…and operator licensing doesn’t work in NZ, either

New Zealand trucking operators face a number of the same challenges that we face in Australia. These include driver shortages, the need to encourage how we safely share our roads, unfair contract terms, and the need for higher productivity vehicles and upgraded roads to handle the freight task of the future.

There are also key differences – chief amongst them is that to operate a road freight business in NZ you need to hold a Transport Service Licence (TSL), or in other words, operator licensing. It’s worth going back and having a look at where it all began.

Operator licensing in NZ, the TSL, dates back to the Transport Licensing Act 1931. It was designed to protect the government-owned rail freight service and effectively put controls and limits on trucking businesses, to prevent the “unnecessary” duplication of transport services. This included limits on how far you could transport goods by road.

Operator licensing in NZ has its roots in anti-competitive policies that sought to distort the transport market, make road freight uncompetitive and effectively increase the price of goods. The removal of most of these restrictions came in the early 1980s and was one of the first of a wave of economic reforms.

It is actually a critical point to make that watering down operator licensing was an economic reform. So going in the opposite direction would seem strange, to say the least.

Last month I wrote about the operator licensing system that operates in the UK and why it would not be suitable for the Australian trucking industry. As in the UK, the NZ TSL requires a person to pass a ‘fit and proper’ test. This can involve looking at a person’s past convictions, their traffic convictions and other areas of interest.

The licence is held by a legal entity such as an individual, partnership or company. The licence is targeted at individual(s) within the entity who have control, so for example both company Directors and an Operations Manager could be considered part of the TSL process.

If someone loses the ability to hold a TSL, they cannot simply go and work for another TSL holder as that would, in effect, bring the new TSL holder to the attention of the TSL review process. Losing a TSL can mean exiting the industry.

It should also be mentioned that buying or amalgamating a trucking business does not mean amalgamating TSLs, and it is not uncommon for a larger trucking company to operate different vehicles of different TSLs.

Then there are the labels. Trucks are required to display a TSL label, much like a registration label, in the front window of the prime mover. If keeping registration labels up-to-date is already a challenge for businesses then this would double that administrative burden.

The argument in favour of the TSL system would be that it is a safety audit tool and if someone displays repeated bad behaviour they can be taken off the road. But they first need to come to the attention of the authorities. It also means that there is effectively a double penalty on transport service providers, as opposed to other users of the road network. If safety is the policy objective then surely there is a better way.

As I wrote last month, the National Road Transport Commission has previously rejected operator licensing as anti-competitive and heavy handed, and instead recommended a Chain of Responsibility (CoR) approach.

A parliamentary inquiry has recommended amending heavy vehicle laws to impose a general safety duty on all chain parties, including consignors and consignees, and to extend CoR to cover maintenance and repairs.

This approach is much more consistent with the modern Australian economy – and the importance of road freight to our economy – than operator licensing would ever be.

Effective safety policies should be designed with that in mind. They should not be retrofitted over a policy such as operator licensing which was actually designed to restrict competition and put up prices.

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