A fortnight ago, Melbourne taxi drivers blockaded Bolte Bridge (linking the CBD to the airport) in protest to the legalisation of ridesharing services like Uber and what it perceives as inadequate compensation by the State Government.
This morning, Melbourne cabbies did it again, traveling in a slow convey from Melbourne Airport to Parliament House, creating traffic havoc for commuters. From The ABC:
Drivers are travelling in a slow convoy from Melbourne Airport to State Parliament for a rally at 10:00am.
VicRoads said it expected the convoy to move along the Tullamarine Freeway, Flemington Road, Victoria St and Spring St before reaching the steps of Parliament…
As part of the industry reforms, the Victorian Government will:
- abolish the current model of taxi licences;
- buy taxi licences back at $100,000 for the first and $50,000 for subsequent licences; and
- introduce a $2 levy on all trips made by hire cars and taxis to raise $44 million annually and pay for the compensation.
In a lobbying move of its own, Uber last week emailed its users in Victoria, urging them to lobby the State Government not to introduce the $2 levy:
In an email sent to its users, Uber’s Victorian General Manager, Matt Denman, urged them to sign a petition to stop the levy.
“The State Government is imposing a new $2 tax on every Uber and taxi trip,” it said.
“This will be the highest tax of its kind in Australia…
Uber said the amount raised by the proposed levy would be bigger than the compensation package.
“We believe Victorian impacted by this $2 levy should have a voice in the debate,” the statement said.
“We’re giving our Victorian riders the opportunity to tell the Government what they think about this plan to introduce an expensive levy with no end date.
“It’s incredibly disappointing to see the Government miss a golden opportunity to unlock the full benefits of competition and ease cost-of-living pressures felt by ordinary Victorians.”
Clearly there is a lot of rent-seeking taking place from both sides.
With regards to the whole taxi compensation issue, the taxi industry is being unreasonable if it thinks it should automatically be paid $250,000 in compensation per licence.
If I bought an inflated house and land package on the fringe, would I automatically be entitled to compensation if the Victorian Government axed Melbourne’s urban growth boundary, causing available land supply to increase and prices to drop? I don’t think so.
If I owned an expensive apartment and the government approved the building of a highrise complex that blocked my view, and reduced my apartment’s value, am I automatically entitled to compensation from the government? The answer is no.
If my firm goes out of business due to international competition via a ‘free trade agreement’ signed by the government, am I entitled to compensation? Again the answer is no.
If I owned shares in Qantas, and the government opened domestic aviation to foreign carriers, would I automatically be entitled to compensation? I think not.
Surely, any compensation paid to taxi plate owners should be capped at their initial cost (licensing fee) paid to the Government, plus interest. In many cases, this amount would be a pittance since a lot of taxi plates date back decades to when they were sold at peppercorn prices.
However, in no circumstance should taxpayer compensation be paid for taxi plates acquired on the secondary market at inflated prices. The public never saw that money.
Anyone paying for a licence in a controlled market knows that there is a risk that effective supply may increase, be it via the issuing of more taxi plates or a new source of competition.
With regards to the $2 levy on all trips made by hire cars and taxis, it is way too blunt and would unfairly penalise those that take a lot of short trips (e.g. in the inner city).
Surely a better approach would be to levy a certain percentage, say 10%? This way, the levy would increase proportionately to the length and expense of the trip?
Regardless of the above issues, having increased competition in the hire car market is unambiguously good for consumers, and should be widely supported by the public and policy makers.
