The Transport and Industrial Relations Committee has examined the Public Transport Management Bill and recommends that it be passed by majority with the amendments shown.
Introduction
The Public Transport Management Bill seeks to help regional councils deliver better public transport services by giving them greater regulatory powers over public transport services in their regions. The bill would repeal the Transport Services Licensing Act 1989. The replacement regulatory framework introduced by this bill would provide regional councils with new functions and powers over those services that are not contracted by the councils (commercial services).
Our submissions process attracted a wide range of comment from regional councils, public transport service providers, and users of public transport. Submitters were well informed about the proposals contained in the bill, and the alternatives considered by officials in developing the policy underlying it. The options ranged from preserving the status quo (“Option A”) to enabling regional councils to require that all services in their region be operated under contract (“Option C”).
As introduced, the bill takes the middle ground (“Option B”). It would empower regional councils to achieve their objectives mainly through two planning mechanisms—regional public transport plans, and controls imposed by councils on commercial services to implement these plans—and a compliance and enforcement regime.
In considering issues raised by submitters, we noted that different regions face different challenges for public transport management. For example the ratio of commercial bus services to contracted bus services varies widely between the regions. The Auckland Regional Transport Authority (ARTA) asked the committee to recommend a re-drafting of the bill in favour of Option C, which would have given ARTA the option of a fully contracted public transport system.
We gave this proposal serious consideration. Labour members believe that this option would enable ARTA to manage their public transport system more effectively than imposing controls on certain aspects of commercial services. However, most of us consider that the bill, with the recommended amendments, would provide regional councils in general with better tools for managing public transport services. At the same time, the recommended amendments would provide more appropriate checks and balances on the exercise of those powers.
This commentary focuses on the main amendments we recommend to the bill. It does not cover minor or technical amendments.
Interpretation
We recommend several amendments to clause 4 and a number of minor amendments.
We considered arguments for and against the inclusion of specific services in the definition of “public transport service”. We recommend that the definition of public transport service in clause 4 be amended to exclude services operating primarily for the benefit of tourism. We believe it would be inappropriate for regional councils to plan for and manage tourism services, and this should be explicitly stated in the bill. For clarity we also recommend that school bus services (contracted or funded by the Ministry of Education) be explicitly excluded from the definition.
This bill would require regional councils to consider the needs of and consult groups that represent people who can be considered “transport disadvantaged”. We agree with submitters that the term should be defined, but not by listing such groups. We recommend that “transport disadvantaged” be defined to include people identified by the regional council as least able to get to basic community activities and services such as work, education, healthcare, welfare, and food shops. We note that the term might apply to people living in isolated rural areas.
As the term “existing service” is not defined in the bill, we recommend inserting a definition in clause 4 to define an existing service as a registered commercial public transport service operating on or before the adoption of a plan or a variation of a plan that includes or amends a control over a commercial service.
Clause 10(3) as introduced would define performance and quality standards. We recommend shifting these definitions from clause 10(3) to clause 4 and including additional matters. Performance standards should also specify degrees of reliability and compliance on matters such as punctuality, routes, and pick-up points. Quality standards should also apply to the design and performance of vehicles, the comfort of passengers, seating for drivers, and customer service training and standards of conduct for staff.
Regional public transport plans
We recommend a number of amendments to clause 10 of the bill, which prescribes the contents of regional public transport plans.
Content and criteria
As we discuss later in this commentary, we are recommending a new provision for a right of appeal against controls the regional councils might impose on commercial services (new clause 40A). Such a right of appeal would require consequential changes to clause 10, because any controls specified in a regional public transport plan would need to be consistent with the purpose of the plan and contribute to its implementation.
We therefore consider that more transparency and clarity about policies and controls are needed. Accordingly we recommend that clause 10(1) be amended to clarify the requirement for plans to specify the following:
any policies that apply to public transport services
the classes of public transport services to which policies in the plan apply
how the regional council will implement the policies
the criteria for determining whether a proposed variation to the plan is significant.
We also recommend amendments to clause 10(2) to clarify that the types of policies that regional councils may include in a plan include
specifying any services, contracted or commercial, whether or not on the same route, that must operate as a group
the application of common emblems and designs of vehicles, but not colour schemes
minimum operating periods
policies for monitoring compliance with controls.
We also recommend amending clause 12 to require that plans explain why the particular controls are included and the alternatives considered, and assess the effectiveness of the controls. We believe that this provision would ensure that regional councils regarded the imposition of a control as just one measure among others for meeting their objectives.
Timeframes
We recommend an amendment to clause 11 to require that regional public transport plans take effect 25 working days after they have been formally adopted, instead of 20 working days as proposed. This would allow more time for operators and other stakeholders to be notified of the plan requirements before they come into force. In addition we recommend an explicit requirement that all operators be notified and sent a copy of the plan as soon as possible after its adoption. These amendments are needed to allow operators to exercise the right of appeal, should they have grounds for doing so.
