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TERMS OF REFERENCE FOR TRANSPORT REVENUE EXPERT
ADVISORY GROUP
Context
Improving the land transport system in New Zealand is a priority for the Government. The
National-ACT coalition agreement includes a commitment to implement time of use charging.
To achieve these goals, reviewing the land transport revenue system is essential.
Historically, New Zealand has been a leader in land transport revenue, pioneering the
implementation of distance and weight-based road user charges for heavy vehicles. Despite
past innovations, the funding required to improve the system has exceeded what is collected
from existing revenue tools. This has led to increased reliance on the Crown for financial
support, and underinvestment in infrastructure.
In response to these issues, the Government has reset the approach to transport investment
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as outlined in the draft Government Policy Statement on land transport 2024, which requires
associated improvements to the revenue system.
Given the strategic importance and systemic implications of this work, it is crucial to ensure
that Ministers receive wel -tested and robust advice. To support this, the Government has
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agreed to establish the Transport Revenue Expert Advisory Group (the Advisory Group).
Role of the Advisory Group
The Advisory Group wil be hosted and supported by the Ministry of Transport (the Ministry).
The Advisory Group’s purpose will be to provide specialist and technical expertise to the
Ministry, the New Zealand Transport Agency (NZTA) and the Minister, to ensure that the
Ministry’s advice is provided to the highest standard.
The focus of the Advisory Group wil be to inform the review the policy settings of the current
system and provide recommendations for improvements to the land transport revenue
system including:
• transitioning the vehicle fleet from excise duty to a system of distance-based charging
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• introducing time of use charging
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• reforming road tolling settings
• exploring the role for a range of alternative funding tools, such as value capture
The Advisory Group wil provide advice on the design of land transport revenue tools to
achieve an effective, efficient, and safe land transport system in the public interest. Its
expertise wil support ensuring effective approaches to policy development, legislative
design, and public engagement.
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Draft objectives of review of the land transport revenue system
• Ensure revenue is sufficient to meet Government’s objectives for the land transport
funding system, including improving the capacity to finance capital spending.
• Ensure the financial sustainability of the revenue system.
• Improve the fairness of the system.
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• Improve the economic efficiency of the system (productive, allocative and dynamic).
The Advisory Group wil meet at least monthly. It may participate in meetings and workshops
with the Ministry on key work items and may be asked to review or provide comments on
policy papers.
The Ministry wil provide the Advisory Group with status updates on the progress of advice
and policy development as required. The Advisory Group may also produce short reports or
papers with their advice.
Advisory Group members are solely appointed in an advisory capacity. The policy,
regulations, and legislation to deliver the revenue work programme wil ultimately reflect the
Government’s views and positions, and not those of individual Advisory Group members.
Membership
The Advisory Group will comprise two members (as at May 2024):
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• Scott Wilson and
• Barney Irvine
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Scott Wilson wil chair the Advisory Group. The Ministry wil provide secretariat and
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administrative support to the Advisory Group. From time to time, the Advisory Group may
need to appoint a member to serve as chair for meetings.
Should an Advisory Group member withdraw from the group, the Minister may choose to
appoint one or more new members to replace them.
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Al members have completed a conflicts of interest declaration and background checks
(including criminal records check), to the satisfaction of the Ministry. Al actual or perceived
conflicts of interest wil be lodged with the Ministry. In the event of a potential conflict, the
Ministry wil determine how best to manage it.
The Minister of Transport, in consultation with the Minister of Finance and coalition party
leaders, may appoint additional members to the Advisory Group as necessary.
Deliverables
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The Advisory Group wil not have specific deliverables, but instead be expected to provide
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on-going review and advice primarily to Ministers which wil be considered in conjunction with
advice from the Ministry and NZTA. The Advisory Group may also provide advice to the
Ministry and NZTA, particularly from a strategic perspective.
Ideas and analysis from the group wil inform the development of Government land transport
revenue policy. The Minister of Transport may commission the Advisory Group to provide
technical analysis or advice on a specific topic, review advice or analysis, or undertake other
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work as required.
The Advisory Group may also provide independent commentary or advice to the Minister of
Transport on advice provided by the Ministry.
The Advisory Group may meet with the Minister on an ad hoc basis on specific matters, at
the request of either the Advisory Group or the Minister.
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Decision making
The Advisory Group wil be an advisory body only and wil not have decision making powers.
Any recommendations of findings wil not be binding on the Government.
