Chapter 6: Levies and fees

There are no regulated fees or levies under the voluntary Standard

We are aware that issuing authorities seek to recover the costs of providing self-containment oversight, administration and vehicle inspections through a variety of methods, including via an annual membership fee or by charging a person when they take their vehicle for an inspection. The existing fee charged by issuing authorities for a self-containment certificate ranges from no cost (in that the cost is included in a membership fee^[23]) to about $100.

Currently, organisations wanting to certify self-contained vehicles need to determine that they meet the criteria in the voluntary Standard. In the current system, no-one checks whether these criteria have been met, because there is no regulatory body.

What the Bill would change

The Self-Contained Motor Vehicles Bill would enable the following freedom camping related fees and levies to be set in regulations:

• a monitoring levy that self-contained vehicle owners would pay once every four years, at the time of certification, to recover the PGDB’s regulatory oversight costs
• a certification authority approval application fee that certification authority applicants would pay directly to the PGDB at the time of application.

The Bill would not prescribe a fee payable by a vehicle owner for the cost of having their vehicle inspected. As with warrant of fitness (WoF) inspection fees, the organisation doing the inspection would set this price itself. At this stage, it is unclear how much a certification authority would charge for a self-containment certification inspection. It is likely this price will vary between certification authorities.

How do law-makers usually Approach levy- and fee-setting?

The Treasury and the Auditor-General have developed guidelines on public sector charging to help identify which charging mechanisms are suitable for different types of activities, and what things to consider when assessing which options are most feasible.

When analysing charging options for a service or activity, officials consider who should pay based on who benefits and who is adversely affected. This analysis is based on four types of economic “goods”: public, industry (club), private and merit. In this case, the services we analysed are:

• regulatory oversight of the self-contained vehicle certification system, delivered by the PGDB
• approval of certification authorities, delivered by the PGDB.

Oversight of the self-contained vehicle certification system is an industry good

We consider regulatory oversight of the self-contained vehicle certification system an industry (club) good. An industry good is when a specific group benefit from the service^[24]. Owners of self-contained vehicles, as a group, would benefit from regulatory oversight because they would:

• have greater confidence in the certification process
• be able to freedom camp in any local authority area (unless otherwise prohibited)
• have greater confidence that owners of non-self-contained vehicles who choose to illegally freedom camp will be identified and appropriately sanctioned.

It is therefore appropriate that owners of self-contained vehicles pay a levy to fund the PGDB’s regulatory oversight costs. The levy would be collected by approved certification authorities when they issue a certification. The certification authorities would then pass this levy on to the PGDB.

The approval of certification authorities is a private good

We consider the approval of certification authorities to be a private good. A private good is where the good has been specifically generated for a person and can only be used by that person^[25].  In this case, applicants will directly benefit from the PGDB receiving and assessing their application, because only approved applicants will be able to certify self-contained vehicles. It is therefore reasonable to recover this cost of this service via a fee paid by each applicant when they apply.

We are consulting you about options for the levy and the fee

In this section of the discussion document, we have listed some options for the self-containment certification monitoring levy amount. We have included the following options (which are all GST inclusive):

• Option 1: a levy of $91.40.
• Option 2: a levy of $101.
• Option 3: a levy of $120.

We are also consulting you about the proposed application fee a prospective certification authority would pay to the PGDB when it applied to be certification authority. We have listed some options for how much this fee should cost. We have included:

• Option 1: a set fee of $431.25.
• Option 2: a scalable fee.

We have also included a single recommended approach for waivers and refunds.

How we have calculated levy options

We have used an overhead allocation approach to calculating the PGDB costs to be fully recovered through a levy. This involved calculating the direct costs of regulating the self-containment certification system by:

• assessing every existing role at the PGDB and determining what percentage (if any) of their time and therefore salary would likely be applied to the new function
  • identifying new roles dedicated solely to the new function
  • identifying associated direct operating costs solely attributable to the new function such as travel, accommodation and contract resource, communications, etc.
  • determining the appropriate amount of depreciation
• calculating the applicable overhead costs based on the overall percentage of staff resource required, including IT-related support and maintenance, communications and marketing, audit, bank fees, printing and stationery, office rent, staff training, phones, internet and Board honoraria.

Comparison with similar types of charges

It can be useful to compare the proposed levy with what is charged in other regulatory regimes. For example:

• Commercial vessels must pay an annual maritime levy. A small fishing boat would expect to pay around $140 per annum, a small passenger boat $235, a large fishing trawler $1,950 and a large foreign cruise ship $13,520 per port visit. Funding from the Maritime Levy allows Maritime New Zealand to maintain important regulatory activities and functions that are critical to maritime safety and protection of the marine environment. In addition, it can be used to fund regulatory activities undertaken by the Maritime New Zealand or the Crown in the performance or exercise of functions, duties or powers under the Maritime Transport Act 1994.
• Operators of freight, vehicle recovery, rental service and passenger transport services industries are required to comply with a range of rules and regulations. In most cases this includes holding an appropriate Transport Service Licence (TSL). For a small passenger service, the application fee for a TSL is $449.80.
• The cost of a four-year electrical warrant of fitness certificate for a campervan ranges from $85 to $200. However, this price does not include any levy because the issuing system for these certificates is not overseen by a regulator.

