Land Transport Management (Regulation of Public Transport) Amendment Bill

Members, the House is in committee on the Land Transport Management (Regulation of Public Transport) Amendment Bill. Members, we come first to Part 1.

Point of order. I seek leave for all provisions to be taken as one question.

Leave is sought for that purpose. Are there any objections? There is none. The question is that Parts 1 and 2, the Schedule, and clauses 1 to 3 stand part.

Thank you, Madam Chair, for the opportunity to take a call on this committee stage of this bill and there are a number of questions for the Minister in relation to the bill. Firstly, I’ll note that in Supplementary Order Paper 419 there’s some changes that have been proposed, and I’d be interested for the Minister to take a call and to explain those changes to the committee and what the purpose of those changes are. I think it’s important to have that put on the record given, given that this bill’s already been through a select committee process.

The second question, really, is in relation to the purpose statement or the purpose principle, “Section 115 amended (Principles)”, in clause 9 that this bill changes in terms of the operation of public transport. I’d like the Minister to outline and actually provide some justification for the legislative change. Because what we heard in committee—and we’ve heard in previous debates on this piece of legislation—is that this bill was needed to fix the unreliability in our public transport system. This bill was needed to make sure we could electrify our buses. This bill was needed to make sure that the buses were turning up on time. And the question was asked during the committee stage of officials: did the public transport operating model stop regional councils operating public transport from being able to negotiate electric buses as part of the contract? Did it stop them from negotiating wages as part of that contract? Did it stop them from negotiating terms and conditions as part of those contracts? The answer was very clear from officials that, no, the public transport operating model (PTOM) did not. It did not stop those issues from being contracted.

The Government, in my opinion, used COVID, used the fact that we lost a significant portion of our bus drivers during the COVID lockdowns, to basically try and say we need to change the law. That has been, I think, a misconception of the real issues here. So I’d like the Minister to provide justification as to why those principles needed to actually be changed and why the issue of efficiency and value for money has been reduced from being a top priority to being a low priority in that list of principles.

The next question I’ve got for the Minister is in relation to the question about how this legislation now allows for councils to, effectively, run public transport services in-house without having to go through a tender process. My understanding is that through the regulatory impact statement the officials didn’t recommend that as the option, but that was rejected by the Government and I’d like the Minister to answer and outline to the House why this Government thinks that in relation to the operation of our public transport systems, there shouldn’t be a competitive tendering process to ensure that taxpayers get good value for money.

Perhaps dealing with the questions in the reverse order to which they were asked, with the last question answered first: the Labour-led Government believes that we can trust local authorities to efficiently run their public transport services and if they want to run them in-house, they can do. They don’t want to have inefficient or overly expensive public transport services, but they do want them to be sustainable, both environmentally but also financially sustainable.

In respect of the duties or the key principles that are in replacement section 115, the member in his question suggested that the efficiency objective is—well, if I understood his question correctly, he asserted that the efficiency and value for money objective is a lower objective than the others. They’re all ranked equally. The prior system required competition to be put ahead of all of the other principles. Now, efficiency and value for money is given equal weighting. In respect of what were the outcomes of the prior system, yes, the Government believes that the PTOM model did put undue focus on lowest cost tendering that led to unsustainable contractual arrangements by people effectively bidding down labour costs in order to win the contract. And, at the end of that, we were hundreds of bus drivers short and we had lots of bus services that weren’t running in our major cities. As a consequence, public transport became less reliable, and fewer people were using it. That undermined the viability of public transport and it also increased traffic congestion.

Finally, in respect of the issues in the Supplementary Order Paper, they really are all technical. They’re shown in track changes in the Supplementary Order Paper on the Table, and members can see that they are technical with the possible exception of the amendment to section 150, in clause 19, with the insertion of new subsection 3A, as it is currently. The explanatory note says that the insertion of that new subsection 3A into section 150 of the Land Transport Management Act relates to matters the Minister must consider before making the regulations regarding exempt public transport services. Those subsections do not provide the extension of the category of exempt public transport services to include appropriate interregional services. New section 3A provides for how those subsections apply where regulations relate to interregional services.

