ROAD USER CHARGES BILL

Transcription

1 ROAD TRANSPORT FORUM NEW ZEALAND INC SUBMISSION TO THE TRANSPORT AND INDUSTRIAL RELATIONS SELECT COMMITTEE OF PARLIAMENT ROAD USER CHARGES BILL Contact: Ken Shirley Chief Executive Officer Road Transport Forum NZ Wellington Ph: Mob: March 2011 Page 1 of 26

2 Submission of Road Transport Forum New Zealand Road User Charges Bill 1.0 ROAD TRANSPORT FORUM NEW ZEALAND 1.1 Road Transport Forum New Zealand (RTFNZ) is a nationwide organisation of voluntary members drawn from the road transport industry and includes owner-drivers, fleet operators and providers of services to freight transport operators. The Forum provides services and public policy advocacy for its members. 1.2 The Forum s Constituent Associations include: National Road Carriers (Inc) Road Transport Association NZ Region 2 (Inc) Central Area Road Transport Association (Inc) Road Transport Association NZ Region 4 (Inc) Combined Owner Drivers Association (S.I.) Inc (Trading as NZ Trucking Association) Road Transport Association NZ Region 5 (Inc) 1.3 The Forum s Associations have approximately 4,000 members and associate members who operate in excess of 17,000 trucks and truck combinations over 3,500 kg GVM/GCM [1] or 80% of the hire and reward truck fleet in New Zealand. The road transport industry turns over approximately $6 billion a year transporting more than 80% of New Zealand s land-based freight. Some 23,000 people or about 1.5% of the workforce are directly employed in road freight. 2.0 RTF POSITION ON ROAD USER CHARGES 2.1 The RTFNZ supports in principle the concept of user pay for roads. The existing user pay regime is an amalgam of: Fuel excise duty on petrol (FED) Road user charges for diesel vehicles (RUC) Motor vehicle registration A very limited use of tolling [1] GVM Gross Vehicle Mass GCM Gross Combination Mass Page 2 of 26

3 2.2 The NZ form of Road User Charges (RUC) implemented in March 1978 is not and never has been supported by RTFNZ. Reasons The RUC regime is an extremely complex, inefficient and wasteful revenue gathering instrument that is unique to NZ. It is: Extremely costly for government to administer and enforce. (Estimated to cost $30 million/annum). Extremely high compliance costs incurred by transport operators. (Estimated to be $30 million/annum). Prone to massive revenue leakage with evasion estimated to be $60/million annum. In summary some $120 million of deadweight costs are incurred in the gathering of $881 million of revenue each year (i.e. 13.6%). 2.3 The Forum believes that the road user charges system (RUCs) should be replaced by a system of annual licence fees and a national diesel fuel excise tax. Successive governments have refused to pursue this option citing concerns with the management of the rebate required for non road use of diesel. Some 75% of total diesel consumption is used in road transport. The remaining 25% is used in agriculture, forestry, fishing, rail and various industrial activities. 2.4 Over the past 33 years since the Road User Charges Act passed there have been 30 substantive amendments and 215 specific changes to the legislation, all in vain attempts to make the legislation effective and enforceable. 2.5 Enforcement and administrative complexities have resulted in the road transport industry viewing the RUC system as operated in New Zealand with derision. Page 3 of 26

4 3.0 ROAD USER CHARGES REVIEW 3.1 Many years of concern and frustration with the current system of Road User Charges (RUC) culminated in road transport operators engaging in protest drives throughout New Zealand on 4 July In response to this concern, the government agreed to an independent review of the current Cost Allocation Model (CAM) and RUC system. The Forum was consulted on the terms of reference for this review. 3.3 The objectives of the CAM and RUC system are: economic efficiency, cost recovery, equity While the CAM and RUC system broadly meet the objective of cost recovery, they do not meet the other objectives of economic efficiency and equity. 3.4 The Independent Review Group reported to the Minister of Transport in March 2009 and he announced government s decisions on the full list of recommendations made by the independent review on 12 th August The RUC Simplification proposals were announced in July THE COST ALLOCATION MODEL 4.1 While the RUC system is the instrument for revenue measurement and collection, the Cost Allocation Model (CAM) determines the allocation of costs between the various road user categories and local authority ratepayers. 4.2 Serious distortions exist within the CAM all of which unfairly load cost onto heavy vehicles. Under the CAM roading expenditure is broken down into four use-related measures: Amenities, space, strength and wear Page 4 of 26