We also recommend a reduction in the transitional periods for controls from 18 months (under certain conditions) to a blanket 12 months. We consider that the conditions attached to the 18- month timeframe are unnecessary.
Controls on commercial services
Clause 12 of the bill would enable regional councils to impose controls over commercial services. Such controls would allow a regional council to require a commercial service to operate an integrated service, with integrated fares, ticketing, and related technology; set, and require operators to apportion and collect, fares; and require common colour schemes, emblems, signs and designs of vehicles.
We agree with some submitters that the intended scope of such controls is not clear, and that regional councils might appear to have unlimited scope to impose controls on commercial services.
We recommend amending clause 12 to provide guidance and place limits on the scope of the controls that regional councils might impose upon commercial services, by deleting clauses 12(1)(a) and 12(5) and inserting criteria for the inclusion of a control in a regional public transport plan. These criteria would require regional councils to consider the impact of controls on existing operators and services, and require their consistency with the purpose of the plan.
We recommend further that clause 12 be amended to clarify the kinds of controls that could be imposed, as follows:
minimum periods of operation
frequency, capacity, and times of public transport services
requiring services to be registered as a group
quality and performance standards
requiring the integration of services, and the acceptance and use of integrated ticketing, fares and technology, and the application of common emblems, signs, or designs
setting and apportioning integrated fares
any other type permitted by regulation.
We also recommend amending clause 12 to state that regional councils may not impose more requirements on commercial services than contracted services of a similar class, and to provide that a control may not be made for the purpose of eliminating an existing commercial service. If a control is likely to result in the withdrawal of a service that has been specified in the plan as needed by the community, we also recommend that a similar service must be available to the users of that service. These amendments should provide operators with more certainty as to potential controls.
Bundling of services
As noted, we have recommended an amendment to clauses 10 and 12 to allow regional councils to require the registration of all the services on one or more routes as a group (“bundling”), either as contracted services or commercial services, but not as a combination of both. We understand that the intention of the bundling provision is to prevent commercial operators from “cherry-picking” preferred routes and times, leaving regional councils to contract out the remainder at a greater cost overall.
Submitters were concerned about the extent of “bundling” permitted under the bill, and about the limits on bundling. Many feared that the bundling provision might require operators to run services that were uneconomic; they submitted that commercial operators would be discouraged from providing public transport services. We agree that more clarity is needed about these matters.
We recommend amendments to clause 12 to allow a regional council to require certain services to be operated collectively as a group, if it is satisfied that it would cost less for a single operator to run the group than to allow multiple operators. This amendment would require an associated amendment to define the “operating cost of a service” as the cost to an operator before any revenue is taken into account.
We considered but rejected calls for placing limits or restrictions on the powers of regional councils to bundle services.
Notice periods
As introduced, clause 12(2) would enable regional councils to set a minimum period of notice for commencing or withdrawing a commercial public transport service or varying the service; the minimum period under the current legislation is 21 days. We considered arguments for extending the notice period beyond the proposed 90 days, and others for not extending it so that operators would not be forced to continue unprofitable routes. We do not support an extension of the 90-day period, which we consider sufficient to allow regional councils to respond to the withdrawal of a commercial service. Nor do we support reducing the minimum notice period. If a service became unprofitable, we understand that an operator could make a case for “reasonable excuse” and so would not be penalised under clauses 48 and 49 of the bill for an early withdrawal of service.
Clause 12(2)(a) would allow regional councils to adopt a control to set limits on the minimum period of notice for registering, varying and withdrawing the operation of services, up to a maximum of 90 working days. We recommend that minimum periods of notice be specified in the regional public transport plan, rather than by way of a control. This would require deleting clause 12(2)(a) and amending clause 10. Although this would remove any right of appeal, because that right (which we recommend in clause 40A) would apply only to a control and not to a policy in a plan, we understand that the recommended notice periods are supported by stakeholders.
As introduced clause 12(2)(b) would allow regional councils to set a minimum period of their choice for the operation of a commercial service. We recommend that clause 12(2)(b) be amended to make 12 months the upper limit, to give operators more certainty and to tie in with regional council funding and planning cycles.
Clause 12(2)(c) would allow regional councils to set a maximum period between the registration of a commercial service and its commencement date, and any variation. We recommend that this provision be deleted, as it would be simpler to apply this under the deregistration processes provided for in clause 36.
Integration of services, tickets and fares
A key objective of this bill is to provide regional councils with the ability to integrate public transport services in their regions. Clause 12 would allow regional councils to impose controls for integrating services, technology, ticketing, and fares. Although most submitters supported integration, many were concerned about the scope of the controls that could be applied for this purpose, and the apportionment of integrated fares.
