General FAQs

  • Why are you consulting on this now, when the cost of living is increasing?

    We’re asking for your feedback on our proposed changes now because any changes would take time to put into place - they wouldn’t happen until the end of 2023, and economic conditions may well be different then.

    We need to find a sustainable way to pay for the regulatory work we do, because the costs of providing our services like vehicle licensing and registration and administration of RUC, and of regulating people in the land transport system, are currently more than the money we’re bringing in.

    Without sustainable funding, Waka Kotahi can’t do a good job as regulator. In 2019, two independent reviews found system weaknesses at Waka Kotahi, and a lack of adequate funding, had contributed to the 2018 death of a passenger travelling in a vehicle that had just received a warrant of fitness. They found we had failed to prioritise public safety, and concluded that serious problems with our regulatory function had developed since the agency was established, resulting in regulatory failure.   

    The improvements we have been able to make since then were funded by government loans. If we are to continue to make those improvements we need to change our funding system to one that is more sustainable so we can regulate properly into the future.

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  • What’s not covered in this consultation?
    • Other Waka Kotahi functions like managing the state highway system, including planning, funding, design, supervision, construction and maintenance operations.
    • Regulation of road tolling and setting of speed limits.
    • Regulation of rail – rail was the subject of a separate funding and fees review.
    • There are some fees and charges that apply to drivers, vehicles and industry that will not change under this review. The consultation document seeks feedback on the fees and charges that are new or changing.
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Questions about regulation

  • What is regulation?

    Regulation ensures drivers and the vehicles they’re using are safe to be on our roads.

    Waka Kotahi is New Zealand’s lead land transport regulator. It’s our job to make sure people and organisations comply with the rules, so we’re all safe on the roads. 

    We provide services that support people and organisations to follow and enforce the rules that sustain a safe, fair and sustainable land transport system.

    We not only regulate driver licencing, vehicle registration, and collect road user charges, but we are also responsible for regulating the people and companies who do vehicle inspections, and who provide driving lessons and driving tests – we make sure the people who are certifying that vehicles and drivers are safe to be on our roads are doing a good job. That’s why our work as regulators is so important.

    If we don’t properly regulate the system, the system is less safe and that increases the likelihood of people being injured or killed.

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  • Who does Waka Kotahi regulate?
    • 5 million licensed drivers (of whom around 40,000 are approved for commercial passenger services or tow trucks).
    • Around 39,000 active licensed transport service operators
    • 2 million motor vehicles.
    • About 90 licensed rail operators.
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  • What do you mean when you talk about ‘regulatory services?

    Waka Kotahi, and our agents like VTNZ, AA, VTNZ, New Zealand Post and your local WoF mechanic (who are legally empowered to act on our behalf), provide services like:

    • driver testing services (making sure drivers are safe to be on the roads)
    • issuing driver licences and transport service licences (TSL – to carry goods, passengers, and other things)
    • vehicle certification (warrant of fitness (WoF) and certificate of fitness (CoF)) - making sure vehicles are safe to be on the road
    • vehicle registration and licensing (new licence plates and annual rego)
    • collecting road user charges (RUC) and other money for roads.
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  • What do you mean when you talk about ‘regulation of people and businesses in the land transport system’?

    We monitor and audit the performance of our agents and other businesses in the regulatory system, like vehicle certifiers, TSL holders, to ensure they’re meeting the required regulatory standards.

    This involves:

    • monitoring compliance of motor vehicle drivers, including commercial drivers, and taking targeted action as required
    • improvements to the operating and compliance models that determine frontline regulatory activities, so they’re focused on where risk lies
    • increasing risk and assurance activity, like audits and checks on certifiers and agents
    • ensuring standards and guidelines are fit for purpose
    • ongoing industry engagement, including a focus on approving and monitoring driving course providers and instructors.
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  • How are your regulatory functions funded?

    Our work as regulators is funded through fees and charges for our services (like driver and vehicle licensing, and regulating people and businesses in the system) and minor contributions from the National Land Transport Fund.

    Funding should cover the full cost of providing users safe access to the land transport system, and of ensuring regulated parties comply with the rules and meet the various standards.

    Because costs aren’t static, it’s essential that funding is reviewed regularly to ensure fees and charges remain appropriate and that the assumptions they’re based on (like cost and volumes) are valid and relevant.

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  • Why is regulation so expensive?