5 4.2.1 Space: In the space related category heavy vehicles in excess of 10 tonnes make up 5% of total vehicle kilometres nationally but have been allocated 16% of space related costs. Most of the demands for additional road space are currently in urban areas, mainly Auckland, to cater for peak period traffic. In those locations heavy vehicles of over 10 tonne comprise only about 2% of the urban traffic. Therefore heavy vehicles are being charged for costs they do not impose Strength: The strength category mostly applies to bridges, elevated motorways and over passes. Over 50% of the strength factor is the static strength required to support the structure itself rather than the dynamic loading strength relating to vehicle weight. It seems however that the model is applied to vehicle weight over the full strength requirement. This again imposes unfair cost on heavy vehicles Wear: Road wear costs which comprise about 70% of the costs allocated to heavy vehicles relate to the axle weight of vehicles. Accordingly the relationship between road wear and axle weight is critical to the integrity of the CAM on which road user charges on heavy vehicles are based. The fourth power rule purports to describe the relationship between road wear and axle weights. This rule asserts that the doubling of the weight on an axle produces a 16 fold increase in road wear. This relationship has been questioned for some time both locally and internationally. In their report to the Ministry of Transport, TERNZ [2] reported that a power relationship of 1.3 to 1.8 gave the best fit to the results of the tests on New Zealand type materials. The Forum in consultation with experts and officials have concluded that a 2 nd power relationship should be adopted instead of the fourth power rule. [2] TERNZ Transport Engineering Research NZ Ltd Page 5 of 26

6 Vehicles with maximum gross vehicle weights above 10 tonnes travel account for 4% of power vehicle kilometres and yet are allocated 32% of vehicle use related costs and 93% of road wear expenditure under the costing model. One 44 tonne truck is incorrectly deemed to have the same impact as 8,300 cars. 4.3 The Independent Road User Charges Review Group recommended (recommendation 29): Changes to the CAM are full implemented on the next occasion CAM is applied so that the most appropriate allocation of cost related to road use is available to inform the setting of new RUC rates and FED (Fuel Excise Duty). The Minister declined this recommendation with the comment that: agreed changes to the CAM can be made at any time. In the meanwhile the distortions, inefficiencies and crosssubsidisation continue. The Ministry of Transport commissioned a study by the Australian Consultant Groups GHD/ARRB on the Cost Allocation Model in The final report is not available from government. 4.4 Contrary to the recommendation of the Independent RUC Review Group the October 1 st 2010 RUC increases were imposed without the review of the CAM and now this Road User Charges Bill is being considered by Parliament while the inefficiencies, distortions and inequities of the CAM, which determines the RUC, remain in place. 5.0 IMPORTANCE OF IMPROVING ROAD FREIGHT EFFICIENCY 5.1 Road transport costs in NZ are much higher than other developed countries. Heavy vehicle road taxes as a percentage of roading expenditure: NZ - 48% Australia - 23% USA - 35% Canada - 25% Page 6 of 26

7 , 5.2 New Zealand s comparable freight costs are 30% - 35% higher than Australia. NZ B-train freight costs are 90% - 100% higher than in Australia. 5.3 Road freight accounts for between 12% and 15% of the cost of goods. Infometric s study on economic impact of changing freight rates 10% reduction 10% increase GDP + 3.7% - 1.4% Export growth + 3.9% - 1.7% Per capita incomes Increase Decrease 6.0 THE RUC SIMPLIFICATION PROPOSALS 6.1 The existing RUC regime is a national average pricing system that allocates costs on the basis of distance, licensed weight and vehicle axle configuration. 6.2 Distance RUC licences are purchased in units of 1,000km with the operator nominating the maximum weight. 6.3 Operators may increase maximum weight by purchasing a supplementary licence which will supersede a portion of the current distance RUC licence. These are available in 50km lots. Supplementary licences typically cost 50% more than standard RUC licences. 6.4 Existing RUCs are calculated on the assumption that vehicles are 55% laden on average. 6.5 The Forum accepts that the proposal to move to a weight distance charging system based on the permitted vehicle mass could potentially reduce administration and compliance costs. In addition with the removal of supplementary RUC licences for standard vehicles the opportunities for evasion should be greatly reduced. Page 7 of 26

8 6.6 Regrettably this Bill fails to deliver the potential gains identified in the policy intention. In many instances compliance costs will be greatly increased by the provisions of this Bill. The penalty regimes for compliance on trivial matters are pernicious. The Bill clings to the prescriptive framework of the past which will perpetuate and possibly exacerbate the administrative nightmare of New Zealand s unique RUC regime. 6.7 Any improvement in equity and efficiency under the proposed regime will be very dependent upon the setting of appropriate weight bands through regulation. Given the content of this Bill we cannot be confident that the subsequent Regulations will be appropriate or practicable. 7.0 CLAUSE BY CLAUSE COMMENTS ON THE BILL 7.1 Explanatory Note General Policy Statement, Page 1 When the RUC system was introduced in 1978 it was stressed that it was a user charge and not a tax. Second paragraph should read:..... as a means of charging diesel vehicles for the use of roading facilities. 7.2 Section 2 Commencement (line 4, page 5) The Bill does not propose a specific date for commencement. It is government s stated intention to have the legislation enacted this year (2011) and commencing in mid to late Government announced its policy intentions to simplify the RUC in July 2010 after receiving the recommendation of the RUC Independent Review Group. The key element of the proposed new RUC regime will be the weight bands which group vehicle types according to their gross weights. These bands will be in the Regulations promulgated after this empowering framework Bill is enacted. The lack of information on the likely weight bands is causing considerable angst and uncertainty for road freight operators. Many investment decisions are on hold because under the new regime there will be a greater incentive to operate the vehicle combination and axle configuration that best fits a particular freight task or combination of Page 8 of 26

