PROPOSED NZ RUC REFORMS : Questions and Answers

1. What changes are being proposed to RUC?

The Government has approved a package of changes to the RUC system. The key reforms relating to Heavy Vehicles (HVs) comprise of:

1. Change to the definition of licence weight from actual gross weight to a definition based on maximum permissible on-road weight.
2. An improved regulatory framework to encourage the adoption of electronic RUC management systems.
3. Improved RUC compliance through:
   
   • more stringent regulations around hubodometer and odometer tampering;
   • transport service operators being required to keep RUC records for 7 years;
   • the government having assessment powers similar to those available in relation to other forms of taxation;
   • vehicle inspectors being required to report odometer readings to the NZTA as part of CoF inspections and NZTA using those readings to check RUC; and
   • updated offences and penalties.

2. How will gross weight be calculated?

The definition of weight for RUC licence purposes will be changed to a new “RUC weight”, based on the lesser of either:

• manufacturer’s specified gross vehicle mass
• gross vehicle mass under the Vehicle Dimension and Mass Rule 2002 (the VDAM Rule).

The NZTA IT system is not currently equipped to handle the new weight definition and there could be delays associated with updating the agency administrative systems.

3. What is EROAD’s view on the proposed RUC Reforms?

EROAD supports the Government’s latest moves to simplify and modernise the RUC system. The Government has made it clear it will encourage the take up of new technology to lower compliance costs, and improve returns for compliant operators.

Over time EROAD expects the Government to move away from paper-based RUC towards a modern internet based system in line with the rapid global move towards cost effective and customer focussed eCommerce service delivery models, such as internet banking and eTickets.

4. What will happen to supplementary RUC licences?

Supplementary Licences will continue to be available to enable operators to increase the licence weight of their vehicles for short distances. However the proposed RUC weight definition makes this provision redundant in most circumstances.

Although no details have been provided, Supplementary Licence payments are likely to still apply for High Productivity Motor Vehicles (HPMV) that are issued with permits to operate above their normal gross mass under the Vehicle Dimensions and Mass Rule 2002.

5. How will the proposed gross weight regime affect HV operators?

The proposed move to gross weights will mean operators no longer have to estimate the actual weight to be carried by a vehicle during the journey. In general vehicles that are similar will pay similar levels of charges.

The biggest impact is likely to be on the existing level of RUC charges paid by individual vehicles relative to the status quo. Many operators will face increased charges, while others will enjoy windfall gains from lower RUC costs. Although a review of the RUC cost allocation model will precede the RUC reforms, and is likely to affect the final distribution between winners and losers, the amount of funds that need to be collected from HVs will remain unchanged and indeed continue to increase inline with infrastructure requirements.

6. What about the level of charges between light and heavy vehicles?

The Government has ruled out any significant shift in the overall distribution of charges between HVs, and light RUC vehicle, and cars.

This means that HVs as a group will continue to pay the same amount as at present, covering the road damage they are responsible for.

7. When will the changes come into effect?

The reforms represent the most significant changes to the RUC system since it was introduced in 1978. As such the Road User Charges Act 1977 and the Road User Charges Regulations 1978 will need to be replaced with a completely new RUC Bill and Regulations. In addition a review of the RUC cost allocation model will precede legislative changes.

The RUC reforms will necessitate formal consultation, followed by extensive policy, legislative and implementation processes. The MoT has stated that it is currently expected that the new RUC Bill will pass in early 2011 and that changes will come into effect a year later in mid-2012. Given that 2011 is an election year the implementation timetable could be extended to 2013.

8. How do the changes affect the benefits clients receive from EROAD’s eRUC service?

Until the move to gross weights is implemented, not expected for at least 2 years, the proposed RUC changes will make absolutely no difference to the high returns EROAD clients obtain from EROAD’s innovative eRUC service.

If implemented the new RUC regime will affect the ability for some operators to optimise RUC weights, but overall the ROI is likely to stay the same and probably increase for EROAD clients. In particular:

1. Every trip can be AutoRUCed for improved cashflow, almost zero administration cost, and full legal compliance – just set and forget!
2. Optimal management of off-road claims with EROAD’s accurate and automated eRUC system will become more valuable with higher RUC charges.
3. Distance accuracy from using the Ehubo will become even more crucial. A mechanical hubodometer can increase distance recorded by upwards of 7% from tyre wear and in excess of 10% from faulty operation.
4. Increased enforcement scrutiny will raise costs associated with mechanical hubodometer failures and accidental non-compliance.
5. The EROAD system automatically archives 7 years of RUC history on behalf of clients as required under the proposed regulations.
6. High returns from the ability to electronically purchase and display Supplementary Licences will be significant for any operator using HPMVs.
7. Managing changes and adjustments to the system now and in the future is a lot easier using the EROAD eRUC system.
8. Opportunity to benefit from an increasing range of value-added services available on the EROAD system.

The EROAD eRUC system will continue to deliver an outstanding return for clients from significant administrative savings, improved cashflow, better control and fewer hassles.