    Waka Kotahi has lots of costs it has to meet when providing regulation. The funding and fees review established how much it costs us to provide and monitor regulatory services, including the agents, individuals and companies we use to do some of this work (like AA and your local mechanic).

    For Proposals 2 to 8, these costs fall into eight general categories:

    Personnel

    The cost of frontline staff involved in delivering services, including monitoring and auditing of parties in the land transport system, processing licencing applications and vehicle registration, and ensuring the data in our registers is accurate.

    Training and development

    Making sure our staff have the skills and the working environment to perform required regulatory services.

    Agent fees

    Fees Waka Kotahi pays organisations that perform frontline services on our behalf, including AA, VTNZ, and VINZ, for example.

    Service delivery costs

    Direct costs to deliver a service that isn’t staff time or agent fees. Includes postage and printing, the manufacture of registration plates, credit card fees etc.

    Operational support costs

    Non-frontline regulatory support functions required to make sure the regulatory system is and remains fit for purpose, including executive managers, project management, administrators, change, risk and assurance and intelligence functions.

    Business support costs

    Wider shared corporate costs associated with Waka Kotahi, including human resources, IT platforms, financial services, communications and information services.

    Core business loan repayment

    The cost to repay the $80m government loan to rebuild the regulatory function in Waka Kotahi, hire additional staff to fill critical frontline roles, strengthen governance and leadership through the development of our regulatory strategy Tū ake, tū māia, and to increase compliance and enforcement in critical areas.

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Questions about the funding and fees review

  • What was the funding and fees review?

    The Funding and Fees Review was done to establish exactly what our financial situation is and to ensure our regulatory products and services can be appropriately and sustainably funded.

    The Review included a stocktake of all regulatory services to understand our true costs. We established how much it costs us to do our work as regulators, and to monitor the agents, individuals and companies we use to do some of this work (like AA, VTNZ, and your local mechanic).

    This was the first review of our funding and fees since Waka Kotahi was established in 2008. Most fees we charge for our services haven’t changed in 13 years – we haven’t even adjusted for inflation in that time.

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  • Why did you review your regulatory funding and fees?

    In 2018, a person was killed when the front passenger seatbelt they were using failed in a car crash. The car they were travelling in had passed a warrant of fitness (WoF) just a month before the crash.

    Following this incident, the Waka Kotahi Board raised public concerns about the regulatory performance of Waka Kotahi, including a backlog of 850 historic non-compliance cases that weren’t properly addressed.

    This led to two independent reviews, published in 2019, that found Waka Kotahi had failed as a regulator, that we hadn’t prioritised public safety, and that we didn’t have enough funding to properly regulate the land transport system. 

    Waka Kotahi borrowed $95 million from the Government to pay for urgent work after independent reviews found we were underfunded for our regulatory work, which contributed to regulatory failure. Since then we have implemented a back-to-basics plan, stabilising the regulatory function within Waka Kotahi and shifting our focus to deliver firm and fair regulation, consistent with our core purpose. We used these interest-bearing government loans to:

    • tackle a backlog of 850 unsafe vehicle cases (the loans we used to do this are called the ‘rectification loans’)
    • address urgent gaps, eg. employing 150 more front line staff to make sure our certifying and licensing systems are safe and thorough
    • strengthen governance and management to help with better decision-making, including appointing a Director of Land Transport, who, along with the Board, is a key point of accountability for the land transport regulatory system
    • develop a regulatory strategy: Tū ake, tū māia, which sets out our role, our purpose, goals, areas of focus, and ways we need to improve. This strategy sets the path we need to take to be the best regulator we can be, outlining key shifts that will bring a focus to good regulation so we can target our efforts in the areas we think can have the greatest impact.
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  • What did the Funding and Fees Review find?

    The review has shown us our current model isn’t working, and that some road users have paid too much, while others haven’t paid enough. Safety needs regulation, regulation costs money and these costs must be met fairly.

    The review has found our current funding situation is unsustainable:

    • We do not bring in enough revenue to cover costs.
    • We had to borrow $95 million from the Government to pay for urgent work to stabilise the regulatory function, following the independent reviews in 2018 and 2019.  While this has resulted in improvements, we need to do a lot more to be an efficient and effective regulator. 
    • Without sustainable funding, Waka Kotahi cannot do a good job as regulator. The improvements we have been able to make were funded by government loans. If we are to continue to make those improvements we need to change our funding system to one that is more sustainable.  
    • To fully fund the costs of effective regulation, we need $264.6 million annually – an extra $100 million each year – to continue to strengthen the regulatory function, increase our regulatory activities, address past and future inflation, and for the repayment of loans.

