Taxi turmoil in Uber age

Herald Sun

February 13, 2017 11:30pm

Subscriber only

VICTORIA’S taxi industry is facing a competition revolution and it’s in revolt.

The State Government has accepted the inevitable as Uber and other ride-sharing new-tech providers storm the market with greater flexibility, efficiency and lower-cost overheads.

Uber sprouted in San Francisco in 2009 and is now an $82 billion goliath spread across the planet and wreaking havoc for traditional cab industries. UberX launched in Melbourne in 2014 and, after a series of win-loss prosecution test cases against drivers and a realisation popularity inevitably meant ride-sharing was here to stay, the Andrews Government late last year announced it would legislate in 2017 to “level the playing field”.

Perpetual and fixed-term taxi license-holders would get $100,000 compensation for a single licence and $50,000 for a second — but no more for third or more licences.

The compensation would be raised through a $2 levy on all taxi, hire-car or ride-share trips.

Importantly, that levy would also support a $50 million “Fairness Fund” to help these mainly family business operators, some of whom have multiple licences and some who had paid up to $500,000 for a single licence, who experience financial hardship.

It’s worth noting that in NSW, $20,000 in compensation is being offered for licences with a maximum of two per holder, together with a $142 million hardship fund, funded by a $1 passenger levy.

Victorian taxi owners are furious — and it’s not surprising — that a previously regulated, exclusive licensing system for which good money was paid to operate in has suddenly morphed into a relative free for all. Taxi operators feel the asset they saw as an investment and a “nest egg” retirement plan has been gutted.

But — separate to arguments of having previously been in a regulatory-protected industry — all business models in the digital and disruptive age must either adapt or lose relevance.

Uber operates in 77 countries and more than 503 cities across the world — and it is being followed by a platoon of other entrants and ride-share app variations such as Lyft, GoCar and Ingogo.

Emotion won’t stop evolution.

Blockading the Bolte Bridge yesterday, causing (additional to normal) traffic chaos and shutting down access to Melbourne did no favors for the cause of taxi licence owners and drivers.

There is real sympathy for taxi operators, but there is also a recognition the industry was a victim of its own historical neglect — it failed to evolve and raise standards to a level where it could compete with ride-sharing on the basis of cost and service.

While some may be looking to the courts, section 90 of the Transport Act protects the government from being forced to pay compensation relating to the “issue, renew, reject, cancel, suspend or revoke (of) any licence”. Obviously, as a matter of fairness, the compensation programs already announced make this a moot point. Further scope for individual cases of financial hardship may yet fall under act of grace provisions in government compensation.

But there can be no blank cheque or dollar-for-dollar book value — the compensation does not come from nowhere — but rather a passenger levy, which the public pays.

And it was the public which paid yesterday, unfairly, as traffic ground to a halt.

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