We believe that regional councils should have the means to require the scheduling of services to connect with other services, and to set policies for integrating fares, technology, and ticketing. For example, a regional council might decide that public transport users in its region should have the option of purchasing a single ticket for a journey that involved a bus ride, which connected with a ferry service, then a train trip to the final destination.
As introduced, clause 12 would empower regional councils to apportion fares for integrated services. We consider that regional councils must act reasonably in apportioning fares, taking account of the cost involved in providing a service that is subject to an integrated fare. We therefore recommend that clause 12(3) explicitly require regional councils to apportion fares reasonably, without undue discrimination between operators.
We also recommend that clause 12 be amended to clarify that a commercial operator might be required to accept a lower fare for travel on their service, if the fare were integrated with other services, than they might otherwise have set.
Clause 12(3) as introduced would allow regional councils to impose common colour schemes, emblems, signs and visual designs to help integrate and promote services. Many submitters opposed these controls for reasons of cost. We consider that the use of common emblems, signs or visual designs would promote integrated services adequately. We do not agree, however, that regional councils should be able to require common colour schemes. We therefore recommend that the provision for controls requiring common colour schemes be deleted from the bill.
Information use and availability
Clause 12(4) would enable regional councils to require operators to provide information about commercial services to help them to plan and monitor public transport. Such information would include details of patronage, revenue, and vehicle and service performance.
We are concerned that the proposed provision might not adequately safeguard commercially sensitive information. We recommend that subclauses (4), (6) and (11) of clause 12 as introduced be deleted, and a new provision (now clause 13) be inserted to empower regional councils to require specific information from operators. As amended, commercially sensitive information acquired by regional councils under clause 13 could not be disclosed without the operator’s consent, except in specified circumstances (for example, only under the Local Government Official Information and Meetings Act 1987, following consultation with the operator where the council cannot identify a reason to withhold it).
Consultation on regional public transport plans
Clause 15 of the bill as introduced sets out consultation requirements for developing and adopting regional public transport plans, in addition to the consultation principles and special consultative procedures set out in the Local Government Act 2002.
Clause 15(1) as introduced lists a wide range of parties with whom regional councils must consult on the basis that they would be directly affected by a regional public transport plan. Amongst others, they include public transport users, the public in the region, affected communities, and Māori in the region. We consider that the proposed list of stakeholders is too broad and the consultation requirement unnecessarily onerous for regional councils, especially given that the interests of these four groups are already provided for under Local Government Act consultation requirements. We therefore recommend deleting them from the list of parties requiring additional consultation.
We recommend extending the requirement to consult, to include commercial operators who have notified a proposal to operate a commercial public transport service in a region, because they would also be directly affected by the adoption of a plan.
We further recommend replacing the single-phase consultation approach, as set out in clause 15(1) of the bill, with two consultation phases. The first phase would require regional councils to consult stakeholders with a direct interest in the funding or provision of public transport when developing a plan. This list would include operators, the New Zealand Transport Agency, and territorial authorities. Before adopting a regional public transport plan, regional councils would be required to conduct full public consultation under Local Government Act procedures, and also notify specific groups listed in the bill and invite them to make submissions.
We recommend that clause 16 as introduced be amended to require regional councils to follow the consultation procedures now set out in clause 17 when significant amendments to a regional public transport plan are proposed. Some submitters were concerned that regional councils might vary a plan without full consultation, and others were unclear about what might constitute a significant change or a minor change.
We agree that clarification is needed, and recommend that the provisions that were in clause 16 be deleted, and that clauses 10 and 18 now require regional councils to
set out their general approach to determining what is significant
consult on any significant variation to a regional public transport plan, reflecting the two-stage approach to consultation set out in clause 17
consult on variations that are not deemed significant under the standard Local Government Act provisions.
We recommend that any proposal to include a control or amend a control be defined as a significant variation to a plan and thus subject to full consultation. And we recommend altering the timing for reviewing regional public transport plans so that they must be reviewed whenever a relevant regional land transport strategy, regional land transport programme, or a long-term council community plan is adopted.
Processes for declining to register and to deregister commercial public transport services
We are concerned that the processes set out in clause 30 would not allow enough time for regional councils to comply with consultation requirements before declining an application for registering a commercial public transport service. We are similarly concerned that the time between notifying an unsuccessful applicant and the proposed start date of a service is too short. We recommend an extension of the period within which a regional council must decide to accept a registration from 21 days to 30 working days, and the provision of a formal process requiring regional councils to make an initial assessment and provide operators with an opportunity to be heard before the final decision.
We recommend consequential amendments to clauses 10, 28, and 32 so that the minimum notice period for commencing or varying a service would be no less than 35 working days, to ensure a minimum of five working days’ notice of a decision prior to the planned commencement or variation of a service.
We also recommend the addition of further provisions in clause 37 requiring regional councils to notify operators of a proposed decision to deregister, and to set out the reasons for the decision and the process for appeal. Operators would then have an opportunity to make submissions within 30 working days, have their case heard, receive notification of the decision and reasons for the decision, and be advised of a further right of appeal against deregistration.
