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2.5  Consultation approach

Stakeholder engagement is an important part of establishing cost recovery charges as it provides an opportunity for the public to question and comment on charges. This serves two main purposes - to enable a good understanding by prospective payers of charges, and to improve the design and implementation of the charging regime and related services. In some cases, consultation may be required by the empowering Act.

Who to consult

Stakeholder engagement is most effective when it is well planned. Identifying stakeholders is the first step. Entities can then decide when and how to consult. Ideally the entity will consult throughout the process, and in some cases have ongoing relationships with key stakeholder groups. The consultation process should be designed in a way that gives those paying the best opportunity to provide feedback on costs, charges, and service standards and levels. However, it should be clear that consultation assists with the decision-making process, but is not a negotiation or undertaking to reach an agreement.

The main emphasis should be on current and prospective payers of charges. In some cases it may be appropriate to identify some key stakeholders and concentrate efforts on seeking their input. However, those conducting consultations should not be overly influenced by particular stakeholders to the detriment of groups that don't have a strong voice.

When to consult

The timing of consultation will need to take into account key decision-making points, the level of authority required for different types of consultation, and how the information gained through consultation feeds into decision-making. For example, discussion documents may/will need to be approved by the Portfolio Minister/Cabinet before release. Consultation on draft regulations must comply with the Attorney-General's protocol for release of draft Government legislation outside the Crown (CO (14) 4).

It may be necessary to undertake more than one round of consultation.

What to consult on and how to consult

As with all parts of the charging process, the amount of effort put into consultation should be appropriate to the significance and complexity of the changes to charges. Entities should consider the legal standards for adequate consultation. For more information on what constitutes the legal standards for adequate consultation refer to Wellington International Airport v Air New Zealand [1993] 1 NZLR 671 and discuss with your legal team. In essence consultation needs to be more than 'mere notification'. As a minimum:

  • there should be sufficient time for genuine and considered feedback to be developed by the stakeholders
  • the information provided in a consultation process should be appropriate to the audience
  • the material used in consultation processes should include enough underlying cost data and accompanying analysis to enable stakeholders to understand the rationale for the proposed levels for charges, and
  • entities should genuinely consider how the feedback provided through the consultation process could change its advice.

Consultation processes can involve a significant amount of resources. Entities should consider how to get the most out of these consultation opportunities, including whether it is useful to gather information about how they can better meet their customers' needs. This can feed into ongoing thinking about the development of the service. A summary of the key feedback and details of the outcome of consultation should be incorporated into the CRIS.

Difficulties when consulting on cost recovery proposals

The default is for entities to consult on cost recovery proposals. In some circumstances consulting may be difficult, for example where signalling a potential fee increase would lead to a surge in demand that could not be managed. When entities don't consult there should be good and well documented reasons for not doing so.

Entities should also consider other mechanisms for getting feedback that better manage potential risks. This may include drawing on feedback from previous changes to the charging regime, or consulting with a stakeholder group, including a group formed specifically for the purpose.

Further information on effective consultation and drafting discussion documents can be found in the Treasury's Regulatory Impact Analysis Handbook. (http://www.treasury.govt.nz/regulation/regulatoryproposal/ria/handbook/)

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