Motor Industry Associations submission to ACC

10 November 2009

Levy Consultation

ACC

PO Box 242

Wellington

6140

Email: consultation@acc.co.nz

1. Introduction

1.1 This submission is made by the Motorcycle Group of the Motor Industry Association (MIA), the national organisation representing the interests of all main motorcycle manufacturers, importers and distributors. The brands represented by this organisation are listed on our website at www.mia.org.nz

1.2 While our membership comprises commercially focused companies it is important to emphasise that they all have a commitment to the safety of their customers, not only through the quality and design of the products they sell, but also to any other aspect which has a relationship with the safety of riders of Powered Two Wheel (PTW) vehicles. For the purposes of this submission the acronym PTW will be used where it is intended to encompass all such vehicles, including scooters and mopeds.

1.3 The MIA actively engages with all government and other agencies on road safety issues and wishes to participate in a positive dialogue with ACC to develop an effective road safety improvement and fair taxation (levy) system for motorcyclists and other riders of PTW vehicles.

2. Position on principles

2.1 While we are participating in this consultation process it is a matter of concern that the timing is wrong because larger ACC structural issues such as the decision to extend the date ACC had to be fully funded by from 2014 to 2019 are also being debated. This means that insufficient resources and time are being focused on the detail of the levy setting principles and processes.

2.2 Another important issue related to timing is the current processing of the 2020 road safety strategy document recently released by the Minister of Transport. Integration between all government road safety initiatives is crucial to achieving positive outcomes. ACC levies and the injury prevention programmes have a specific relationship with reducing road trauma and the process through which change evolves should be timed to coincide with the Government’s primary road safety strategy development. A summary page of our submission on this document is attached.

2.3 There is an inevitable relationship between the funding processes (levies) and the fiscal performance of ACC. Over time as the ACC accounts have developed more complexity that relationship has been obscured to the point where the balance between overall income and costs is very difficult to unbundle. If, for example, ACC was in a good financial position would there be the same apparent urgency to apply what can only be described as draconian increases in some sectors of the Motor Vehicle Account?

2.4 The Motor Vehicle Account shift to an even stronger “user pays” approach pushes to one side any suggestion of a claim that this is a “no fault” system and ACC and the Government need to be honest and acknowledge this. The Motor Vehicle Account is actually based on a blame principle and to describe this as “user pays” is just obscuring the truth. The irony is that because there is a convenient levy collection system (the registration database) that blame is placed on the vehicle, not the operator, which is in fundamental conflict with a basic road safety principle.

2.5 In his First Reading Speech on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill 2009 on 27th October, the Minister for ACC made the following statement;

“The Government and ACC should be better rewarding those motorists and employers who have got better safety records.” 

We agree with the Minister – taxing vehicles by category is a fundamentally flawed principle but if this is the only way that levies are going to collected there must be some way of recognising individuals who do take responsibility for their own actions and choices on public highways.

2.6 This principle should apply to all beneficiaries of the motor vehicle account, including cyclists and pedestrians. If it is not possible to put any levy collection process in place for these and other categories of road users who do not contribute to the account, their costs should be funded from another account which could clearly demonstrate what those costs are. It is understood that this analysis is not possible at present.

2.8 In the same speech the Minister also said

“A difficult part of the Motor Vehicle Account is the extent to which the account is funded by petrol levies or registration fees. The amendment in this Bill gives the Government greater flexibility to be able to use the petrol levy for residual claims.”

We are also supportive of an amendment which enables raising the petrol levy portion for funding residual claims because we consider the majority of cost recovery should take place through this mechanism. The principle of “the more miles traveled the greater the tax contribution made” is a much fairer approach and is in alignment with efforts to promote more efficient use of fossil fuels.

3. The proposal to add complexity to the motorcycle classifications

3.1 Segmentation of PTWs into sectors based on engine size is a fundamentally flawed approach. Engine size has nothing to do with the safety related design characteristics of a PTW and the fact that ACC or MOT statistics show that riders of larger units feature more in the stats says more about the rider rather than the vehicle they are riding. There are many over 600 cc motorcycles which are much safer than smaller bikes – lower centre of gravity, less powerful (in terms of kw output), larger rubber footprint and often slower.

3.2 It is understood that the cost of ACC claims may be higher on larger motorcycles than on smaller units. This may be more a reflection of the employment status of the rider – motorcyclists who can afford larger bikes have higher incomes.

3.3 It is difficult to understand how on the one hand MOT have been arguing that scooters do not require the application of component compliance rules because they don’t feature in the accident data while ACC maintain a different view to justify the massive increase in levies on these PTWs, an increasingly popular, efficient and environmentally green form of road transport that helps keep the workforce mobile.

3.4 It is not possible to accurately predict what the market impacts of the segmentation of levies will be but clearly there would be shift in demand which won’t necessarily result in a better road safety outcome. A buyer may purchase a smaller motorcycle in circumstances where a larger bike may have a better safety specification. This proposal ignores the segmentation suggestions in the Safer Journeys document which are a much more sensible approach if segmentation must proceed.

