Write to the LTNZ. They do investigate- when I worked for the Wellington crew, they interviewed drivers whenever they got complaints like that- and what you described would be seen as serious, and would have had them hauled in as soon as they got your letter. I would assume the same would be true in Auckland.

As for offenders getting licenses, can't really comment, but part of my job involved looking over criminal history checks (which were yearly and also randomly pulled in between) and the only example I ever saw (of someone still driving) was an incident from about 30 years before. As soon as the changes came in, this guy wasn't going to get his license renewed, either.

Files for drivers who are considered a potential problem are kept separately and are flagged for special attention; they are definately monitored. Also, 'sex offender' covers people who got caught out for a bit of slap and tickle with their 15 year old girlfriends when they weren't much older themselves. Quite a few people seem to have that one, so the figures aren't necessarily as bad as they might seem...