    All New Zealanders have a part to play in helping make our roads safe – it’s important people, groups and organisations pay their fair share for better regulation to ensure drivers and vehicles are safe on our roads.

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  • Is doing nothing an option?

    The current funding model is unfair and unsustainable because it doesn’t support robust regulatory performance or address the issues outlined in the two independent reports:

    • failure to prioritise public safety.
    • a lack of a sustainable funding model to support robust regulatory performance.

    We need to change our funding and fees to make them fair, and to ensure we have enough money to properly regulate the land transport sector. Doing nothing leaves us with a broken regulatory system.

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Questions about the new funding model

  • What’s the difference between an agent and an industry agent, and why are their costs different?

    Our key delivery partners (agents) offer a wide range of products and services on behalf of Waka Kotahi. They are paid agent commissions that must be covered by our funding model.

    Industry agents are not paid commission for the services they provide. Industry agents tend to offer motor vehicle services that complement their main business offerings. They don’t provide the breadth of services our key delivery partners provide.  They also do their own administration around fees and so this does not create costs for the regulator.

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  • What does cost recovery mean?

    It means breaking even on providing a service – not making a profit and not making a loss. In a cost recovery funding model, the costs of providing a service are covered by the amount of money charged for it (eg if it costs $25 to deliver a service, the user should pay $25 for it).

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  • Why are some fees and charges going up and some going down?

    We’re proposing to introduce new fees for services we’ve previously provided for free because there was no way to recover the costs of providing the service when they were set up.

    We’re proposing to increase fees where the cost of providing the service is greater than the fee paid for it.

    We’re proposing to reduce fees where the cost of providing the service is less than the fee paid for it.

    Each of these proposed changes reflects our need to accurately recover our costs for providing regulatory services.

    If fees or charges are not changing, they are not included in this consultation.

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  • What are agents?

    Waka Kotahi has agents who are legally empowered to act on our behalf to provide services and compliance activities. Our agents include large organisations like AA, VTNZ, VINZ, and New Zealand Post, companies like eRoad who are agents for RUC, and smaller businesses like local Warrant of Fitness (WoF) providers. We monitor and audit the performance of our agents to ensure they’re meeting the required regulatory standards.

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  • What’s the difference between a fee and a charge?

    A fee is charged where someone gets an individual benefit from a service, eg driver licence, vehicle rego, driver licence endorsement to be able to carry passengers or goods.

    Charges are applied when averaging the costs of an overall service (eg safety systems like monitoring, auditing, and industry engagement) across a group of users (eg everyone who holds a transport service licence, or all vehicle certifiers).

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  • Why are there different fees for doing things through different channels – online, email/mail, agent, phone?

    The costs to provide these services are different according to how you apply. Each of the fees accurately reflects how much it costs us to provide the service.

    Postage and printing costs have been increasing at a rate higher than the cost of inflation, and we need to recover these costs.

    Our current online services are not necessarily automated processes and, although an application may be available to do online, people are still required to do manual processing in the background.  Like other channels, the fees reflect the cost to provide each service.

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  • What cost recovery principles did you use to develop the model?

    We used the following cost recovery principles:

    • supports transport system objectives
    • sustainable
    • focuses on ensuring risk exacerbators and
    • beneficiaries of services pay their fair share
    • users should pay for the services, but incentives are
    • important
    • limits Crown funding to certain functions
    • ensures that users and beneficiaries contribute to
    • the integrity of the system
    • incorporates a regular review cycle to test efficiency
    • equitable
    • simple and consistent.
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Questions about Proposal 1

  • Why should public money pay for regulatory costs when you already charge fees to cover regulatory costs?

    This review establishes a better system where the right people are paying the right amounts for the right things. The regulatory fees and charges for specific services relate to the costs to deliver those services and the individual or group benefits from those services. 

    Some of the work we do isn't to provide a specific service, but to make sure the system works well and provides the right safety framework. These functions are called ‘public goods’, because they benefit all users of the land transport system more so than individuals or specific groups. These costs have not been fully funded in the past.

    Public goods are appropriately provided through government funds. Instead of adding another cost to all fees, we are suggesting these be funded by money that is already collected from road users.