9 tasks. Equally there will be a greater penalty for running vehicles less suited to a particular task or group of tasks. The protracted delays and open-ended commencement date compounds investor uncertainty further frustrating the road freight sector s drive towards improving productivity. 7.3 Clause 5: Interpretation Distance Recorder (lines 22 and 28, page 7) In (c)(ii) and d(ii) the term accuracy is used in the context of providing reliable records. Hubodometers are notoriously unreliable and inaccurate. Odometer readings can be used for a heavy vehicle RUC assessment for determination of a divergence value in comparison with a hubodometer reading. In these cases it is difficult to judge whether the odometer or the hubodometer is faulty or both. The opportunity to use a divergence measurement is only available from COF inspection data where both hubodometer and odometer readings are recorded. It is unconscionable for government to collect some $800m in revenue, relying on mandated distance measurement devices that are notoriously inaccurate and are not required to meet an established technical standard for accuracy. The NZTA has continued to resist any opportunity to test hubodometers for reliability and durability and have instead required owners of vehicles to rely on hubodometer manufacturer warrantees. The Forum believes that NZTA should establish a test regime (using random selection) for determining hubodometer reliability, the preferred test method being tri-axle force analysis. This would subject an axle mounted hubodometer to the same rotational forces typically imposed on them by vehicle movements when fitted to a vehicle in service. In respect of heavy duty trucks, odometer accuracy is a fallacy. Truck owners can fit alternative tyres with a rolling radius that measurably alters the travel distance recorded on an odometer. Even changing from a coarse tread (block tread) on the drive axles Page 9 of 26

10 to a less aggressive tread pattern can alter the distance recorded because odometer accuracy is not responsive to tyre characteristics or rear axle ratio. It is sensor or gear driven off the transmission output shaft. Given the variables that affect both truck odometer and hubodometer accuracy the police provide for a maximum 7.5% variation against a certified police odometer when testing an hubodometer for accuracy. This magnitude of variation takes into account reasonable factors that may cause an hubodometer to under-read or over-read as the case may be. This level of variability is not available to a transport operator to substantiate his own hubodometer accuracy. When NZTA institutes an assessment or recovery of allegedly unpaid RUCs they take the view that any magnitude of divergence between the two devices, over two successive COF inspections represents a faulty hubodometer. Proceedings to recover lost RUC are typically instituted on this basis alone. In summary the Forum has grave misgivings with the use of accuracy in reference to hubodometers and odometers and is dismayed that there are no reliability or durability specifications for hubodometers which the Crown relies upon in determining the RUC liability of all heavy vehicle users. Obviously a fuel tax regime would obviate these administrative and compliance issues Electronic System (line 35, page 7) This Clause should be amended to read other technology situated in or fitted to a RUC vehicle... We suggest adding fitted to as it is not always possible or appropriate to fit electronic and other similar technologies physically in a vehicle. For trailers the system may have components mounted on the exterior such as between the chassis rails for protection. Page 10 of 26

11 Line 3, page 8 Reference in (a) is made to location of a RUC vehicle. Location by point in time of a RUC vehicle would be more appropriate. Point in time is critical as different devices pole at different time cycle frequencies and each GPS polling point is a unique data output. Where signal data disruption occurs, post point reporting can occur by package downloading of the information. Time reference is therefore very important when trying to determine location references in GPS data sets Records (line 4, page 10) This definition, like many others in the interpretations section has little or no limitation and appears to be a grab bag of information by Government agencies. Most of the specified documents in (a) to (g) have no relevance given the simplified RUC provisions of this Bill. The only records that should necessitate access are variables by distance and vehicle mass as defined in terms of RUC weight. Access to the full records list would impinge on the rights of the vehicle owner. For example manifest and waybills are not required by any other statute so why place an inordinate mandate for record keeping of this nature upon road transport operators. Likewise with invoices relating to cartage and records relating to fuel and maintenance and financial records. The list represents a large cache of unnecessary documentation. The new RUC provisions were promulgated with the intention of reducing compliance costs and bureaucracy. This interpretation simply perpetuates the unwieldy and inefficient provisions of the 1978 Act RUC Information (line 1, page 11 reference to (a)) This subclause relates specifically to electronic system providers but it should state in line 4 relating to the provision, by the electronic system provider providing services specifically relating to road user charges etc. This qualification would confirm that unrelated commercial information that a RUC electronic system provider might acquire is not required to be relinquished to the Crown. Clause 40(3) (line 36 page 30) refers to Schedule 1 of the Bill which sets Page 11 of 26

