Part 2: The taxi industry framework

2.1
In this Part, we describe the various components of the taxi industry framework, and the obligations and responsibilities of those involved in the industry. This includes:

• reform of the taxi industry in 1989;
• legislation that applies to the taxi industry;
• the 3 tiers of the taxi industry – taxi organisations, passenger service licence holders, and taxi drivers;
• the fit and proper person assessment;
• provision of courses; and
• the structure of the Authority at the time of our audit.

Reform of the taxi industry

2.2
Before 1989, there were controls over the number of operators who could work in the taxi industry at any one time, where they could work, and the fares taxi drivers could charge. Assessments were required of an applicant’s financial situation, and the effect granting them a licence would have on supply and demand, before they could enter the taxi industry.

2.3
The Transport Services Licensing Act 1989 set up a new licensing regime to govern the entry of individuals and companies into transport service industries. Transport service licences were required for goods services (such as couriers), vehicle recovery services (such as tow truck operators), rental services, rail operator services, and passenger services (such as bus and taxi operators).

2.4
A significant change introduced by the Transport Services Licensing Act 1989 was a move away from a focus on quantity (how many taxis, for example, worked in a particular area), and towards assessing whether an applicant had the necessary qualities to enter the industry, without considerations of economic viability.

2.5
For the taxi industry, the result was a large increase in the number of new entrants. Before 1989, there were 2567 taxi licence holders, who belonged to 107 taxi organisations and drove 2742 taxis. As at September 2004, there were 23,000 passenger endorsement holders,⁶ belonging to 190 approved taxi organisations and driving 8089 taxis.

2.6
The Authority advised us that in 1989 there were 18 Enforcement Officers (an equivalent position to a Compliance Officer) who conducted enforcement and compliance work for the Ministry of Transport, along with Traffic Safety Service Officers. There would have been about 152 taxis for each Enforcement Officer. As at September 2004, there were 42 compliance (enforcement) staff⁷, and about 192 taxis for each of them. There have also been increases in the number of other transport service licences, including those required for a goods service.

2.7
The prescriptive framework for the industry did not change in 1989. Some controls were removed – for example, centralised setting of taxi fares, and the limit on the number of drivers. However, a significant number of obligations were kept, and extra ones introduced, with the aim of achieving a quality standard in the industry.

2.8
There are many obligations on those who wish to enter the taxi industry, and those already in it. For example, in 1993, the Certificate of Knowledge of Law and Practice was introduced as a prerequisite for obtaining a transport service licence. The aim was to ensure that people controlling transport services (including passenger services) knew the laws that applied to their industry.

2.9
Another example is the Area Knowledge Certificate that drivers must hold for the areas in which they want to work, to prove they know how to get to and from major locations.

Legislation currently applying to the taxi industry

2.10
Most of the legislation about the taxi industry is in the:

• Transport Act 1962;
• Land Transport Act 1998;
• Transport Services Licensing Act 1989;
• Transport Services Licensing Regulations 1989;
• Land Transport (Driver Licensing and Driver Testing Fees) Regulations 1999;
• Land Transport (Driver Licensing) Rule 1999; and
• Land Transport Rule: Passenger Service Vehicles 1999.

2.11
Together, this legislation forms a prescriptive legislative framework, made up of various Acts, Rules, and Regulations, that:

• provides prescriptive requirements that must be satisfied before a person or operator can enter the taxi industry; and
• places a significant number of ongoing obligations on drivers and operators in the taxi industry.

2.12
The Transport Services Licensing Act 1989 created 3 tiers in the taxi industry, each with particular obligations and requirements. The tiers are:

• taxi organisations;
• passenger service licence holders; and
• taxi drivers.

Taxi organisations

2.13
A taxi organisation is an entity that manages a fleet of taxi vehicles. Taxi organisations vary in size. They can have one driver and one vehicle, through to hundreds of drivers and vehicles. The Authority must approve all taxi organisations.⁸

Applying to manage a taxi organisation

2.14
Those who will control, or are likely to control, the taxi organisation must have their fitness and propriety assessed by the Authority.

