Alas, it looks like VTNZ was privatised and the exact outcome you would expect happened.
But really I think the government incentives are the root cause.
Fortunately I can still find workshops that care about doing a good job (more than they care about ripping off customers). But I feel bad for anyone who can't pick good services: which takes skill and costs time.
I never used VTNZ because I found them to be overly picky when I tried them. I thought VTNZ followed the rules too strictly and you didn't get any fair relaxation. I didn't know the history you have mentioned.