12 out the details for electronic system providers disclosure of information. Clause 40(2) requires a written request for RUC information but this is limited to RUC information relating to assessments for recoveries of allegedly underpaid RUCs. The Forum would like to see a formal procedure set out for accessing any electronic RUC records RUC Weight (line 37, page 11) The following additional provision is required: (c) A maximum allowable mass for any individual RUC vehicle or combination of RUC vehicles as determined by the Chief Executive. This additional provision would provide an avenue for the Chief Executive to set a RUC weight determination for specialist vehicles and vehicles that have been modified. In respect of individual vehicles it provides the opportunity for the Chief Executive to determine a RUC mass irrespective of any gross vehicle mass that might have been provided by the manufacturer or a certifying engineer following a vehicle modification. Some vehicles cannot operate at their GVM or maximum allowed road mass as determined by the Dimensions and Mass Rule because of limitations such as their static threshold rollover mass value (SRT). In these instances the RUC mass would be less than the vehicle is capable of under either of the two provisions. A more complex conundrum is how to solve the cost imbalance between vehicles in combination under the provisions of Bill versus the same combination operating at the same gross weight under the present RUC system. The cabinet paper titled Road User Charges; Change to Definition of Licence Weight, on pages 13 and 14, presents this very problem by illustrating the 8 axle truck and trailer combination exceeding its current RUC attribution by 9% and the 8 axle B-train by 30%. These are two of the most commonly featured combination vehicles in use today. We estimate that there are about 9,000 8 axle truck trailer combinations in the NZ fleet. Our transportation efficiency is built upon this model. Creating a redesigned RUC regime that severely penalises the most payload Page 12 of 26

13 efficient combinations, and in the case of B-trains the safest in terms of roll stability, is extremely foolish Vehicle Inspector and Vehicle Inspection (lines 16 and 13, page 12) Vehicle inspectors recording hubodometer and odometer readings at certificate of fitness (CoF) inspections is well established. It is important that the existing vehicle inspection definition is not expanded beyond an inspector certifying a vehicle under the authority of a Transport Services Delivery Agent (TSDA) e.g. VTNZ, VINZ, AA etc. It must not be expanded to include certifying engineers or repairers of heavy vehicles. A distinction should be made between general certification services and specific COF inspection services. We have no desire to see the truck and trailer repair industry put in the unfortunate position of having to ascertain RUC compliance for their customers vehicles. We expect provisions in the interpretation of this Bill to follow the principle that vehicle inspection in the case of RUC heavy vehicles means a certificate of fitness inspection and inspector means a person appointed under the relevant legislation to carry out a certificate of fitness inspection on a heavy motor vehicle. Clarification of these provisions is important Clause 5(2) (line 21, page 12) We suggest the addition of the following phrase unless approved by the Chief Executive under Clause 34. This small change will provide some flexibility for the Chief Executive to allow a co-joined licence in specific circumstances and fits with our suggested changes to the definition of RUC weight. 7.3 Clause 8: RUC vehicle must have distance recorder (line 16, page 13) The subclause (2)(b)(iii) reference is again made to hubodometer accuracy e.g. requires a hubodometer that accurately records the distance travelled by the RUC vehicle at all times. The term accurately as related to the tax gathering device is undefined; (refer to our comments on Distance Recorder). Page 13 of 26

14 7.4 Clause 10: Reading of Distance Recorder Subclause 10(2) (line 9 page 15) sets a limit of 500km for overrun. This distance represents less than a half day operation for many trucks. The full RUC is going to be purchased in any event as distance gaps are not permitted. This measure appears to be a vestige of the regulated industry that prevailed when the initial RUC legislation was introduced in At that stage it was illegal for trucks to compete with rail freight and carry goods for distances in excess of 150km. We suggest a limit of 1,000 km would be more appropriate and practicable with trucks now travelling long distances and fleets dispersed country wide. 7.5 Clause 11: RUC vehicle must have RUC type and RUC weight (line 16, page 15) Without reference to the regulations and weight bands versus vehicle types this section cannot be commented on in any real depth. 7.6 Clause 12: Certain RUC vehicles must have additional licences (line 23, page 15) This Clause epitomises everything that is wrong with both the present RUC system and the proposed regime outlined in this Bill. Clause 12 proposes in subclause (1) a vehicle or combination operating pursuant to a mass based permit issued by the Chief Executive be subject to subclauses (2) and (3) with the enforcement provisions covered off in subclause (4). However subclause 4 also captures any standard vehicle or combination, operated in excess of the mass limit for its type specified by section 4 of Part 1 of the VDAM Rule Clause (4) is not limited to a permit vehicle not having the additional RUC licence or registration scheme participation. The former, in reference to standard mass combinations and vehicles, presents a serious issue in its application to vehicles operated around the threshold mass for their type. Page 14 of 26