While these are not an exact comparison, the above levies do indicate that the proposed levy options (which work out to between $20 and $30 per year) is not out of step with similar charges.

Review of fees and levies

Regulating the self-containment certification process is a new activity for the PGDB. To reflect this new activity, fees and levies will be reviewed within five years to ensure that the PGDB is efficiently delivering the appropriate level of regulatory oversight and the amount is appropriate to fund the required level of oversight.

The PGDB will report annually on the levy revenue it has obtained and the cost of regulating self-containment certification. A detailed memorandum account will also be kept.   

Options for the self-containment monitoring levy

Option 1: a levy of $91.40

Under this option, a levy of $91.40 would be collected from vehicle owners by a certification authority prior to receiving its self-containment certificate. The certification authority would then pass the levy on to the PGDB.

This option applies the bare minimum resources to self-contained vehicle certification activities. It would enable the PGDB to undertake its regulatory functions, which include assessing applications from prospective certification authorities, investigating complaints, undertaking disciplinary actions and maintaining the register of self-contained vehicles. There would be no additional funding available to put towards implementation activities such as an education campaign as well as dedicated IT support for the register of self-contained vehicles. These activities would have to be met from existing PGDB resources.

It has both minimal dedicated self-contained vehicle certification (SCVC) expenditure and fewer full-time equivalents (FTE) dedicated to SCVC matters (an additional 3.85 new FTEs would be provided rather than 5 FTEs under Options 2 and 3) with a further $449,500 in savings from that option.

If adopted, the levy under this option would be $91.40 including GST ($79.44 plus GST) for a four-year certificate ($22.85 per year including GST).

Option 2: a levy of $101

Under this option, a levy of $101 would be collected from vehicle owners by a certification authority prior to receiving its self-containment certificate. The certification authority would then pass the levy on to the PGDB.

This is an alternative option to Option 1. It would provide slightly more funding to enable the PGDB to perform its regulatory role as described in Option 1. There would an additional 5 FTEs (1.15 more FTEs than Option 1). The additional 1.15 FTEs would go towards additional human resources (HR) and accounting support for the PGDB. Additional HR and accounting support would reflect the overall increase in the number of staff at the PGDB, as well as the new self-containment oversight work.

If adopted, the levy under this option would be $101 ($88 plus GST) for a four-year certificate ($25.25 per year including GST).

Option 3: a levy of $120

Under this option, a levy of $120 would be collected from vehicle owners by a certification authority prior to receiving its self-containment certificate. The certification authority would then pass the levy on to the PGDB.

This option ensures a smooth implementation of the new SCVC system. Under this option, the PGDB would get the additional 5 FTEs under Option 2, and additional resources dedicated solely to SCVC. This option would provide funding for the following activities:

• running a targeted awareness campaign for the first five years to ensure that vehicle owners are fully aware of their certification obligations under the new regulatory system
• providing dedicated IT support for the new online register of self-contained vehicles
• obtaining technical advice by setting up and supporting a sector stakeholder group, which would provide the PGDB with appropriate advice on certification-related matters.

Under this option, the PGDB would incur an estimated $1,898,000 per annum in regulatory oversight costs. Based on an estimated 18,250 self-contained vehicle certifications per annum, the cost per vehicle would be $104 plus GST ($120 total). Since the certificate is for four years, this would come to $30 total including GST per year, per vehicle.

This option is more expensive than the two alternative options. However, it is lower than the estimated $125 plus GST levy we referred to during consultation on the discussion paper Supporting Sustainable Freedom Camping in Aotearoa New Zealand at public meetings held in April/May 2021. You can access that document here: www.mbie.govt.nz/dmsdocument/13853-discussion-document-supporting-sustainable-freedom-camping-in-aotearoa-new-zealand(external link)

The impact of our levy options on freedom campers

This is a new levy and will have an impact on freedom campers. The extent of this impact will depend on what owners of vehicles that have been certified under the current unregulated system decide to do:

• Get their vehicle certified under the new regulatory system, pay the associated monitoring levy, and have the choice of freedom camping at any site that permits freedom camping.
• Not get their vehicle certified and be limited to only freedom camping on Department of Conservation land and sites that councils have designated as being suitable for non-self-contained vehicles.
• Not get their vehicle certified and stop freedom camping.
• Not get their vehicle certified and camp on land regardless of whether freedom camping in non-self-contained vehicles is permitted, and risk incurring associated fines.

It is unclear at this stage what option freedom campers will choose. However, we consider that the impacts on owners are proportionate to similar costs borne by campervan owners for the electrical warrants of fitness and fishing boat owners.

The Bill will provide for transitional arrangements between the current and new regulatory regime. Vehicle owners with a current blue warrant will not need to have their vehicle certified under the new regulatory requirements until two years after the new regime comes into force (unless they are a vehicle rental fleet owner, in which case the time period is 1.5 years).

