Federated Farmers: RMA Needs Overhaul - Survey

RMA Needs Overhaul - Survey
5 October 2007

The cost of the Resource Management Act has been slammed again in a survey of farmers, said Don Nicolson, vice-president of Federated Farmers of New Zealand.

Results specific to Federated Farmers’ members polled in 2007 Business NZ-KPMG Compliance Cost Survey rank the RMA as the second worst compliance cost, rising from third place last year.

As expected, tax compliance costs remained in the top spot as a priority issue.

“We have been saying for years that the RMA is causing significant compliance costs for farmers and many others in the community, but the government hasn’t been listening. It must wake up to the fact that the RMA is not working and must be improved”, said Mr Nicolson.

The 2007 Business NZ-KPMG Compliance Cost Survey reinforces the findings of another independent survey earlier this year. The survey by Research New Zealand found that 73 percent of farmers with some experience of the RMA believed that the Act and how local councils apply it should be changed. Only three percent were happy with the RMA.

Improving the RMA and its processes has been a priority project for the Federation since 2006.

“The Federation is working tirelessly to persuade the government of the need to fix the RMA, and both these survey results add weight to our arguments,” said Mr Nicolson.

For a full run down on the ‘six-pack’ of RMA problems and solutions, go to www.fedfarm.org.nz/RMAproject.html

Business NZ-KPMG Compliance Cost Survey Background:

Definition of Compliance Costs

The Compliance Cost Survey defines compliance costs quite conservatively in line with the Government’s own definition:

Compliance costs are the administrative and paperwork costs businesses incur when meeting a regulatory obligation. They include the costs of:

• Collecting taxes and rates for central and local government (but not the actual amounts of taxes or rates).
• Requirements to submit information to government.
• Obligations imposed on businesses to benefit others (e.g., consumer rights, health and safety, border control, etc).

Compliance costs can be both tangible and intangible and they can also be non-monetary, e.g., time spent dealing with paperwork as well as stress and anxiety. They can also include the time and costs of any disputes, the time taken to prepare and make applications (e.g., for permits or consents) and the subsequent wait for decisions to be made on them.

1. Compliance Cost Priority Issues

Respondents were asked to choose their top three priorities for action. The table below show the rankings for ‘all respondents’ versus Federated Farmers’ respondents.

The most significant difference is that farmer respondents assigned much higher priorities for RMA (46%) and local government (28%) than the equivalent percentages for ‘all respondents’ (10% and 11% respectively). In contrast the Employment Relations Act and the Holidays Act were perceived to be much lower priority issues for farmers compared to ‘all respondents’.

Other compliance cost issues that were more significant for farmers as opposed to all respondents were Statistics NZ surveys and HSNO.

Compared to 2006, the RMA increased in concern for farmers, rising from third to second place (and from 38% to 46%). By contrast HSNO dropped from fourth to eighth place (and from 31% to 18%).

2. Contact with Government Agencies

Respondents were asked whether they had contact with government agencies over the previous 12 months. The table below shows the rankings for ‘all respondents’ versus Federated Farmers’ respondents.

The most significant difference is that farmer respondents had much more contact with local authorities (87%) and transport agencies (60%) than the equivalent percentages for ‘all respondents’ (61% and 40% respectively). In contrast farmer respondents had much less contact with agencies such as Work and Income NZ, Companies Office and Department of Labour.

Compared to 2006, farmers had an increased levels of contact with local authorities, IRD, ACC, and transport agencies. However, there were big falls in contact with agencies such as MAF, Work and Income NZ, and Statistics NZ.

3. Helpfulness of Government Agencies

Respondents were asked to rate 17 government agencies by their helpfulness (or unhelpfulness). The tables below show the rankings for all ‘respondents’ versus Federated Farmers’ respondents. The higher the score, the more helpful the agency was perceived to be.

The Best

The Worst

The most significant difference in the rankings between farmers and ‘all respondents’ was for the NZ Immigration Service, which was ranked third most helpful by farmers yet only 16 (out of 17) by ‘all respondents’.

Compared to 2006, for farmers the biggest improvements in helpfulness scores were recorded for the Department of Labour (up 31%), NZ Immigration Service (up 21%) and Work & Income NZ (up 18%). The biggest deterioration in helpfulness score was recorded for the Ministry of Education (down 12%).

4. Compliance Cost Trends

Respondents were asked to give their perceptions on whether compliance costs had risen or fallen across 18 compliance cost areas. The tables below show the rankings for ‘all respondents’ versus Federated Farmers’ respondents. The higher the score the more compliance costs were perceived to have risen by (a score below 2.50 would be a fall in compliance costs – there are none of these however).

Biggest Increases

Smallest Increases

The compliance costs that were perceived to have increased the most (Holidays Act) and the least (companies and securities) were the same for farmer respondents and ‘all respondents’. On the other hand farmers ranked hazardous substances as having the second largest increase in compliance costs yet ‘all respondents’ ranked it only ninth out of 18.

Compared to 2006, for farmers the biggest increases in compliance cost trend score were recorded for employer-based superannuation (up 25%) but there were falls for border control and transport sector (both down 10%). The increase in perceived compliance costs for superannuation would reflect the introduction of KiwiSaver.

5. KiwiSaver

This year respondents were asked to rate the Government’s KiwiSaver information. The table below compares the responses for ‘all respondents’ versus Federated Farmers respondents.

Government KiwiSaver Information

Farmer respondents were more likely than ‘all respondents’ to be neutral on KiwiSaver. This is likely to be because as small employers farmers are less likely to have needed to access such information.

6. Government Websites

Respondents were asked to rate their experience in finding the exact information on government websites. The table below compares the responses for ‘all respondents’ versus Federated Farmers respondents.

Frequency Finding Exact Information on Government Websites

Farmer respondents were a little less likely than ‘all respondents’ to find the information they were seeking on government websites.

7. Hours Spent on Compliance Issues

Respondents were asked to estimate how much time their business spent on dealing with compliance cost issues over the preceding 12 months.

In the 2007 survey farmer respondents spent on average 198 hours on compliance issues, down from 218 hours in 2006. 42% of this time was spent on tax issues (similar to 2006). 198 hours is the equivalent of 8.25 days – this is a large burden for a small business where dealing with compliance issues tends to fall on the owner.

8. Average Total Compliance Costs

As well as being asked to estimate amount of time spent, respondents were also asked whether they used external advice and if so to estimate how much they spent on it over the preceding 12 months. Business New Zealand then estimated a total compliance cost burden for respondents.

The table below shows the amounts for ‘all respondents’ versus Federated Farmers’ respondents.

The significantly lower average total costs for farmer respondents reflects the fact that farms are much smaller businesses than the profile of ‘all respondents’. When converted into a per-employee basis farm compliance costs were twice as high as for ‘all respondents’ and this order of magnitude is consistent with the 2006 results.

Over the five year life of the Survey a key finding for all respondents is that compliance costs fall disproportionately on smaller businesses. This is no surprise: smaller businesses are less able to absorb fixed costs and they are also less likely to have staff employed to deal with compliance issues.

In the 2007 survey the average each farmer respondent was found to pay was $8,506, down from $10,018 in 2006. Although on the face of it this is an encouraging result it is actually a reflection of the 2007 respondents being generally smaller businesses (average of 4.0 employees) than the 2006 respondents (average of 6.5 employees). When expressed on a per-employee basis the average total compliance costs for farm respondents increased from $1,548 to $2,127.

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