Monitoring and compliance with controls
Some submitters complained that the bill contains insufficient means of ensuring compliance with controls. We agree, and have considered various options for strengthening the compliance regime. We considered but rejected arguments for introducing a minor offence regime or an infringement notice regime.
We recommend amending clause 38 to allow regional councils to serve notice on an operator for failure to comply with a control, setting out the process for notification and the consequence of non-compliance. If after receiving a notice the operator continued to fail to meet a control the regional council could apply for a court order.
We also consider that regional councils need additional powers to monitor compliance with controls, similar to those that apply to contracted services. We recommend inserting new clause 35B to provide additional functions and powers for regional councils, to
monitor commercial public transport services and vehicles used in those services for compliance with controls
conduct interviews and passenger surveys for the purpose of monitoring compliance with controls
board vehicles for the purpose of monitoring compliance with controls
inspect an operators’ complaints register and maintenance records.
We consider that these additional powers and functions would enable a regional council to monitor commercial services effectively and thus increase their compliance with controls.
Right of appeal
Several submitters were concerned that commercial operators would have no right to be heard by an independent third party. We agree that controls might have a significant effect on commercial operators, and that a right of appeal should be provided.
We recommend inserting a right of appeal for operators of existing commercial services (new clause 40A). We consider the Environment Court to be the appropriate body to consider appeals because of its experience in decisions that involve weighing up commercial benefits against public benefits. We note too that the Environment Court has more flexibility in its mode of inquiry than district courts.
We also recommend that new clause 40A limit the grounds for appeal to these areas: failure by a regional council to properly consider the impacts of the control on the operator; inconsistency between the control and the purpose of the plan; inappropriateness of the control; imposing a higher standard on commercial services than contracted services; and failure to plan for replacement services. New clause 40A would replace the provisions under clause 52(b)(ii) and (c) for regulations to be made to limit, restrict or suspend controls, which we recommend be deleted.
New provisions are also needed to define the decision-making powers of the Environment Court. We recommend that new clause 40B empower the Environment Court to dismiss an appeal, modify (or remove) the provisions of the plan relating to the control, modify arrangements to alleviate any material adverse effects of the control on existing services, or modify the relevant provisions of the regional public transport plan.
Labour members’ view
The committee heard submissions from Auckland regional and territorial local government, ARTA, some operators and public transport users in support of adding an option to the bill known as Option C but this did not receive majority support of the committee. We believe it should have been added as an option and were convinced by ARTA that it is necessary to have this available to better enable them to deal with Auckland’s unique set of difficulties in providing a truly efficient integrated public transport network. Although the bill as amended will significantly improve on the status quo for many regions it is interesting to note that local government in Auckland is united in supporting the addition of Option C. We also received letters of support from other metropolitan regional councils supporting Auckland’s position.
The evidence we heard from users of the system showed clearly that Auckland needs the tools to fix a system that is groaning at the seams due to a growing demand from the public. We believe adding a new Option C would have been highly desirable.
National members’ view
The New Zealand National Party believes this bill imposes too much bureaucratic burden on public transport services and shifts the balance of power in contract negotiations too far in favour of regional councils.
The Government originally consulted with industry on a scheme referred to as Option B. Although there was some level of disquiet among operators they were prepared to accept that regime. National also would have supported this.
The bill that was eventually introduced to Parliament by the Government differed markedly from that which industry had agreed to. This new Option B went further than had been envisaged.
There are two distinct classes of public transport services. Those that are stand-alone without subsidy (commercial services), and those that need public subsidy to be viable (contracted services). National believes that these two types of service must be treated differently.
National accepts that where operators are receiving a subsidy for their services, the regional councils have every right to set the terms and conditions under which those contracted services will be delivered. But this bill allows regional councils to have direct control over private operators and what commercial services they can or cannot operate.
National believes there may be some justification for bundling commercial and contracted services together into the one contract but this should be done as part of a negotiated process. We believe that because the regional councils are the “keeper of the purse” for large sums of public subsidy, they already have a very strong upper hand in any contract negotiations. This bill moves the balance even further in the direction of the regional councils almost to the point of allowing them to dictate the terms and conditions in a “take it or leave it” type environment.
For these reasons National opposes the bill.
Appendix
Committee process
The Public Transport Management Bill was referred to the committee on 16 October 2007. The closing date for submissions was 14 December 2007. We received and considered 62 submissions from interested groups and individuals. We heard 37 submissions, which included holding hearings in Auckland and Christchurch.
We received advice from the Ministry of Transport and Land Transport New Zealand.
Commentary
Recommendation
The Transport and Industrial Relations Committee has examined the Public Transport Management Bill and recommends that it be passed by majority with the amendments shown.