There was a related amendment made at the select committee, but the consequential amendment to section 150 wasn’t made, and is by the Supplementary Order Paper.

Thank you, Madam Chair. Just for the sake of informing officials at the start of my call, I will be going to Waiheke. So I was obviously, in the last bill just before, applauding the Minister in his former role as Minister of Revenue around the work that he’d undertaken. But in this one, as Minister of Transport, I have got to say he’s been dragging the chain on the issue of the Waiheke ferries, he may know, with the previous Minister of Transport on this issue, as well.

So just for the public who may not potentially be able to follow this one along at home, what we are talking about here is a move away from the Public Transport Operating Model (PTOM), as put in place by the former National Government—then the Minister of Transport, the Hon Steven Joyce. This is the sustainable transport framework, or something along those lines—the sustainable public transport framework—which will allow for councils, finally, local authorities, to run public transport services themselves, as well as a range of other criteria that are outlined in the legislation through regulations. That is the marked change that Simeon Brown was just kind of referring to; the fact that there is no longer this requirement to contract out.

So in the PTOM there are still a number of issues with regard to how the Minister previously could prescribe what are called “exempt services”; services that are not subjected to—even within that contracted out PTOM framework for there to be services that are, for example, meeting cost and servicing requirements for public transport. It’s typically presumed that public transport services operating within the PTOM are those which are considered integral to the public transport routes by local authorities.

We currently have a situation in Tāmaki-makau-rau where we have one outlier amongst routes that are considered integral to the public transport network of that city by the local authority here—by Auckland Transport as the council-controlled organisation for Auckland Council responsible for this—and that is the Waiheke ferry route. That means that the Waiheke ferry route is not subjected to expectations and criteria on servicing and cost. And it has meant that my constituents on Waiheke Island have been subjected to, for at least the past decade, serious concerns with regard to the level of servicing and the cost of that service provision for them.

This has led to Auckland Transport—an organisation not particularly renowned for its advocacy—making it explicitly clear that they need the Government to remove the legacy of that exemption decision, made by the former National Government under pretty dubious means, I have to say. I did an OIA on this and found approximately 300 pages of advice where officials were making it really clear to the former National Minister not to provide this exemption because it would result in precisely the anomalies that we’re now seeing at this point.

But my written questions to the Minister have demonstrated that this shift from the PTOM into the sustainable public transport model is going to see those exemptions grandfathered. So we’re not going to deal with this issue of this one outlying exempted service, which is not even currently required to meet the criteria of the PTOM, which the Government itself is saying is not good enough.

So my question to the Minister is how much longer is it going to take for him to revoke that exemption, which is a simple Order in Council process? I know that only about a month or two ago, we finally had the independent contracted report published. And I asked a range of questions to the Minister on that as well. And it transpired that the former Minister had not undertaken any of the recommendations of that independent report that they had received at the end of last year. So I’m just wondering how much more time is necessary. How much longer are my constituents on Waiheke going to have to wait for that exemption to finally be removed? Because, Minister, the evidence is overwhelming. The report itself made it abundantly clear that there are some very evident things that the Ministry of Transport, that Waka Kotahi can do to start to get the ball rolling on this. But, to date, and as exposed in written questions, it doesn’t appear like too much has been happening.

Thank you, Madam Chair. The member is correct that the passage of the Act doesn’t revoke the exemption and that there would have to be an active decision taken in respect of the exemption to revoke it. I’m not in a position to give the member an answer as to when those decisions will or will not be taken, tonight, but I will undertake to get back to the member within two weeks with some further information.

Just in closing this back and forth with the Minister, I wanted to thank him for committing to get back to me on that point. There is an outstanding letter with his office that I sent a few months ago on this issue in particular, so I’d very much appreciate that before the close of House business. Thank you.