3.5 We would be very interested to see any evidence which demonstrates that riders of smaller PTWs consider that it is unfair that they are “cross subsidising” riders of larger units. The absence of such evidence leads to a conclusion that this proposal is based more on ideology and bureaucratic intervention rather than any concern on the part of those riders of smaller PTWs. All taxation involves cross subsidy and all PTW classes can attract the same levy. As an aside on the issue of “cross subsidy” it would also be interesting to know how many car drivers have made any formal complaint to ACC about their “cross subsidisation” of their fellow PTW road users.

4. The proposed levy amounts

4.1 There is a great deal of confusion regarding the data on which the levy proposal calculations are based. Statistics from ACC and MOT are quoted but the detail of how this data is collected and analysed is absent. There is an apparent public mistrust of the statistics and the only way this can be overcome is by an in-depth independent audit of the analysis. For this reason this submission will not discuss the statistics in detail.

4.2 In the case of scooters and larger motorcycles the levy amounts are very large and will result in avoidance and a greater need for registration regulation enforcement which will be a cost to the taxpayer. A tax increase of this magnitude is unreasonable by any standards and if it were to be suggested in any other taxation forum would raise an even greater public outcry than has been evident since these levy proposal announcements. The usual approach to such a massive tax increase would be to phase it in over a period of years. If these large increases are adopted this is the approach which should be taken.

4.3 Another relevant issue relating to a taxation increase of this magnitude is that the stock disposal and ordering timelines relating to sourcing products from manufacturers would mean that the market effect of any announcement of a tax increase of this size would mean that dealers and distributors would be left holding unsaleable stock and an inability to make adjustments to stock orders within the logistics timeframes.

4.4 The Injury Prevention, Rehabilitation, and Compensation Amendment Bill 2009 includes provisions to increase the petrol tax proportion of the total levy. This organisation has consistently argued that the greater part of the levy should be funded through this tax and is a less market distorting approach. This is particularly true in relation to the larger registration levy proposals.

5. A more positive approach

5.1 There is nothing in the consultation document which will lead to a reduction in deaths and serious injuries arising from PTW accidents on public roads. It is essentially a cost recovery proposal which takes a negative perspective of motorcycles and those who ride them. This negativity was echoed in the paid advertisements taken out by ACC and published in the main centre daily newspapers on 5th November. In fact this approach will probably lead to shrinkage in motorcycle and scooter registrations which will only reduce the tax base from which the Motor Vehicle Account is funded. This does not make sense.

5.2 For many years this and other organisations have been advocating for more positive action on the part of the Government when it comes to the regulatory environment for PTWs. The ACC levy system is part of that environment and we wish to see more forward looking and positive government strategies to address the core issue – how to reduce road trauma associated with those New Zealanders who choose to use an increasingly popular form of road transport.

5.3 The Minister of Transport has shown this initiative with the release of the “Safer Journeys” suggestions which are currently being processed by officials. We strongly believe that the issue of ACC levies is a key part of that process, whether it be by way of looking at the possibility of incentives being incorporated into the levy structure, or through influencing behaviours such as purchasing decisions and road safety awareness.

5.4 This requires better integration between government agencies and organisations such as ourselves to implement policies and processes which are agreed by all parties and which will improve current road safety outcomes. The leadership for such an initiative needs to come from the Ministry of Transport and while the purpose of this consultation process may not be aimed at central government structures and management frameworks we think that as a key stakeholder in road safety, ACC should advocate for a new and more effective approach to integrating all government agencies to develop and implement a long term Road Safety Plan, not just for PTW riders but for all road users.

5.5 This has already started with the Minister of Transport’s initiative and we will be advocating through that process over the next few weeks for the establishment of a new consultative body to be set up – and that the issue of the level of levies and how they are collected and administered should be considered within such a group. We would wish to take an active role in the group. The precedent for such an approach already exists in the State of Victoria.

6. Conclusion and recommendations

6.1 In summary the MIA is very concerned that the proposals as contained in the consultation document will not reduce deaths and serious injury arising from PTW accidents on public highways. In fact the reverse effect may occur with the added dynamic of a reduction in income arising from levy avoidance and sales reductions giving rise to a higher ratio of cost per registered PTW.

6.2 ACC levies and their administration are a key aspect of the government’s road safety regulatory environment and should be considered within the framework of the 2020 Road Safety Strategy consultation process. One of the outcomes we wish to see from that process is the establishment of a more effective consultative body which we would wish to be a part of.

6.3 This organisation has been making submissions on the annual levy setting process for many years and we have never had any formal response to the points made in our submissions. We appreciate that the volume of responses is such that it would be difficult to do this for all who make submissions but as a national organisation representing a significant part of the motorcycle community we would appreciate some feedback and more dialogue before final recommendations are made to the Minister.

6.4 Recommendations:

a. Defer timetable and integrate all of the issues relating to ACC levies on PTWs within the framework of the 2020 Road Safety Strategy development process

b. Establish a new motorcycle consultation group chaired by MOT which also includes overview of ACC levy issues

c. Implement and publish an independent audit of the levy setting data analysis

6.5 If these recommendations do not proceed

a. Retain existing classification for PTWs

b. Increase contribution from petrol levy to a maximum proportion of the total levy.

c. Phase levy increases in over a minimum of three years

We look forward to further dialogue on theses issues before any final recommendation are made to the Minister

Sincerely

Clive Hellyar

Motorcycle Group

Motor Industry Association