The Parliament protest and the proliferation of fleeing drivers and gang violence have forced the Government into a rethink of how much it pays tow truck companies to tow cars. The regime is ineffective, officials say, and is costing councils a fortune - Auckland Council is said to be losing $140,000 a month in unpaid tow fees.
Some regions are unable to have cars towed, meaning more unsafe vehicles on the roads. In March 2019, in Nelson, Police impounded a vehicle after a fatal crash, but no tow companies were available to recover the low-value vehicle so it was left where it was.
The owner of the vehicle retrieved it from the roadside only to crash it again two days later. Fortunately no one was killed or injured in the second crash.
The main fee the Government pays companies to tow vehicles was set in 2004 and has not changed since. Towies are sometimes paid as little as $53.60 to tow a vehicle or about $20 more if the tow is outside of regular office hours.
But those rates are miserly compared to what the tow company might have received from a commercial contract, whose fees have risen with inflation.
A briefing, obtained by the Herald under the Official Information Act, said the fees did not reflect the costs of tow companies, and were “too low to sustain the level of service required to deliver key transport system outcomes, including safety and accessibility”.
This is not the first time the Transport Ministry raised these concerns. They were first aired in 2021 and then again when officials offered advice on the Government’s gang crackdown, which will widen the grounds for towing vehicles for driving offences. This would likely lead to an increase in vehicles being towed, but officials warned towing rates are so poor, towing companies might be unwilling to move all the vehicles the Government wants towed.
Transport Minister Michael Wood said the Ministry of Transport picked up a need to “update the framework for the towage and storage of impounded and illegally parked vehicles”.
He said that subsequent to this, “parliamentary protests, fleeing driver reforms and work as part of Road to Zero work programme highlighted the need to progress this work”.
Wood said the ministry was reviewing regulated fees for towage and storage operators and this should be completed by the middle of 2023.
The paper noted that in 2012 a fee increase of 33 per cent was recommended by officials and considered by Cabinet, but the Government chose not to proceed.
“Recent events - the March 2022 protests at Parliament and the increase in gang activities - have… tested the efficacy of the towage and storage system,” officials said.
They added that since the current towing regime was instituted in 1999, it has been successful in making roads more safe.
Under the current rules, Police have to “seize and impound vehicles being driven by unsafe drivers, including someone who is disqualified from holding a drivers licence, or is unlicensed, or has been forbidden to drive, or who is street racing and cruising”.
To “deter” these people from driving, “sanctions have to be swift, certain, and severe”.
“The prompt removal of dangerous machinery [cars] from people who have shown they cannot use them safely, followed by a compulsory 28-day period in storage, are crucial for an effective impoundment regime.”
The system appeared to work when it was first introduced in 1999. The proportion of crashes involving a disqualified or unlicensed driver fell 29 per cent.
An analysis of the vehicles that could have been impounded in 2019 found that 70 per centrelated to drivers that have been disqualified, suspended or forbidden to drive, while the other 30 per cent was divided between racing, failure to stop and drivers on their third drink-driving offence in two years.
Vehicles can be towed after a police-ordered impoundment, if the driver has committed a particular offence, or if ordered by a council for a parking infringement.
Councils have said that the rates set by Government are such that they are losing thousands of dollars a month in unrecoverable fees because they are not allowed to charge storage or release fees.
Auckland Council has said towing vehicles costs it $140,000 a month in unrecoverable fees, and officials think that councils such as Wellington City are also facing this cost.
“AT [Auckland Transport] has expressed concern that towage fees recoverable from offenders leave a significant cost to be borne by Auckland ratepayers,” the officials said. They said that these costs had to be funded by shifting money away from other council services or by putting up rates.
A spokesperson for Auckland Transport said those figures were “averages” and ran “run across tow / storage and release fees”
”The costs we can pass on are only for the tow itself as there is currently no ability to pass on the costs of the release, nor storage, for vehicles towed against an infringement. This is the same for all road controlling authorities,” they said
“We are pleased that a review on how costs are compensated is underway,” they said.
“Many provincial councils, officials said, are not towing vehicles, because it is no longer “financially viable”. This can mean, for example, lpeople who rely on disabled parking spots are put out, as other road users can park in the spots without fear of being towed.
The Government is keen to expand the use of towing as part of a gang crime crackdown, but officials warned that this would face difficulties unless fees were increased, particularly in rural areas where the fees were so low companies could be making a loss on vehicles towed.
Officials warned that towies “may perceive impoundments involving gang harm to carry a higher risk and be unwilling to accept these jobs”.
They warned that expanding the impounding regime, as the Government plans to do, might not work unless action is taken to make impounding “commercially attractive”.
Officials said that whether a police-ordered impoundment is profitable for the towing company depends on “factors beyond their control”, such as how far the car has to be towed, and the value of the vehicle, and the people it is towed from.
If a vehicle owner does not pay their fines, tow companies are allowed to deregister and scrap the vehicle. Officials say that the scrap value of a vehicle can be between $100 in rural areas to $300 in urban centres. A full 28-day impoundment period can cost $305 not including the cost of actually towing the vehicle.
Officials recommend a staged approach to changing the fees that are charged. This would begin with a review of the fees given to towies, but would move to a broader look at the system to understand how it could be improved.