By Eric Crampton 16/12/2015


Well, the Ministry of Transport proposals around Uber could have been worse.

This week’s white paper produced two preferred options. The first would place requirements on drivers; the second, on transport operators. The National Business Review asked me for comment on the proposals; here’s what I told them.

“The government’s approach to taxicab regulation intends to avoid risks where new services, like ridesharing or carpooling apps, work outside of existing regulations, and to modernize the existing regulations so services like Uber are a better fit. But are those risks really large enough to compel regulation?” “The Transport discussion document advances two options it views as preferable to the status quo. The first of these would place the burden of compliance on approved drivers; the second, on approved operators.

But both options would require that drivers have a P endorsement, that drivers work within limited time periods, that vehicles have a certificate of fitness, that drivers pass health tests, and that vehicles have mandatory security cameras – albeit subject to potential exemption by application.” “While the proposed regimes would be more open than the status quo, they could be substantially more liberal. If Uber were ever to decide, for example, that some other test were more effective in determining driver suitability than the P endorsement, as a passenger, I’d trust Uber’s judgement. It’s their reputation on the line if drivers prove unfit, and they have an international reputation to maintain.

Regulations requiring that drivers undertake extra training, or that cars used in new services carry more than the standard Warrant of Fitness, make it just that much harder for new drivers to come into the market and pick up a few shifts. It makes things like Uber work less well. There are potentially many people who would be willing to take the family car out during a period of surge demand, but who would never find it worth the bother of getting a P endorsement (which requires taking a course and waiting 6-8 weeks for processing), and keeping the car under a Certificate of Fitness rather than just the WoF, and getting a doctor’s certificate, and putting in a camera.

These regulatory rigidities make it harder for surge pricing to bring more drivers into the market at times when people really need rides. And, really, what’s the point?” “I would have liked to have seen a sixth, less regulated option. In a world in which I can immediately complain about the vehicle’s quality through an app-based feedback mechanism, and where we already have warrants of fitness for cars, it is hard to see the case for certificates of fitness. Where drivers can be chosen based on their reputation and where customers can leave immediate feedback, it is hard to see the case for P endorsements over regular driver’s licences. If I can pick up a hitchhiker without a P-endorsement and without a certificate of fitness, or a doctor’s exam, why should that be illegal just because the hitchhiker finds me with an app and pays me?”

 The story’s here. Campbell Gibson does a great job of excerpting from my excess verbiage.