4 May 2004

Funding review of passenger clearance services

The government is reviewing how the cost of providing passenger clearance services at New Zealand's seven international airports is funded.

Announcing the review, Finance Minister and chair of the Ministerial Committee on Funding of Border Security, Michael Cullen, said consultations would begin later this month with key users and stakeholders, including airport companies, international airlines, the broader tourism and travel industry, consumer groups, and local government.

“Incidents such as the September 11 terrorist attacks in the United States, the foot and mouth outbreak in Britain and the SARS virus have raised security concerns both in New Zealand and internationally while increasing passenger numbers have created pressure for efficient screening techniques,” Dr Cullen said.

The cost of the new and enhanced passenger services is estimated at around $28 million a year. This is on top of the annual cost of providing existing services, approximately $55 million.

The new services, and their annual estimated costs, are:
-hold baggage screening, carried out by the Aviation Security Service ($21.4 million)
enhanced passenger processing and border security by the New Zealand Customs Service ($5.4 million) and
-enhancements to advanced passenger screening provided by the New Zealand Immigration Service ($1 million).

A special consultation advisory group, nominated by stakeholder groups to speak for them, will be set up to meet regularly with government representatives from May to July.

The consultations will cover:
-how the cost of funding existing passenger clearance services and the new/extended services might be shared between the government and users of the services; and
-how any contribution towards costs which might be paid by users (airlines, airports or passengers) can best be recovered and any resulting charges applied at minimum cost.

Dr Cullen said that ultimately somebody had to foot the bill for the costs of additional security.

“At the moment, the Crown pays about two thirds of the $55 million cost and users contribute one third. The question is whether this is an appropriate mix. The introduction of the new services provides an excellent opportunity to review the funding balance, to ensure that all services are funded in a fair and consistent manner.”

He said that where there was a clear element of public benefit arising from a service, the government would continue to fully or partially fund on a case-by-case basis.

“But we will also be asking the industry and consumers to consider what contribution airports, airlines, and passengers, as beneficiaries of these services, might make to the cost of funding them. The context for this discussion is examined fully in the discussion document we have prepared to support the consultation.”

The discussion document can be viewed on www.treasury.govt.nz/fundingpcs Copies are also available from the Passenger Clearance Services Secretariat: 04-917-7034.

The main proposals outlined in the discussion document are that:

-the funding source of existing services, as well as the new services being introduced, be reviewed;

-different services (customs, biosecurity, immigration, and aviation security) may receive full or partial public funding – depending on the level and extent of public benefit that applies in the case of each of those services;

-any resulting charges will be at least partially “location specific”, that is charges will vary from one airport to another to reflect the different and variable costs of providing those services at each of those locations

-there will be one unified charge covering all relevant costs for providing the range of passenger clearance services, not a number of separate or distinct charges.

Dr Cullen said the government would work with industry and consumer representatives in a constructive way to seek out the best outcome for travellers, taxpayers and the wider travel industry.

The PCS funding review is one of several reviews of border services being conducted by the government this year. The reviews are being coordinated by the Ministerial Committee on Funding of Border Security.

ENDS

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