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What are small passenger services?

Anyone carrying passengers for hire or reward in a vehicle designed to carry twelve or fewer people (including the driver) is operating a small passenger service. There is a list of special exceptions to this, such as carpooling.

What is happening?

The Government is overhauling small passenger services to remove outdated requirements and modernise the sector in line with technology and transport advancements.

Following the passing of the Land Transport Amendment Act 2017 on 3 August 2017, three related Land Transport Rules (Operator Licensing 2007, Work Time and Logbooks 2007 and Driver Licensing 1999) have been updated and will come into force at the same time as the small passenger service aspects of the Act – on 1 October 2017.

What has happened to date?

In 2015, the Ministry of Transport undertook a review of the small passenger services regulatory environment to consider whether it continued to be fit for purpose and flexible enough to accommodate new technologies. The public was consulted on changes from December 2015 to February 2016. Legislation was introduced in September 2016, and consultation on the associated land transport rules took place in late 2016.

Further details about the review, public consultation, and government decisions can be found here (external link) .

What has changed?

The Government has simplified the requirements for small passenger services.

Previously there were separate categories and rules for taxis, private hire, and shuttles. From 1 October 2017, these services are regulated under a single category of small passenger service, meaning one set of rules for all.

In addition, a person or organisation facilitating a small passenger service – including technology or app-based operators connecting passengers and drivers - is now required to be licensed.

Some requirements that impose costs on operators but no longer provide significant benefits have been removed.

What do the changes mean for different types of services?

Service type

Summary of changes

Taxis

Taxis as previously defined are covered by the small passenger service category.

Some requirements have been removed – these are listed below as part of “What are the changes?”

However, in practice taxis can choose to operate in much the same way as they did previously.

Technology or app-based operators who connect passengers and drivers

A technology or app-based operator that connects a passenger with a driver is required to become a small passenger service licence holder.

What are the benefits of the changes?

The changes simplify the regulatory framework, while maintaining a focus on safety for passengers, drivers, and vehicles.

Customer Group

Benefit

Owners and operators of small passenger services

Able to compete on an even footing.

Can differentiate their brand on aspects such as cost, service, environmental footprint and philosophy.

More flexibility to deliver services using new technologies.

More discretion to make their own business decisions on a range of issues that were previously requirements and are now optional.

Consumers

Increased competition for their custom.

More choice due to a wider range of transport services to choose from.

Continue to be confident that they can use these services safely.

Drivers

Continue to feel safe in their places of work.

Why were these changes proposed?

The Government is a strong supporter of innovations that improve and enable all New Zealanders and businesses in New Zealand, traditional or otherwise, to enjoy the benefits of new technology.

The Ministry of Transport reviewed the regulatory framework for the operation of small passenger services. The framework had been in place since 1989 (with some changes subsequently, particularly in 2007). Since then, technology, the range of services offered, and consumer expectations have changed greatly. Our regulatory framework was no longer able to fully respond to the changes arising from the increasing use of smart phones and the introduction of app-based services.  

What assurance do passengers have that services are safe to use?

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 and drivers continue to be subject to regular checks during the term of their P endorsement.
  • Drivers must continue to operate within their work time limits.
  • Vehicles continue to be required to have a Certificate of Fitness.
  • Vehicles operating within the 18 main urban areas require an in-vehicle recording camera, except in certain specified situations set out in the Rule.

What legislation applies to small passenger services?

The provisions that apply to small passenger services are contained in the Land Transport Act 1998 and a range of Land Transport Rules and associated regulations.

The main Rules relevant to the operation of the services

What are the changes?

A person or organisation that carries on a small passenger service must have a small passenger service licence.

The new rules remove a number of regulatory requirements that impose costs on operators, but no longer offer any significant benefits, including:

Group

Summary of changes

For a small passenger service vehicle

  • Removal of signage requirements (including taxi top light and ‘for hire’ signs, information about fares, mandatory branding, information supplied in Braille), although signage is allowed.
  • Meters are no longer mandatory

For an operator or company

  • Approved Taxi Organisation (ATO) cease to be required.

Removal of the following requirements:

  • Certificate of Knowledge of Law and Practice.
  • Removal of the following requirements for a taxi operator:
  • mandatory membership of an approved taxi organisation
  • provision of small passenger services on a 24/7 basis
  • driver panic alarms.

For a driver of small or large passenger service vehicles

Removal of the following requirements:

  • an Area Knowledge Certificate (currently only required for a taxi driver)
  • a full licence test in the five years preceding an application or renewal of a Passenger (P) endorsement
  • completion of a Passenger (P) endorsement course.

Large passenger services, rental services, vehicle recovery services or exempt services

No policy changes are proposed that affect these groups. The new Operator Licensing Rule contains requirements for the two classes of passenger services: large passenger services and small passenger services.

The main change is that all requirements common to more than one type of transport service (e.g. the complaints register) have been consolidated into Section 2 of the Operator Licensing Rule 2017 (Transport Service Licences).