2.15
The taxi organisation must have rules, rosters, and other internal procedures to adequately control its members.

Obligations of taxi organisations

2.16
Under legislation, taxi organisations must:

• have a service, including telephone booking, available 24 hours a day and 7 days a week, unless exempted by their regional council;
• assign unique numbers to the fleet’s vehicles;
• maintain a register (of passenger service licence holders who are members of the organisation, their drivers, the unique fleet numbers assigned by the taxi organisation, and the number of vehicles used by each member), and make it available for inspection by any Enforcement Officer⁹;
• keep a register of complaints in a prescribed form;
• inform the Authority of any exemption it receives;
• • ensure that drivers hold Area Knowledge Certificates for the taxi organisation’s operating area, have an appropriate ability to communicate in English, and maintain an adequate knowledge of the taxi organisation’s current operating area;
• notify the Authority of any change in the taxi organisation’s responsible officers;
• notify the Authority of the taxi organisation’s operating area;
• have the organisation’s rules, and any amendments, approved by the Director of the Authority;
• ensure that passenger service licence holders and drivers comply with the organisation’s approved rules; and
• comply with the applicable parts of the Small Passenger Service Rules¹⁰ contained in Schedule 3, Part 1, of the Transport Services Licensing Act 1989 (for example, that taxi organisations must register their fares with the Director of the Authority).

2.17
Figure 1 summarises the types of taxi organisations in the taxi industry framework, and their basic obligations.

Figure 1
Types of taxi organisations, and their obligations

Passenger service licence holders

2.18
Everyone who wants to drive a taxi has to hold, or be employed by an entity or person who holds, a licence to operate a passenger service¹¹ (a passenger service licence). The Authority issues passenger service licences.

2.19
Figure 2 shows some of the possible contracting, leasing, or employment arrangements between passenger service licence holders and other drivers. Passenger service licence holder ‘1’ drives a taxi and employs other drivers. Passenger service licence holder ‘2’ drives her own taxi. Passenger service licence holder ‘3’ does not drive a taxi, but leases his vehicle out and uses contracted drivers (employed drivers are the only ones who do not need to hold a passenger service licence).

Figure 2
The role and obligations of passenger service licence holders in the taxi industry

Applying for a passenger service licence

2.20
To get a passenger service licence, an applicant must:

• advertise, twice within not more than 7 days, his or her plan to apply for a passenger service licence;
• complete an examination, delivered by a sole provider approved by the Authority, to gain a Certificate of Knowledge of Law and Practice (unless a person who has, or will have, control of the transport service already has the Certificate);
• submit application documents and fees to the nearest regional office of the Authority;
• allow, and pay for, the Authority to check the applicant’s fitness and propriety to operate a passenger service; and
• name each person in control of the passenger service, so that the Authority can check their fitness and propriety to be in control of the passenger service.

Certificate of Knowledge of Law and Practice

2.21
The requirement that someone in control of a transport service must hold a Certificate of Knowledge of Law and Practice (unless they had obtained their licence before 1992) was introduced to help ensure that people entering the transport industry were well prepared, and aware of their legal responsibilities.

2.22
The assessment for a Certificate of Knowledge of Law and Practice comprises 2 examinations. One examination is based on general transport industry laws and safety standards, and the other examination is based on the specific rules and practices that apply to the type of transport service the person wants to operate (for example, a passenger service). The examinations are multiple-choice and open book, run for 1½ hours each, and require a score of 80% or higher to pass.

Obligations of a passenger service licence holder

2.23
Passenger service licence holders must ensure that:

• they become a member of a taxi organisation, or get an exemption if they are not operating a taxi service;
• every taxi used under their passenger service licence has an approved taxi sign in an approved position on the vehicle;
• any advertising on a taxi does not reduce visibility or obscure any signs or notices required by the Transport Services Licensing Act 1989 (if it does, the passenger service licence holder must ensure that the vehicle is not used as a taxi);
• the fare schedule inside a taxi is readily visible to passengers, and includes the taxi organisation’s details as well as information about making complaints;
• the fare schedule is displayed on the outside of the taxi;
• the name, business location, and telephone number of the taxi organisation, and the fleet number of the taxi, are clearly displayed on the inside and outside of every taxi in the service (and in the position required by the Transport Services Licensing Act 1989);
• the driver’s identification card is readily visible to passengers; and
• every taxi has an accurate meter, certificated by the Director of the Authority, and in a position where it can be easily read by a passenger.

