Minister envisage that labelling to be, and in what form, shape, or format will that labelling take? Is this to be something as simple as, maybe, another line on the registration that sits in the little pocket inside your windscreen? Or is this a requirement that will see a vehicle actually having a sticker or a sign or a piece of sign writing added to it? And what form or shape will the labelling take? Will it be required to be waterproof, protected from ultraviolet degradation, robustness? How will it be affixed to the vehicle? All those sorts of questions.

So my question, really, is: what is the intention relating to the prescription that requires vehicles to be labelled not only for their carbon dioxide emissions but the label that, it seems to me on the reading of this, will require details relating to the financial rebates receivable or chargeable on the vehicle. Will the label that will be affixed to the car in some way, shape, or form, be sort of like a mark of, “There goes a dirty car. There goes a good car.”? Will the label, for instance, have, maybe, a thumbs up signal for cars that qualify and meet the standard? Or will it, perhaps, have a thumbs down for those dirty vehicles that don’t? I’m keen to know, if it is to be a thumbs up or a thumbs down, what colour will the thumbs be? There seems to be an increasing level of concern when you use thumbs up and thumbs down in social media about the cultural appropriateness of certain coloured thumbs up and thumbs down.

So I’m just concerned, and I don’t want to make light of it unnecessarily, but I do think that this is another detail of practical application, that this legislation, it’s seeking to amend legislation. We already have—and I think it is the Energy Efficiency and Conservation Authority that, for instance, prescribes labelling to go on domestic appliances like fridges and washing machines, and dish driers, and things of that nature. Is that the kind of labelling that the Minister envisages will be appropriate under this new clause? And—

Simeon Brown: Will it be made of plastic?

Hon SCOTT SIMPSON: —I’m keen to know—yeah, my colleague Simeon Brown asks a good question: will they be made of plastic, these labels? Will it actually be, sort of, a degree of “greenwashing”, and we’ll be hailing with enthusiasm the cleanliness of the power train that is providing energy to propel the vehicle, but we’ll be sticking horrible plastic labels on it somewhere, of an indeterminate size?

So, as I say, I don’t want to unnecessarily make light of the situation, but I do think that the public and the sector and the potential purchasers of vehicles that will be captured under this legislation need to know what the labelling will look like, what form it will take, how it will be affixed, what size, and will it be multilingual, for instance? Following up on my previous question: will we have elements of te reo on the label? And so those are issues that I’d like the Minister to address, please.

Thank you, Madam Chair. Just a very quick question. Does the Minister accept, perhaps, that the ACT Party would have the correct labelling for the vehicles in question, and it could be issued as a legitimate ute driver sticker?

I thank both members for their very earnest and deep consideration of this issue. I can confirm there’ll be no eggplants or other emojis on the labels. But, beyond that, I think that the members will understand that we’re not going to get in the business of designing label specifications in the committee stage of the House of the New Zealand Parliament. This is an empowering piece of legislation that sets up a regulation to enable the labels to be designed. That’ll be done through the energy conservation Act legislation. As the member notes, this is how we organise energy-efficiency labels for other things that we regulate within New Zealand. The plain wording is pretty clear here: that the focus will simply be on the rebates receivable or the charges payable. That’s the key information that the consumers need to know. The other details we won’t be getting into in the legislation.

Thank you very much, Madam Chair. Just carrying on from that response—and thank you, Minister, for that—because I just want to drill down, I suppose, into the rebate. Under clause 15(1G), you’ve got “a - b = c”. And, you know, fair to say, with algebra, sometimes “a - b” doesn’t always equal “c”. I was interested when you gave my colleague from ACT—Mark Cameron—those figures around—

Hon Member: Said like a real St Bede’s boy.

MATT DOOCEY: —capital expenditure (CAPEX) and operating expenditure (OPEX). Sorry?

Hon Member: Nothing.

MATT DOOCEY: Oh, OK. I thought my schooling was being called into question. Can you take an offence to your own side of the team, Madam Chair?

CHAIRPERSON (Hon Jenny Salesa): Continue, Matt Doocey.

MATT DOOCEY: I must say, I’m probably one of the only people in Parliament where I’ve still got my school teacher in my caucus.

So “a - b = c”. Now, if “a” is the revenue and “b”, as you said, CAPEX and OPEX—and I think you just told Mark Cameron that it was—what was it?—$8 million for CAPEX and $6 million for OPEX. That’s $14 million. What we’re probably missing is it needs to be divided by “d”, which would be the number of cars for the rebate, which would give you then “e”, which would be the rebate. My point is, to that formula, what if there is no money left after that equation—

Hon Member: What about the square root of the emissions?

MATT DOOCEY: Serious, serious—with CAPEX and OPEX at $14 million? And what happens if you don’t raise enough money through revenue to pay a rebate back in that formula? Thank you, Madam Chair.

The member misunderstands, so if I can clarify: the costs that I identified before relate to the administrative costs of running the overall Clean Car Discount and standard schemes. The provisions that the member is referring to relate to the confines that the legislation sets up for the actual Clean Car Discount scheme, which, as I identified before, is funded through a repayable $300 million loan. And the short answer to the main question that the member has is that that is the fund within which the scheme has to operate. It can’t operate beyond that. And as we traversed in the debate on Part 1, the discounts and the fees have to be set in such a way that the scheme remains solvent. So it has to operate within that overall cap, and this formula is what ensures that happens.