Thank you, Madam Chair. Look, it’s wonderful to have a new Minister in the chair, a new Minister of Transport, with an almost unblemished record when it comes to transport. But, Minister, perhaps you’d like to enlighten the House and those at home watching or listening, or maybe those who might click on Parliament TV at some point in the future, to understand how we got to this point. Minister, how is it that when consulting on apparent improvements to the delivery of public transport services in New Zealand—those services which help, you know, workers get to work, students get to school and uni, and so on, how is it that even though the current model requires a competitive and efficient procurement of public transport services, so that ratepayers and the taxpayer through the National Land Transport Fund get value for money and so that public transport users get an efficient service—I mean, we wouldn’t want buses just running around the place empty all day, would we? I mean, no one’s ever seen that, or with one forlorn person sitting in the back of a $100,000 or $200,000 vehicle on some rarely trafficked urban route. What we would want to see is efficient public transport.

So, Minister, perhaps, given that you’re a relatively new Minister to the role, the previous Minister wore a number of different hats, and I’m wondering if maybe you could explain how, in clause 14 of this Land Transport Management (Regulation of Public Transport) Amendment Bill, and the Supplementary Order Paper, which has made some changes to what we saw at the Transport and Infrastructure Committee—how is it, in clause 14(1)A), that this amendment proposes to delete “having regard to the desirability of encouraging a competitive and efficient market for public transport services” and to replace it with “the views of the territorial authorities in the region”. For those laypeople listening at home, that means councils. So, delete “encouraging a competitive and efficient market for public transport”; add in “the views of territorial authorities in the region”. Minister, forgive me, but I assumed that territorial authorities were actually procuring the public transport services, so we would assume their views are taken for granted. I mean, if you’re procuring something like a bus service from the private sector, you would assume that you’ve taken your own views into account when writing the request for tender or the scope of services. But maybe you can’t assume anything in 2023 after six years of a Labour-led Government. Isn’t that right, Simeon Brown? Can’t assume anything.

Then, “After section 124(c)(v), insert: (vi) the views of the public transport workforce and its representative unions”. Now, imagine trying to deliver public transport services for people trying to get to school or uni or get to work across the city—or, as some of my friends and family do, catch a bus on the Northern Express busway from the northern suburbs of Auckland into the city—and it turned out that instead of an efficient and competitive public transport service, what’s going to happen is, after this bill’s passed, somebody’s going to go and ask the union whether they would like to keep working as bus drivers and whether they think the route is the right route, because when adopting a regional public transport plan, it’s the unions that are going to have the final say as to what the bus services and routes look like. Not the customer; not the ratepayer, who’s paying a significant proportion of the operating cost; not the taxpayer, who’s paying an also significant proportion of the cost through the National Land Transport Fund subsidies; not the customer—the union.

Minister, thinking back to a time when there was a former transport Minister who was also the Minister of workplace relations and pushed through the Fair Pay Agreements Act and often talked about himself being a champion of the wakas—perhaps, Minister, this is a mistake. This is a legacy. Maybe this should go on the bonfire of policies that the current temporary Prime Minister, Chris Hipkins, may have wished to put on the bonfire but missed. Minister, would you care to explain how on earth the views of the unions take precedence even over public transport suppliers, those private sector operators who supply the quarter-million-dollar buses, or the customers? How on earth do unions have precedence, Minister?

The member’s wrong if he asserts that the public transport workforce has the final say on these matters. It is one of the matters that’s taken into account. Why is that sensible? The member may have recalled some industrial disputes, which was one of the underlying reasons why it was very difficult to recruit bus drivers, because routes were being run in a way that they couldn’t go to the toilet or have morning tea during their shifts because the way in which the schedules were being run didn’t even allow them to go to the toilet periodically. So I have no problem with those viewpoints being taken into account.

In terms of the higher standard that is accorded to principles which are high-level principles that sit over those taken into account in matters later in the Act, those higher-level principles include, at amended section 115, inserted by clause 9, as I already mentioned to Simeon Brown, that “public transport services should be provided in a way that assists—(i) public transport investment to be efficient; and (ii) public transport investment to give value for money.”

Before I call the member again, I would warn him to be respectful. One of the things he said earlier on was that the Prime Minister is a temporary Prime Minister. He’s not—he is the Prime Minister. You will be respectful.

