May 2008

ESC TELEGRAPHS THINKING ON TAXI FARES

Reproduced in this Taxi Talk edition are extracts of the Essential Services Commission (ESC) interim report into taxi fares and the impact of the increased price of LPG.

Whilst recognizing that taxi fares needed to increase by an interim 4.2 percent, the ESC made it clear that the whole of the increase in fare revenue is for the taxi operator to offset the increased price of LPG, industry accreditation compliance, and modification of the taxi meter to accommodate the new tariff structure. Driver remuneration and assignment fees are being considered as part of the substantive fare review due later this year.

Whilst the ESC interim report was triggered by the LPG price increase, the ESC took the opportunity in this interim report to give some leads as to its thinking and areas of investigation as it develops its more substantive fare review report – including industry costs, fare adjusting models, revenue sharing between drivers, operators and licence assignors, fare setting models, the regulatory environment and social equity.

You will see from the extract of the ESC interim report that some of the matters on the mind of the ESC, if pursued and implemented, could make fundamental changes to the way in which the taxi industry is structured and operates. The risk is though that because the Victorian taxi industry is barely viable, fundamental structural changes could more than likely lead to a worsening of service standards and the destruction of the framework that holds the industry together. As well as some industry stakeholders, the public could be big losers if this comes about.

It is also important that those who built the taxi industry and invested in it are not penalized for their long term commitment and the risks and hardships they took throughout the journey. Let’s face it, governments don’t have a good track record of looking after those who built the country, its communities, its infrastructure, its businesses, and fought to keep it safe.

What seems to be clear though is the agenda - increase net driver and operator income and reduce operator costs.

In parallel with this is the regular call for more taxis. Sometimes the call is louder than normal, and more likely to be at times when the “cats choir” of economic journalists have little to do or don’t understand what they are supposed to be doing. It is mysterious that these so called economic commentators regularly impose their self acclaimed wisdom on the taxi industry when the fate of Australia’s future has zilch to do with taxis but a lot to do with world markets and economies, energy, water, health and care, pollution, manufacturing, freight and public transport, and meeting skills needs – all those things that impact upon the sustainability of Australia’s economic and structural wellbeing and that of its people.

Yes indeed, the next few months could be interesting and telling.

Neil Sach
VTA CEO