Response to the Victorian Government Proposed Commercial Passenger Vehicle Industry Bill 2017

 

 

 

 

Summary of VHCA Position

It is apt and timely to write now as we have been advised that this bill is coming back into the Upper House (Legislative Chamber) of the Victorian Parliament this week.

What is Ride Sharing?

Ride Sharing has been defined as “an act or instance of sharing rides or transportation, especially by commuters” (Dictionary.com, n.d.).  It also has been defined as “the practice of sharing a car with other commuters as a means of lessening traffic congestion or pollution” (Harper Collins Publishers Limited [GB], n.d.)  As we look in the mature markets in the United States and other jurisdictions it’s reported the exact opposite has occurred: greater congestion as drivers “cruise” hoping to obtain work; this exacerbates the impact on the environment.
We are now seeing hundreds if not thousands of cars daily cruising Melbourne CBD creating further congestion and taking what limited parking there is (and parking illegally), negatively impacting those who work and have businesses in Melbourne’s CBD. We now also see increased congestion around major events such as last years Spring Racing Carnival and this years Melbourne Grand Prix caused by those operating illegal Ride Share services.

This masquerade that Uber claims is a technology company connecting riders with drivers is being dismissed around the globe, they are being found to be an unlicensed taxi service and more and more now being found to be employers.
The Australian Federal Court has recently determined that Uber for taxation purposes is a taxi service!

Level Playing Field

The Government has been very vested in telling us that what they are all about is creating a “level playing field” for all participants in the point to point transportation industry.

Back in August 23, 2016 Premier Andrews was quoted as saying “We’re levelling the playing field for the whole industry while ensuring consumers have safe and reliable access to transport services.” 

On 22 February 2017 in her press release, Minister Jacinta Allan stated “We’re creating a level playing field for the industry and providing the largest industry support package in Australia.” (Andrews MP, Daniel, 2017). We at the VHCA welcome the concept of a level playing field, but feel the need to ask the following questions of Minister Allan.

What part of fair and level playing field contains:

·         Removal of privately owned perpetual assets without fair and reasonable compensation? Leaving legacy debt that cripple businesses so they will not be able to compete;

·         Giving a commercial advantage to illegal ride share providers and being complicit, involved in an activity that is unlawful and morally wrong by not instructing the TSC to enforce the current legislation;

·         Destruction of the ‘fruit’ of generations of hard work by the working classes. Generations of people where the majority have traditionally been Labor Party supporters. I wouldn’t think that there would be an electorate that will not have a taxi and hire car family member living in it.

A (very brief) History of Taxi and Hire Car Licences

Both Taxis and Hire Cars operate as a Government Regulated Industry.  Under current legislation each taxi and hire car requires a licence to operate.  Taxi licences can either be leased from the Government (The Government owns approx. 1/3rd of all taxi licences in Victoria), assigned (leased) from an owner or purchased outright.  The Government enabled the Bendigo Stock Exchange to list all Taxi (MH) licences to enable transparency across the industry. Victorian State Governments have made tens of millions dollars over many years under that scheme , but now choose to give up this revenue stream. Or are they?

The Government sets regulations as to what size the taxi vehicle should be, what signage it had, the pricing of the fares, etc etc.  Every aspect of the industry is still regulated by the Government.

Unlike Taxi Licences, Hire Car Licences are not allowed to be assigned.  The only place to purchase a licence is either from the Government (they are still selling them TODAY at $40,000 each) or from an existing operator who chooses to exit the industry.  

After the Fels enquiry was established on 28 March 2011, the value of Taxi and Hire Car Licences began to fall. As a part of the recommendations of this enquiry a maximum level of assignment fee was placed on taxi plates – thus lowering their value even more.  Once the final report was released in early 2013 prices started to collapse and continued to do so. That brings us to a point that now where the price is academic – who in their right mind would buy one?