Thank you, Madam Chair. Minister, I just want to come back to this clause 14 which amends section 124 of the primary legislation. As you’ve raised, if bus drivers don’t have time to get out and use the bathroom or take a smoko break or a vape break in between their shifts and assuming that there are already rules and regulations that stipulate how many hours commercial drivers can drive—I understand it’s 11 hours in a 14-hour shift that they’re legally allowed to operate a heavy vehicle and that they must have regular breaks—how is it, Minister, that even though fair pay agreements have been passed, even though there already exist employment laws and this Government has been a Government for six years, how is it, Minister, that under this Government, bus drivers weren’t able to take a toilet break? What responsibility does the Minister take or the Government take for that?

Thank you for that question, because it’s what you call a lob at the net. You know, the need for this is illustrated by the fact that under the current system, schedules were arranged in a way that was so impractical. You will get better outcomes if you talk to people as to whether these outcomes are practical. This isn’t about the statutory maximum hours to be worked or the break that’s needed every four hours; it was about simple things like whether routes could be run in a way that were fair to the drivers in order to attract drivers to the routes.

Thank you, Madam Chair. Well, Minister of Transport, thank you for that explanation. Because, of course, an employer who wished to secure drivers to operate vehicles that could be worth a quarter of a million dollars, that meet the highest standards for emissions controls, Euro 5 or Euro 6 turbo diesel buses, or, if they have the ultimate luxury—driving a low-emissions or electric vehicle or hybrid bus around our major metros—you’d think that if a public transport operator, a private sector bus operator, had tendered for a contract, assuming that in order to get paid they would have to deliver a certain number of services that met the schedule and they were there to pick up the passengers, that they would have provided, in their tender offer and in the way they manage their workforce, for regular breaks. Because there has not just been a driver shortage, there’s been a worker shortage in New Zealand. New Zealand’s been in a global war for talent, which includes competent heavy-vehicle - trained drivers—

Hon Damien O’Connor: Oh, here’s the market genius.

SIMON COURT: —heavy-vehicle - trained drivers. The Associate Minister of Transport, the Hon Damien O’Connor, suggests that the ACT Party are full of geniuses. Well, Dr James McDowell here, he does have a degree which might help. I’m a civil engineer and I’ve worked in transportation, Mr O’Connor. But the person here that you should be directing your questions to, Mr O’Connor, is the Minister of Transport, David Parker, who sits in the chair and who has offered himself up for questioning.

So, Minister, I just need to try to get my head around this. A public transport operator has invested millions or tens of millions of dollars in very expensive pieces of equipment—a quarter of a million-dollar buses. They’re air conditioned. They’re state-of-the-art. They have to have a certificate of fitness every six months. The drivers have to have been trained to a heavy vehicle standard. They have to pass alcohol and drug tests. And they have to be paid a reasonable rate. If they’ve immigrated to New Zealand, they have to be paid the minimum wage, according to the immigration—sorry, the median wage. The median wage. According to the immigration expert—one of the ACT geniuses, the Hon Damien O’Connor—they’ve been paid the median wage.

Hon Damien O’Connor: Is that too much?

SIMON COURT: So not only are they well paid—no, it’s not too much. It’s fine. That’s up to the bus company operators.

So here’s the problem I’m failing to understand. This bill proposes that, for some reason, bus companies won’t give drivers a bathroom break, even though this Government’s been in charge of WorkSafe, it’s been in charge of the Ministry of Business, Innovation and Employment, so it could go in and investigate workplace safety issues or a failure to meet minimum standards. Clearly, after six years, that hasn’t been a priority, because here we are tonight, debating a bill that would actually, according to the Minister himself, help resolve the issue of where drivers get to use the bathroom. So I’m really interested, if a bus company operator, who’s invested tens of millions of dollars in equipment, needs to put drivers in the driving seat so they can pick up passengers, so they can then invoice the council, the regional council who’s commissioned them, in order to get paid, I would have just assumed that you’d want to give better conditions to drivers, and that if there was a circumstance where somebody scheduling buses had forgotten to leave enough time for a bathroom break, that’s something that would be brought to the attention of management and resolved quick smart because the last thing you want is your drivers walking away and leaving a quarter of a million dollar bus parked in at the side of the road, so you can’t deliver the services.

