What the future of Uber means for New Zealand

It’s been three years since the international ride-sharing service Uber landed on New Zealand’s shores.

It has thrown the taxi industry into disarray, forced legislative changes, saved consumers time and money - and drawn plenty of controversy along the way.

Morgan Tait looks at the Uber example, and what its story says about other disruptors coming here.

Government-subsidised rides and carpooling in driverless cars on every New Zealand road: This is the future Uber envisages for its operations here.

Yes, these are bold, futuristic aims but do we have any reason to doubt the juggernaut that has changed the way the modern world travels?

Since arriving on New Zealand’s shores in 2014, the ride hailing app is now established in Auckland, Wellington and Christchurch with more than 300,000 passengers and 4000 active drivers registered.

Visitors from 75 different countries have used their Uber app here and Uber Eats has been popular after rolling out in central Auckland.

While the overall benefits of Uber for consumers are obvious - cheaper, more efficient transport - the company has faced harsh criticism for flouting local laws, sort-of-but-not-really-but-sort-of dodging taxes and a number of other accusations.

Speaking exclusively to Newsroom, New Zealand General Manager Richard Menzies revealed Uber’s plans for the future here.

Long-term, Menzies said the company has big ideas for improving Kiwis’ transport woes. While there was no current activity to expand beyond Auckland, Wellington and Christchurch - extending its reach is the end goal.

“We have no set plans at this stage but definitely recognise that a lot of regional centres here have issues ... we are looking at it over time.

“We are still working through a regulatory framework in New Zealand.”

It’s not as if such roadblocks have stopped Uber before, though. Public support and lobbying have been used by Uber the world over to prove to bureaucrats its formula works better than their laws.

Uber’s presence in New Zealand has fast tracked a review of the rules governing passenger services, and the Land Transport Amendment Bill is now at its second reading stage.

It is this gap between Uber’s innovation and New Zealand’s legislation which has interested Dr Eric Crampton, the Head of Research at The New Zealand Initiative.

“Uber is a very interesting case,” he said. “It has had ramifications for consumers, the taxi industry and government policy.

“It’s been pretty obvious that it has forced competitors to catch up a little bit, Uber has sparked a competitive environment within the incumbent players which has all been for the good of consumers.”

It was good for drivers, too, he said.

“It offers more flexibility, but then you start getting into the policy changes.”

There is still some contention about the proposed changes from the taxi industry, Uber and commentators, as Newsroom’s Shane Cowlishaw wrote recently.

Despite these holes, Menzies said the company was generally pleased with the Government’s efforts to support Uber in New Zealand.

“The Government’s intentions throughout this process to improve passenger services have been genuine. Although there are still some issues to work through.”

In fact, he hoped Uber could work with those in charge even further.

Uber has already integrated with Auckland Transport’s journey planner, allowing commuters to use the service to or from their public transport stop.

Menzies said he has also presented to a number of local and central government lawmakers about syncing in with their transport needs. Uber could offer alternative solutions to expensive transport infrastructure problems, he said.

A project called MoveNZ piloted subsidised rides for passengers travelling to Auckland’s Northern Busway and Wellington’s Lower Hutt Trainline.

“Applying the framework, from what we have seen internationally, city councils looking at building a new park and ride station, what they have done instead is partner with Uber. We have partnerships like this with governments in Boston and Florida.”

“On the Auckland Harbour Bridge, about 160,000 cars go across the bridge every day with an average of about 1.2 people car.”

This congestion could be solved, he said, by UberPool. A service also likely to hit New Zealand’s shores soon, too. This allows a driver to collect multiple passengers on the same trip, with the costs shared between all riders.

“We think the impact could be phenomenal.”

And of course, there are the self-driving cars.

“Self-driving cars is definitely something we are really, really excited about at the moment. If you look at the safety issues on the roads, self-driving cars will start to solve that problem.”

But, as has been widely commented, there is no set time frame for that.

“At the moment testing is very much focused in the US,” said Menzies. “It’s really difficult to give a timeline because the technology is developing day by day.”

Dr Crampton said Uber was ultimately an example of how new technology and business models could very quickly show gaps between the intent of a law and its seemingly outdated execution.

“They want a level playing field, the taxi industry is saying everyone should have the same rules but we need to step back and look at what the purpose of those rules are.

“The existing sets of taxicab regulations, the point of them is to make sure people are comfortable and safe getting from A to B.