What the Government is proposing in this legislation is to devalue the perpetual taxi and hire car licences to zero. The Andrews Government then chooses to place this financial burden on those who have done everything that what was required of them. Unjust and unfair! The Andrews Government is abandoning long held principles of Governments of all persuasions – that when a Government compulsory acquires a privately owned asset that those people get a fair compensation for that asset.

The $2 Taxi Tax

The VHCA has had meetings with Minister Allan, her staff, the Dept. and the TSC.  We remember discussing this tax only to be told that it is a “Levy”.  It isn’t.  It is a tax.  Moreover, it is a tax that is ongoing with no sunset clause and is indexed to CPI.  It has been suggested to us that this tax will cease when the cost or recouping the proposed payouts in the Hardship Fund and Transition Fund have been paid out. Really? The VHCA simply does not accept this. If we may quote words President Trump likes to use, and is effectively what the Andrews Government is asking us to do… “Believe Me”  “Trust Me”  well we do not believe you, nor do we trust you.

Because of this new tax we will now have the financial burden of reporting to not the Taxi Services Commission (TSC), not the Australian Taxation Office (ATO) but now, four times a year to the State Revenue Office (SRO) (apparently this is removing red tape)!!
We will be expected to bear the cost of that compliance, and now on top of all of that, the Minister Allan suggested for us to absorb the tax! The cost to my little 3 car business, would be in the $7000 to $9000 range per year without administration costs factored in. This is a shocker, we suggested back in 2015 an annual licence fee, then we nominated $2500 per year per commercial passenger vehicle, we have also put up recently increasing the registration fee for commercial passenger vehicles say $3000/year this is a no-brainer. These have been rejected.
The Governments option will cause thousands of businesses increased compliance costs and increased red tape. We confidently predict there will be widespread non-compliance, and it will be an administrative nightmare for all concerned.

The Andrews Government has been less than transparent with the Victorian public regarding why they have not put a sunset clause, or a dollar amount once they have raised sufficient monies to fund the compensation package. State Governments have been raising tens of millions of dollars from the selling of hire car licences and leasing of taxi licences, and this new taxi tax is about the replacement of that revenue, and in our view is not about compensation but moving the cost onto the consumer.   

The VHCA totally rejects this tax.  We have no wish to become tax collectors for the State of Victoria. Indeed, it would appear that this legislation flies in the face of Minister Allan’s own words.  She said that these new reforms will “strip[ping] away complexity and red tape” (Andrews MP, Daniel, 2017).

The burden placed on small businesses to collect this new tax is insidious, ridiculous and simply not required.
 Transition Payment

The VHCA notes that there is no mention of the Transition Payments in the proposed legislation. Despite the chatter about it, all we have as “proof” that it will occur is the same press release quoted in other places in this document.  The VHCA is of the considered opinion that these transition payments should be: 1) noted in legislation and; 2) paid immediately as the financial harm has impacted already.

VHCA Recommendations

Whatever decisions that get made in the Upper House in regards to this Bill, we have no doubt that some matters will end up in Court.
(The irony of course is that the Andrews Government will use tax-payer funds to defend their decision which is to assist a company that has done its best to avoid paying tax in this country).
We have also referred other serious matters to the Victorian Ombudsman for review. But let’s put all of that to one side for the moment.

This is a moral question, and clearly we are not the only ones concerned about this Government’s moral compass; this is a Government that had a Minister that thought it was OK to ferry his dogs around Victoria in a Government car; this is a Government that had Ministers who thought it was OK to use Government cars to attend a rock concert in the country; this is a Government who had a Speaker and the Deputy Speaker take advantage of some very lax ‘living away’ allowances.
This Government will cause thousands of businesses to become financially vulnerable. Many will be forced to close – tens of thousands of taxi and hire car operators and their families are already facing financial and emotional stress. These people have done nothing wrong and deserve to have this matter reviewed.
We urge you, send this to committee for review.

 

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