What is a small passenger service?

A small passenger service is a service that receives revenue for connecting a passenger with a driver. This includes taxis, private hire services such as limousines, shuttles, ridesharing, and dial-a-driver services.

What rules currently apply to small passenger services?

The rules that apply to small passenger services are outlined in the Operator Licensing Rule, which can be found at: https://www.nzta.govt.nz/resources/rules/operator-licensing-2007/(external link).

What is changing?

The Government has decided to simplify the rules for small passenger services.

Currently there are separate categories and rules for taxis, private hire, shuttles, and dial-a-driver services. In the future, these services will be regulated under the single category of a small passenger service.

Some rules that impose costs on operators, but no longer provide any significant benefits, will be removed (more on this below).

What do the changes mean for taxis?

Taxis will continue to be defined as a small passenger service. Some requirements will be removed, however, in practice taxis will operate in much the same way as they do currently. These requirements are listed below.

What do the changes mean for technology or app based operators who connect passengers and drivers?

A technology or app based operator that receives revenue from connecting a passenger with a driver will be defined as a small passenger service, and therefore will be required to become an approved transport operator (see definition below).

Under the new system, how will passengers be confident that they can use services safely?

Under the new system, the fundamentals of safety are maintained:

  • Drivers continue to be required to hold a P endorsement and display a driver identification card. A fit and proper person check, including a police check, is undertaken before a P endorsement is granted
  • Drivers must continue to operate within their work time limits
  • Vehicles will continue to be required to have a Certificate of Fitness
  • Vehicles operating within the 18 main urban areas will require an in-vehicle recording camera unless they have an exemption.

What requirements will be removed under the new system?

For a small passenger service vehicle:

  • Signage requirements (including information about fares, mandatory branding, information supplied in Braille)

For a driver:

  • An Area Knowledge Certificate
  • Passing a full licence test in the preceding five years (currently needed to obtain a P endorsement)
  • In addition, the continued need for a driver to have passed a Passenger endorsement course is being reviewed by Ministers. Removing this would save a driver $400-$700 when applying for a P endorsement.

For an operator or company:

  • The need to belong to an approved taxi organisation
  • Provision of small passenger services on a 24/7 basis
  • A certificate of knowledge of law and practice
  • A Passenger Service Licence
  • Driver panic alarms, monitored 24/7 from a fixed location

Why are these requirements being removed?

The Ministry’s review found that these requirements no longer add value. For example, GPS and mapping technology means that area knowledge is not as important as it was in the past. Removing these requirements means that the proposed regime will be more flexible, and reduces compliance costs. It encourages businesses to make their own decisions about what their services should include, depending on their customers’ needs.

Why did the Ministry of Transport do a review?

The Ministry undertook the review to ensure New Zealand’s regulatory environment is fit for purpose and flexible enough to accommodate new technologies.

The existing rules for the sector have been in place since 1989 and a lot has changed since then.

Since then technology, the range of services offered, and consumer expectations have changed greatly. In particular, the increasing use of smart phone technologies in New Zealand and the introduction of ridesharing in overseas markets have underlined the importance of the review.

The agreed changes are necessary to:

  • Respond to new and innovative technology business models that are emerging within the small passenger services sector
  • Ensure the sector is able to operate in a competitive market
  • Ensure that the regulatory framework is both fit for purpose to meet future needs and that it delivers maximum benefits for consumers.

What did the review look at?

The review looked at how New Zealand’s regulatory regime could apply in the future to services such as carpooling, private hire, and taxis.

This included looking at how it could better incentivise competition through encouraging new technologies and improving customer services.

In particular, it looked at ways to maximise benefits for customers while maintaining the safety of passengers, drivers, and vehicles.

Was there public consultation before decisions were made?

Yes, the Transport Ministers sought public feedback between 14 December 2015 and 12 February 2016 through a consultation paper.

What is a P endorsement?

A passenger or P endorsement is required by anyone wanting to drive a small passenger service vehicle. It includes regular checks that the holder is ‘fit and proper’ to provide a transport service. More information on P endorsements and how to apply for one can be found on the NZTA website(external link).

What is an ATO?

Under the current system an ATO is an Approved Taxi Organisation. Under the new system an ATO is an Approved Transport Operator.

All drivers must drive for an Approved Transport Operator. This could mean that an owner/driver will need to be an ATO themselves.

What will an approved transport operator have to do?

Under the new system an approved transport operator must be approved by the NZ Transport Agency. Approval is based upon a fit and proper person check. The NZ Transport Agency will audit approved transport operators to ensure compliance.

An approved transport operator would be responsible for ensuring and maintaining evidence that:

  • All of its drivers have a P endorsement (and display an identification card)
  • All drivers only work within their legal work time limits
  • All vehicles have a Certificate of Fitness
  • If operating in a main urban area, all vehicles have an in-vehicle recording camera, or an exemption.

Has anything changed in regards to in-vehicle recording cameras?

In-vehicle cameras have an important role in promoting driver and passenger safety. After considering submissions, cameras will continue to only be required for services operating in the 18 main urban areas.

However, a specific exemption criteria has also been developed.

What are the criteria for an exemption from the requirement to have an approved in-vehicle camera?

The four criteria the NZ Transport Agency will use to determine whether an approved transport operator should be exempt from the approved in-vehicle recording camera requirement are:

  1. Providing services to registered passengers only
  2. Collection of driver and passenger information
  3. Availability of driver and passenger information
  4. Retaining a record of each trip.

Where an ATO is given an exemption under the above criteria, this would apply to any driver using the system.

What about cameras in limousines, shuttles and other private hire vehicles?

Investigations are continuing, to provide an exemption for such services. Approved transport operators will be able to apply to the NZ Transport Agency for this. More information on this will be provided in the legislation.

What is ridesharing?

Ridesharing is when a third party connects people that want to take a trip, and the third party receives revenue for facilitating the ridesharing trip.

Under the new rules ridesharing will be defined as a small passenger service, and will meet the same requirements as any other service defined as a small passenger service.

What does this mean for neighbours and friends who share rides, such as a regular commute to work?

Neighbours and friends sharing rides, or carpooling, will not be defined as a small passenger service. This is the current situation.

What does this mean for third parties that don’t charge to connect people who want to share rides?

Third party organisations, such as council-run carpooling schemes, which connect people but do not receive revenue from doing so, will not be defined as a small passenger service. These types of services will remain exempt.

What if someone receives a payment for connecting passengers and drivers?

Where a third party receives revenue from connecting a driver and passenger/s who do not previously know each other, they will be required to register as an approved transport operator.

However, it is intended that if the driver is operating purely on a cost-sharing basis, they will not be required to hold a P endorsement. The NZ Transport Agency will have investigatory powers to ensure compliance in this regard.

When will the new system start?

The new system must go through the regulatory process before it will become law. This means that any changes are unlikely to start before 2017.

Will there be further opportunities to comment on final proposals?

Changes to the Land Transport Act are required, so there will be further opportunity to comment via Select Committee when the changes are considered by Parliament.

Specific changes to the rules are also required and these will offer further opportunities for consultation.