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  • What does land transport revenue currently fund?

    Land transport revenue currently funds:

    • the National Land Transport Fund (NLTF), which is then allocated to many activities like state highway maintenance and public transport improvements.
    • some maritime safety activity under section 9(1) of the LTMA.
    • revenue management activities under section 9(2) of the LTMA – like RUC and FED refunds and RUC enforcements and investigations.
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  • What public money is available to cover regulatory costs?

    Previously we have borrowed money from the government to pay the costs of providing public good services. We did this to pay for urgent work to tackle a backlog of 850 unsafe vehicle cases, to address urgent gaps, and to stabilise the regulatory function.  We’ve called these the ‘rectification loans’, and they need to be repaid.

    Under a new section of the Land Transport Management Act, the Minister of Finance and Minister of Transport can now allocate land transport revenue to fund certain regulatory functions of Waka Kotahi.

    Because the allocation of land transport revenue is a redirection of existing money that’s already been paid by transport users, it wouldn’t cost these users anything extra.

    We’re asking for this allocation:

    • to pay for oversight of the regulatory function
    • to help us pay back government rectification loans
    • to fund costs of regulatory services that can’t be efficiently or fairly collected from particular groups.
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Questions about Proposal 2

  • Why reduce the costs of driver licences and remove re-sit fees when lots of other fees are going up?

    The cost of getting or renewing a licence is currently higher than the cost of providing the service. Drivers should only pay the cost to provide the service.

    Incorporating the driver licence tests fees as part of the application fee and removing re-sit fees makes the process simpler, removing agent and Waka Kotahi costs from multiple fees. It makes the fee more consistent across applicants, and provides price certainty and transparency. 

    Making licences more affordable should encourage applicants to continue to move through the licensing system and lead to fewer people driving without an appropriate licence, with an aim to increasing overall road safety.

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  • I studied really hard to pass my driver licence test first time. How is it fair to remove re-sit fees?

    Current driver licence fees are made up of an application fee and a test fee for each stage of a driver licence. If you fail your test, you have to pay again.

    We’re proposing that the driver test fee becomes part of the driver licensing fee (which still decreases) that reflects the average costs for people at each stage in their licence. 

    We know the majority of applicants don’t pass one or more tests the first time, and re-sit fees may discourage people from continuing to move through the licensing system to get a full driver licence.

    Setting a combined fee for each stage of the system provides transparency and cost certainty for applicants. Improved affordability should encourage applicants to continue to move through the licencing system and lead to fewer people driving without an appropriate licence, with an aim to increasing overall road safety.

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  • How did you come up with the proposed costs for drivers licencing?

    We worked out the costs of driver licence applications and testing for each stage of the licence process (learner, restricted and full). 

    Testing fees make up the majority of those costs – the average pass rate (over 10 years) for each stage of a driver test is:

    • Learner theory licence – 55% pass first time/45% fail first time
    • Restricted practical driving test – 33% pass first time/66% fail first time
    • Full practical driving test – 59% pass first time/41% fail first time.

    In terms of costs, the restricted test takes an hour; the full test takes 30 minutes.

    We calculated a set combined fee for the application and testing that reflects the average costs for people at each stage in their licence.

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  • What are P, V, I and O endorsements?

    P endorsement – needed if you carry passengers for hire or reward. You also need a P endorsement if you drive a large passenger service vehicle (more than 12 seats), even if you’re not being paid for it. A small passenger service vehicle has 12 seats or less, including the driver, eg taxi, shuttle, app-based service, private hire service. You also need a P endorsement if you drive for a dial-a-driver service and are driving the customer’s vehicle.

    V endorsement – Tow truck and car transporter drivers are the most common drivers who need an endorsement for vehicle recovery. If you operate a vehicle recovery service of any kind, you’ll need a V endorsement.

    I endorsement – Teaching people to drive for your business, or any kind of payment, requires you to have a driving instructor (I) endorsement on your licence.

    O endorsement – Needed to conduct practical driving tests. To conduct practical driving tests, you must be employed by the NZ Transport Agency, a testing agent contracted to Waka Kotahi, or the NZ Defence Force.

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Questions about Proposal 3

  • What will the increases in motor vehicle fees pay for?

    Motor vehicle licence and regulatory services are provided through our teams internally and our agents.  Motor vehicle licence and regulatory fees and charges cover the costs of trained personnel, agent fees and costs, things like data management, policy development and normal government business costs to support the system to operate well, and repayment of our government loans.

