We have been reviewing the feedback from our last round of consultation and have been exploring and refining the detail of a potential revised Percentage of Revenue Framework.
We refined our potential options down to two:
- A formula to determine the percentage
- A fixed percentage for each industry category (e.g. accommodation, ski fields, guiding)
After assessing these options in detail, we concluded that given the complexities involved, it would not be possible to confirm a simple, fair and transparent method that would be acceptable to everyone.
We have decided to remove the current percentage of revenue formula for determining fees. This is because it remains too complex and is neither helpful nor realistic for us to continue to use.
Instead, we will take a case-by-case approach to setting annual activity fees based on a percentage of revenue. This will allow us to find a method that works well for each individual concessionaire’s circumstances.
For existing concessions, at each three-yearly rent review, we will continue to assess whether any market conditions have changed since the percentage was applied. For new agreements, we will apply similar percentages to similar activities with this case-by-case approach.
Note this is a policy review on the method used to determine the activity fees for some (but not all) concessions. We are not looking at individual concession fees as part of this review.
We have invited the concessionaires who have an activity fee that is directly or indirectly based on the percentage of revenue framework to participate in the review by email. We are also keeping concessionaires updated with regular information in the Business on the Green newsletter.
What happened during the review
There were several phases where we sought input during the review:
- Phase 1 (completed) – Issues and options papers were sent to participating concessionaires for feedback in January 2021. This feedback helped us work through various options.
- Phase 2 (complete) – Participating concessionaires were provided with information for feedback on our preferred option, why we selected it and how we propose it will work.
- Phase 3 (no longer required) – We’ll send out our proposed modified Percentage of Revenue Framework for final feedback.
During Phase 2 consultation we asked for feedback on DOC’s options assessment.
The “Assessment of Options” paper provides information on the preferred option and why we selected it for further development and testing. The feedback provided is assisting us with developing the detail for a preferred option.
The Phase 2 consultation period closed on Friday 23 July 2021. The Phase 2 high-level feedback summary gives an overview of the key themes and findings in stakeholder feedback on the Assessment of Options.
- High level feedback – Phase 1 (PDF, 104K)
- Concession Revenue Information Sheet (PDF, 179K)
- Treaty Partner Issues Paper – prepared by Deloitte (PDF, 1,378K)
- Summary of the Issues and Options (PDF, 205K)
- Issues and Options Paper – prepared by Deloitte (PDF, 907K)
If you have any questions around the percentage of revenue fees review send them to PRFreview@doc.govt.nz.