Passenger Transport Amendment Bill

The Hon. M. R. EGAN (Treasurer, Minister for Energy, Minister for State and Regional Development, Minister Assisting the Premier, and Vice-President of the Executive Council) [2.42 p.m.]: I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The provision of public transport services in large urban and regional centres to provide a realistic alternative to the car has been a fundamental challenge for successive governments.

Bus services and other flexible public transport services such as taxis will become even more important in the future to respond to increasingly dispersed trip-making patterns

.

A key focus of the bill before the House is to foster higher performance standards and accountability in the bus and taxi industry.

The principal amendment being put forward in this bill with respect to bus services is to provide for the establishment of a performance assessment and contestability regime for commercial service contract holders to replace the system of automatic contract renewal rights currently contained in the Act.

Under the current section 23 of the Passenger Transport Act there is little, if any, opportunity for the Government to periodically "test the market" for the exclusive right to provide regular passenger services in an area or on a route.

The effect of the proposed amendment to section 23 of the Act would be to enable a phasing in of a contestability regime for commercial service contracts.

This will provide the most reasonable means of meeting potential national competition policy requirements, without unduly jeopardising the commercial viability and stability of employment in the NSW bus industry.

Under the proposed amendment to section 23 of the Act, all commercial service contracts that are on foot immediately before the commencement of the amending legislation (and that have not already been renewed) will be renewed once in line with existing legislative and contractual entitlements. Thereafter the basis for obtaining any further renewals would be as follows:

•a contract would be renewed for another 5 year term if under the new performance assessment regime a series of best practice benchmarks have been met for a specified period in the previous contract; or

•if the contract holder has not met the objectives and standards prescribed by the performance assessment regime, then the contract would be put to competitive tender.

The case for the introduction of the performance assessment and contestability regime is that:

•best-practice benchmarking can be an effective proxy for outcomes which might otherwise be achieved by competitive tender;

•the introduction of best practice benchmarking and competitive tendering is supported by the industry as a preferable alternative to automatic competitive tendering for all commercial contracts; and

•both best practice benchmarking and competitive tendering provide opportunities for significantly improved services to the public and for potential savings to government.

The best-practice objectives and standards prescribed by the performance assessment regime will relate to:

•service levels;

•the costs to government (if any) of the service;

•fares and ticketing; and

•any aspect of service quality.

For best practice benchmarking to be effective, the framework must have input from both consumers and the industry. It is the intention of the Government that the public transport authority, the public transport advisory council, unions and representatives of commercial regular passenger service operators should be closely involved in shaping the details of the benchmarking framework.

Response to consumer requirements will be a significant indicator of operators’ performance, and in that regard, consumer consultation will be very important.

The proposed change to the definition of "Tourist service" would allow pre-booked services operating according to a publicly available tour itinerary, to travel to multiple destinations. It would also allow services operating without

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pre-booking or without a publicly available tour itinerary, to travel to either a common destination (as is currently provided for), or to multiple destinations if all passenger journeys have a common origin point.

The new legislative definition will accord much better with the requirements of the tourism market.

It is also proposed to insert a definition of "charter service" into the Act. The proposed definition of "charter service" has been designed to accurately reflect the generic characteristics of such services, while maintaining an effective demarcation with a "regular passenger service", that is, a "charter service" does not include a service conducted according to a regular route or timetable.

Consistent with the current Government’s policy, it is now proposed to broaden the Act’s objectives to include:

•encouraging public passenger services that meet the reasonable expectations of the community for safe, efficient, and reliable passenger transport services; and

•encouraging co-ordination of public transport services.

These simple amendments recognise the community interest in public passenger services and will remedy the existing situation where the only interests being safeguarded by the objectives of the Act are those of traditional service operators.

In the New South Wales taxi industry there are thousands of individually licensed vehicles, roughly half of them operated by lessees, engaging many more thousands of individual drivers.

It is considered that further improvements to service levels are best approached via the networks. This involves redefining what constitutes a network and introducing a performance based system and new accountability mechanisms at a network level.

The bill provides that a taxi-cab used to provide a public passenger service must be connected to an authorised ‘taxi-cab network’ and have arrangements in place to receive messages from the network centre. This amendment also recognises the increasing use of mobile phones and satellite communications in the taxi industry.

The bill goes on to provide that the taxi-cab network authority is subject to conditions prescribed by the regulations or imposed by the director-general. The prescribed conditions would include requiring the network to:

•meet specified service levels at given times of the day;

•ensure maximum taxi utilisation rates;

•ensure standards of customer service including provision of child restraints to passengers on request;

•provide for the safety of passengers and drivers;

•meet certain vehicle maintenance and presentation standards;

•train taxi drivers; and

•establish quality assurance systems.

