CAA funding and the fuel levy: It ticks all the boxes except the one marked ‘Too hard’

The CAA feedback summary. For a copy, click on the link at the end of the story

The CAA feedback summary. For a copy, click on the link at the end of the story

Based “on information to hand, the CAA Board does not support the introduction of a fuel levy”.

This is the hidden headline in the CAA’s summary of feedback to its Stage 1 consultation. Hidden, in fact, on the final page of its document. In one throwaway line. Yet this was the most significant and most widely supported suggestion made by respondents to Stage 1 of the CAA’s funding consultation feedback.

Unfortunately, the CAA has so far declined to put its “information to hand” into GAA hands and from there into the public domain. Instead, it says that the Ministry of Transport is studying the feasibility of a fuel levy. But we know that the ministry has already stated that it considers a levy would be difficult to introduce. And when the sclerotic Ministry of Transport completes its feasibility study, the result will conveniently come too late to influence the CAA’s charging policy from 2015 to 2018.

The suspicion is that the “information to hand” indicates to the CAA Board that Air New Zealand will dramatically spit the dummy if this idea gets anywhere near birth. It would also cause friction between the Minister who oversees our publicly-controlled airline, the Prime Minister who watches over tourism and the Minister of Transport, who rules the CAA and nods to the Treasury.

When we asked CAA Director Graeme Harris to supply the “information to hand” on which his Board was basing its published opinion, he asked us to ask the Ministry of Transport to tell us what it had told his own CAA Board, and not ask him. Getting the picture, folks? Sure, it’s foggy – and it looks deliberate.

So, despite the reasoned arguments of the Aircraft Owners and Pilots Association of New Zealand and a good many others, it is likely that the CAA will consign the fuel levy proposal to its “too hard box”.

Yet this idea ticks all the boxes in the Treasury’s definition of user-pays. The more any participant in the aviation system uses it, the more they pay to sustain the CAA. Like GST, it’s delightfully simple, because only the ultimate user pays – whether they be an airline passenger, a private pilot or just somebody who needs a part for the tractor to be delivered by air from Auckland to Westport.

Sorry, I almost forgot: Westport is about to fall off Air New Zealand’s radar…

Why should microlight pilots pay tax for roads on fuel they put in aeroplanes?

Why should microlight pilots pay tax for roads on fuel they put in aeroplanes?

The idea seems no more complicated than tax on mogas, bought by microlighters at the local service station. Part of the per-litre cost contains some money which goes towards maintaining highways which microlight pilots pray their aeroplanes will never have to use. That this tax component might be diverted by the Ministry of Transport and the IRD to help fund the CAA instead is a  question that the Transport Minister and his officials have been unable to cope with.

GAA tried to begin a dialogue about this with former Transport Minister Brownlee back in June 2013. We reminded him of his oft-stated political declaration that cross-subsidisation is neither appropriate nor fair and Treasury guidelines state that, to deal equitably with the taxpayer, determination should be made as to who benefits from the output and/or those whose actions give rise to it. The Minister eventually agreed to refer the matter to his officials in the MoT.

An entire year passed and then, in July 2014, we were advised by the Ministry that it planned to consult with a selected group of stakeholders on the content of the refund regulations in December 2014, in advance of consultation on ACC regulations. This means that the government won’t be able to consider any changes to the refund regulations until after the official ACC consultation in late 2015.

Meanwhile, of course, the status quo continues – with aviators cross-subsidising roading projects, which is neither appropriate nor fair. And it breaches the Treasury doctrine.

Gerry Brownlee: His record as Transport Minister is open to question

Gerry Brownlee: His record as Transport Minister is open to question

Sorry, I almost forgot. Brownlee was made Minister of Defence because he couldn’t be seen to resign as Minister of Transport for barging through Christchurch Airport’s security. He got a $2000 fine (but no court appearance) from CAA Director Graeme Harris. This is the ministerial equivalent of a wet rail ticket to Gisborne – and the investigation was oh-so-carefully scrutinised by a Queen’s Counsel. We just hope that Mr Harris applies the same level of due diligence to his next problem with some Pilot Joe Public and that the new Minister of Transport pays truer diligence to his email inbox than Brownlee did.

