An Evaluation of Compulsory Levy Frameworks for the Provision of Industry-good Goods and Services: A New Zealand Case Study

A market failure exists in the supply of industry-good goods and services with characteristics of non-rivalry and non-excludability. Compulsory levy frameworks are one form of intervention that governments use to address this market failure. Key components of the New Zealand levy framework, the Commodity Levies Act 1990 (the CLA) are described. The CLA is then evaluated against the criteria of accountability, effectiveness, efficiency and fairness. Some key aspects of the Australian, United Kingdom (UK) and Canadian frameworks are also considered. The CLA is found to be strong on accountability, and to place strong performance incentives on industry organisations. The CLA is found to be fair to small and large-scale producers, and its flexibility enables efficiencies in administration and management of industry organisations.