Introduction
The Public Transport Management Bill seeks to help regional councils deliver better public transport services by giving them greater regulatory powers over public transport services in their regions. The bill would repeal the Transport Services Licensing Act 1989. The replacement regulatory framework introduced by this bill would provide regional councils with new functions and powers over those services that are not contracted by the councils (commercial services).
Our submissions process attracted a wide range of comment from regional councils, public transport service providers, and users of public transport. Submitters were well informed about the proposals contained in the bill, and the alternatives considered by officials in developing the policy underlying it. The options ranged from preserving the status quo (“Option A”) to enabling regional councils to require that all services in their region be operated under contract (“Option C”).
As introduced, the bill takes the middle ground (“Option B”). It would empower regional councils to achieve their objectives mainly through two planning mechanisms—regional public transport plans, and controls imposed by councils on commercial services to implement these plans—and a compliance and enforcement regime.
In considering issues raised by submitters, we noted that different regions face different challenges for public transport management. For example the ratio of commercial bus services to contracted bus services varies widely between the regions. The Auckland Regional Transport Authority (ARTA) asked the committee to recommend a re-drafting of the bill in favour of Option C, which would have given ARTA the option of a fully contracted public transport system.
We gave this proposal serious consideration. Labour members believe that this option would enable ARTA to manage their public transport system more effectively than imposing controls on certain aspects of commercial services. However, most of us consider that the bill, with the recommended amendments, would provide regional councils in general with better tools for managing public transport services. At the same time, the recommended amendments would provide more appropriate checks and balances on the exercise of those powers.
This commentary focuses on the main amendments we recommend to the bill. It does not cover minor or technical amendments.
Interpretation
We recommend several amendments to clause 4 and a number of minor amendments.
We considered arguments for and against the inclusion of specific services in the definition of “public transport service”. We recommend that the definition of public transport service in clause 4 be amended to exclude services operating primarily for the benefit of tourism. We believe it would be inappropriate for regional councils to plan for and manage tourism services, and this should be explicitly stated in the bill. For clarity we also recommend that school bus services (contracted or funded by the Ministry of Education) be explicitly excluded from the definition.
This bill would require regional councils to consider the needs of and consult groups that represent people who can be considered “transport disadvantaged”. We agree with submitters that the term should be defined, but not by listing such groups. We recommend that “transport disadvantaged” be defined to include people identified by the regional council as least able to get to basic community activities and services such as work, education, healthcare, welfare, and food shops. We note that the term might apply to people living in isolated rural areas.
As the term “existing service” is not defined in the bill, we recommend inserting a definition in clause 4 to define an existing service as a registered commercial public transport service operating on or before the adoption of a plan or a variation of a plan that includes or amends a control over a commercial service.
Clause 10(3) as introduced would define performance and quality standards. We recommend shifting these definitions from clause 10(3) to clause 4 and including additional matters. Performance standards should also specify degrees of reliability and compliance on matters such as punctuality, routes, and pick-up points. Quality standards should also apply to the design and performance of vehicles, the comfort of passengers, seating for drivers, and customer service training and standards of conduct for staff.
Regional public transport plans
We recommend a number of amendments to clause 10 of the bill, which prescribes the contents of regional public transport plans.
Content and criteria
As we discuss later in this commentary, we are recommending a new provision for a right of appeal against controls the regional councils might impose on commercial services (new clause 40A). Such a right of appeal would require consequential changes to clause 10, because any controls specified in a regional public transport plan would need to be consistent with the purpose of the plan and contribute to its implementation.
We therefore consider that more transparency and clarity about policies and controls are needed. Accordingly we recommend that clause 10(1) be amended to clarify the requirement for plans to specify the following:
any policies that apply to public transport services
the classes of public transport services to which policies in the plan apply
how the regional council will implement the policies
the criteria for determining whether a proposed variation to the plan is significant.
We also recommend amendments to clause 10(2) to clarify that the types of policies that regional councils may include in a plan include
specifying any services, contracted or commercial, whether or not on the same route, that must operate as a group
the application of common emblems and designs of vehicles, but not colour schemes
minimum operating periods
policies for monitoring compliance with controls.
We also recommend amending clause 12 to require that plans explain why the particular controls are included and the alternatives considered, and assess the effectiveness of the controls. We believe that this provision would ensure that regional councils regarded the imposition of a control as just one measure among others for meeting their objectives.
Timeframes
We recommend an amendment to clause 11 to require that regional public transport plans take effect 25 working days after they have been formally adopted, instead of 20 working days as proposed. This would allow more time for operators and other stakeholders to be notified of the plan requirements before they come into force. In addition we recommend an explicit requirement that all operators be notified and sent a copy of the plan as soon as possible after its adoption. These amendments are needed to allow operators to exercise the right of appeal, should they have grounds for doing so.
