How is it regulated and why?

Vehicle use is subject to relatively high levels of regulation, much of which is targeted at safety-related objectives.

Road vehicle regulation

Vehicles registered for use on roads are heavily regulated: vehicles must be manufactured in accordance with Australian Design Rules (ADRs), be kept in a roadworthy condition, and have compulsory third party personal injury insurance cover; drivers are required to be licensed, having demonstrated a level of proficiency by passing a test; and drivers are required to comply with road rules which govern how, where and when vehicles may be operated on the road network.

In Australia, road transport is primarily regulated at the state and territory level, albeit with a high degree of harmonisation.

TRANSPORT TECHNOLOGIES 185

The main area of Australian Government vehicle regulation is in setting the ADRs, which are administered under the Motor Vehicle Standards Act 1989 (Cth). The ADRs are national standards that covers areas such as vehicle safety (occupant protection, lighting, braking), anti-theft security and engine emissions. A new vehicle needs to be ADR-compliant when first registered for use on Australian roads. There is an established consultation process for reviewing and developing ADRs. New or amended ADRs may also be subjected to a vote by Transport and Infrastructure Council Ministers, before a determination by the Australian Government Minister for Infrastructure and Regional Development. The Australian Government also has a policy for harmonisation with international regulations, primarily United Nations vehicle regulations.

States and territories are generally responsible for regulating driver licensing and registration, and for enforcing road rules. There is a considerable degree of harmonisation between jurisdictions and some aspects, such as elements of heavy vehicle regulation have been moved to administration by a national regulator. The Australian road rules are maintained and reviewed by the National Transport Commission and generally adopted by each state and territory, although there are some differences between jurisdictions.

Regulatory changes to facilitate autonomous vehicles

For vehicles to operate in autonomous modes on Australian roads, a number of regulatory changes will be needed. These barriers are currently the subject of a review by the National Transport Commission (NTC) following a request by the Transport and Infrastructure Council. An issues paper for the review was released in February (NTC 2016a) and a discussion paper in May (NTC 2016b).

The main regulatory changes required are adaptation of the Australian road rules to permit vehicles to operate without a driver; and the adaptation of the ADRs to set appropriate standards for autonomous features for use in Australia.

• The role of the driver has an obvious primacy in the Australian road rules. The driver is responsible for the operation of the motor vehicle and is subject to penalties where a vehicle is operated in breach of the rules. Rules may need to be changed to allocate responsibility for rule breaches to a range of vehicle operators and providers of facilitating services. The NTC has proposed that over the medium term governments should move to expand the meaning of a driver to include an automated driving system (while ensuring that a legal entity is responsible for the system). Of more imminent concern, the NTC noted that lack of clarity around the concept of control for conditionally or highly automated vehicles was an issue, and proposed that governments should develop national enforcement guidelines that clarify the meaning of ‘control’ and ‘proper control’ (NTC 2016b).

• Given the current initiatives to maintain a degree of harmonisation between the ADRs and international standards, changes to ADRs to facilitate autonomous vehicle technology are likely to primarily involve the adoption of international standards. As modern car manufacture is a globally integrated business with manufacturers actively

186 DIGITAL DISRUPTION: WHAT DO GOVERNMENTS NEED TO DO?

pursuing these technologies, and other countries are looking to change regulations to facilitate these technologies, there is likely to be considerable momentum for the necessary changes to international standards. Harmonisation of the ADRs with new international standards will need to be timely and responsive to the commercialisation of the technology. In the meantime as standards develop, non-traditional vehicle designs could be facilitated through exemptions (NTC 2016b).

South Australia is the first Australian jurisdiction to introduce legislation explicitly aimed at facilitating autonomous vehicles. The Motor Vehicles (Trials of Automotive Technologies) Amendment Bill 2015 was introduced to the South Australian Parliament in September 2015. The bill is to amend the Motor Vehicles Act 1959 (SA) to allow for the responsible Minister to authorise trials of automotive technologies on public roads and to provide exemptions from provisions of the Act.

However, explicit legislation is not necessary to facilitate trials. Rather it represents an alternative approach to general exemption powers (NTC 2016a). Other states and territories are also active in this space, including activity to encourage and facilitate trials.

The NTC (2016b) has identified the potential for inconsistent conditions for on-road trials across the states and territories as an issue and proposed that governments should introduce national guidelines to support a consistent approach between jurisdictions.

Regulators in other countries are also addressing the operation of autonomous vehicles (box D.3).

TRANSPORT TECHNOLOGIES 187

Box D.3 Regulatory responses to autonomous vehicles in other countries

Trials of autonomous vehicles are being undertaken in numerous countries, including the United States, United Kingdom, Japan, Singapore. To facilitate these, a number approaches have been adopted. In some cases, there are specific regulations governing testing, in others there appears to be a lighter touch code of practice style approach, while in others there appears to be less specific exemption process.

