KEY POINTS:
The Public Transport Management Bill, if enacted in anything like its present form, could have a serious impact on bus services in the Auckland region.
About 80 per cent of public passenger trips occur in Auckland and Wellington, and the vast majority are made by bus.
The control given to regional government by the bill will remove many of the commercial incentives to provide efficient services and will put bus services under pervasive bureaucratic control.
The existing bus services are a mix of "commercial" and "contracted" public transport. "Commercial" services are provided on routes for which there is no public subsidy and so must pay their way. That accounts for up to 40 per cent of the bus business in the Auckland region.
In contrast, "contracted" services are provided on routes where "commercial" services would be uneconomic but the public interest demands buses and so these are subsidised from the public purse.
The regional council stipulates detailed requirements for the services and monitors them closely. In Auckland the Auckland Regional Transport Authority exercises these powers.
Although there is no evidence to suggest that this way of providing "contracted" services is ineffective, the general policy statement accompanying the bill indicates that this mix of "contracted" and "commercial" services has created problems so serious that they need to be fixed by legislation.
These problems apparently get in the way of regional government obtaining "the best value for money in achieving an integrated, safe, responsive, and sustainable public transport system that enables fair competition and a competitive and efficient market for public transport services".
This is the justification for the bill sweeping all "commercial" and "contracted" services up into a regional government-administered registration and licensing scheme.
Under it, almost total control of the provision of commercial services can be determined by "controls" imposed through delegated legislative power without the usual forms of protection.
The bill authorises "control" of every aspect of the commercial bus service business. The regional council becomes a judge in its own cause, as it will have total control over the spoon that is mixing what will be increasingly indistinct elements of "contracted" and "commercial" bus services.
In the longer term the proposal could lay the foundations for nationalisation of bus services. If regional government was authorised by this bill to expropriate all the bus companies' assets (with full and fair compensation) this would require considerable resources and would be highly controversial.
Perhaps that is the reason it is not proposed. Perhaps another reason is that regional councils might not be expert at running bus services.
Be that as it may, the functional difference between nationalisation and the potential reach of the proposed regime is not readily apparent. Under each the regional government can effectively run buses.
It is just that under the present proposal in the bill this can be done by stealth, indirectly and (not coincidently) without any compensation. What is more, it can be done through delegated legislative power at the regional level with no parliamentary oversight or appeal to a court. All of this raises extremely serious issues of policy and constitutional law.
In countries with formal constitutions that protect property rights, the courts draw a distinction between "takings" or expropriation (which must be compensated) and "regulation" (which does not allow for compensation).
Every civilised society regulates property and its use, and society would break down if every act of regulation allowed for compensation. Drawing the line, however, between taking and regulation is notoriously difficult.
Courts, in considering whether deprivations of property are reasonably justifiable in a free and democratic society, are engaged in balancing public and private interests. The common law freedom or liberty to trade is a fundamental right.
The regulation of that liberty by the imposition of a licensing regime will often be justifiable and may not be considered a taking or expropriation even in countries (unlike New Zealand) with constitutional protections against deprivation of property. But regulation can go too far, as this bill shows.
There are two important difficulties with the proposals in this bill. First, the regulatory powers may go too far (and can become a "taking" without compensation), and there has been no serious attempt so far to justify the giving of these powers to regional government.
Secondly, there are inadequate protections against abuse of these regulatory powers and insufficient protections and lack of oversight at central government level giving considerable potential for abuse of power. It is beyond dispute that the powers given in the bill to adopt and impose controls on commercial operators are so extensive that taken to an extreme regional government could almost take over the business of running buses.
No compensation is payable for any costs or losses suffered by an operator and no appeal provided against the imposition of a control.
These controls are expressly declared not to be a "regulation" for the purposes of the Regulation (Disallowance) Act 1989, with the intended consequence that they will not come under the scrutiny of the Regulations Review Committee.
This parliamentary select committee specialises in scrutinising delegated legislation but it will have no jurisdiction over the control orders nor authority to investigate complaints afterwards.
The only checks on what regional councils can do with these control powers are judicial review before the High Court or the promulgation of regulations (made by the Governor-General in Council) to specifically limit or condition a control. These checks are inadequate.
In the bill it is proposed to delegate the power to impose controls on the regional councils around the country. The controls are not self-executing and so some person or body must be given the power.
The difficulty is that these extensive powers are proposed to be given to the body with the financial and other interests that likely predispose it to favour the needs of the regional transport system over the interests and reasonable commercial risk expectations of the commercial operator. Nor is any provision made for consultation or fair hearing before a control is adopted.
The issue of vested interest by the regional council can be countered in one of two ways. Either the decision to impose controls should be given to some other body which is not directly interested, or the regional council's decision-making should be subject to review by a court, ministerial approval, parliamentary oversight or a combination of these.
Each of these mechanisms have advantages and disadvantages but there needs to be some mechanism available.
If the power is to remain in the hands of the regional council it should at least require ministerial approval or provision for an appeal to the district court.
In either case the focus of the oversight or the appeal should be to ensure that the controls do not unreasonably interfere with or restrict the profitability of service operators. This reflects some of the grounds that the Regulation Review Committee employs in reviewing delegated regulations.
Without the inclusion of such safeguards, the bill as it stands offends constitutional principle. Furthermore, it contravenes the legislation advisory committee's guidelines on process and content of legislation in these ways:
* It deals with policy issues in delegated legislation rather than the act.
* It deals with fundamental freedoms by way of delegated legislation without providing for procedural fairness before a decision is made or appeal to a court afterwards.
* It disguises a controversial measure in the legislative scheme by burying it in delegated legislation. The delegated legislative form potentially affects rights and liberties, but it is to be exercised by the body with a clear conflict of interest rather than at central government level.
The select committee is considering submissions on the bill next month. A rethink is required.
* Michael Taggart is a barrister and public law expert.