We also recommend a reduction in the transitional periods for controls from 18 months (under certain conditions) to a blanket 12 months. We consider that the conditions attached to the 18- month timeframe are unnecessary.
Controls on commercial services
Clause 12 of the bill would enable regional councils to impose controls over commercial services. Such controls would allow a regional council to require a commercial service to operate an integrated service, with integrated fares, ticketing, and related technology; set, and require operators to apportion and collect, fares; and require common colour schemes, emblems, signs and designs of vehicles.
We agree with some submitters that the intended scope of such controls is not clear, and that regional councils might appear to have unlimited scope to impose controls on commercial services.
We recommend amending clause 12 to provide guidance and place limits on the scope of the controls that regional councils might impose upon commercial services, by deleting clauses 12(1)(a) and 12(5) and inserting criteria for the inclusion of a control in a regional public transport plan. These criteria would require regional councils to consider the impact of controls on existing operators and services, and require their consistency with the purpose of the plan.
We recommend further that clause 12 be amended to clarify the kinds of controls that could be imposed, as follows:
minimum periods of operation
frequency, capacity, and times of public transport services
requiring services to be registered as a group
quality and performance standards
requiring the integration of services, and the acceptance and use of integrated ticketing, fares and technology, and the application of common emblems, signs, or designs
setting and apportioning integrated fares
any other type permitted by regulation.
We also recommend amending clause 12 to state that regional councils may not impose more requirements on commercial services than contracted services of a similar class, and to provide that a control may not be made for the purpose of eliminating an existing commercial service. If a control is likely to result in the withdrawal of a service that has been specified in the plan as needed by the community, we also recommend that a similar service must be available to the users of that service. These amendments should provide operators with more certainty as to potential controls.
Bundling of services
As noted, we have recommended an amendment to clauses 10 and 12 to allow regional councils to require the registration of all the services on one or more routes as a group (“bundling”), either as contracted services or commercial services, but not as a combination of both. We understand that the intention of the bundling provision is to prevent commercial operators from “cherry-picking” preferred routes and times, leaving regional councils to contract out the remainder at a greater cost overall.
Submitters were concerned about the extent of “bundling” permitted under the bill, and about the limits on bundling. Many feared that the bundling provision might require operators to run services that were uneconomic; they submitted that commercial operators would be discouraged from providing public transport services. We agree that more clarity is needed about these matters.
We recommend amendments to clause 12 to allow a regional council to require certain services to be operated collectively as a group, if it is satisfied that it would cost less for a single operator to run the group than to allow multiple operators. This amendment would require an associated amendment to define the “operating cost of a service” as the cost to an operator before any revenue is taken into account.
We considered but rejected calls for placing limits or restrictions on the powers of regional councils to bundle services.
Notice periods
As introduced, clause 12(2) would enable regional councils to set a minimum period of notice for commencing or withdrawing a commercial public transport service or varying the service; the minimum period under the current legislation is 21 days. We considered arguments for extending the notice period beyond the proposed 90 days, and others for not extending it so that operators would not be forced to continue unprofitable routes. We do not support an extension of the 90-day period, which we consider sufficient to allow regional councils to respond to the withdrawal of a commercial service. Nor do we support reducing the minimum notice period. If a service became unprofitable, we understand that an operator could make a case for “reasonable excuse” and so would not be penalised under clauses 48 and 49 of the bill for an early withdrawal of service.
Clause 12(2)(a) would allow regional councils to adopt a control to set limits on the minimum period of notice for registering, varying and withdrawing the operation of services, up to a maximum of 90 working days. We recommend that minimum periods of notice be specified in the regional public transport plan, rather than by way of a control. This would require deleting clause 12(2)(a) and amending clause 10. Although this would remove any right of appeal, because that right (which we recommend in clause 40A) would apply only to a control and not to a policy in a plan, we understand that the recommended notice periods are supported by stakeholders.
As introduced clause 12(2)(b) would allow regional councils to set a minimum period of their choice for the operation of a commercial service. We recommend that clause 12(2)(b) be amended to make 12 months the upper limit, to give operators more certainty and to tie in with regional council funding and planning cycles.
Clause 12(2)(c) would allow regional councils to set a maximum period between the registration of a commercial service and its commencement date, and any variation. We recommend that this provision be deleted, as it would be simpler to apply this under the deregistration processes provided for in clause 36.
Integration of services, tickets and fares
A key objective of this bill is to provide regional councils with the ability to integrate public transport services in their regions. Clause 12 would allow regional councils to impose controls for integrating services, technology, ticketing, and fares. Although most submitters supported integration, many were concerned about the scope of the controls that could be applied for this purpose, and the apportionment of integrated fares.
We believe that regional councils should have the means to require the scheduling of services to connect with other services, and to set policies for integrating fares, technology, and ticketing. For example, a regional council might decide that public transport users in its region should have the option of purchasing a single ticket for a journey that involved a bus ride, which connected with a ferry service, then a train trip to the final destination.