A performance-based system will provide better accountability for the quality of services co-ordinated and delivered via taxi-cab network. Breaches of conditions by the taxi-cab network will attract monetary penalties with the ultimate sanction being the revocation of a network authority.

There are a number of other deficiencies and anomalies in the Passenger Transport Act that require remedying in order to ensure the continuing improvement of taxi services.

It is proposed that provision be made for both accreditation and authorities to be periodically renewed.

In addition, the bill provides that accreditation and authorisation may contain conditions requiring the operator or driver to satisfy certain performance standards on an ongoing basis.

At the moment, the only sanction against recalcitrant operators and drivers is the threat of cancellation of the accreditation or authorisation. It is proposed to provide for monetary penalties for breaches of accreditation and authorisation conditions to allow for more effective and even-handed enforcement.

At present, it is estimated that around half of the vehicles in the Sydney taxi fleet are operated by lessees and sublessees. Accordingly, it is proposed that section 29 be amended to recognise this. A consequential amendment is also required to section 40 which currently allows only a licence-holder to operate another vehicle in place of a taxi.

The Act provides that the Director-General of the Department of Transport "may" issue licences "unless" certain conditions are established. The wording of this section has been found to be unclear. It is proposed to amend section 31 to establish very clearly that the director-general has absolute discretion in the issuing of licences, and to remove the current cumbersome "provisos".

The issuing of short term, non-transferable, non-renewable licences is restricted to 1 year terms only. This restriction on the term of the licence provides no flexibility to operators interested in short term licences. It is proposed to amend the section to permit the issuing of short term licences for any term up to six years (which is the regulated maximum age of a taxi) to better meet the needs of operators.

The director-general determines fares and approves other arrangements for remuneration in connection with taxi-cab or private hire vehicle services. The proposed amendments provide for the fares determined by the director-general to be published in the "Government Gazette" for all to see.

Although the fee for a short-term licence for taxis is required to be determined by the director-general, such an amount is supposed to reflect what such a licence would be worth on the open market if it were transferable. In practice, compliance with this requirement has not been found to be feasible because such licences cannot be traded on the open market. Therefore, it is recommended that this unrealistic fetter on the director-general’s discretion to determine licence fees be omitted from the section.

To enable effective enforcement to be undertaken, it is proposed to amend the Act to allow authorised enforcement officers powers of entry to inspect vehicles, premises and records at any reasonable time. The bill also includes a range of public safeguards will apply in that dwellings cannot be entered, identification must be produced, and any damage must be paid for.

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It is proposed to amend section 52 to make it clear that the only persons who have rights of appeal against a decision of the director-general in licensing matters are the licensee or licence applicant (not other licensees) and to make it clear that the quantum of licence fees due to the crown is not an appealable matter.

Each of the proposed amendments to the Passenger Transport Act that outlined today is aimed at promoting and enforcing higher performance standards and accountability in the bus and taxi industry.

I commend the bill to the House.

The Hon. J. H. JOBLING [2.42 p.m.]: The object of the bill is to provide for the expiry and renewal of the accreditation of operators of public passenger services, a matter that needs to be considered from time to time. The authority under which persons may be engaged as drivers for the purpose of the service is undoubtedly important to members of the public. The bill also makes provision with respect to the performance assessment of the operators of commercial regular passenger services and the renewal of their service contracts. Indeed, the matter of buses in this country being driven by visitors who may or may not be licensed or accredited to drive them was raised in the newspapers today. The renewal of service contracts is of great importance to the security and safety of passengers travelling on regulation vehicles. The bill varies the basis on which the discretion of the Director-General of the Department of Transport to issue taxicab licences is exercisable. It also varies the term for which short-term taxicab licences may be issued. The Opposition will support the bill.

The Hon. Dr MARLENE GOLDSMITH [2.43 p.m.]: I am delighted to speak to the Passenger Transport Amendment Bill and to report that the Opposition will support it. As honourable members are aware, the purpose of the bill is to foster higher performance standards in the bus and taxi industry by the introduction of a performance assessment and contestability regime for the renewal of commercial service contracts for buses, and also the introduction of a new performance-based system for the accountability for taxicab networks, with significant monetary penalties for inadequate performance. The proposed amendment to section 23 of the Act will enable the phasing in of a contestability regime for commercial service contracts in the bus industry. That will provide the means for meeting potential national competition policy requirements without jeopardising the commercial viability and stability of employment in the bus industry.

Best practice benchmarking and competitive tendering for the New South Wales bus industry may also provide opportunities for improved service levels and for potential savings to the Government. Changes to the Act will require taxi networks to meet specific service levels at any given time of the day; to ensure maximum taxi utilisation rates; to ensure standards of customer service, including the provision of child restraints on request; to provide for the safety of drivers and passengers; to meet vehicle maintenance and presentation standards; to provide for the training of taxidrivers; and to establish quality assurance systems. If drivers and operators do not meet standards set by the Department of Transport, they will face increased fines. The periodic accreditation of taxidrivers will deliver better service levels for passengers. Given that the legislation seeks to achieve those objectives, I am delighted to report that the Opposition will support the bill.

