Victorian Parliamentary Inquiry into Ride Sourcing Services

Aug 01 2016

The Victorian Parliament’s Economy and Infrastructure Committee is currently undertaking an ‘Inquiry into Ride Sourcing Services’ (the Inquiry).  Consultations are open with submissions due by early August.

Since the emergence of ride sourcing/sharing or ride hail service in Victoria, the VTA has developed a comprehensive policy proposal outlining what we believe to be a sustainable and equitable way forward for the future of commercial passenger vehicle (CPV) services which we will provide to the Inquiry. 

The below canvasses some of the key questions raised by the Inquiry.

No one is more eager to see a resolution to the current uncertainty which prevails within the CPV industry than taxi businesses, operators and drivers.  The VTA, on behalf of our members and the Victorian taxi industry, has not argued to be protected from competition.   On the contrary, we are urging regulatory reform to embolden all CPV operators to more actively compete on equal terms and hope efforts such as this Inquiry will progress such developments. 

Fiona Patten MLC recently introduced a private members Bill, Ridesharing Bill 2016 (the Bill).  Despite a subsequent agreement with Government to hold voting on this Bill for a more comprehensive consideration of the issues, we believe the content of the Bill is similarly constrained by its scope as the Inquiry.

The Bill does not adequately acknowledge the thoroughly legislated and highly regulated context within which ride sharing services operate and as such is insufficient to deal with the various policy issues at hand. Whilst we fully support an objective and thorough prosecution of the regulatory issues associated with ride sharing services, it is our view that the Terms of Reference established for this Inquiry share these same limitations and thus compromise the potential outcomes of the investigation.

Ride hail services have emerged within the context of, and in direct competition with, existing CPVs which continue to be subject to high levels of prescriptive regulation in Victoria. In our view, an Inquiry into the regulatory impacts, challenges and opportunities of ride hail services can only be sensibly conducted with an awareness of this context and that necessary adjustments be made to the entire landscape of CPV regulation.  A singular focus on new service types will not facilitate fair and vigorous competition between providers and generate the maximum potential benefit for passengers.

The case for competition

Ride hail provider Uber has long argued that ride hail services cater to a different market than traditional taxi and hire car services and offer a completely different service. On the one hand they assert their restriction to immediate requests for transport limits their impact on the ‘pre-booked’ market, while on the other do not claim to encroach on the traditional ‘rank and hail’ market because their services are un-marked and do not have dedicated street access.  This is what we refer to as the ‘myth of two markets’.

Over the past year, the VTA has collated significant evidence refuting this claim. A report by Deloitte Access Economics commissioned by Uber and released in January this year shows an average response time of approximately 3.5 minutes for UberX cars.  Information is also widely available to confirm that Uber does not accept a request for travel (or booking) if there is not an UberX car within the vicinity of the passenger. These facts demonstrate they are actively catering to the same market of customers for point-to-point transport as the ‘rank and hail’ taxi market.

Uber has also recently announced its intention to begin accepting pre-booked journeys via their smartphone application (‘Uber pre-bookings strike another blow against taxis’, The Age 10 June) undermining any argument that they do not compete for ‘pre-booked’ journeys with taxis and hire cars. This latest news only serves to confirm irrefutably that ride hail services and taxi services are indeed one and the same.

Further, Uber have repeatedly operated outside the conditions they claim to impose upon themselves, including working at Sydney Airport and setting up dedicated ranks as the Australian Grand Prix in 2016 and the Taste of Melbourne event in late 2015.  It is also clear that a sub-industry in vehicle leasing has emerged to provide access to vehicles for people who do not own car but want to drive for Uber. This is reminiscent of the bailment structure enshrined in taxi and hire car legislation with various legal protections for drivers.

This is not to say the taxi industry does not support changes to regulation in light of the impact ride hailing services have had on the CPV industry. However, it does lend weight to our argument that ride hailing services and taxis compete in one market for the provision of point-to-point transport and thus all providers deserve the opportunity to compete on a level playing field for customers. As such, any analysis and proposals for reform must include the creation of a single licence for all CPV drivers. This is central to ensuring parity between ride hailing services and taxis in the future and thus a fair platform on which for them to compete.

The taxi industry is ready to go toe-to-toe with our competitors, we now need the redundant regulation removed to allow us to do so.

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