As introduced, clause 12 would empower regional councils to apportion fares for integrated services. We consider that regional councils must act reasonably in apportioning fares, taking account of the cost involved in providing a service that is subject to an integrated fare. We therefore recommend that clause 12(3) explicitly require regional councils to apportion fares reasonably, without undue discrimination between operators.
We also recommend that clause 12 be amended to clarify that a commercial operator might be required to accept a lower fare for travel on their service, if the fare were integrated with other services, than they might otherwise have set.
Clause 12(3) as introduced would allow regional councils to impose common colour schemes, emblems, signs and visual designs to help integrate and promote services. Many submitters opposed these controls for reasons of cost. We consider that the use of common emblems, signs or visual designs would promote integrated services adequately. We do not agree, however, that regional councils should be able to require common colour schemes. We therefore recommend that the provision for controls requiring common colour schemes be deleted from the bill.
Information use and availability
Clause 12(4) would enable regional councils to require operators to provide information about commercial services to help them to plan and monitor public transport. Such information would include details of patronage, revenue, and vehicle and service performance.
We are concerned that the proposed provision might not adequately safeguard commercially sensitive information. We recommend that subclauses (4), (6) and (11) of clause 12 as introduced be deleted, and a new provision (now clause 13) be inserted to empower regional councils to require specific information from operators. As amended, commercially sensitive information acquired by regional councils under clause 13 could not be disclosed without the operator’s consent, except in specified circumstances (for example, only under the Local Government Official Information and Meetings Act 1987, following consultation with the operator where the council cannot identify a reason to withhold it).
Consultation on regional public transport plans
Clause 15 of the bill as introduced sets out consultation requirements for developing and adopting regional public transport plans, in addition to the consultation principles and special consultative procedures set out in the Local Government Act 2002.
Clause 15(1) as introduced lists a wide range of parties with whom regional councils must consult on the basis that they would be directly affected by a regional public transport plan. Amongst others, they include public transport users, the public in the region, affected communities, and Māori in the region. We consider that the proposed list of stakeholders is too broad and the consultation requirement unnecessarily onerous for regional councils, especially given that the interests of these four groups are already provided for under Local Government Act consultation requirements. We therefore recommend deleting them from the list of parties requiring additional consultation.
We recommend extending the requirement to consult, to include commercial operators who have notified a proposal to operate a commercial public transport service in a region, because they would also be directly affected by the adoption of a plan.
We further recommend replacing the single-phase consultation approach, as set out in clause 15(1) of the bill, with two consultation phases. The first phase would require regional councils to consult stakeholders with a direct interest in the funding or provision of public transport when developing a plan. This list would include operators, the New Zealand Transport Agency, and territorial authorities. Before adopting a regional public transport plan, regional councils would be required to conduct full public consultation under Local Government Act procedures, and also notify specific groups listed in the bill and invite them to make submissions.
We recommend that clause 16 as introduced be amended to require regional councils to follow the consultation procedures now set out in clause 17 when significant amendments to a regional public transport plan are proposed. Some submitters were concerned that regional councils might vary a plan without full consultation, and others were unclear about what might constitute a significant change or a minor change.
We agree that clarification is needed, and recommend that the provisions that were in clause 16 be deleted, and that clauses 10 and 18 now require regional councils to
set out their general approach to determining what is significant
consult on any significant variation to a regional public transport plan, reflecting the two-stage approach to consultation set out in clause 17
consult on variations that are not deemed significant under the standard Local Government Act provisions.
We recommend that any proposal to include a control or amend a control be defined as a significant variation to a plan and thus subject to full consultation. And we recommend altering the timing for reviewing regional public transport plans so that they must be reviewed whenever a relevant regional land transport strategy, regional land transport programme, or a long-term council community plan is adopted.
Processes for declining to register and to deregister commercial public transport services
We are concerned that the processes set out in clause 30 would not allow enough time for regional councils to comply with consultation requirements before declining an application for registering a commercial public transport service. We are similarly concerned that the time between notifying an unsuccessful applicant and the proposed start date of a service is too short. We recommend an extension of the period within which a regional council must decide to accept a registration from 21 days to 30 working days, and the provision of a formal process requiring regional councils to make an initial assessment and provide operators with an opportunity to be heard before the final decision.
We recommend consequential amendments to clauses 10, 28, and 32 so that the minimum notice period for commencing or varying a service would be no less than 35 working days, to ensure a minimum of five working days’ notice of a decision prior to the planned commencement or variation of a service.
We also recommend the addition of further provisions in clause 37 requiring regional councils to notify operators of a proposed decision to deregister, and to set out the reasons for the decision and the process for appeal. Operators would then have an opportunity to make submissions within 30 working days, have their case heard, receive notification of the decision and reasons for the decision, and be advised of a further right of appeal against deregistration.
