Good law-making missing on Regional Fuel Tax

22 Jun 2018


The Government plans to implement, in conjunction with the Auckland Council, a fuel tax for Auckland on 1 July 2018. On behalf of our growers, HortNZ has submitted to the Parliamentary Select Committee considering the Land Transport Management (Regional Fuel Tax) Amendment Bill, written to Ministers, met with Ministers, met with government department officials charged with implementing this law, and even taken New Zealand Transport Agency (NZTA) officials on a field visit to talk to Pukekohe growers.

We want to ensure that this tax law is fair, equitable and workable. Our primary submission is that the best way to pay for roads and transportation infrastructure, is a road toll that the users of the road pay. With any other system, such as a fuel tax, there are anomalies and unintended consequences and ultimately, it is unfair.

Given that the Government is committed to using a regional fuel tax despite its less than perfect application, our submissions have been based on trying to make the law fair, equitable and workable. Our issue is that users of fuel off-road should not have to pay the tax at all – currently they will have to pay and go through a very complicated system to get a rebate. When we talk about off road, or “behind the farm gate” use, we are talking about vehicles and diesel-powered equipment used by growers to grow, harvest and produce fresh, healthy food for market, including tractors, fork lifts, pumps and irrigation machinery. 

In the first place, why should off-road users pay a tax allegedly designed to target users of congested roads around Auckland city specifically? Why should they have to pay on fuel that is not captured by the intent of the regional fuel tax, and then go through an unnecessarily complicated rebate system that is costing both NZTA and growers considerable sums of money to get that money back? They should not.

In fact, this has been agreed by the Government, that “we don’t want to tax people who are using their fuel off-road” – Dr Duncan Webb, Bill second reading, Hansard Report. But between agreeing that they should not pay, and putting in place a system that is fair, equitable and workable, is where we are now stuck. The rush with which this legislation is being passed presents us with the following problems:

- Good laws take time. Although Parliament may pass legislation and the Auckland Council may put that into effect, how a law works in action – rather than just theory -  is critical for its success. The Regional Fuel Tax will not pass into law until sometime next week and comes into force on 1 July 2018, five days or less after it passes into law. This cannot possibly allow sufficient time to develop the system for it to operate, and for that system to account for issues such as off-road use, and how to account for fuel purchased outside of the fuel tax region etc.

- You need to know what the law is to comply with it. From what we understand, the online regional fuel tax rebate system will not be operative until a number of months after 1 July 2018, and that how it will work is still being worked out. So how can you comply with a law when you have not been told how to comply with it?

- Good laws and an efficient tax need to be simple and straight forward. If too much money is spent administering the tax, is it achieving its purpose? It appears there will be considerable cost to NZTA to collect the tax and then hand it on to Auckland City, and to our growers in trying to navigate an overly prescriptive rebate system. From what we understand, and this is subject to whatever the final recording and rebate system is, this is going to be very complex and difficult to operate. Indications are, for example, that the fuel companies will just average the tax out across New Zealand. That is not a good solution for off-road use exemptions and means the exemption regime will need to apply country wide – something that has not been contemplated by those designing the system. Laws that people can’t understand will be difficult to comply with.

- Good laws need to be understood. As well as needing to know what the law is, it needs to be understood. There is no information available about how this law is to be applied for our 441 Auckland-based fruit and vegetable growers who have considerable off-road fuel use, yet it will be forced on them from Sunday week. Normally a law change such as this would be supported by a public information campaign with information about how it is to work being published. Not this law. It would be very naïve of NZTA to think that between Tuesday and Sunday next week it could reach all the people affected by this Bill and give them adequate instructions on what is expected of them.

So, our plea to the Government is to slow down the process to enable these four principles to ensure that this law is fair and equitable and critically, workable. So far, that plea has fallen on deaf ears.

 - Mike Chapman, CEO