Members wil not be required to reach consensus on any issues raised. The Advisory Group
may choose to provide advice to the Ministry or the Minister either as individual members, or
as a collective.
Expectations
Advisory Group members shall:
• Prepare for, and attend, each meeting unless extenuating circumstances provide
otherwise.
• Respect confidentiality of specific topics discussed at the meeting, including as
requested by other members.
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• Draft reports and comment on reports drafted by other members presented to the
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Advisory Group.
• Declare any conflict of interest or potential conflicts of interest that may arise.
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• Treat commissions from the Ministry or Minister as a high priority to be completed in a
timely manner.
• Work collaboratively with the Ministry to provide the best quality advice to the
Minister.
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Of icials
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• Organise the meetings and provide administrative support.
• Maintain an Advisory Group member conflicts of interest log and work with members
to manage any conflicts.
• Draft the agenda and circulate it with the Advisory Group members at least three
working days prior to each meeting.
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• Provide updates to the Advisory Group to facilitate their involvement in the agreed
work programme.
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• Be responsible for ensuring accountability, record-keeping and that official
information requirements are met.
Duration
The Advisory Group wil be established in May 2024. The tenure of the group is subject to
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review by the Minister of Transport, who retains the authority to extend its duration or
determine an end date as deemed necessary.
Other matters
Confidentiality and information sharing
1 Ministry of Transport to lead, NZTA and the Treasury to support where necessary.
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• The Advisory Group members should assume that all information presented to the
group, whether writ en or in oral form, is confidential and may not be made public.
• If there is a desire to release the information, Officials wil seek agreement from
anyone who supplied confidential information for confidentiality to be waived.
• Where information is already in the public domain (through no fault of a member or
observer), the confidentiality requirements do not apply to that information.
• Members and observers must comply with the requirements of the Privacy Act 2020
and keep information about identifiable individuals confidential.
• Al information provided to the Advisory Group wil be treated as official information
under the Of icial Information Act 1982 and, subject to the requirements of that Act,
may be released to the public if there are no grounds for withholding it.
Media and public forums
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• Advisory Group members may identify themselves as members of the Advisory
Group.
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• An Advisory Group member may not comment on the business of the Advisory
Group.
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Conditions of Appointment
• Each member is appointed by the Minister. The term of service and reappointments
are made for a duration at the discretion of the Minister.
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• A member may resign from the Advisory Group by informing the Minister in writing.
• The Minister can review and amend these Terms of Reference unreservedly.
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Document 2
22 May 2024
TRANSPORT REVENUE EXPERT ADVISORY GROUP –
Summary note to Minister of Transport
Draft Cabinet Paper - Land Transport Revenue Action
Plan
Background
On 20 May 2024, the Ministry of Transport (“the Ministry”) supplied to the Transport
Revenue Expert Advisory Group (“TREAG”) its draft cabinet paper on the Land
Transport Revenue Action Plan. Both members of the TREAG read the paper and
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exchanged initial comments, then discussed via Microsoft Teams their response to the
draft paper. An eight-page note was prepared and agreed by the TREAG and sent to
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the Ministry on 21 May 2024, followed by a telephone discussion between Scott Wilson
and Matthew Skinner about the main points of the note. The purpose of this summary
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note is to inform the Minister of the TREAG’s key conclusions in relation to the draft
cabinet paper and proposed actions.
Main conclusions
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The paper needs substantial rework. It should be restructured to focus on objectives,
propose principles to guide reforms, pressures/issues with the status quo, the ”case
for change” for the five reform elements and the next steps (including report backs on
those elements).
Of the five elements identified (Fleetwide Transition to RUC, reforming tolling, time-of-
use charging, using the full range of tools and adjusting existing charges), and noting
that no content was provided for time-of-use charging (hence it is not included), three
appear to be reasonably well developed in the draft paper (tolls, the full range of tools
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and adjusting existing charges). There remain some key gaps that need addressing,
but this does not seem likely to be a major issue. The draft Cabinet Paper could be
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drafted to indicate significant progress can be made relatively quickly on these three
reform elements, and on time-of-use charging, but to require further report-back on
the work programme and key issues in the Fleetwide Transition to RUC. This can
demonstrate a series of actions on each of those elements that is achievable in the
short-medium term, providing sufficient time to undertake necessary policy
development work on the transition to RUC.
