Appendix 3 – Costing details for preferred levy option
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General
A five-year horizon has been taken. This reflects a two-year implementation period and a further three years of business as usual before a full fees review.
Inflation has been factored in, with a 5 percent annualised wage inflation rate, and a five-year midpoint inflation figure of 12.5 percent.
Estimated Direct Cost Calculations
- Every existing role at the PGDB has been assessed as to what percentage (if any) of their time and therefore salary would likely be applied to the new function – this varied from 0 percent to 35 percent and totalled 3 FTE equivalents. These roles included communications, investigations, legal advice, complaints, human resources technical advice, finance etc. All up, these totalled $388,130.
- The number of new roles that would need to be dedicated solely to oversight of self-containment certification was assessed at two – a manager and a senior auditor. Total estimated salary costs for these roles were $225,000 per annum.
- Direct costs totalling $340,500 were calculated for:
- travel and accommodation, and contract resources for auditing
- a targeted awareness campaign for vehicle owners outlining their obligations under the new certification system
- IT support for the new register of self-contained vehicles
- establishing and running an industry technical advisory group.
- Depreciation for the proposed new national register of self-contained vehicles was calculated on a four-year straight-line period. This is a shorter period than the PGDB’s current register, which is being depreciated over a seven-year period. This is because the register of self-contained vehicles will be a completely new register and is likely to require changes through its life span. Based on an estimated register value of $1.9 million, the depreciation cost will be $475,000 per annum over the four-year period.
Overhead Allocation (indirect costs)
21.7 percent of overheads have been applied to self-containment certification oversight based on the percentage of staff roles that will be applied to self-contained vehicle certification activities. These included IT-related support and maintenance, communications and marketing, audit, bank fees, printing and stationery, office rent, staff training, phones, internet and PGDB honoraria. These totalled $469,371.
Overall
Direct costs $1,428,630
Indirect costs $469,371
Total to be recovered per annum from the levy $1,898,001
Assumptions on number of certifications per year
We estimate that there are approximately 73,000 self-contained vehicles, of which 68,000 are in private ownership and 5,000 in the rental fleet. An unknown number of these will have portable toilets. Owners of vehicles with portable toilets will need to decide whether to install a fixed toilet or restrict their freedom camping to Department of Conservation sites, and areas designated by local authorities as suitable for non-self-contained vehicles, or stop freedom camping altogether. In addition, an unknown number of vehicles undergo major modifications and as such require re-certification.
Given the level of uncertainty, we have gone with an estimate of 73,000 vehicles for the purposes of calculating the proposed levy amount. Given that certification lasts four years, this means that 18,250 vehicles can be expected to be certified per annum. A memorandum account will be established to smooth out any peaks and troughs in certification volumes over the implementation period. Following the initial four years, the fee level will be reviewed to ensure that it is set at an appropriate level.