Former ACCC head kills taxi competition

ScreenHunter_2355 May. 09 08.58

By Leith van Onselen

I find it somewhat ironic, but also saddening, that the former head of the Australian Competition and Consumer Commission (ACCC), Graeme Samuel (now head of Victoria’s Taxi Services Commission), has moved so swiftly to stop ridesharing applications, such as Uber, and in the process has killed-off competition against the taxi cartel and deprived consumers of greater transport options and reduced costs.

According to Fairfax, the Victorian Government has already issued $1,700 fines to dozens of ridesharing drivers in an undercover sting, with more on the way:

Representatives of Victoria’s Taxi Services Commission have been using the app to take rides, thus identifying drivers in order to issue fines…

Commissioner Graeme Samuel said the commission had sent “well over” 30 fines to drivers and that there were more to be issued…

The commissioner and the Victorian Transport Minister Terry Mulder had previously warned people against using Uber’s ride-sharing service…

“What we want to do is to facilitate competition and we see Uber as a source of competition,” Mr Samuel said. “But it needs to be competition that is on grounds to protect the public interest.”

While Samuel continues to spout off about wanting to facilitate competition, he has also demanded that rideshare drivers cough-up tens-of-thousands of dollars to the Government ($40,000 per hire care licence according to the Taxi Services website) in order to provide what is essentially a simple and straight forward service – giving passengers lifts. And in the process, he has effectively advocated restricting competition to the taxi industry, raising prices for consumers and limiting choice.

Of course, the Victorian Government is not alone in its opposition to ridesharing applications, like Uber. The New South Wales Government has also moved to outlaw the service. Meanwhile, over in the UK, London’s black cab drivers have arranged a mass protest against greater competition:

The Licensed Taxi Drivers Association (LTDA) has said that the apps that Uber’s drivers use to find passengers and calculate their fares count as taximeters – devices that are illegal to be installed in private vehicles…

Mr McNamara told the BBC that London’s black cab drivers were planning to gridlock in the city some time in early June…

Ride-sharing is an economic no-brainer, providing greater choice to consumers and lowering costs, while also improving productivity by facilitating a more efficient use of the existing transport fleet. Yet, economic no-brainers tend to be resisted by incumbent interests who are threatened by it.

Everywhere in the world where ridesharing has been tried, a storm of opposition has been aroused by vested interests; not just in the Taxi industry, but in public transport monopolies and government.

As argued by Colin Clark (a distinguished colleague of J M Keynes), in possibly his last published work, “Regional and Urban Location” (1982):

Anyone who defends the taxi monopoly, and restrictions on multiple hiring, while at the same time complaining about the use of fuel, is totally incoherent. The abolition of the taxi monopoly would cheapen travel, save fuel, reduce congestion, and would have one further great advantage, to which hardly any attention has been drawn, namely that it would provide employment opportunities for the unskilled…..

As I keep arguing, all that should be required in operating a ridesharing service is meeting basic performance standards, a valid driver’s licence, and a registered and road worthy car. Adults in Australia should be free to choose their transport options, not have them dictated to by the Government.

It would be nice if the former head of the ACCC, Graeme Samuel, recognised the broader competition and productivity benefits from ridesharing, rather than seeking to protect the taxi cartel.

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Unconventional Economist
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    • Yes, right.
      Protectionism is typical for feudalism – guild monopolies. In addition, where the competition is dead, capitalism is dead.

    • No surprises. Both London and Oz are leveraged up to the eyeballs on housing, little to no room for capitalism. Certainly not one for one of the bread and butter industries that is so crucial to our mass immigration, grow and hope ponzi economy.

  1. Pfh007MEMBER

    Even more ironic considering his history and interests in DFO and the battles that company had trying to find ‘approved’ land and space in the market to compete against the big boys of the retail mall industry.

    But then his gig is as Commissioner of Vic “Taxi” services and standing by and watching the march of progress eat into its privileges and protections would probably not be part of his job description.

