More battles in the regulatory war between Uber and the Government

It’s been interesting to watch ongoing developments in the regulation of ‘small passenger services’ in New Zealand. The Government has conducted a review of the sector, but that doesn’t seem to have calmed the waters at all.

In March, Uber launched in Christchurch (expanding from Auckland and Wellington). The taxi industry wasn’t pleased, particularly given Uber said it was launching with a different set of rules to taxis.

In April, Uber dropped its fares in Auckland and Wellington, and also announced that it was relaxing the rules for driver registration. Uber said it would no longer require a “P” endorsement before allowing its drivers on the road — instead they would get a criminal background check from the Ministry of Justice and an NZTA driving history check. The Transport Minister Simon Bridges and the NZTA responded by saying Uber’s new practice was illegal.

In May, the Government announced its intention to get rid of some taxi regulations and bring Uber into the new regime. Here’s how the Ministry of Transport describes the changes:

…the same rules will apply to all services that connect passengers with customers (including taxi, private hire, ridesharing, and dial a driver services).

Some rules that impose costs on operators but which no longer provide significant benefits will be removed.

This will allow all operators to compete on an even footing and to differentiate from competitors as part of their brand on aspects such as cost, service, environmental footprint and philosophy.
Consumers will have a range of services to choose from, and can be confident that they can use these services safely. Drivers will also feel safe in their places of work.

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

For existing taxis, the Government is getting rid of a few rules like the need for signs on the outside of the vehicle, area knowledge requirements, panic alarms etc.

What the Government is keeping, which Uber seems to hate, is the requirement for drivers to have a “P” endorsement. To get a P endorsement, a person needs to have had their licence for two years, be a ‘fit and proper person’, and complete a course (although this last bit is still under review). The ‘fit and proper’ involves getting checked out by the Police to make sure you don’t have relevant convictions and aren’t a bad person to be driving others around.

From Uber’s perspective, they don’t like the requirement for drivers to jump through all these hoops because they want normal people to be able to earn a bit of money on the side without having to wait to get rigorously vetted. But from the Government’s perspective, it’s probably not desirable to have a whole lot of people becoming short-term Uber drivers without making sure they’re not going to cause any problems. The Government says the new system will probably be up and running in 2017.

Fundamentally regulations always impose costs on industries/people (e.g. “I have to wait around for ages to become an Uber driver!”) but they should create benefits which outweigh those costs (e.g. “When catching an Uber/taxi I can be confident the ride will be safe”). I think the new rules sound like a reasonably pragmatic and sensible response to the arrival of Uber. Catching an Uber is very similar to catching a taxi, so they should probably be regulated the same.

Since the announcement about future regulation of the industry in May, Uber has come under increasing pressure to follow the (old) rules. As RNZ reports:

The New Zealand Transport Agency has ordered seven of the company’s drivers off the road, five in the past month alone. It has also issued 34 formal warnings and 11 infringement notices.

Those choosing to ignore the sanctions could potentially face a $10,000 court fine.

The agency has also issued 756 letters to those it believes might be considering driving for Uber, warning them of the consequences for breaching transport laws.

In a statement, it said the police checks Uber did on its drivers were far less rigourous than what the agency required of drivers.

“As a safety regulator we have no interest in standing in the way of innovation, but we have an obligation to ensure that people carrying passengers for a living have been properly vetted for criminal convictions, including any overseas convictions, risky health issues or other matters which could put the travelling public at risk.”

This isn’t the first time the Government has cracked down on Uber, and I’m sure it won’t be the last.

Uber is encouraging their drivers to challenge the Government in court on the issue. Uber also says they’re supporting their drivers, but that seems to be rhetoric more than reality:

Menzies also said Uber would “stand by our partners”, though when asked later what that meant in practice, simply restated that it would “stand by them 100 percent”.

While I think many people are sympathetic to Uber’s campaign to be lightly regulated, because they like the service, I’m not sure if blatantly flouting the rules is the best way to get people to rally behind you. I will be very interested to watch how this issue plays out in the near future.

Updated to add details of Uber encouraging drivers to challenge the Government.

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