Professor Ian Harper’s competition policy review, released Monday, is only the latest call for taxi industry deregulation; the industry has been the subject of inquiries and reviews for years. In Sydney at least, nothing much changes. It’s time to shake things up — and double the number of taxis on our roads.

The problem with the taxi industry is simple. When you don’t need a taxi, they’re everywhere. When you do need one, you can’t get one for love nor money. Most of us have had the enraging experience — at 3pm changeover, if it’s wet, almost any time on a Friday or Saturday night — of not just a shortage of taxis, or a long queue, but being harassed by drivers with their vacant light off, hovering just out of arm’s reach, window wound half-down, shouting “where you going?”  And if your destination — or just the look of you — is not to the driver’s liking, tough. Some drivers are so blatant they’ll get out of the cab and try to haggle a multiple fare with desperate passengers, picking and choosing to suit themselves.

It’s completely illegal. Unless you’re drunk or aggressive, or the driver is on his or her way home with a destination sign clearly visible in the front window, cabbies are legally obliged to pick you up and take you wherever you want to go. App-based “disrupters” like Google-backed Uber and Packer-backed goCatch are not the answer; ride-sharing is only going to grab a small slice of the industry, and the promoters appear to be loss-leading to get there. Who wants to sacrifice safety by lowering standards of driver licensing or vehicle registration? Driverless cars, now that would be disruptive.

The answer is pretty clear: put more cabs on the road. Like, double the number. The key sentence in the Harper review, which devotes just a few pages to the vexed taxi issue, is this:

“Significantly reduced barriers to entry could see more taxis operate at peak times, without needing to operate at off-peak times just to earn a return on the licence.”

The drivers will whinge. I know — I was one, driving nights through my uni years, decades ago (proof in the picture above). It’s a tough job, slave to the meter, and the drivers by and large aren’t well paid for the 12-hour shifts (or dangerous double shifts), backache, loneliness, pissheads and accidents that come with it.

Sometimes there was a buzz. A few memorable passengers, like the bloke out Bankstown way who told me he and a mate played nude golf over a few tinnies at the end of their cul-de-sac, picking lemons out of a bucket, whacking them into the night. I was proud to take anyone — only once did I drive off; a guy so drunk he couldn’t open the door. Before mobiles, the best company was often the one-sided radio chatter. Some operators hammed it up — “slam your fist into the roger button there, 1384” — as the old hands bid for jobs using street locations best described as aspirational. A warrant for my arrest — failing to wear a collar (pinged at the airport), then forgetting to turn up to local court to cop the fine. Only robbed once, in inner-city Glebe (my own suburb): a $5 fare, four guys waving a tenner. I was too quick to hand over the five bucks change and watched it occur to the bloke he might just hang onto that, without handing over the tenner … what was I going to do as they slid quietly out of the cab?

Back then, and from the guys I talk to I’m pretty sure it’s the same now, it was the owners making the money — certainly not the casuals driving out of a base, struggling to make their pay (the cab owner got $60, $80, $100 or whatever per shift) and cover gas before they could earn for themselves. On a Tuesday, I’d make $80. On a really good Friday or Saturday I’d make $200. It all averaged out at $10 an hour, if you could get the right shifts. Tax didn’t come into the equation — we were supposed to buy stamps, apparently.

But the taxi plates could be a goldmine, especially in Sydney in the lead-up to the Olympics, and the graph shows the steady upward trend has continued. Unrestricted taxi plates now sell for $372,000, up from $200,000 20 years ago. After such an investment, the owners — more than 80% of whom have just the one plate — have to run the car all the time.

taxi licences

Two years ago in New South Wales, as The Sydney Morning Herald reported, the Independent Pricing and Regulatory Tribunal made the same call for more licences to be issued, arguing that greater availability and cheaper fares would lead to more patronage, even if it diminished somewhat the value of the plates, which had returned 12-14% per annum over a decade.

There has been some response. NSW Taxi Council chief Ron Wakelin-King told Crikey that 800 new plates had been issued in NSW over the past five years, taking the total in Sydney to about 6000 and the state total to 7200. A significant proportion of those new licences are peak availability plates, which can only be driven 17 hours a day. There is now also more annual leasing of plates, as occurs in Victoria, where the recent taxi industry inquiry recommended discontinuing capping of licences. Owners are unhappy, and Wakelin-King predicts the reforms will be revisited sooner rather than later.

Wakelin-King says there are already “more plates than what the market can sustain”. The Australian Taxi Industry Association submission to the Harper review says state and territory caps on the supply of taxi licences are a balancing act, with “supply caps well in excess of normal demand, although less than the number required to service peak demand without some acceptable diminution in service level”.

Acceptable diminution of service? That’s in the eye of the beholder, and from a customer’s point of view, we’ve gone past that.

The ATIA submission reads like a cartel kingpin’s manual, recommending that state and territory governments treat taxi licences as public assets that they have “a fiduciary duty to promote”, and follow the US model and provide for compensation where a regulatory intervention lowers the value of taxi licences.

It is time for politicians to bite the bullet and take the taxi industry on. Lift the caps, or better yet remove them altogether.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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