    We need to recover these costs for providing these services - we do not make a profit. We have been undercharging for certain services, and not charging at all for others previously. We’re introducing new fees for services we’ve previously provided for free because there was no cost recovery mechanism established when they were set up. We’re increasing fees where the cost of providing the service is greater than the fee currently paid for it.

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Questions about Proposal 4

  • What will the increases in fees pay for?

    RUC administration services are provided through Waka Kotahi and our agents.  These fees and charges will cover the costs of trained personnel, agent fees and costs, things like data management, policy development and normal government business costs to support the system to operate well.

    We need to recover our costs for providing these services, we do not make a profit. We have been undercharging for certain services, and not charging at all for others previously. We’re introducing new fees for services we’ve previously provided for free because there was no cost recovery mechanism established when they were set up. We’re increasing fees where the cost of providing the service is greater than the fee paid for it.

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Questions about Proposal 5

  • Why are there changes to fees for new TSL?

    Until now, new TSL cost the same whether they were for a single applicant or multiple applicants. But more work is required to process multiple applicants – more paperwork to check, more fit and proper checks, for example - so it costs Waka Kotahi more to process an application for multiple applicants.

    We’re proposing to increase the fee to accurately reflect what it costs us to provide this service.

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  • How would you collect this group charge?
    • TSL holders group (PSL, SPSL, LPSL, VRSL) – charge would be collected in cost of motor vehicle licence renewal for all vehicles under a TSL except light trailers.
    • TSL holders group (GSL and RSL) – charge would be collected in cost of motor vehicle licence renewal for all vehicles under a TSL except light trailers.
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  • What will the increases in fees and charges pay for?

    The increase to fees covers the cost of providing the service through our teams internally and service partners externally. We need to recover our costs for providing these services, we do not make a profit.

    The increase to charges covers the cost of ensuring the system operates as it is supposed to. TSL holders are high risk users and monitoring of TSL holders is undertaken by Waka Kotahi. This will cover compliance activity including auditing, education etc.  It will cover the costs of trained personnel and things like data management, policy development and normal government business costs to support the system to operate well.  It will also contribute to repaying our government loans.

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Questions about Proposal 6

  • If vehicle certification was the area where regulatory failure occurred, why aren’t you charging certifiers for the whole lot?

    Because much of the regulatory failure occurred in this part of the industry, Waka Kotahi did consider charging this group for the rectification component of the loans repayments (see Proposal 1). But our review identified risks across the whole system that need better regulation and so it wouldn’t be fair for certifiers to pay for all those improvements.

    This industry is also very different from the way it was in 2018, as it has been working closely with Waka Kotahi to lift its capability and performance and to eliminate poor practices. Charging the whole certifier group for the failings of a small number of operators who are no longer in the system is also not fair.

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  • Why are you removing application fees for vehicle certifiers and replacing these with charges?

    Certifiers perform a critical safety function, and there are limited numbers of them, particularly Heavy Vehicle Specialist Certifiers. If we don’t retain and grow this group, there could be significant safety and economic consequences in the land transport sector. A reduced capacity to certify heavy vehicles would impact on the ability of the commercial vehicle sector to operate safely.

    These industries have aging workforces and a reducing number of businesses. Reducing the barriers to entry to the industry as much as we can should allow the industry to grow and strengthen.

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  • What will the charges pay for?

    The charges covers the cost of regulating the certifier industry. We need to recover our costs for providing these services. We do not make a profit.

    The increase to charges covers the cost of compliance activity including monitoring and auditing of certifiers to reduce the risk of unsafe motor vehicles being driven on New Zealand’s roads.  This means more trained staff, better information and better systems. We intend to invest in a more sophisticated risk-based intelligence system to better understand risks and monitor performance, along with a new standard setting framework, and a shift from prescriptive standards to outcomes-based standards. It will also contribute to repaying our government loans which funded urgent improvements to the regulation of the certifier industry.

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Questions about Proposal 7

  • Why does this proposal only impact commercial and council data users?

    These are the people and organisations that can make revenue using our data, either by using it to provide their own services or to ensure they can apply their own charges.  They have different IT systems that need to be provided for so that they can access the data. We consider it is fair that they contribute to ensuring the register is current and robust.  We will continue to assess our data users cost every three years to ensure it is fully cost recovered. 

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