Most European countries have implemented some sort of process for allowing the testing of autonomous vehicles, often involving an exemption process, In the United Kingdom, the Department for Transport has developed a code of practice that sets out requirements for approval of on-road trials, which includes having appropriate insurance cover.

In the United States, the National Highway Traffic Safety Administration has released a statement of policy, which makes recommendations to US states on how trials should be governed with a particular focus on safety. California has been a relatively active jurisdiction in establishing regulations for testing of autonomous vehicles on public roads and currently a dozen different companies have been issued testing permits under its Autonomous Vehicle Tester Program. Under the program, testers are required to report accidents within 10 days and submit annual reports summarising the disengagement of the technology during testing.

Beyond testing, regulatory responses to facilitate the actual use of autonomous vehicles are much less advanced. However, California released draft regulations on the deployment of autonomous vehicles for public operation in December 2015. Amongst other things, the draft regulations include third-party testing prior to deployment, ongoing reporting requirements, privacy and cybersecurity protections and the requirement for a licensed driver in the vehicle.

Sources: California Department of Motor Vehicles (2016); ITF (2015); NTC (2016a).

RPA regulation

In the case of civilian operated RPAs, the key areas of regulation are around safety and privacy issues. Safety regulations are administered by the Civil Aviation Safety Authority (CASA). Privacy issues are primarily dealt with under the Privacy Act 1988 (Cth) administered by the Office of the Australian Information Commissioner.

Currently, the way in which the use of RPAs is regulated is dependent on what they are used for. For RPAs used for recreational purposes, as with traditional model aircraft, the operator is not required to have any qualifications or accreditations, but operation must comply with a number of restrictions. These include: operation within line-of-sight during daylight; not flying within 30 metres of vehicles, buildings or people; not flying over populous areas; not flying higher than 120 metres in controlled airspace; and not flying within 5.5 kilometres of an airfield.

If an operator wishes to use an RPA commercially, they currently need to be authorised by CASA. This involves obtaining both a UAV controller’s certificate (or ‘remote pilot’s licence’) for the individual and a UAV operator’s certificate (UOC) for the operating business or entity. In addition, if the RPA is to operate outside the ‘default area’ (which is

188 DIGITAL DISRUPTION: WHAT DO GOVERNMENTS NEED TO DO?

the same as that applying to recreational fliers), then additional flight authorisations are required. In addition to submitting application forms, applicants for operator’s certificates are required to develop operations, flight and maintenance manuals, while applicants for a controller certificate need to demonstrate appropriate qualifications, such as completion of a training course by a CASA approved training organisation. As at March 2016, there is a waiting period of around 6 months for a UOC, with fees of around $2300.

CASA has acknowledged that the regulation is becoming outdated and that application processes are onerous and time consuming (Skidmore 2015). It recently announced that amended regulations will come into effect on 29 September 2016 (CASA 2016b). The amendments create new weight classifications of RPAs and create exclusions from the need to hold a controller’s and/or operator’s certificate for some commercial or commercial-like uses of RPAs. This will cover the use of ‘very small’ (less than 2 kg) RPAs in compliance with a set of standard operating conditions (broadly similar to the restrictions imposed on recreational users noted above). Operators will still need to notify CASA prior to their first flight. Private land holders will also be able to carry out commercial-like activities using ‘small’ (2-25 kg) RPAs — or ‘medium’ (25-150 kg) RPAs with a remote pilot licence, but without a UOC — provided none of the parties involved receive any remuneration.

These changes will allow a subset of lower-risk commercial RPA uses under a less onerous regulatory regime. However, notable modes of operation not permitted under the relaxed regulations are autonomous flights and flights that are outside line-of-sight. CASA (2016b) notes that it is still in the process of developing new suitable regulations for autonomous flight.

Addressing privacy concerns

Recently, the House of Representatives Standing Committee on Social Policy and Legal Affairs (2014) completed an inquiry into drones and the regulation of air safety and privacy. The inquiry primarily focused on privacy concerns around the use of RPAs.

Privacy laws are complex and covered by the Commonwealth Privacy Act 1988, as well as various state and territory legislation and common law. Various Commonwealth, state and territory surveillance regulations also potentially provide some privacy protections from RPA use. The inquiry noted that the Privacy Act does not provide Australians with comprehensive privacy protections and there are gaps and inconsistencies in the patchwork of regulations across Australia. Further, that because of the complexity of the regime, RPA users are unlikely to be aware of breaches and that regulatory compliance will be difficult to enforce. The Committee made a number of recommendations — including: the introduction of additional regulation to provide protections against privacy invasive technologies; simplification and harmonisation of Australia’s privacy regime; and issues around the use of RPA for surveillance by law enforcement agencies. To date, it is not clear that there have been any regulatory developments in respect of these issues.

TRANSPORT TECHNOLOGIES 189