LINZ is reviewing its fees and charges to make sure they are fair and easy to understand.
The review will also ensure that we have the resources to perform our statutory and regulatory functions and sustain and grow our value to New Zealand.
Background to the review
A range of LINZ fees and charges have not been updated for some years. The Government has put in place a series of initiatives that will change how some LINZ products, services and functions will be delivered.
On 16 October 2018, Cabinet directed LINZ to complete a survey and title third-party fees review.
This review forms part of the Government’s approval of the LINZ Survey and Title Enhancement Programme (STEP). STEP involves rebuilding and modernising the Landonline system in four tranches over five years.
Any further amendments to the Overseas Investment Act 2005 will also change the functions of the Overseas Investment Office, which is a part of LINZ.
LINZ receives revenue from fees and charges
During the year ended 30 June 2018, total LINZ revenue was $146.5 million. Of this total, ‘other revenue’ (primarily fees and charges) made up 56 per cent, or $82.0 million.
LINZ fees and charges are spread across eight sets of fees contained in regulations.
We primarily receive revenue from titles fees, search fees, and survey fees. These three categories provide 82 per cent of ‘other revenue’.
Revenue is also received from Overseas Investment Office applications; rating valuation audit charges to territorial authorities; and licence and sign-up fees to Landonline.
Principles underpinning the cost recovery review
There are five key principles underpinning the cost recovery review:
- Fair: Receivers and users of services should pay unless there is a good reason for them not to.
- Effective: The funding approach should support the objectives and/or reasons as to why LINZ provides the product or service.
- Efficient: The funding approach should assist in ensuring LINZ products and services are value for money.
- Sustainable: The funding approach supports the long-term financial sustainability of the products or services being provided and reduces reliance on the Crown for funding.
- Transparent: There must be clear line of sight between the costs recovered and the services provided. It must be clear as to what products or services fees and charges are being collected for, and why.
Phases of the cost recovery review
The cost recovery review programme has three main phases:
- Phase 1 - develop a framework to review fees and charges that is best practice and meets the requirements of The Treasury and the Auditor-General.
- Phase 2 - apply the framework across LINZ. Survey, Title and Overseas Investment Office fees will be the priority for the fee reviews. Other groups of fees and charges will be reviewed subsequently.
- Phase 3 – seek Government approval for an amended set of fees regulations, and then implement the new fees structure.
Stakeholder input into the review
In Phase 1, LINZ is following good-practice guidance from the Office of the Auditor General and the Treasury in developing a review framework. As part of this work, the main concepts that may form part of the framework are being tested with a sample of users. LINZ has already carried out a series of roundtables with stakeholder groups to explain the reasons and methodology for the cost recovery review.
In Phase 2, there will be four stages during which LINZ will seek input from our stakeholders when sets of fees and charges are reviewed:
- Stocktake – to determine which fees work best and are LINZ services providing value for money.
- Funding design – working out the most appropriate fees and charges for levels of service and determining the relevant users and beneficiaries of those services.
- Financial modelling – assessing the current and future demand for LINZ services, and the likely impact of different options for fees and charges.
- Discussion document – a public release of proposals on the fees framework, who will be charged, what will be charged for, and at which levels.
The timing of these stages will vary depending on each review of sets of fees. LINZ will give our stakeholders ample notice of when there will be opportunities for their input.
The outcome of the cost recovery review will depend on decisions that will be taken during the process, including on what costs are going to be recovered, who should pay, whether operational efficiencies can be made, and whether some LINZ products or services will be subsidised by the Crown.