Monitoring and compliance with controls
Some submitters complained that the bill contains insufficient means of ensuring compliance with controls. We agree, and have considered various options for strengthening the compliance regime. We considered but rejected arguments for introducing a minor offence regime or an infringement notice regime.
We recommend amending clause 38 to allow regional councils to serve notice on an operator for failure to comply with a control, setting out the process for notification and the consequence of non-compliance. If after receiving a notice the operator continued to fail to meet a control the regional council could apply for a court order.
We also consider that regional councils need additional powers to monitor compliance with controls, similar to those that apply to contracted services. We recommend inserting new clause 35B to provide additional functions and powers for regional councils, to
monitor commercial public transport services and vehicles used in those services for compliance with controls
conduct interviews and passenger surveys for the purpose of monitoring compliance with controls
board vehicles for the purpose of monitoring compliance with controls
inspect an operators’ complaints register and maintenance records.
We consider that these additional powers and functions would enable a regional council to monitor commercial services effectively and thus increase their compliance with controls.
Right of appeal
Several submitters were concerned that commercial operators would have no right to be heard by an independent third party. We agree that controls might have a significant effect on commercial operators, and that a right of appeal should be provided.
We recommend inserting a right of appeal for operators of existing commercial services (new clause 40A). We consider the Environment Court to be the appropriate body to consider appeals because of its experience in decisions that involve weighing up commercial benefits against public benefits. We note too that the Environment Court has more flexibility in its mode of inquiry than district courts.
We also recommend that new clause 40A limit the grounds for appeal to these areas: failure by a regional council to properly consider the impacts of the control on the operator; inconsistency between the control and the purpose of the plan; inappropriateness of the control; imposing a higher standard on commercial services than contracted services; and failure to plan for replacement services. New clause 40A would replace the provisions under clause 52(b)(ii) and (c) for regulations to be made to limit, restrict or suspend controls, which we recommend be deleted.
New provisions are also needed to define the decision-making powers of the Environment Court. We recommend that new clause 40B empower the Environment Court to dismiss an appeal, modify (or remove) the provisions of the plan relating to the control, modify arrangements to alleviate any material adverse effects of the control on existing services, or modify the relevant provisions of the regional public transport plan.
Labour members’ view
The committee heard submissions from Auckland regional and territorial local government, ARTA, some operators and public transport users in support of adding an option to the bill known as Option C but this did not receive majority support of the committee. We believe it should have been added as an option and were convinced by ARTA that it is necessary to have this available to better enable them to deal with Auckland’s unique set of difficulties in providing a truly efficient integrated public transport network. Although the bill as amended will significantly improve on the status quo for many regions it is interesting to note that local government in Auckland is united in supporting the addition of Option C. We also received letters of support from other metropolitan regional councils supporting Auckland’s position.
The evidence we heard from users of the system showed clearly that Auckland needs the tools to fix a system that is groaning at the seams due to a growing demand from the public. We believe adding a new Option C would have been highly desirable.
National members’ view
The New Zealand National Party believes this bill imposes too much bureaucratic burden on public transport services and shifts the balance of power in contract negotiations too far in favour of regional councils.
The Government originally consulted with industry on a scheme referred to as Option B. Although there was some level of disquiet among operators they were prepared to accept that regime. National also would have supported this.
The bill that was eventually introduced to Parliament by the Government differed markedly from that which industry had agreed to. This new Option B went further than had been envisaged.
There are two distinct classes of public transport services. Those that are stand-alone without subsidy (commercial services), and those that need public subsidy to be viable (contracted services). National believes that these two types of service must be treated differently.
National accepts that where operators are receiving a subsidy for their services, the regional councils have every right to set the terms and conditions under which those contracted services will be delivered. But this bill allows regional councils to have direct control over private operators and what commercial services they can or cannot operate.
National believes there may be some justification for bundling commercial and contracted services together into the one contract but this should be done as part of a negotiated process. We believe that because the regional councils are the “keeper of the purse” for large sums of public subsidy, they already have a very strong upper hand in any contract negotiations. This bill moves the balance even further in the direction of the regional councils almost to the point of allowing them to dictate the terms and conditions in a “take it or leave it” type environment.
For these reasons National opposes the bill.
Appendix
Committee process
The Public Transport Management Bill was referred to the committee on 16 October 2007. The closing date for submissions was 14 December 2007. We received and considered 62 submissions from interested groups and individuals. We heard 37 submissions, which included holding hearings in Auckland and Christchurch.
We received advice from the Ministry of Transport and Land Transport New Zealand.
Committee membership
Hon Mark Gosche (Chair)
Hon Maurice Williamson (Deputy Chair)
David Bennett
Peter Brown
Russell Fairbrother
Darien Fenton
Lesley Soper
Hon Judith Tizard
Kate Wilkinson
Pansy Wong