May 01, 2015

Why taxi industry regulation is vital to service quality

Our CEO David Samuel has written in response to an editorial published in the Sydney Morning Herald yesterday in the wake of commentary from the Harper Review - (‘
Harper competition review dragging taxis, shopping hours into 21st century’, Elizabeth Knight, 2 April

“I continue to find the current discussion and debate surrounding the industry I represent both frustrating and disappointing.
The arguments that continue to be advanced by a small number of ‘experts’, commentators and journalists lack rigour and too often depend on theories and conspiracies.

The latest editorial in the wake of the Harper Review from Ms Knight is no exception (‘Harper competition review dragging taxis, shopping hours into 21st century’, Elizabeth Knight, 2 April).

Restrictions on taxi licence numbers were created to protect the consumer from a significant market failure, an oversupply of poor quality taxi services, as indeed all regulation is intended to do. Contrary to the reporting which prevails on this issue, these restrictions have not been maintained to protect ‘industry incumbents’. 

Recent reforms in Victoria have made taxi licences accessible in unlimited supply and we have seen a greater than 10% increase in the taxi fleet with no corresponding increase in demand. The vastly reduced barriers to entry have not lead to a decrease in price for consumers, but the opposite.  Despite the space for greater competition, business costs remain the determinant of service price for the customer.

Ms Knight does acknowledge the impact of Victorian reforms on taxi licence owners but fails to understand these people are not the only losers from taxi deregulations - most importantly, the customer loses. 

In every comparable jurisdiction which has implemented deregulatory measures such as those being recommended by Harper, the consumer has suffered from higher prices and deteriorating service standards. This is not a partisan opinion but the findings of countless post-reform reviews which in many cases have result in licence regulation being reinstated in the name of the customer.  You only need to look at the situation in Ireland, New Zealand, the Northern Territory and any number of North American States to understand where this has all gone wrong before. 

Finally, the phone applications that recent market entrants use to run illegal taxi services are nothing new.  The taxi industry had the same booking technology long before any ‘disruptive technology’ hit Australian shores - the argument that technology is driving the need for industry deregulation is absurd.

A new app should not legitimise a product that risks consumer safety from a company that proudly breaks local laws throughout Australia.

If the law is to be changed it should be done to accommodate the needs of the community, not the flawed business models of large multinational companies.”