    He simply wants Uber inside the tent that he is responsible for and part of the jolly rent seeking family of taxi and hire car plate owners.

    That is quite understandable and why he simply cannot be part of the solution – he is conflicted.

    • The Patrician

      +1 Though it is not clear to me what Samuel’s interest is.

      Is Samuel statutorily compelled by his position to have his staff entrapping and prosecuting Uber drivers? It is insane.

      What is Fels position on this?

      • Is Samuel statutorally compelled by his position to have his staff entrapping and prosecuting Uber drivers?

        Probably, he must be responsible for enforcement of the regulations.

        I doubt there is anything Fels can do.

        Uber drivers would appear to in breach of the regulations – they certainly are in NSW and until the regs change I can’t see how they can operate without a Hire Car licence.

        Samuel is just doing is job and I am sure the irony of his situation has not escaped him.

        The best he can do, if he was sympathetic and he says he is, is issue as many Hire Care plates as he can get away with at a price that is not likely to generate too much heat from existing plate holders – hire car and taxi plate holders that is.

        That is probably what he is referring to when he says Uber should have come and talked to him.

        Now from the Uber perspective – Samuel’s problems are Samuel’s problems. They are clearly attacking the legitimacy of the hire car plate system and Samuel cannot give them any love on that front.

        That is something for the strong spines in parliament.

      • “That is probably what he is referring to when he says Uber should have come and talked to him.”

        I’m not surprised that they didn’t.

        As much as I like what Uber is doing, the CEO is an Ayn Rand disciple who thinks that he is entitled to disrupt anything and everything without regard for existing laws and regulations.

        Again, I support Uber’s business model but not the way that they are trying to spread it.

      • The Patrician

        Dear Kelly O’Dwyer,

        Please recruit Graeme Samuel to enforce FIRB compliance.

  2. johnathonbbbrown

    You bastards don’t get it. Owners of taxi licences paid the EQUIVALENT of a house to buy the licences. They employ people. It is small business. They have the right to get an income from them.

    • Some of them may have the right to a refund from the government if they paid large amounts of money to the government for the plates but the majority did not.

      Most plates were sold by the government for pepper corn prices decades ago.

      The majority simply speculated that the government would always manage supply so the value of their plates went up.

      Just like those who invested in video shops, hi-fi shops and any other number of small businesses whose business model dried up, unfortunately, the bet is not working out.

      At least they can take some comfort in the knowledge that if they run their service well there will always be a market for professional taxi and hire care services from people who are uncomfortable with less formal alternatives.

      PS: We are not bastards 🙂

      • If the state gov had any clue they would sell every car in the state that wanted one a hire car license for $50 annually then watch the revenue pour in.

    • A government mandated RIGHT to an income and monopoly. A house can wait, I want to join the rentier class!

    • They aren’t owed anything.

      What happened to the old days, where technology progressed and those caught left behind collapsed? Are we supposed to stall progress purely because some people have invested in the status quo?

      Should we have banned the internet because it would put video rental shops out of business?

      Now I wouldn’t be averse refunding the holders of these taxi plates for the amount they paid the Government, because I am a nice guy, but have some f*cking perspective about things at least. What ever happened to “creative destruction”? Risk management (including regulatory risk)?

      Everyone just wants a fucking license to print money issued by the government these days and it makes me sick. Our days as a developed nation are numbered if we keep relying on the Govt in order to grow.

      • ”What happened to the old days, where technology progressed and those caught left behind collapsed? Are we supposed to stall progress purely because some people have invested in the status quo?

        Should we have banned the internet because it would put video rental shops out of business?”

        YES and YES

        This is what Aus (and others) are all about, vested interests, just check out the forthcoming budget. The big crony VI’s will be protected, big end of superannuation will be protected, the REestate Ponzi will be protected. the other 90% of the population will pay and play their lowly part, punishment on default.
        Bread and circuses is all that is required for the majority and that’s why things are why they are, numb and stupid.