Thank you, Madam Chair. So, I guess, the question, following on from my colleague Matt Doocey’s is whether, if the scheme, effectively, is charging a lot more than it’s paying out, that will, effectively, mean that the charges will be reduced to match the discounts, or will the discounts be increased, and what periods will those be reviewed? This will be a question I’m sure the public would be interested in.

My question is relating to clause 19, around the monitoring matters relating to the Clean Car Discount scheme. My understanding of this particular new section 101A is that it allows the Secretary for Transport to evaluate the performance of the clean vehicle discount scheme, to monitor and review, and there’s a range of different things that can be done. “(a) the revenue used by the Agency for the purposes of administering the scheme”—I guess, the question there is: is that to try to understand whether the New Zealand Transport Agency is appropriately managing and being good stewards of the money, in terms of the administrative cost? Because I’m sure that this could become quite administratively complex. “(b) the number and nature of rebates provided in relation to the carbon dioxide emissions of vehicles; and (c) the expenses and capital expenditure for the purpose of administering the scheme; and (d) any funding provided by the Agency…”—so there’s a range of things that can be monitored and reviewed, but it doesn’t seem to have much teeth, this particular clause. It, effectively, says that they may monitor, may review, and then, basically, may ask for some information. The only actual requirement in this clause is that, if some information is requested from the secretary, the agency must provide that information to the secretary. So, effectively, that’s the only requirement; the rest is just “may”.

Basically, it’s setting up monitoring capability, which I don’t think is a bad idea. Actually, monitoring the scheme—is it working efficiently, is it actually achieving its purposes?—those are all good questions which should be asked by the Government, because this is something which is very new. It’s a very new scheme, and whilst the Minister might say, “Well, there are similar schemes around the world.” and all this other stuff, it’s new to New Zealand. We have a different market in New Zealand from other countries, and we have different needs, in terms of what consumers require, in terms of the vehicles that they drive.

So why is the Minister not actually requiring the secretary to monitor and review this scheme, to review the revenue that’s being used by the agency for administering it—which I think, actually, is a very good thing. I mean, the reality is that the agency could, effectively, just decide, over time, that it’s going to use more and more of the revenue and grow quite an empire to run this thing. There’s no requirement for efficiency in this piece of legislation. Effectively, it’s just telling the agency to administer it, but this is millions and millions of New Zealand’s tax dollars which are being used to run this scheme—millions of dollars being used to run this scheme—and no requirement for efficiency, and, effectively, just saying to the secretary, “Well, if you’d like to monitor it and review it, you may.” Why is that not a requirement to actually have that monitoring? I think New Zealanders want to see their dollars that they spend used efficiently and effectively. If we’re going to have the scheme, then that should be the expectation that the Minister should be monitoring.

And the second point is: if we’re going to put this particular section in, why are we not asking for this to be done on a frequent, regular basis? At the moment, with the terminology being “may”, this could be done once a year; it could be done never. It could be done, for instance, in three years’ time. Surely this would be something that should be monitored on a regular basis. And I know there are some reporting requirements, but reporting requirements are very different from the monitoring and reviewing requirement from the Ministry of Transport, which I would be suggesting would be an important amendment or change that the Minister may like to consider.

The other point is in relation to the requirement to provide information. There’s actually no requirement to provide that information in a timely fashion. It, effectively, says the secretary may request information and that the agency must provide the information, but it doesn’t say the information needs to be provided in a timely fashion. It doesn’t say it needs to be provided in 30 working days, or 21 working days, or whatever number of working days may be appropriate in this instance; it just says “must provide the information”. Effectively, that could be something which becomes quite complex when these reviews actually need to be undertaken. So a number of questions relating to this part, which I look forward to the Minister addressing.

I’m happy to address the points raised by the member there. The first is, though, that I do note that in 9A there is a requirement for the agency, in its annual report every year, to be reporting on matters in relation to the Clean Car Discount scheme. So there is a direct requirement for the agency responsible not just to the Minister but actually back to the Parliament and to face select committee scrutiny, and, of course, the eyes of the Auditor-General, who will advise the select committee as a part of that process. So I’m confident that there’s a high degree of transparency about the scheme and a high degree of ability to scrutinise not just from a ministerial point of view but from a parliamentary point of view. And that is important, I agree with the member.

The additional powers provided to the secretary here, we did rather traverse this in the previous discussion—or outlined the role of the Crown agent and the ministry as the Crown monitor giving advice to the Minister. I think it is appropriate to set up that power so it’s, effectively, at the discretion of the secretary to fulfil that function and to be able to inquire in a way that they need. I note that if we took up the member’s suggestion and said it has to happen every 12 months or every two years, that would actually be restrictive. You know, obviously, there is an annual process, but I would think that if a matter came to the secretary’s attention at any given point in time, we would want the secretary to be able to make those inquiries, to be able to require the information to be forthcoming, and for that information to be provided to the Minister to make decisions, or at least to be aware. What I would say beyond that is that certainly for my own part, I already receive very regular reporting on the operation of the scheme. I get good information from the agency, good support from the ministry, and I’m sure that future Ministers will be keen to do that as well.

I move, That the question be now put.

The question is that the Minister’s tabled amendment to clause 26 be agreed to.

The question is that Part 2 as amended be agreed to.