We are assessing options against cost recovery principles for the proposed levy

There are four cost recovery principles that have underpinned our approach to calculating the proposed levy and application fee. These are:

• Fairness – that costs of services are recovered from the users who benefit from them or who create the risk the service is designed to manage.
• Effectiveness – the levy rate needs to support the policy outcome of the freedom camping regulations.
• Efficiency – the cost recovery charges should be efficient to administer for levy payers and the regulator.
• Transparency – the basis and costings for proposed levies should be clear to payers.

As there is no current levy, these options are being assessed against Option 1, which is the lowest-cost option.

Our preferred option

At this stage, we prefer Option 3 because it provides greater assurance that:

• implementation would go smoothly
• both freedom campers and certification authorities are aware of their obligations under the new regulatory system
• the PGDB has sufficient resources to provide appropriate regulatory oversight.

This assurance will be particularly important given the significant transition period, when new certification authorities will need to certify an estimated 73,000 motor vehicles over four years, using new regulations and will need to record these details on a new online register.

The calculations and assumptions underpinning this option are set out in Appendix Three.

Options for the application fee

Below we present the following two options for the application fee a person or organisation applying to be a certification authority must pay to the PGDB:

• Option 1: a set application fee of $431.25.
• Option 2: a scalable application fee.

Option 1: set application fee of $431.25 (including GST), payable every five years

Under this option, people or organisations applying to be a certification authority would pay a set fee to have their application assessed by the PGDB.

We estimate that an assessment of whether an applicant’s proposed certification system and procedures meet the criteria for approval and the required evidence, as set out in regulations, will take five hours at an hourly rate of $75.00 plus GST. The hourly rate and effort are the same as used by the PGDB when assessing applications for employer licences.

The proposed fee of $375 plus GST ($431.25 total) includes the cost of receiving the application, assessing the proposed system against the prescribed criteria and evidence requirements, assessing how the prescribed competency requirements for vehicle inspectors will be met, and issuing the five-year approval.

Option 2: a scalable application fee

Under this option, the application fee would be scalable, depending on how much time the PGDB takes to process the application. There would be a base fee based on three hours of PGDB effort, plus an hourly rate of $75.00 plus GST for every additional hour spent on the application. This would reflect that some applications may contain large amounts of evidence and be complex to assess.

Under this option the fee would start at a minimum of $258.75 (including GST) for each application.

Either option is likely to be less than the most comparable regime

As a comparison, the fee for approval as a WoF inspecting organisation by Waka Kotahi is $1,437.50 (including GST). This includes one site assessment with additional inspection sites incurring an additional charge ($184 per hour, with an average site assessment costing $552). In addition, a person must pay an application fee of $494.50 to Waka Kotahi in order to be approved as a vehicle inspector. We are not proposing that the PGDB carry out any site assessments. Nor are we proposing that persons be required to apply to the PGDB to be ‘recognised’ as vehicle inspectors – they will be assessed and recognised by certification authorities.

The impacts on applicants will be minimal

It is expected that certifying organisations would process approximately 91,000 applications over a five-year period. The organisations would be able to set the cost of this themselves. We expect the cost of our preferred fee option (Option 1) to be minimal compared to income generated by certification authorities from the total number of applications processed.

We are assessing options against cost recovery principles for the application fee options

Our preferred option

At the moment, we support Option 1 – a set fee – as this more strongly aligns with the outcome that we are seeking. This option is less fair than Option 2. However, it provides more certainty to applicants and is more likely to incentivise existing issuing authorities to transition to the new regime. While Option 2 an attractive option, it trades off fairness against certainty. We are also mindful that PGDB staff may initially need to spend more time on applications due to it being a new regulatory function. A set fee will therefore not disadvantage any applicant.

We are keen to ensure an orderly transition to the new regulated system. To that end, we favour certainty for all prospective applicants and certainty for the PGDB. However, we recognise that as the system matures, it may be preferrable to move to a scalable fee model. We expect that scalable and fixed fee models would be considered during the fee review, which will take place within five years.

Waivers and refunds

We propose that the regulations authorise the Registrar of the self-contained vehicles register to grant a waiver or refund of the proposed levy or application fee in the following circumstances:

• in the case of an administrative error on the part of the PGDB or a certification authority
• if the Registrar considers, in any particular case, that it would be unreasonable or unfair to require payment of the whole of the levy or application fee.

Footnotes

[23] The current membership fee for the New Zealand Motor Caravan Association is $90 per year.

Join us(external link) — New Zealand Motor Caravan Association

Members are entitled to receive a range of benefits, from discounted ferry trips, fuel savings, to access to a nation-wide network of parking sites.(external link)

Member Benefits(external link) — New Zealand Motor Caravan Association

[24] The Treasury, Guidelines for Setting Charges in the Public Sector (April 2017), at page 19.

[25] The Treasury, Guidelines for Setting Charges in the Public Sector (April 2017), at page 19.

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