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The section on the Fleetwide Transition to RUC still requires substantial work – it does
not address critical issues that we expect Cabinet will want to see resolved as part of
any “action plan”. Notably, there is an absence of any mention of a transition plan or
the intention to develop one, and ambiguous wording which raises more questions
than it answers about the direction being taken in reform. In its current form, it does
not appear to have a clear work programme. Although two appropriate principles of
reform are identified (market and technology led), there is insufficient detail, or let
alone context about the cited “implementation plan” of NZTA to give confidence that
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key issues around how the current system works for light vehicle owners are to be
addressed. With an apparent lack of clear principles to guide this, it is difficult to have
confidence in the approach being taken.
Given this element of reform is substantially more complex than all of the other
elements combined, it seems more appropriate for this section to note that a
programme of work to progress this policy is under development. It may note some of
the key issues that the programme of work will address, and that there will be a report-
back on a later date about the progress. Critically, it should highlight that the details of
the “end-state” do not need to be decided now, but that principles should guide the
next steps towards it.
The paper has the appearance of being led by solutions, rather than addressing
problems. There is a considerable risk that this is being led by operational imperatives
identified in isolation, rather than a strategic level SWOT analysis of the current RUC
system. It appears to ignore some major issues. There is, for example, no data on
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current light RUC non-compliance. This is a potentially enormous risk for the fleetwide
transition and the claim in this paper than the transition will “generate marginal
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additional revenue” seems difficult to reconcile with this.
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Other key points
The TREAG also wishes to highlight the following points:
• Objectives are stated as financial sustainability and fairness. “Improving
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productivity” should be another objective, as this is consistent with the GPS and
the wider government policy agenda, as well as the greatest benefit of some of
the reforms (e.g., time-of-use charging).
• Objectives should also include “enabling greater use of financing of capital
projects”, rather than reliance on the PAYGO model, which has long been
recognised as a constraint on capital funding. This supports the objective of
shifting towards a utility model.
• Some underlying principles for designing reforms should be agreed which could
guide officials. This can help policy development, but also communications with
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the public. Recommended principles include:
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o Sufficiency (enough revenue generated to meet spending objectives);
o User pays;
o Ease of understanding;
o Clear objectives (for each reform measure);
o Clear benefits to users;
o Ease of use;
o Difficulty to evade;
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o Cost effectiveness;
o Flexibility;
o Scalability;
o User choice (by technology and service provider); and
o Protection of privacy.
• Problems with the status quo should be clearly listed, and should include:
o Insufficient revenues/capacity to fund capital spending
o Owners of differently fuelled light vehicles pay different amounts to use
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o Long term unsustainability of fuel excise duty
o Congestion is unlikely to be resolved by supply side measures alone
o Lack of flexibility and scalability of existing tools
o Insufficient leveraging of some existing tools (notably tolling)
o Poor connection between what users pay to use the roads and those
who benefit from spending in the National Land Transport Fund.
• There are no initiatives to enable greater private sector involvement in the
provision of RUC, which is unsurprising as there is no indication of the
development of a programme of work, or identification of the issues needing to
be address in the Fleetwide Transition to RUC
• There is mention of a NZTA “implementation plan” around RUC, but insufficient
description of what it is, what issues it seeks to address in relation to the
Government’s policy objectives.
• There is no data provided to explain any of the issues, such as the differences
in what vehicle owners pay, or around RUC compliance or enforcement. Given
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the latter is a critical issue in moving away from fuel duty, it has little mention at
all.
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Description of the proposed measures to reform tolling is unclear, and there is
no description of the likely scale of impact of reforming tolling on revenues and
ability to support financing/funding of major projects. There is nothing about
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reforming the process to approve or regulate newly tolled roads.
• No mention of the review of local government funding tools, which are an
integral part of the system.
• There is little description of the claimed “long term vision” this needs to be
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clarified and may be guided by more comprehensive objectives and guiding
principles.
• Questions are likely to be asked about how a revenue system which raises
considerable funds cannot fund its own upgrades, noting the amount NZTA
charges in fees for relatively simple transactions appears disproportionate.
Proposed actions
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It was recommended that the Ministry restructure the Cabinet Paper as described,
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focusing on the objectives noted, principles to guide reform, issues with the status
quo and the case for advancing the five policy measures proposed. Of the five
policy measures, a further report back will be needed on the Fleetwide Transition to
RUC as that work programme does not yet appear to have been finalised, but the
key elements of the other four measures are sufficiently well developed to be refined
further in the paper.
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Document Outline
