Business Day’s Michael Pascoe has written a cracking article today (worth reading in full) questioning whether the New South Wales Government will have the cojones to side with the “consumer, competition, innovation and improved productivity”, or will side with the rent-seeking taxi industry, and seek to shut-down Uber’s ride sharing operation:
A very large amount of money is at stake... there were 5,647 plates just in Sydney last year with each plate worth the better part of $400,000. Call it $2.2 billion. Then there’s Cabcharge, the biggest of the networks, with a market capitalisation of $480 million… the NSW government itself is [also] the biggest lessor of taxi licenses with 600 under lease, providing the treasury with $20 million in annual revenue...
Uber’s model of internet-enabled “ride sharing” threatens a lot of investment...
It’s predictable that the first reaction is to have taxi drivers complaining about unfair competition, but as various studies, such as Professor Alan Fels’ Victorian review have shown, the drivers are people most exploited by the industry structure… there’s every chance taxi drivers would be better off outside a system that’s constructed primarily to justify the price of the artificially created and maintained government licences…’
Someone briefly wanting to hire a driver with a car should be a simple and reasonable basis for a business transaction, but it’s been turned into an inflated monster…
Cutting out the layers of middlemen and women in the personal transport business would represent a considerable productivity gain…
Standby for sob stories about people who have bought taxi plates and now risk losing some of their capital due to competition and new technology. If anyone cares, there are sob stories about people who invested in video rental shops, in lawn mower repair businesses, in newspapers. Anyone expecting to make a profit from an investment has to accept that there is a risk that they won’t.
Pascoe is spot on. Although, I doubt the Government will listen to such logic, and will move to protect the taxi cartel, at everyone else’s expense.
