Linz Overcharging Nets $40m Pot of Gold

21 JANUARY 2016

The Taxpayers’ Union can reveal that Land Information New Zealand has overcharged New Zealanders by $40 million for its "Landonline" service, despite the requirement that is it to function on a cost-recovery basis.

Data from LINZ shows the account as having a forecast surplus of $40.284 million at 1 July 2016.

Taxpayers' Union Executive Director, Jordan Williams, says, “Landonline is the LINZ service used to change and order copies of land records. When Kiwis buy or sell a home, they are being forced to pay well in excess of the costs need to run the service. Housing already costs enough in New Zealand without the Government clipping the ticket on the way through. It's not right.

"Government agencies are required to operate these monopoly services on a cost-recovery basis. LINZ appears to be ignoring that."

"The Minister for Land Information needs to ensure her officials cut the costs of Landonline and stop price gouging for access to this core government service."

Data obtained from Land Information New Zealand can be found here.

Q&A

What is Landonline?

Landline is the transaction centre for carrying out land dealings online. Every time a real property is sold in New Zealand, the record is entered into Landonline. More information can be found here.

What are the current charges?

Licence fees vary between $511 and $1022, a breakdown for fees can be found here. These fees are passed onto sellers and vendors of real estate.

Why is there a surplus?

The surplus is due to Land Information New Zealand charging more for the service than it costs.

Why is making a profit on Landonline inappropriate?

Landonline provides a service, which costs money to run, but over which the government holds a monopoly. When fees are set higher than what is required for the service, the government is making money from a monopoly service.

How did the Taxpayers' Union find out about the Landonline surplus?

The Taxpayers' Union runs a confidential tipline for New Zealanders to dob in government waste and rorts. Late last year a concerned member of the public approached us about LINZ's excessive fee charging.

What is a memorandum account?

Memorandum accounts record the accumulated balance of surpluses and deficits incurred in the provision of certain outputs on a full cost-recovery basis. These accounts are used to separately disclose the cost of such outputs over the years, given that such information would otherwise just be aggregated as part of an entity's financial position.

In general, full cost-recovery (including the capital charge) applies where departments supply services to third parties in the absence of competition or under a statutory monopoly.

Except where prior approval for alternative arrangements has been obtained from Treasury, departments must use memorandum accounts to record the accumulated balance of surpluses and deficits incurred in the provision of third-party fully cost-recovered outputs.

What should happen now?

The fees charged for users of this service should be reduced to a point where the surplus is distributed and it is operating on a cost-recovery basis, in accordance with Treasury’s advice.

ENDS

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