The NSW Community Transport Model was established to "bridge the gap between isolation and community inclusion", however the Community Transport Organisation (CTO) claim a reinterpretation of a clause by Transport NSW is "restraining" the industry.

In 2017 Transport for NSW, who funds organisations such as Oxley Community Transport (OCT), ruled that vehicles could only be replaced after eight years or 300,000 km, whereas the former interpretation was that operators could use vehicles up to 300,000 km.

OCT manager Sharon Tibbs disagrees with the new interpretation and blanket policy.

"We have been managing fleets for 30 years - we know the clients needs, the roads, and the vehicles," she said.

"There is a big difference between 300,000 km in the city, and 300,000 km around Walhollow." 

Tamworth MP Kevin Anderson said vehicles can be replaced by operators at anytime, providing they show Transport for NSW the community would benefit with a replacement, however did agree to further investigate the issue.

"If they are unhappy with this government policy I am happy to take it up on their behalf," he said.

"We need to look at the reason behind the policy being set, and if that doesn't suit regional NSW then we will look into it."

CTO CEO Di Hallet said having to put a business case together to have a car replaced was a waste of operator's time and resources.

Ms Hallet also said the new rules are restricting operators from stepping into the commercial space and offering much needed NDIS transport options.

"Red tape reduction is a critical issue for the viability of the sector," Ms Hallet said.

"Decisions have been taken out of the hands of people that have decades of fleet management experience, and are instead being arbitrarily made by Transport for NSW - it is adding unnecessary layers of red tape."