For all

Updates to applicable offences and penalties.


Why remove these requirements?

The 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 new 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.

What hasn’t changed?

Retained under the new system are provisions to ensure that passengers can feel safe, irrespective of the particular services they may be using; including:

Customer group

Safety provisions retained under new system

For passengers

  • Drivers must hold a P endorsement and display a driver identification card.
  • A fit and proper person check, including a police check, is done before a P endorsement is granted.
  • The requirement for drivers to operate within their work time limits remains.

Drivers must operate under a small passenger service licence holder – it is an offence for a driver to drive a small passenger service vehicle for hire or reward if they are not doing so for a licence holder.

Note that drivers for third-party facilitated cost sharing services are exempt from some of these requirements.

Vehicles

Continue to require a Certificate of Fitness. Child safety lock stickers are still required unless the locks have been permanently disabled.

For drivers

Those that are operating within the 18 main urban areas require an in-vehicle recording camera except in certain specified situations that are set out in the Operator Licensing Rule 2017.

What are the additional requirements for operators and drivers (existing and new)?

Customer group

Requirements

Operators in relation to drivers

Operators have several duties in relation to drivers. These duties are to ensure that:

  • drivers have a current P endorsement                          
  • drivers comply with work time and logbook requirements
  • vehicles have a current CoF
  • drivers have a current identification card and display this
  • operators maintain evidential records of the above four matters
  • the Transport Agency is advised of serious improper behaviour by a driver (e.g. murder, attempted murder, sexual offences, abduction, kidnapping, robbery, and intent to cause bodily harm by injury)
  • assistance is provided with audits or investigations by the Transport Agency or NZ Police.

Operators in relation to vehicles

Operators must ensure that any distance/time meter used to calculate a fare in a vehicle used in a small passenger service is accurate.

Operators within the 18 urban areas must meet one of two requirements:

  • all vehicles are fitted with an approved in-vehicle camera system; or
  • the small passenger service:
  • only provides services to registered passengers
  • makes driver and passenger information available (for example, names and photographs of both driver and passenger), before each trip
  • makes a record of the trip available (for example, GPS records).
  • There are a number of specified exceptions to these requirements (see following section).

Drivers

  • Have or drive under a small passenger service licence, or be facilitated to connect with passengers by the holder of a small passenger service licence.
  • Comply with all applicable legislative requirements:
  • must have held a full class 1 licence for at least two years before applying for a P endorsement
  • comply with work time and log book requirements.
  • Hold a current P endorsement and display their Transport Agency-issued driver identification card.
  • Ensure their vehicle meets all applicable vehicle related requirements (CoF and loading).
  • Accept the first hire at a small passenger vehicle stand (unless driving for an operator that only provides services to registered passengers). Take the route most advantageous to the hirer.
  • Must not refuse a passenger unless the driver is concerned for their safety or there is another lawful reason to refuse the passenger.
  • Agree the basis of fare in advance of the trip (e.g. meter, negotiation or via an app).
  • Issue GST receipts if registered for GST.

 

What is the exception for in-vehicle recording cameras?

There are four criteria by which a small passenger services are not required to have an in-vehicle recording camera. These are:

  • providing services to registered passengers only, and
  • collection of driver and passenger information (for example name, photo, address, phone number), and
  • availability of driver and passenger information prior to each trip, and
  • retaining a record of each trip.

An adequate level of safety is provided where all these criteria are met. Safety concerns are alleviated because these services will have more information about their passenger’s identities than those which offer services to unregistered passengers.

This flexible approach was designed to make sure there is not a disproportionate impact on businesses, which would otherwise face the considerable cost of installing in-car cameras.

Some exclusively pre-booked services, such as special occasion vehicle hire services are not required to have in-vehicle recording cameras or to meet the four criteria listed above.

What is the definition of a facilitator?

A facilitator is a person who facilitates a small passenger service.

Facilitate, in relation to a small passenger service means to enable drivers and passengers to connect by electronic or any other means (for example, by telephone, internet site, application, or software), but does not include the mere provision of an answering or call centre service.

What is a third-party facilitated cost-sharing arrangement?

These are services that connect drivers and passengers who are travelling from and to similar points, on a cost-sharing arrangement basis (i.e. sharing fuel costs), by electronic app or other means.

What are the requirements for operators of facilitated cost-sharing arrangements?

For third-party facilitated cost-sharing arrangements, the third party needs to hold a small passenger service licence.

However, provided the service adheres with the requirements for cost sharing, their drivers do not need to hold a P endorsement or meet work time requirements, and their vehicles do not need to have a Certificate of Fitness or, if operating in the 18 urban areas, be fitted with in-vehicle cameras.

How are third party facilitated cost-sharing services affected?

A third-party facilitated cost-sharing service is different from a normal small passenger service, as the driver can only be reimbursed the cost of running the vehicle, not the driver’s time. The Minister of Transport has gazetted a cost-sharing rate that drivers are to receive.  
Under the new system, a third-party facilitator may take a fee for its services.

