Cost Recovery for Passenger, Aircraft and Vessel Clearance at the Border

11 February 1998

Background  Information

Introduction

The Government has decided to move to fully recover the cost of the clearing of passengers and aircraft and sea craft at the New Zealand border. This will be effective from 1 January 1999. It is proposed that a charge on port companies (i.e. sea or airport) be applied, rather than a general passenger tax, unless consultation with those companies shows that there is a more effective way to recover these costs.

The charge to each port will depend on the costs of providing the service at that port. Officials will be consulting with port companies at the end of February 1998, and will report back to the Cabinet on implementing the decision by 20 March 1998.

Background

Following extensive discussion the Cabinet decided that costs will be recovered. Late last year the Cabinet directed officials from the Ministry of Agriculture, NZ Customs Service and NZ Immigration Service to address:

  • The basis for the charges.
  • Methods for setting and collecting the charges.
  • Ways to ensure that the charge to each port reflects the conditions which exist at that port.
  • How the level of charges would be fixed, reviewed and adjusted.
  • Legislative changes which would be required. and
  • What efficiency gains would result from the new system.

The officials from the above departments consulted the Department of Prime Minister and Cabinet, the Treasury, the Ministry of Foreign Affairs and Trade and the Ministry of Transport on the issues.

Issues relating to implementing the charge are the key focus of consultation meetings during late February. Some of the thinking behind how officials addressed some of the issues is outlined below.

Basis for the charges

The cost to the Crown (and therefore to taxpayers) of providing border services in 1997-98 is expected to be $31.67 million (it is noted that NZIS's costs are recovered from visa/permits). Of this, some 15% will be recovered through charges. The charges were mainly imposed on Palmerston North, Dunedin and Hamilton airports. These airports recently began offering international flights. International airports at Auckland, Christchurch and Wellington are charged for some immigration and customs services. No charges are levied on sea ports.

The essential basis for recovering the cost of border services flows from a number of factors. These include:

  • International passengers arriving in New Zealand expose our community and environment to a range of biosecurity risks.
  • Some international travellers present other risks e.g. weapons, drugs and pornography.
  • Increasing visitor arrivals are placing greater demands on existing border services.
  • Border services must be delivered in the most efficient and effective manner.
  • Border control services should be fair to existing and new players.
  • All ports must be treated equally under the new arrangements.
  • Charging port companies appears to be the simplest and cheapest means of collecting payment because it involves the least administration - but this is subject to consultation.
  • The proposed policy will transfer the cost of the services from New Zealand taxpayers onto the users of the service (i.e. international travellers).
  • About half the people serviced at New Zealand ports of entry each year are non-residents (but most of their border clearance services are currently paid for by New Zealand taxpayers).
  • The charge will have little material effect on the travel costs of tourists.
  • Four other countries including the United States and Australia have similar direct charges for border clearance.
  • Standards of border control will remain firmly in Government's hands.
  • A user charge can lead to operational efficiencies through greater accountability and transparency.

Methods for setting and collecting the charge

Two main methods were explored - charging passengers directly or charging port companies. On balance, officials from MAF, Customs, Immigration, Transport and Treasury jointly agreed that charging port companies was better for the following reasons:

  • It would place an incentive on individual companies to provide resources necessary for an efficient service at their port, in turn, reducing costs to them and to passengers.
  • The efficiency and costs of the service would be more transparent to the buyer of the service
  • Administrative costs for the Crown would be minimised.
  • The fiscal risk to the Crown would be minimised.

Ways to ensure that the charge to each post would reflect the conditions at that port

The charge to each port should reflect only conditions in that port. Different ports handle different numbers of passengers and use different ways to process those passengers. Officials saw this as a critical issue when deciding what charge might be imposed on each port. This will be an essential part of consultation on how the Cabinet's decision is implemented.

Consultation Meetings

Meetings will be held with key industry players during the last week in February. The meetings will be held in Auckland, Hamilton, Palmerston North, Wellington, Christchurch and Dunedin.

  

 

Last Updated: 08 September 2010

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