2.24
Passenger service licence holders must also:

• notify the Director of the Authority of any change in their details;
• keep the taxis used in their service in a “fit and proper condition”, and pay all fees related to the vehicles;
• only use vehicles in the passenger service that meet specified design, construction and maintenance standards; and
• disclose the full name and address of an employee driver who has allegedly committed an offence, if requested to do so by the Director of the Authority or an Enforcement Officer.

Taxi drivers

2.25
Individuals who wish to work as taxi drivers must hold a current passenger endorsement on their driver licence. Before a person can apply for a passenger endorsement, he or she must hold, and have held for at least 2 years, a full driver licence (other than a motorcycle licence).

2.26
Taxi drivers must hold a current driver identification card, and hold the relevant Area Knowledge Certificate(s) for the area(s) in which the taxi organisation they work for operates.

2.27
Taxi drivers must either hold a passenger service licence, or be employed by a passenger service licence holder.

2.28
Drivers must belong to an approved taxi organisation (approved by the Authority).

Passenger endorsements

2.29
Passenger endorsements are issued by the Authority, and appear as the letter “P” under item 7 of a person’s driver licence. A passenger endorsement shows the driver licence holder knows his or her obligations and responsibilities as the driver of passengers, and has had his or her fitness and propriety assessed.

2.30
Applicants for a passenger endorsement must have successfully completed a passenger endorsement course, and present their course certificate when they apply. This course, approved by the Authority, covers the legislated obligations and responsibilities of people who carry passengers in large or small passenger service vehicles.

2.31
Applicants for passenger endorsements must also provide a medical certificate (unless they have provided one for other driver licensing purposes in the last 5 years) and have their eyesight checked. They must provide evidence of their identity, and evidence of their address. They must provide an electronic version of their signature, allow their photograph to be taken, and pay the required fees.

Driver identification cards

2.32
The driver identification card is a security measure, allowing passengers to identify their driver, and providing assurance that the person driving the taxi is legally entitled to do so.

2.33
The Transport Services Licensing Act 1989 requires the Director of the Authority to assess the fitness and propriety of applicants for driver identification cards. The Act also requires the Director to assess the fitness and propriety of applicants for passenger endorsements. All taxi drivers must hold a driver identification card, so the requirements are combined; the Authority uses one application form, and assesses the applicant’s fitness and propriety when deciding whether to issue a passenger endorsement.

Area Knowledge Certificates

2.34
Taxi drivers must hold Area Knowledge Certificate(s) for the area(s) in which they want to work, to prove they know how to get to and from major locations. They must present their Area Knowledge Certificate(s) to the taxi organisation they drive for. The organisation must record that the driver has the correct Certificate(s) for the organisation’s area(s) of operation.

Obligations of taxi drivers

2.35
Passenger endorsement holders are required, by the Land Transport (Driver Licensing) Rule 1999, to:

• renew their passenger endorsement when required;
• renew their driver identification card when required;
• comply with logbook requirements; and
• comply with the applicable parts of the Small Passenger Service Rules contained in Schedule 3, Part 1, of the Transport Services Licensing Act 1989.

2.36
The role and obligations of taxi drivers are summarised in Figure 3. Figure 4 summarises how each of the Acts, Rules and Regulations, noted in paragraph 2.10 relate to the taxi industry.

Figure 3 - The role and obligations of taxi drivers in the taxi industry

Figure 4
Legislation covering the taxi industry

Legislation	What the legislation covers
Transport Act 1962	Logbooks that must be completed by occupational drivers (including taxi drivers).
Land Transport Act 1998	Sets out the objectives, functions, and powers of the Land Transport Safety Authority. Driver identification cards.
Transport Services Licensing Act 1989	Approved taxi organisations. Passenger service licences. Occupational endorsements for driver licences (including the passenger endorsement). Area Knowledge Certificates. Driver identification cards. Providers of area knowledge courses. Certificate of Knowledge of Law and Practice examination provider. Ongoing obligations of approved taxi organisations, passenger service licence holders, and passenger endorsement holders.
Transport Services Licensing Regulations 1989	Content of the complaints registers that must be held by taxi organisations.
Land Transport (Driver Licensing and Driver Testing Fees) Regulations 1999	Fees for licensing (including the fees for passenger endorsements, and driver identification cards).
Land Transport (Driver Licensing) Rule 1999	Occupational endorsements for driver licences (including the endorsement to carry passengers). Driver identification cards. Passenger endorsement course providers.
Land Transport Rule: Passenger Service Vehicles 1999	Vehicles used in a passenger service (including taxis). Taxis must also comply with general vehicle standards; for example Land Transport Rule: Frontal Impact 2001.