Why do third-party facilitated cost-sharing operators have different requirements?

Carpooling has the potential to contribute to reducing traffic congestion and vehicle emissions. A traditional barrier to carpooling has been the ability to easily match drivers and passengers - third parties that facilitate this process can potentially play a significant part in overcoming this barrier.

We want to ensure the small passenger services regulatory system provides the right incentives to make sure that carpooling remains an inexpensive and easy transport option. It is important that regulatory requirements reflect this.

Are traditional carpooling between people who know each other, or services facilitated by local councils, affected?

No, existing exemptions continue, for example, carpooling between people who know each other and council-facilitated services.

Will there be a complaints register in the new regulatory system?

The previous small passenger services system required that operators of small passenger services have a complaints register and report serious allegations to the Transport Agency.

Operators are now required to report allegations of serious improper behaviour to the Transport Agency and cooperate with any investigation or audit that we or the Police might perform. To support that, operators are also required to maintain a record of complaints and to make that record available during an investigation by authorities.

Serious improper behaviour and offences include murder, attempted murder, sexual offences, abduction, kidnapping, robbery, and intent to cause bodily harm by injury.

Why remove the Passenger (P) endorsement course?

One of the aims of the small passenger services review was to lower the compliance burden. The P endorsement course was one of the requirements that imposed costs on a driver, but no longer provided any significant benefit. The course involves two components and typically costs between $400 and $700. The changes to the small passenger services system, particularly the removal of a number of rules the course refers to, means it would have added little value in the future. Other relevant information provided by the course could be provided in other ways.

Does an applicant for a P endorsement still have to sit a full Class 1 licence test if they have not passed a test in the five years preceding the application?

No. The Driver Licensing Rule requirement for applicants for a P endorsement to pass a full Class 1 licence test if they have not passed a test in the five years preceding an application has been removed. This is because it imposed a cost on the driver, with little benefit. A fully licensed New Zealand driver is deemed to be competent to be on the road without having to sit ongoing tests. You must have held a full New Zealand driver licence for two years before you can be granted a P endorsement, however.

What about those operating outside the law?

The sector will continue to be regulated by the Transport Agency and Police, and those who don’t comply with the regulatory requirements will be subject to similar sanctions as previously existed (infringement fees, licence suspension and revocation, and court action).

What are the changes to work time and logbook requirements?

Previously taxi drivers were required to take a rest after 7 hours of continuous work time, documented in the taxi logbook. Drivers of other classes of vehicles were required to take a rest break after 5.5 hours of continuous work time, documented in a general logbook.

The work time requirements for taxi drivers have been extended to all drivers of small passenger service vehicles and the details documented in a new small passenger service logbook (unless they are in the mixed work situation where they also drive a different class of vehicle, such as a heavy truck, in a cumulative work day). Drivers can work without a break for up to 7 hours if they undertake short fares in a town or city (ie fares up to 100 km). This recognises that as a small passenger service driver, they naturally have periods of downtime while waiting for jobs and passengers.

Is electronic recording of work time allowed?

Yes. The law allows the Transport Agency to approve electronic logbooks or work time records, and no changes have been made to this provision.

How are fares negotiated under the new rules if meters are no longer compulsory?

Use of a meter for calculating fares is no longer mandatory though operators may still choose to use one. A driver is required to have agreed the basis of a fare (for example, whether calculated by a meter, negotiation or via an app) with a passenger in advance of the trip.

A driver is required, if requested, to state the correct scale or basis for a fare that applies to a hire, and must not demand more than the exact amount of the fare payable.

What happens if a passenger wants to dispute a fare? How are complaints about fares handled?

Provided the fare or basis of the fare was agreed in advance of the trip, the Transport Agency will no longer investigate and take action in response to fare disputes between passengers and companies. Instead disputes are addressed by existing mechanisms provided in the Consumer Guarantees Act 1993, the Fair Trading Act 1986 and contract law. If you have a dispute, your first point of contact should be the operator/company providing the service.

Have the fees relating to small passenger services changed?

No, the fees for an application for a small passenger service licence stay the same at $449.80 including GST. The associated Police vetting fee also stays the same at $9.70 including GST.

Approved taxi organisations cease to exist and the application fee to be an approved taxi organisation ($3,678.15 including GST) has been revoked. Passenger endorsement courses and full licence tests are no longer required – so those costs have been removed.

Is the holder of a small passenger service licence required to live in New Zealand?

Where an application for a small passenger service licence is made and no person in control lives in New Zealand, under the Land Transport Act 1998 the applicant is required to identify a representative of the service that lives in New Zealand. The full name and address of that representative must be provided. A representative is defined as an agent who is authorised to engage with the Transport Agency on matters relating to the operator’s compliance with the relevant legislation and who is also authorised to accept service of legal documents on behalf of the operator.

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