15 The provisions in clause 12 set the mass thresholds referred to in the VDAM Rule as absolute for the purposes of this Bill but make no reference to the weighing variations commonly referred to as tolerances set out in the Offences and Penalties Regulations Equally no variation or concept of tolerance is provided for judging whether a vehicle or combination has exceeded its RUC licence weight and therefore its RUC liability. This conundrum is exacerbated by subsection (3) which inappropriately amalgamates two separate concepts, a vehicle being overweight in terms of mass limits for road preservation imperatives and a vehicle being overweight in terms of its RUC liability. The RUC Review Committee recognised the difficulty in operationally achieving weight precision on vehicles and combinations of motor vehicles. The following example illustrates this point [3] Type 14 truck, 4 axles, new RUC weight licence covers mass up to 26 tonnes Type 43 trailer, 4 axles, new RUC weight licence covers mass up to 29 tonnes The total RUC mass covered by the aggregation of RUC Licences is 55 tonnes [4]. Note the masses referred to solely for RUC licensing are unlikely to be anywhere near actual operating weights. Under the VDAM Rule this combination can only operate at 44 tonnes for reasons of road preservation yet it carries RUC licensing for some 55 tonnes (at 44 tonnes VDAM mass) based on the conceptual RUC table composition. (Refer footnote 3). [3] The framework for applicable RUC charges to vehicle types is outlined in the cabinet paper titled Road User Charges: Charges of Definition to Licence Weight page 12/14. [4] These conceptual RUC models are supported by Clause 11. However the Forum still supports an option for the Chief Executive to provide a co-joined licence in specific circumstances. Page 15 of 26

16 It is accepted that for road preservation reasons, a combination operating above 44 tonnes (or for that matter any individual vehicle) exceeding the standard mass limits specified in the VDAM Rule, should hold a mass permit. In this example if the mass exceeds the limit of 44 tonne for the truck trailer combination type, the normal weighing penalty provisions apply. In terms of RUC liability the same combination requires either an additional licence or participation in a registration scheme as per subclause (3)(a) if operating above the standard 44 tonne VDAM threshold. NZTA s own RUC purchase analysis has shown combination vehicles operating at the limit for type tend to overbuy their RUCs solely to avoid the burden of a RUC audit where their vehicle combination may be subjected to vehicle weighing for road preservation purposes. In these instances tolerances are utilised for determining whether an overweight penalty is payable. This concept must be carried into the present Bill. We submit that a RUC audit requiring a RUC recovery payment would only commence if the actual vehicles combination mass limits exceed the VDAM mass limits for type by 10% or more. The 10% value correlates with the off loading limit used by police under section 126 of the Land Transport Act This proposal is not put forward to legitimise overloading. Normal policing enforcement of the VDAM limits would still prevail with the accompanying provisions relating to penalties. The proposition the Forum puts forward is that the initiator of an RUC audit and subsequent RUC recovery would only commence if a vehicle or vehicles operated by an operator exceeds the mass for type by 10% or more. (In the case of the 44 tonne example, the RUC initiator would occur at 48.4 tonnes). This approach would greatly ameliorate the worst adverse impacts of this Bill, particularly the antagonism and costs associated with RUC audits and the accompanying recovery processes. As a consequence it is likely proceedings under subclause 5(a) and (b) would become a rarity. Page 16 of 26

17 The present provision around weighing tolerances for RUCs, provides for a tolerance of 5% of the RUC licence on the vehicle for infringement fee offences but is only applicable to individual unit vehicle RUC mass enforcement. Separately under Section 23(3)(3B) RUC licence financial values for vehicles in combination are able to be aggregated. This allows the RUC revenue aggregation to be a defence where the individual RUC licence weights may be insufficient for an individual vehicle in a combination. Each of these current provisions reflects the difficulty of achieving absolute mass compliance. The 5% tolerance would also greatly assist the targeted enforcement against deliberate and systematic offending. The former infringement fee regime has become irrelevant because the RUC economic division of NZTA has sought to recover the quantum of money represented by the 5% RUC weighing tolerance. So while an operator may not have exceeded the licence weight on the vehicle by virtue of the 5% RUC weight licence tolerance, this has no affect whatsoever in preventing a RUC audit and subsequent recovery. While this approach has been supported by case law, it is only applicable in an environment where there is the ability for the operator to elect the RUC licence weight. Under the provision of this Bill only an approach that includes a tolerance threshold prior to the issuing of a RUC audit and recovery discussed above will avoid unacceptable compliance costs for operators and intolerable administration complexity for the authorities. With reference to to subclause (2), the Forum accepts that vehicles and combinations operating above 44 tonnes require an additional licence or to be in association with a registration scheme providing for the additional costs attributable to road wear when operating under a mass permit regime. What is unacceptable is locking the additional charge or registration scheme arrangements into an association with electronic service providers as set out under regulations yet to be promulgated through clause 81(k). Page 17 of 26

