Cost recovery

The costs of administering the PFSI will be fully recovered from applicants, participants and certifiers.

The administration of the PFSI is expected to be relatively similar to the administrative processes used for the approval and monitoring of sustainable indigenous forestry under Part 3A of the Forest Act 1949. These administrative processes have been used as a guide to the likely costs of administering the PFSI.

Options for cost recovery mechanisms

Part 3B of the Forests Act 1949 sets out the following options for recovering the costs of administering the PFSI:

  • fixed fees or fixed charges;
  • fees based on a scale or hourly rate, or similar formula;
  • fees utilising a formula, or similar method of calculation;
  • fees or a charge reflecting actual and reasonable costs – provided the charge is associated with the performance or service provided;
  • estimated fees or charges – fees can be based upon estimates followed by a reconciliation and further payment or refund after the provision of the service;
  • levies;
  • any combination of the above.

In determining the most appropriate method of cost recovery the Minister must have regard, as far as is reasonably practicable, to the following criteria:

  • Equity: Funding for a particular function, power or service, or a particular class of functions, powers or services, should generally, and to the extent practicable, be sourced from the users or beneficiaries of the relevant function, power or service at a level commensurate with their use or benefit from the function, power or service.
  • Efficiency: Costs should generally be allocated and recovered in order to ensure that maximum benefits are delivered at minimum cost.
  • Justifiability: Costs should be collected only to meet the actual and reasonable costs (including indirect costs) for the provision or exercise of the relevant function, power or service.
  • Transparency: Costs should be identified and allocated as closely as practicable in relation to tangible service provision for the recovery period in which the service is provided.

Accurately judging cost recovery levels is difficult because there are still a number of uncertainties that may impact on the levels of cost recovery. These uncertainties include:

  • level of interest in and uptake of the PFSI;
  • potential economies of scale in the administration of a large number of applications;
  • size of areas applying to enter the initiative;
  • the exact methodology for carbon measurement;
  • the exact nature of the final regulations;
  • the quality of the applications received.

This will mean that cost recovery levels will need to be reviewed and adjusted over time. Adjusting methods or levels of cost recovery requires consultation with affected persons.

Proposed cost recovery mechanism and fees

MAF’s proposals for the mechanisms and fees for recovering the administration costs of the PFSI are detailed in Tables 1 and 2. All fees exclude GST. Costs specified as annual levies are likely to be combined into a single levy. They are broken down here for transparency.

Table 1: Costs recovered from applicants and participants

Activity What the activity includes Proposed method of
cost recovery		 Proposed fee/levy Alternative
methods of
cost recovery
Application processing (standard application)
  • Checking for completeness and acknowledging application, fee received/ receipted/banked, file opened/database entry, processing of application
  • Preparation and signing of covenant
  • Recording of information in database
  • Transfer of data to national carbon accounting system
  • One-off application fee per hectare, with sliding scale and provision for actual time and cost charges for non-standard applications
  • $8 per hectare for
    1-150 hectares
  • $6 per hectare for next 250 hectares
  • $4 per hectare for next 600 hectares
  • $2 per hectare for each hectare over 1000 hectares
  • Minimum of $500
  • Fixed fee per application
  • Hourly time and cost
Initial carbon measurement and auditing
  • Receipt, review and recording of details
  • Transfer of data to national carbon accounting system
  • On-site audit of a proportion of sites
  • Fixed fee per verification, plus a fee per hectare for audit
  • Fixed fee of $232, plus audit fee of $4.64 per hectare with a minimum of $100
  • Fixed fee per audit
  • Hourly time and cost
Subsequent carbon measurements and auditing
  • As with initial carbon measurement, but in addition includes submission of details to NZEUR for transfer of units
  • Carbon measurement/ audit fee per hectare
  • Fixed fee of $406 plus audit fee of $4.64 per hectare with a minimum of $100
  • Fixed fee per audit
  • Hourly time and cost
Administrative tasks
  • Responding to public enquiries and handling covenant queries
  • Information bulletins and website maintenance
  • Maintaining files and database; ownership and contact details
  • Receipt and recording of harvesting details
  • Invoicing and financial records
  • Annual levy per hectare
  • $3.87 per hectare per year
  
Recovery of PFSI establishment costs and maintenance of carbon accounting system
  • Recovery of development costs and maintenance of carbon accounting system
  • Annual levy per hectare
  • $2.27 per hectare per year
  
Miscellaneous charges
  • Processing poorly documented/ complex/non-standard applications
  • Negotiating non-standard clauses in covenant
  • Special audits
  • Investigations
  • Other contingencies
  • Hourly time and cost
  • $115 per hour
  

Table 2: Costs recovered from certifiers

Activity Proposed method
of cost recovery		 Proposed fee Alternative methods
of cost recovery
Registration of certifiers
  • One-off application fee
  • $300 per application
  
Maintenance of register of certifiers and technical support
  • Annual fee per certifier
  • $180 per year
  
Training of certifiers
  • Fee per course
  • Fees based on time and cost ($115 per hour), number attending
  • Combine into annual levy for Certifiers

 

Questions about cost recovery

  1. How supportive are you of the proposed methods of cost recovery?
  2. Do you think alternative methods of cost recovery would be more appropriate? If so, what do you propose and why?
  3. What do you think of the proposed level of the fees?
  4. How could the proposed administration be simplified to create cost-savings?
  5. If you wish to make any further comment on cost recovery or explain your answers to questions 16–19, please do so.

 

Contact for Enquiries

Indigenous Forestry Unit
Ministry of Agriculture and Forestry

14 Sir William Pickering Drive
PO Box 20 280
Bishopdale
Christchurch 8053
NEW ZEALAND

Tel: 64 3 943 3700
Fax: 64 3 943 3701

Te Papa Tipu Innovation Park
99 Sala Street
PO Box 1340
Rotorua
NEW ZEALAND

Tel: 64 7 921 3400
Fax: 64 7 921 3402

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