Now, the Hon Damien O’Connor, I know you’re not a genius but that’s what the private sector does. They try to put people in the cab so they can operate a bus or a truck so they can deliver the service and then invoice their clients. But, apparently—apparently—this bill has to legislate so they can have a bathroom break, even though this Government’s had all the power to check whether people get a bathroom break, for six years.

Minister, are you absolutely sure that the views of the public transport workforce need to be taken into account when adopting a regional public transport plan because they might not get a bathroom break?

Thank you, Madam Chair. I’d like to take up a couple of points in relation to the workforce shortage that the Minister of Transport raised earlier. Of course, this bill is being promoted by the Government to apparently solve the workforce shortages that we have. I’m not sure, Minister, whether you have seen the news, because, on 16 August 2023, which was—what’s that?—seven days ago, Auckland Transport put out a statement saying relaxed immigration settings help end bus driver shortage in Auckland. So, Minister, the bill hasn’t been passed and we no longer have a bus driver shortage in Auckland. In fact, Auckland Transport is quoted saying, “It was a big help from the government relaxing the immigration settings for bus drivers, and putting in that pathway to residency. We’re applying those learnings to resolving the crisis in [ferries],”. So, Minister, is it that the legislation needs to change, or was it that the former Minister of Transport, who was also the Minister of Immigration, was just a little bit caught off guard and not really thinking about, actually, how he should be talking to himself about the fact that as Minister of Immigration he could solve some of his transport issues? Maybe he was distracted doing other things instead. So I’d like you to answer that question.

The second question is in relation to clause 7, which replaces section 27 with: “Local authority may hold interest in public transport services and infrastructure”. The Minister said earlier, “Well, it’s a matter of trust—it’s a matter of trust. We’re going to trust local government to operate these services efficiently and reliably.” Well, why is it that this Government feels that it can trust local government to operate public transport services in-house efficiently? And now it’s going to say, “Three waters, we’re going to take that all away because we don’t trust you.” So the Government can’t have it both ways. But the point in that is that this bill takes it away from being operated in a competitive tender process, and officials recommended against that. I would like to understand how the Minister is going to measure, under this legislation, whether or not local authorities, if they were to operate those services internally, are operating them in a way which is efficient, providing good value for money, or is he just going to leave it up to “trust”?

Thank you, Madam Chair. It is correct that immigration has been part of the answer to resolving the driver shortage—I accept that.

Simeon Brown: It’s solved!

Hon DAVID PARKER: Well, it was solved through Government intervention that was necessary also to provide more money to pay for higher wages to be paid for bus drivers because they had been competed down under the competitive model to a point that the driver—

Simeon Brown: You did that within the Public Transport Operating Model, though.

Hon DAVID PARKER: Well, we had to fix it because the current model—we had to fix it using more Government money because the current model had driven down wages to the point where drivers could not be attracted.

Hon Member: Terrible blimmin working conditions.

Hon DAVID PARKER: It is terrible that that was the position that was reached, and it was a failure of the current model that led to that.

In respect of the matter that that he raised as to clause 14 of the bill, there are lots of cities around the world that own their own public transportation systems, and their public transport systems are quite often better than ours.

Madam Chair, thank you very much, and I’d like to ask the Minister whether or not the existing legislation allows for public transport operators to be able to put in place, in the tender, particular pay rates? Does the legislation need to be changed in order for them to be able to make the pay and conditions a non-negotiable term?

The practice under the current legislation has been to award tenders to the lowest cost operator. The way those operators have lowered their costs is to compete on wages in a way that drove down wage costs to unsustainable levels, that meant that they couldn’t recruit bus drivers.

I move, That the question be now put.

Thank you, Madam Chair. My question was whether or not the existing legislation allowed for the wages and conditions to be a non-negotiable term in the tender process.

My answer was that it’s the wrong question, because the outcome was the one that I have repeated on a number of occasions, which was that the practice under the current model drove down wages to the point where the bus drivers couldn’t be recruited.