Instead of a fuel levy, the CAA seems keen on revisiting and rationalising the passenger levy. This is good news because we can see a vague hint that, in doing so, the CAA may be trying to repair the damage it wrought by punishing what the Treasury said was the User: the general aviators.

GAA, AOPA and others might have lost their complaints to Parliament’s Regulations Review Committee simply because the authorities correctly imposed an unfair set of regulations, but the resulting damage is now obvious. What was done in 2012 caused great harm to aviation in New Zealand and if the CAA’s current cost structure continued, it would cause even more.

We see hints of change, in the CAA’s summary of feedback. We can expect a revision of its charge to anyone applying for a medical examination (and hopefully the abolition of it, to be replaced by a small administrative fee). The authority’s claim that the charge also covered other costs of its medical unit was never credible and because of that, it fell short of the user-pays benchmark.

We may also see a change in the mechanism by which charges are approved. Currently, they are made by regulation, which restricts the authority’s movement in making revisions when errors are identified. This is why we were stuck with the medical application fee for three years. Finance Minister Bill English is on record in saying he would like to make it easier for the CAA to make changes within a pricing cycle, rather than at the end of one.

It’s expected that passenger levies will be equalised between national and international travellers, and that a cargo levy will be introduced. This is edging us closer to user-pays.

What is troubling is that the CAA has given its clients no clues about the authority’s projected operating costs for 2015 to 2018. Significantly, while it makes a broad-brush claim to have reduced costs and increased efficiency, it fails to provide any evidence – and none has been seen since 2012.

In August 2014, GAA attempted to discover what efficiency gains have been achieved by the CAA since the Martin Jenkins Value for Money Review of 28 February 2011.

Click here for a PDF copy of the GAA CAA Cost-saving Questions.

The letter was eventually treated as an Official Information Act request and the CAA replied:

“Pursuant to section 15(1)(a) of the Act, the CAA may charge for the supply of official information. Because of the scope of the information covered by your request, it will be necessary to impose a charge for making the information available to you.

The CAA charges are consistent with the Ministry of Justice’s Charging Guidelines for Official Information Act 1982 Requests.

We estimate that it will take 40 hours to process your request. The standard charge imposed for Official Information requests by the CAA, in accordance with the Ministry’s Charging Guidelines is $76.00 per hour; this puts the total estimated amount to be charged at $3,040.00.

Under section 15(3) of the Act, the CAA requires 50% of the estimated charge to be paid in advance, with the balance payable on invoice once the final charge has been calculated.”

This has a distinctly hollow ring. If the CAA is claiming to have made improvements, it must already have the detail to back the claim. If it doesn’t, the authority’s claim fails – therefore, why should GAA fund the authority to research itself? It’s also possible to imagine the Charging Guidelines are being misused in order to discourage requests made under the OIA, and we’ll be keeping a beady eye on how the CAA carries on in this respect.

It is tempting to surmise that

♦  the CAA’s budget is unknown to itself, and perhaps poorly controlled, and that

♦ passengers and cargo carriers will simply be made to contribute more to support a bloated bureaucracy, while general aviation will be placated by token reductions in charges.

That will help no one but the people in Asteron House.

Stage 1 of the CAA consultation plan involved asking us who should pay. Stage 2 will provide us with information about how much it will cost.

But the CAA has missed the important middle stage, where it tells us who it has decided will pay – and invites more feedback. Getting it right is better than meeting a deadline, as 2012 proved.

In overlooking Stage 1B, the authority sends a clear message to aviators:

Our vision of consultation is not the same as yours.

Here’s a shortcut to the CAA’s 2014_funding_feedback