For much of the twentieth century, most long distance freight in New Zealand was moved by rail. The road transport industry developed to serve local markets but was heavily restricted in its right to carry long-distance freight.
Restrictions on road transport were formally introduced in 1936 to protect railways against increasing road competition and, in the opinion of legislators at the time, to establish price stability in freight transport.
Road freight limitationsThere was a limit on the distance that goods could be hauled by road. For many years it was 30 miles but was increased progressively to 40 miles and then 150km in 1977, with an increasing range of commodities exempt from restrictions.
Road transport operators could carry goods further than the 150 kilometres, but only by being granted an exemption to do so by a network of Transport Licensing Authorities that held regular sittings around the country to hear applications.
Apart from restrictions on the length of road journeys, there were also restrictions on entry into the industry. New entrants had to prove that there was a need for their services and that they would not disadvantage existing operators.
Transport Amendment Act
In November 1983, the Transport Amendment Act began the deregulation of road transport. It made two significant changes. Firstly, the restriction on the number of road transport operators was replaced with a system that required operators to prove that they were capable and qualified to run a trucking business.
Secondly, the 150km restriction was gradually phased out. Until 1986, road transport operators were still required to pay for a permit from the Ministry of Transport on a per tonne-day basis. But after 1986, the road transport industry was freed from all restrictions.
Effect of deregulation on railDeregulation had a profound effect on rail’s freight income. It is estimated that about 30% of goods – mostly long distance traffic - was carried by rail in 1980. By 1988, rail had lost a significant proportion of the nation’s freight traffic, both long and short haul.
Deregulation, and its effects on rail business, had a significant effect on the later decision to privatise.