Fit and proper person assessment

2.37
The Authority must assess the fitness and propriety of people in all 3 tiers of the taxi industry – taxi organisations, passenger service licence holders, and taxi drivers.

2.38
The requirements for the fit and proper person assessment are set out in section 24 of the Transport Services Licensing Act 1989. This assessment is intended as a measure to protect the public.

2.39
In relation to any passenger service using small passenger service vehicles, the Director of the Authority is required to consider, as part of the fit and proper person assessment:

• any offending in respect of offences of violence, sexual offences, drug or arms offences, or offences involving organised criminal activity;
• any major transport-related offending, especially offences related to safety or road user charges;
• any history of mental health or behavioural problems;
• any persistent offending of any kind; and
• any complaints in respect of the person or any transport service operated by the person that are of a persistent or serious nature.

2.40
In determining whether a person is fit and proper, the Director of the Authority may consider:

• the person’s criminal history (if any);
• any transport-related offences;
• any history of mental health or serious behavioural problems;
• any complaints made in relation to any transport service provided by the person or in which the person is involved, particularly complaints made by users of the service;
• any history of persistent failure to pay fines incurred by the person in respect of transport-related offences; and
• any other matter the Director of the Authority considers it is appropriate in the public interest to consider.

Provision of courses for the taxi industry

2.41
Courses of relevance to the taxi industry are the:

• passenger endorsement course;
• area knowledge courses; and
• Certificate of Knowledge of Law and Practice course.

2.42
As at May 2005, there were 123 providers of passenger endorsement courses approved under the Land Transport (Driver Licensing) Rule 1999, and 99 providers of area knowledge courses, approved under the Transport Services Licensing Act 1989. The Authority told us that the exact number of approved providers fluctuates from week to week. Taxi organisations or other providers (for example, driver training schools) can offer these courses. The Authority must approve providers for each course.

2.43
Passenger service licence holders must pass the Certificate of Knowledge of Law and Practice examination, unless someone who has, or is to have, control of the transport service already has the Certificate. A sole provider, approved under the Transport Services Licensing Act 1989, won an Authority tender and administers the examination nationally.

Structure of the Land Transport Safety Authority in relation to the taxi industry framework

2.44
From 1993 until 1 December 2004, the Authority, as established by the Land Transport Act 1993, was primarily responsible for land transport safety.

2.45
During our audit, the Authority consisted of 6 divisions – Corporate Services, Policy, Operations, Information Systems and Technology, Communications and Education, and Strategy.

2.46
Our audit focused on the Operations Division, which comprises 7 regional offices. Figure 5 shows the regional boundaries for each office.

2.47
The regional offices monitor and review the performance of parties within the transport sector (such as drivers, transport organisations, and driver licence course providers), and promote and enforce compliance with legislative requirements.

The Compliance Section

2.48
In relation to the taxi industry, the Compliance Section, which is part of the Operations Division and sits within the regional offices, is responsible for matters including the approval of taxi organisations and course providers, and granting licences or endorsements for drivers.

2.49
Positions within the Compliance Section include Regional Compliance Officer, Senior Compliance Officer, Compliance Officer, and Compliance Support Officer. In addition to the approval and licensing functions, these staff (excluding Compliance Support Officers) are also primarily responsible for monitoring and enforcing the taxi industry’s compliance with legislative requirements.

Figure 5
Regional office boundaries

2.50
Regional Compliance Officers are responsible for managing the delivery of provisions in the various transport legislation, including:

• checking and licensing of applicants for transport licences, driving instructors and examiners, and course providers;
• appearing in the District Court on behalf of the Director of the Authority in appeals by declined applicants;
• ensuring providers and agents maintain appropriate quality standards for courses or testing;
• encouraging innovation within the land transport industry, which encourages and promotes responsibility by operators and drivers for compliance with quality standards; and
• initiating positive compliance action in all matters relating to relevant transport legislation, including Acts, Rules, and Regulations.