The Hon. ELISABETH KIRKBY [2.46 p.m.]: On behalf of the Australian Democrats I am also happy to support the Passenger Transport Amendment Bill. I should like to place on the record that research into the legislation was done for me by Tom Chisholm, who worked for me in a part-time capacity as a research officer in the preparation of the Australian Democrats integrated transport strategy. I am indebted to him for what I believe are important comments on the bill. As has been pointed out by previous speakers, the most important reforms in the bill relate to the private bus industry. The first of those reforms relates to exclusive rights and competition policy. It is obvious that these reforms are justified both to improve services to the public and to comply with national competition guidelines.

It has been stated that the present system of effective automatic renewal may well be in breach of the new Trade Practices Act. It is argued that the new system will be acceptable as the provision of exclusive rights and service contracts is not necessarily a problem in itself, provided that the basis for obtaining those rights is periodically contestable. Those are the views of the Minister in another place. However, it is not entirely clear that under the new system the basis for obtaining the exclusive rights are periodically contestable; they are only contestable by competitive tender if the best practice benchmarks are not met. If those benchmarks are met, it seems that the contract is renewed automatically. It may be interesting to ask the Government to produce legal advice to show that the amendments are legally acceptable and that they comply with the requirements of the new Trade Practices Act. The Minister also stated:

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The "exclusive service franchise model" continues to have the Government’s support and the absolute support of the bus industry as a demonstrably better policy framework . . . than, for example, the British deregulation model.

The system that has been entrenched in the bill seems to depart from the old system to the minimum extent necessary to comply with the national competition laws. It represents a rejection of alternative policies, such as, on the one hand, gradually replacing private bus services with public ones and, on the other hand, adopting a fully competitive tendering process on the expiry of each five-year contract. The key difference between the old and new systems of contract renewal is the distinction between the old minimum standards and the new best practice benchmarks. I do not know how those best practice benchmarks can be enforced, even if they are to be enshrined in the legislation.

It seems at the moment as if they are to be left to the discretion of the Department of Transport, in which case it may be possible that they could be significantly watered down to suit the commercial interests of the well-connected private bus industry. In the future the Government might consider amendments that require best practice standards to be written into legislation, at least to the extent that that is possible. The success or failure of the reforms in the bill will obviously depend on the adequacy of the best practice standards and, as I have just said, the extent to which they are enforced. It would seem that the taxicab reforms are very good but, once again, their success will no doubt depend on the adequacy and enforcement of the practice standards.

I hope those who travel across Sydney will have greater opportunities to use private or public buses and to use bus, rail and light rail links. At the moment there are problems. Obviously Sydney Harbour is a problem. Those living on the north shore and in the Chatswood and Epping areas also experience problems. Those living on the peninsula have a bus service that is not really adequate. Those who live on the central coast and make their way to work in the west of Sydney by car are making the roads overcrowded and, in many cases, dangerous. Even using the existing ringroads the public transport service from north of Hornsby to the west of Sydney is not adequate. Those issues need to be examined. Whether the aim is to get more people to use public or private transport, unless the timetables meet their employment needs they will not use either public or private transport: they will use private motor vehicles. That is causing numerous air pollution problems. With those remarks I am happy to support the bill.

Reverend the Hon. F. J. NILE [2.52 p.m.]: Call to Australia is pleased to support the Passenger Transport Amendment Bill. This important legislation contains provisions that will upgrade the operations of bus networks in New South Wales. At present bus operators with commercial contracts have an automatic right of renewal for a further five years if they meet the terms of the contract. In effect, that gives bus operators perpetual rights of operation without allowing other operators an opportunity of better contract performance. The State Transit Authority and a number of private bus operators have performed well by building up service levels, responding to new travel patterns, and introducing new cross-regional services.

A number of bus operators have not performed well, and have been content to provide the bare minimum levels of service. The bill introduces a new competitive tendering and benchmarking regime for all commercial service contracts in 2001 after all original contracts have been renewed. Call to Australia has been advised that the legislation has resulted from consultation with the Public Transport Advisory Council, the Public Transport Authority, the Environment Liaison Office, the Bus and Coach Association and the Taxi Council. The bill has received the support of those bodies as well as the support of various unions and operators. For that reason Call to Australia supports the bill.

The Hon. M. R. EGAN (Treasurer, Minister for Energy, Minister for State and Regional Development, Minister Assisting the Premier, and Vice-President of the Executive Council) [2.54 p.m.], in reply: I thank honourable members for their contributions to the debate and I commend the bill to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.