18 This represents an attempt to mandate association with electronic service providers by stealth. This approach is particularly galling given that NZTA has made every effort to avoid HPMVs and other permit type vehicle operations being captured by a mandatory GPS compliance environment. Such proposals are at odds with the free market approach that let operators make their own decisions on how they operate their business and with whom they might form a management relationship. This is also at variance with the Minister of Transport s assurance contained in his cabinet paper entitled Road User Charges overview and introduction to legislative proposals. On page 5 (clause 37) of this paper he said: operators will continue to have the choice of using an electronic system or continuing with paper RUC licences and hubodometers. Obviously the electronic systems vendors have presented a very convincing case to the Regulator to have their product mandated in this way. It should also be noted that this mandate reliance on an electronic service provider makes no provision for unplanned situations such as a heavy duty recovery vehicle recovering or towing a disabled heavy duty truck of truck combination where a weight based permit is required. 7.7 Clause 13: Offences Relating to Distance Recorders (line 20, page 6) Subclause 13(1)(a) must make provision for the truck to be taken to a place of repair. A driver could discover that a hubodometer has been damaged, possibly in a remote location, and if that vehicle is moved a fine of $75,000 may be incurred. 7.8 Clause 15: Application for RUC Licence (line13, page 18) Subclause 15(3) could result in an administrative error, such as the transposing of a number, triggering a fine of $75,000. Again this highlights the administrative burdens and pernicious penalties under this Bill. Page 18 of 26

19 7.9 Clause 17: Issue of RUC Licence (line 33, page 18) Subclause 17(1) gives excessive powers to the RUC collector who could use these powers to insist that all RUC licences be issued electronically. industry. This would be unacceptable to the road freight Subclause 17(2) needs to make provision for combination vehicles Clause 19: Display of RUC Licence (line 15, page 19) Sublause (3), relating to display of licences, includes penalties that are out of keeping with the magnitude of the offence. Failure to display a licence should not incur a similar penalty as failure to pay for a licence. The non display of TSL labels incurs a $400 infringement fee for the driver and $2,000 for any person under summary proceedings. We submit that the penalty for not displaying a RUC licence should be of similar order. With the police adopting electronic ticketing and electronic enforcement, the roadside enforcement system should enable real-time checking of whether not having a valid licence is the issue or non display of a licence Clause (20): Proof of purchase if RUC licence issued but not received (line 33, page 19) In subclause 20(2) 7 days should be changed to 10 days. For operators relying on rural mail delivery 10 days is required to receive the mailed out hard copy Clause 21: RUC licence must be produced on demand (line 4, page 20) Subclause (1) confirms the legal requirement and therefore subclause (2) is redundant Clause 22: Current distance licence to be provided to purchaser on sale of RUC vehicle (line 7, page 20) This is a new provision which again carries penalties that are out of all proportion with the offence. In addition this clause does not make provision for the sale of a vehicle on an as is where is basis. Page 19 of 26

20 7.14 Clause 23: Offences relating to altering or defacing RUC licences (line 1, page 21) In subclause (2) the level of fines are extraordinarily high even though they are dependent upon proceedings through the Court. The Forum proposes the penalty in subclause 2(a) be reduced to $3,000 for individuals and in 2(b) be reduced to $15,000 for body corporates. Altering and defacing RUC licences represents a premeditated act to circumvent RUC liability. However since these provisions will relate to each individual licence they should be reduced accordingly. For example a combination vehicle could involve three separate licences Clause 24: Offence of displaying anything on RUC vehicle likely to be mistaken for RUC licence (line 13, page 21) This Clause is of concern because it doesn t explain the circumstances which might trigger a mistaken belief. For example, a sporting club logo on a windscreen might be mistaken for a RUC licence. Nor is there any qualifier of how close an enforcement officer would need to be to determine he was mistaken. It is also important to distinguish between those situations where a valid RUC licence is issued and those where there is no licence even though some other display may have been mistaken for a RUC licence Clause 25: Offence of operating RUC vehicle on road with RUC licence obscured (line 24, page 21) The levels of penalty for committing this relatively minor offence are extraordinarily high. A licence could be obscured by a logbook or other driver paperwork quite innocently. An obscure licence is not likely to be a premeditated action like tampering or defacing. The Forum believes there is a penalty correlation with Clause 19 Requirement to display a licence and consequently the penalties for obscured licences should reflect our suggested amended penalties for this offence with a minor charge because the licence is obviously on the vehicle. We suggest the penalties in 2(a) for a driver be reduced to $400 infringement fee and 2(b) in the case of any other person $1,000 upon summary proceedings. We believe these penalties better reflect the nature of the offence. Page 20 of 26