“A lot of the things that the regulations are trying to achieve are already being achieved by the Uber app.

“So you have to think, should a level playing field be in terms of regulation or be a standard that the regulation should bring everyone up to?”

Taxi companies in New Zealand say they're nowhere near giving up. Photo: Lynn Grieveson

Uber is known for its tough recruitment processes and as such is represented by a growing army of young, intelligent and military-like media-trained employees.

Menzies himself left the corporate security of Deloitte as a 20-something to join the company in its early days in New Zealand.

“It’s been a really exciting opportunity and pretty amazing what our team has achieved in a really short time,” he said.

“One of the really interesting things about ride sharing in New Zealand is we actually created a whole new industry that didn’t exist previously. I hope we can look back and say we had an impact on congestion in Auckland.”

But while youth and intelligence are undoubtedly part of the tech giant’s MO, the traits appeared a distant cry from the policy makers Uber has come up against here.

The confusion was captured well in this Herald article covering a select committee meeting in which its members failed to grasp the basic concept of the app. 

It was also something that did not escape commentators.

“It’s been incredibly frustrating watching the policy develop on this one,” said Dr Crampton.

“There was the almost unbelievable ignorance in the transport committee when Uber came up to them earlier in the year that just showed how under qualified these guys are.”

University of Auckland marketing expert Dr Bodo Lang said Uber’s arrival in New Zealand has shown that our lawmakers need to sharpen up a bit.

“Regulators need to be somewhat insightful, they need to be adaptive in addressing their role as a regulator.

“On the other hand you don’t want to shelter an industry and make it uncompetitive by letting it operate in a heavily government-regulated space.”

Regulators need to keep their fingers on the pulse of global trends, he said. Uber came here much later than its 2011 US launch.

“What it does show is that they probably weren’t as prepared as they could have been and also probably shows the philosophy of the current Government - let the market decide and not have too much red tape and bureaucracy.”

Which is probably a good thing, he said.

“It helps that the regulators are hands off with this type of stuff and only when enough pressure is applied by lobbying groups and companies that the Government really sees the need to do something.”

So Uber is literally rewriting the rules for transport in New Zealand, but what does such disruption mean for other industries here?

Dr Lang said Uber was likely to have some irreversible impacts on the country’s business ecosystem.

“The thing is if a business operator or owner, whether it is a chain or corporate the lesson to be learned from Uber is you mustn’t take things for granted.

“The way that a market is structured is always flexible and can always move quite rapidly, particularly through technology.

“Whether you are small or large it is always important to be quite visionary about what could happen and be quite challenging in your business strategy sessions.

“The thing is if a business operator or owner, whether it is a chain or corporate the lesson to be learned from Uber is you mustn’t take things for granted."

“My sense is that many companies find that very hard because they are quite good at the operations, but what about the idea of a competitor that comes from nowhere? In order to retain market share and increase market share they have to be always asking what could happen next.”

The taxi industry, which has tried to modernise its own technology since Uber’s arrival, said it was not giving up.

Taxi Federation executive director John Hart told Newsroom: “The taxi industry has been around a long time and it’s not about to go away.

“The industry isn’t just laying over and giving up, it’s going to be around for a long time yet.”

Dr Crampton said he saw Uber as paving the way for other contractor-type businesses to enter other sectors here.

“There is more broad thinking now about these kinds of contractor-based relationships and the app mediated transaction, it’s now in more sectors and others seem to potentially be going that way, too.”

Uber in New Zealand

The taxi industry raised concerns about Uber sidestepping the law before it even arrived here, so it was no surprise when the business, which defines itself as a ridesharing service, never registered as an Approved Taxi Organisation under New Zealand law.

Instead, Uber drivers just needed a P endorsed driver's licence and an unmarked vehicle to operate as a private hire service.

Incumbents said the app was unsafe because drivers did not have to meet the same standards as traditional taxi drivers and it was unfair those playing by the rules were getting hit in the pocket for gaining the right accreditation.

Uber argued its technology makes it safer than legal requirements - it screens drivers and those with low ratings were removed, passengers and drivers knew who they were getting in the car with, and all journeys were tracked.

But when, in April 2016, Uber dropped the requirements for drivers to have P endorsements - the Transport Agency moved in.

NZTA has issued around 200 infringements valuing close to $100,000 on Uber drivers since, yet the company continues to operate here.

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