Thank you, Madam Chair. Minister, I just want to come back to clause 6, “Procurement procedures”, before the House moves on to the next part of this bill.

Procurement procedures. So clause 6 amends section 25 of the Land Transport Management Act and it removes the requirement that the procurement procedures under the Land Transport Management Act don’t apply “to [the] procurement of a public transport service.” Now, Minister, we haven’t really had a clear explanation of why that is.

Of course, there’s been some concerns that tenderers have lowballed. If there’s a price-quality component where some of a tenderer’s qualities are evaluated and given a weighting, and the price is evaluated and given a weighting under a typical price-quality tender evaluation process, it may well be that the local council or regional council procuring a public transport contract got the weighting wrong. Maybe instead of the qualities that they could have given more weighting to—like, for example, I don’t know, driver pay and conditions, smoko breaks, bathroom stops, who knows; massages—they could have put anything in there as a quality measure and given it a weighting.

But if regional councils and local territorial authorities didn’t do that and they gave price a greater weighting, well, isn’t that something that the New Zealand Transport Agency—NZTA—through its National Land Transport Fund, through its activity classes for public transport, could have provided some guidance to local government as to what the price-quality weighting could be? Then, wouldn’t it have been far more likely that the type of services offered came in at maybe a slightly higher price but had a different set of qualities.

Minister, if that’s the outcome that the Government wanted, there are a number of different ways to direct it. Yet when we look at section 25, “Procurement procedures”, in the primary legislation this bill seeks to amend, it says 25(2)(a), essentially in approving a procurement procedure, the agency must look at the ability of “persons to compete fairly for the right to supply outputs required for the preferred activities”. Minister, what this will do is it will give councils the almost exclusive right to, essentially, buy services and put the private sector out of business. That’s what they’re afraid of, Minister, and that’s what this bill does. In approving procurement procedures, the agency—we’re talking about the New Zealand Transport Agency, trading as Waka Kotahi—must encourage “competitive and efficient markets for the supply of outputs required for approved activities.” under section 25(2)(b).

Minister, this is a small nation. If we can’t encourage effectively functioning markets for the provision of services—whether it be buses to pick up people and take them to work; or whether it’s for physical works contracts so we can actually build the roads or the bus expressway; or for professional services contracts so that, for example, New Zealand Transport Agency, trading as Waka Kotahi, can actually get some advice about how to procure and maybe add some additional weighting to the quality metrics so that maybe they have a higher weighting than price—Minister, all of these things are available to the agency. They’re available to a Minister who might want to set direction through a Government Policy Statement on land transport, as the Minister did just last week when the Minister released the Government Policy Statement on land transport 2024-27, which included activity classes for public transport, where all of those directions are signals to be given.

Minister, isn’t there a risk that this sets a precedent that by removing the requirement to encourage competitive and efficient markets for the supply of outputs required for transport services, that it actually removes one of the pillars of procurement that the taxpayer demands from a Government that is authorised to spend on behalf of the taxpayer?

Because if we can’t have competitive and efficient markets for the supply of outputs for one type of transport service, Minister, is it likely that will also carry over into other types of transport services? Does this set a precedent, Minister, and was there any other way to achieve this measure?

As a matter of ideology, the last National-ACT Government, when they set up the Auckland City, tried to distance the control of the Auckland Council over all the things they owned and ran. That was a matter of ideology from Rodney Hide at the time, trying to force the corporate model upon Auckland City even when they didn’t want it. We’re not requiring them to run any other model, but we’re allowing them to run services as they think fit. They do have to, obviously, meet cost-effectiveness and efficiency objectives as well as other objectives, and a sensibly governed city would.

I would again make the point that there are many other cities around the world, including in the Land of the Free—the United States of America—or many parts of Europe, many parts of the world, where councils run their own public transport systems because they believe it to be more effective.

The question is that the Minister’s amendments set out on Supplementary Order Paper 419 be agreed to.

Madam Speaker, the committee has considered the Land Transport Management (Regulation of Public Transport) Amendment Bill and reports it with amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Third Reading