21 7.17 Clause 21: Issue of RUC licence may be conditional on payment (line. 11, page 22) Subclause 27(b) should state that the appropriate security is no more than the amount owed Clause 33: Surrender of RUC licence (line 14, page 25) In subclause (c) line 14 the word absolute is unnecessary. The Crown through NZTA can make a discretionary judgement and to add absolute is just tautology Clause 36 Further provisions relating to refunds (line 15, page 27) Subclause 36(1)(a); the refund threshold should remain at $2.00 as often a large number of small amounts are due for refund which collectively can amount to a considerable sum of money. This is not an onerous issue in the electronic age. Subclause 36(1)(c)(iii) rules out a refund if the hubodometer is not produced on demand. The loss of a hubodometer from a wheel end is a common occurrence. Subclause 36(1)(c)(i) gives the RUC collector the discretion of requiring or not requiring the provision of the hubodometer. However if the hubodometer is lost the operator cannot produce it and therefore cannot receive a refund Subclause 36(2) (line 37 page 27) refers in two places to 2-years as the expiry time limit for the RUC collection to provide refunds. This contrasts with the requirements under Clause 48(5) that allow the RUC collector to recover unpaid road user charges for any period of up to 6-years from the date specified in an assessment. The Forum s view is 2-years should apply under both circumstances Clause 39: Obligation for electronic system provider to report tampering (line 13, page 29) In subclause 39(1) the reference to any electronic system needs clarification to ensure that this only applies with respect to equipment directly associated with RUC collection notwithstanding the interpretation provided in Clause 5. Page 21 of 26

22 7.22 Clause 40: Disclosure and management of RUC information by electronic system provider (line 24, page 30) There are many unanswered questions concerning the ownership and disclosure of electronic RUC information. Subclause (3) refers to Schedule 1 provisions for the management of data from electronic system providers. Elsewhere reference is made to Codes of Practice. It is important that clear coordinated rules are established concerning the ownership, management and disclosure of all electronic data collected under the provisions of this Bill. Schedule 1 should form part of the Code of Practice and the road freight sector should be involved with the establishment of the Code of Practice Clause 44: Restrictions on fitting hubodometers Subclause 44(1)(b) (line 10, page 32) requires dispensation to allow a vehicle to travel to a place of repair. Refer Clause 13(1)(a). Subclause 44(3) (line 21, page 32) is superfluous and should be deleted. Subclauses (i) and (ii) could commence with the words It is an offence to Clause 48: RUC collection may issue assessment for unpaid Road User Charges The provisions in subclause 48(5) (line 9, page 36) referring to 6- year recovery of RUCs determined by assessment is a legacy of a manual RUC accounting and management system. With current data management and electronic monitoring procedures with the RUC database plus the simplified RUC rate regime proposed by this Bill the likelihood of an operator deceptively underpaying for 6-years is very remote. The recovery timeframe under any RUC assessment should be limited to 2-years and therefore Clause 48(5) should be amended accordingly Clause 52: Penalty for failure to pay after assessment (line 19, page 38) The compounding 10% penalty must not apply if an instalment arrangement has been agreed. (Refer Clause 55). Page 22 of 26

23 7.26 Clause 57: RUC collector may take information from engine management system (line 32, page 40) In subclause 57(b) (line 4, page 41) reference is made to accessing information from the vehicle engine management systems. 57(b) should state: take information from the engine management system only relating to the distance travelled by the RUC vehicle. We believe it would be relatively easy to manufacturer a download tool that excludes all other information. An engine management system may record the following information; fuel consumption, heavy braking, excessive speed, excessive rpm, sudden acceleration, sudden deceleration, engine throttle position, change in lateral or longitudinal velocity, seatbelt use, seat occupancy, driving time between exceptional incidents (a crash) and total distance travelled. These may be based on specific data sets and could identify total distance travelled as well as distance travelled between any of the above as might be derived from of the odometer sensor input. Only the total distance travelled is required for the purposes of this Bill. The rest is just a grab bag and serves no meaningful purpose in respect of this Bill. Accessing unrelated information is intrusive and totally unnecessary. What is of concern is the total lack of protocols around electronic information gathering and the management of the data. The downloading of extraneous information that is analysed and stored by authorities has the potential to create legal and financial risks for the operators who own that information. In some vehicles the on board diagnostic system may have wipe protocols that enable the operator or any Crown Agency appointed auditor to wipe data that is relevant to the vehicles operation. This Bill provides the Crown with wide access to private data, much of which is unrelated to RUC collection, with no system of security or controls on accessibility. Page 23 of 26

