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Vehicle licensing could be made simpler and fairer

Vehicle licensing could be made simpler and fairer

The Motor Trade Association (MTA) says including the vehicle licensing fee or at least part of it, up front in the cost of fuel, would be a more efficient and fairer way for Government to achieve what it is seeking in its current Vehicle Licensing Reform review.

The reform is a joint NZ Transport Agency and Ministry of Transport review of annual vehicle licensing (commonly known as registration), warrant of fitness/certificate of fitness and the transport services licensing systems. Its purpose is to consider opportunities to make each of the systems simpler and more efficient, without compromising safety.

Announcing the review earlier this year, Minister of Transport, Gerry Brownlee said “The almost $1 billion that comes in from annual vehicle licensing is important for ACC and contributes to transport infrastructure and services, so it needs to be collected efficiently.”

Currently, drivers need to relicense their vehicle annually, with a choice of 3, 6 or 12 monthly instalments in a system that involves millions of transactions each year. The fees collected help to pay for a range of transport projects and services, such as roads and public transport, and vehicle safety programmes. The ACC Motor Vehicle Account levy is also collected through this process and is currently the largest portion of the relicensing fee.

MTA says collection of this fee could be made much simpler, fairer and would better reflect both the amount of wear to the roads caused by vehicle use and the safety risks a driver is exposed to if it was included as a tax at the pump.

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MTA spokesman Ian Stronach says “Including licensing fees at the pump would mean that drivers couldn’t avoid the costs of licensing and the need for an expensive label system could be eliminated. It would be fairer to all road users with everyone paying in proportion to their use of the roads; if they use fuel then they are automatically contributing to the costs of the system. It’s a simple solution.”

Potential savings include reduced costs in managing the National Vehicle Register ($39M per year) with both vehicle and ownership data being validated at the time of a WoF inspection.

Those travelling further each year would pay more due to the higher wear and tear they cause to the road system, while the additional ACC levies they would pay would reflect the increased time they are on the road and thus exposed to crashes or injury. Drivers travelling fewer kilometres would pay less overall.

The system could be refined even further if vehicle liability (Third Party) insurance was to be made compulsory, as has previously been suggested. All drivers would need to have a relationship with an insurance provider, who would in turn be able to rate drivers individually for risk, rather than using the blanket approach that currently prevails. This again represents greater efficiency and fairness; good safe drivers would not have to subsidise the irresponsible.

The reforms are seeking, amongst other things, ways to remove the heavy burden that traffic offences place on the court and justice system. Around 250,000 offence notices (approximately $38M) are issued each year against unlicensed vehicles, with the attendant fines sometimes difficult to collect.

MTA believes Government can reduce their costs as well as those to consumers, remove the need for fines to the public while at the same time improving the quality of vehicle data for ownership and enforcement. With the Minister looking for greater efficiency within the licensing system, simplifying the way the fees are collected is a straight forward solution, across all fronts.

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