2.51
Alongside these technical functions, the Regional Compliance Officer is also accountable for leadership, business planning, customer service, managing consistent standards, human resources and financial management, and regional partnerships.

2.52
The Senior Compliance Officers assist the Regional Compliance Officer in managing the licensing and monitoring activities of the Compliance Officers and Compliance Support Officers. They have similar functions to the Regional Compliance Officers (when needed they act in that role), but generally have a more hands-on relationship with compliance staff in monitoring the consistency of their exercise of delegated responsibilities.

2.53
The purpose of the Compliance Officer position is to–

… achieve better compliance with transport legislation by industry groups and drivers through the efficient use of existing Authority databases to target non-compliance and measure the effectiveness of compliance measures. In addition new initiatives are to be sought to achieve voluntary compliance within the industry through encouragement, education and performance monitoring and assessment.

2.54
In particular, Compliance Officers are responsible for functions including:

• auditing and monitoring individuals and industry groups’ compliance with relevant transport legislation;
• providing information and encouragement to industry groups to improve willing compliance with legislation administered by the Compliance Section;
• establishing and maintaining close working relationships with appropriate external agencies, including enforcement and audit organisations;
• reviewing courses used by, and available to, industry groups targeted at improving awareness of legislation and compliance;
• investigating, making decisions where delegated, and where appropriate, testing driving instructors, course providers, or driving testing officer applicants, to legislative and Authority standards; and
• representing the Director of the Authority as a witness (or prosecutor) in the District Court.

2.55
Compliance Support Officers assist others in the Compliance Section by completing the administration of applications received by the regional office, and obtaining criminal, traffic, and, where applicable, immigration checks. They can also assess applications, with some having the power to grant applications, while others can make recommendations only.

2.56
As at September 2004, there were 11 full-time equivalent Compliance Support Officers, and 42 full-time equivalent compliance (enforcement) staff comprising:

• 7 Regional Compliance Officers (one in each of the 7 regional offices);
• 3 Senior Compliance Officers (in Auckland, Wellington, and Christchurch); and
• 32 Compliance Officers.

2.57
The Operations Division also includes the Transport Registry Centre, based in Palmerston North. The Transport Registry Centre’s role includes administering the Authority’s Driver Licence Register¹² and the Motor Vehicle Register¹³(on behalf of the Ministry of Transport).

2.58
Many of the Operations Division’s activities are contracted out to external agents (Transport Service Delivery agents). The New Zealand Automobile Association, Vehicle Testing New Zealand Limited, and Vehicle Inspection New Zealand Limited are agents for driver licensing, motor vehicle registration, and motor vehicle licensing services. Outlets of New Zealand Post Limited, and some independent outlets, also provide motor vehicle registration and motor vehicle licensing services.

---

6: Passenger endorsement holders are individuals qualified as taxi drivers. The figure excludes bus drivers and other holders of passenger endorsements.

7: The term “compliance (enforcement) staff” does not include the 11 Compliance Support Officer positions. The Authority’s compliance positions are discussed in paragraphs 2.48-2.56.

8: This is required by section 21 of the Transport Services Licensing Act 1989.

9: The term “Enforcement Officer” includes the Police and those in the Authority who are appointed as Enforcement Officers.

10: The vehicles used in a passenger service are either ‘small’ or ‘large’. Small vehicles carry 12 or fewer people (including the driver), while large vehicles can seat 13 or more people (including the driver). Taxis are small passenger service vehicles.

11: If the passenger service uses large passenger service vehicles, the operators must hold a passenger service licence whether or not the passengers are carried for hire or reward.

12: The Driver Licence Register is an electronic database, required by section 29 of the Transport Services Licensing Act 1989, that holds records of licences granted, suspended, surrendered, and revoked under the Act.

13: The Motor Vehicle Register is a database of vehicles. It includes information on a vehicle’s owner, colour, make and model, use (whether the vehicle is used privately or in a particular transport industry, such as a passenger service), ownership history, and safety inspection results.

page top