24 The Forum believes that only data required specifically for adjudication of RUC compliance (distance movement should be accessible) and then only with adequate protocols in place for custody, time limit on storage of such data and how it can be accessed for evidential purposes. The provision for access to non specific data reflects the opportunities electronic system providers appear to have offered various government agencies ignoring the interests of the transport operator who is the owner of such data. It should also be noted that truck manufacturers stress that engine management systems are designed and developed as guidance and should never be relied upon or used for regulatory functions Clause 58 Vehicle inspection records (line 6, page 41) In our comments on the interpretation of vehicle inspector and vehicle inspection we have explained our reservations with respect to the impact Clause 58 would create if the interpretation of vehicle inspectors is expanded beyond those who carry out CoF inspections Clause 59: Certain persons must make and maintain records (line 16, page 41) Subclause 59(1) provides that only TSL holders are required to keep records for 7 years. Records relating to the RUC Bill should only be required to be kept for 2 years in accordance with our proposed amended provisions for assessments determined by the RUC collector. The revision of the RUC regime was about reducing compliance and administration costs, not expanding them. Subclause 59(2)(b)(i) is an additional provision requiring logbooks to be retained for 3 years. The present requirement in the Land Transport Act 1998 under 30ZD(2)(a) and 30ZH(b) are a requirement to keep logbooks for 12 months. The hubodometer recordings shown in logbooks are not a proxy for vehicle travel distance and have no direct relationship to RUC compliance. A relationship between RUC distance and logbook details could have been better established under the old logbook regime which Page 24 of 26

25 required more detailed hubodometer recording at each activity change e.g. rest/drive/on-duty. Today s Worktime Logbook Rule only requires that daily start and finish points be recorded. The Forum is opposed to operators being required to keep logbooks more than 12 months. The requirement imposes unnecessary storage and custody responsibilities for no tangible benefits and reflects another additional administration complexity to operators daily routines. Subclause 59(2)(ii) line 28 sets requirement for all other records to be kept for 7 years. Once again this is a reflection of interference in an operators business beyond what is reasonable. Subclause 59(4) is reaffirming logbooks be kept for 3 years refer to our comments above in respect of subclause 59(2)(b)(i) Subclause 59(6) (line 7, page 42) Proposes excessive fines for not meeting the specified record keeping requirements. It is the Forum s view these fines should be reduced to $5,000 and $25,000 respectively so as to be in context with range of penalty charges proposed by the Forum Clause 60: Inspection of records line (14, page 42) Sublause 60 (1) provides for access to records and again includes many records which are unrelated to the requirements of this Bill. In subclause 60 (2) the RUC collector is allowed to take records as opposed to making copies. The Forum opposes what appears to be an incremental creep in powers for State agencies to take records that may in fact be required for the ongoing continuation of business. Furthermore, nowhere is there any reference to the custodial management of the records, nor any receipt to the owner of the records. The Forum is opposed to the breadth of powers conferred on the RUC collector to take records. This whole Clause in the Bill needs to be reframed to allow the RUC collector to copy records and make certifiable copies if required but not remove copies from the operator s premises or from the operators designated custodian of those records. Page 25 of 26

26 7.31 Clause 61: Access to records held by third parties (line 7, page 43) This Clause simply reframes the requirements to produce records outlined in Clause 60. The provisions on data access are far too wide. Our comments in respect of Clause 60 also apply to Clause 61. The Bill should make provision for the accessing or core data that is imperative to distance validation and vehicle type compliance. All other business records are irrelevant and not the business of the RUC collector Clause 88: Proceedings for offences generally (line 27, page 46) Section 74 of the Summary Proceedings Act provides that the general time limitation for laying information is 6 months. We see no justification for this Bill making specific provision to extend that time limitation to two years Schedule 1 (3)(1): (line 3, page 60) The RUC collector should only be empowered to collect information relating to the collection of RUCs. The powers to request any specified traffic or transport information is unnecessary and excessive. (Refer to comment on Clauses 40 and 57). 8.0 CONCLUSION The stated intention of this Bill was to simplify the RUC regime and reduce administrative and compliance costs. The Forum welcomed that intention. Regrettably the Bill as outlined imposes significantly increased demands and compliance costs on operators. The very narrow range of RUC rates that will result from this Bill together with a centralised database recording RUC purchases provides a golden opportunity for a much more streamlined regime. Unfortunately the Bill has been drafted looking through the rear view mirror. Most of the provisions in the Bill are based on the unwieldy, impracticable and prescriptive existing legislation which has been an abject failure since it was enacted in Page 26 of 26