IFA Denounces Two-Day Notice of Road User Charge

Media Release 20 April 2007

IFA Denounces Two-Day Notice of Road User Charges Increase

The major freight and forwarding industry group International Forwarders Association (IFA) is outraged that the government raised road user charges at the beginning of April with only 48 hours’ notice to businesses.

IFA President Brian Broom said that his group’s objection was not only the large increase in rates but also the short notice, with the lack of warning from government meaning many businesses were caught short. “We represent 13 businesses with major global and local representation, and over the past three weeks we’ve been getting consistent feedback from our members. They’re telling us these charges need to be passed directly on to our customers, as the increases are unable to be absorbed by the businesses themselves. This means that ultimately the end consumer will bear the cost of these increases.”

The average 11% increase in road user charges for vehicles over six tonnes is the first increase since 1989. Road user charges are bought from authorised agents, including Land Transport New Zealand and the Automobile Association, and are based on the vehicle’s laden weight and the distance the operator intends to travel.

John Sargent, IFA Secretary and Sales Director for Mondiale Freight Services, said the Government’s decision to increase road user charges at some level may be warranted, but he considered in particular the lack of notice to be unconscionable. “The announcement was made on 30 March, and the change came into effect on 1 April. Businesses received no direct communication at all, because the Transport Minister didn’t send any correspondence. Even the organisations which sell road user charges were given only one week’s notice, so they didn’t have time to advertise the increase to their customers.”

Acting Transport Minister Harry Duynhoven is quoted as saying the rise was necessary to ensure that all vehicles are contributing their fair share of roading costs. He noted that vehicles over six tonnes cause a disproportionate amount of wear and tear to roads.

Mr Broom said in discussing the issue with IFA members, he had found transport companies largely accepted the increase, but believed Mr Duynhoven failed to appreciate how the suddenness of its introduction was hurting businesses. “This is going to affect all New Zealanders. If a company that traffics consumer goods to supermarkets immediately has to pay 11% more than it budgeted for, Kiwis are going to find themselves covering that cost at the check-out.

“The Minister has not handled this well, and given the importance of this issue to the New Zealand economy we are dismayed at the lack of notice and consultation at any stage of the process. Even now that many groups have tabled legitimate concerns, he appears quite unsympathetic and unconcerned. Possibly Mr Duynhoven was not prepared for the reaction. He had to front the issue because Annette King, the Transport Minister, was overseas when the increase was announced.

“One question the Government needs to answer is: Do all the taxes collected for roading improvement and maintenance get spent on roading?”

Mr Sargent said there was now a clear choice for many transport companies: raise charges or go out of business. “Many companies, particularly smaller ones, will be running at a loss during the transition period, and that isn’t sustainable for long. The Government needs to justify the abruptness of this increase and try to work with business to ease the transition.”

The Road Transport Forum, which represents trucking companies, is now lobbying the Government for a deferral of the introduction date of the increase, a move the IFA supports.

“The Government’s defence of the two-day notice period has been that customarily when there is an increase, they don’t give much warning because businesses would buy heavily before the increase came into effect,” Mr Broom said. “In our view, that attitude is unfair given the importance of the transport industry to New Zealand, and the effect the suddenness of this increase is going to have on consumers. With the complete absence of consultation, the Government seems unprepared for the impact this move is going to have.”

ENDS

About the IFA
The IFA is an industry group which was formed in early 2004 to represent New Zealand’s air and ocean freight and forwarding industry. The company is represented at GM or MD level. It has 13 national members with significant global representation: DHL Global Forwarding, Mondiale Freight Services, Schenker, Panalpina, UTi, Fliway, Expeditors, Hellmann, GV International Freight, Eagle Global Logistics, Vanguard Logistics Services, Express Logistics, and Kuehne + Nagel.

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