    • I’ve bought an excavator and a truck, now the government owe me some civils contracts eh!

      These diggers cost REAL MONEY I am owed a return as per my rights!!

      You Bastards! I’ve got employes too, doesn’t that count for something? Oh good god won’t someone think of the little children. lol

      Nice one Johno I’m sure it works well to you in your mind.

      Time to read up on capitalism.

    • J BauerMEMBER

      What about the right of consumer’s to get a quality service? A lot of taxis in Australia aren’t providing a service equivalent to what they’re charging. It’s more common than not for the driver not to know where they are going (compare that to cabs in London where you can describe the front of a restaurant and the driver will know where it is).

      • “…A lot of taxis in Australia aren’t providing a service equivalent to what they’re charging..”

        That’s because what they are charging does not reflect the cost of providing a good service.

        They cut corners on the good service expense items

        * grubby cabs
        * underpaid drivers
        * poorly trained drivers

        To ensure the plate owners are able to extract the largest possible return on their investment in a slice of the economic rent action.

      • Agreed JB

        What happens when a lads out on the town and post Kebab finds himself a little worse for wear.

        Giving the address should be enough but asking him for directions as he concentrates on not filling the foot-well isn’t going to bring out the best in a man.

        I have had a few shockers in the last few years.

        Wrong side of the road.

        Falling asleep (so he drove us at 80 with all the windows down to try and stay awake)

        Tailgating so close I could have changed the station on the radio in the front car. Whilst looking at us explaining hes a good driver!

        Unable to produce a drivers card with his photo on it.

  3. Cabcharge and the taxi lobby are among the biggest donors to our state governments (following property developers of course). Sounds like Graeme has been ‘strongly urged’ to interpret the law as it is written rather than question its existence.

  4. Any destruction of the taxi monopoly ought be over a substantial period and by the gradual flooding of the market with licences until they have merely relatively nominal value, otherwise the trust of the public in buying and trading in government granted monopolies is undermined.

    The place to start is to issue standby licences for the periods when it takes more than 10 minutes to get a taxi by phone within 10 km of the city, including any otherwise off peak times when it is raining, or major sporting events etc.

    This would provide massive consumer benefit at no cost to existing licences because it is self evident that thy don’t get that much of the revenue that is available in those times.

    Then issue more and more licences but pay the funds raised as compensation to those holders whose licences are being devalued by the new licences.

    Consumers could be immensely better off and taxi plate owners no worse off under these proposals.

    • “otherwise the trust of the public in buying and trading in government granted monopolies is undermined”

      Every thing that the govt sells off or regulates like this is subject to the risk of legislation change. This is usually reflected in the price i.e. the purchasers of govt monopolies usually do rather well from the deal.

      Its difficult to have sympathy with existing licence holders, its clearly a risk to purchase these at these prices. Same goes for land bankers etc.

      Especially when this restrictive behaviour adversely affects the public which is actually paying for the whole thing via its taxes. Disgraceful.

    • The licences should be with the driver and only the driver, the other massive layers should not be involved, ie current plate owners, massive insurance costs, rip of radio services (should be corporative owned)
      However the current and onogoing system is that the number1 person that should be served and protected is the plate holders.

  5. There is a moral responsibility to honour arrangements which maintain the value of an asset in which there is a vested interest, regardless of whether that arrangement artificially sustains a price which undermines competition and broader notions of equity, and regardless of whether there is any contractual obligation for the government to do so.

    This moral responsibility to keep capital whole is a bedrock conservative principle. The breach of this principle is a short path to chaos. And while we may all wish for the lower prices ushered in by increased competition, what we innately crave even more is stability.

    • I am all for honouring arrangements between the Govt and the citizen, so I would like to see plate and license prices refunded to those who purchased from the Govt and still hold the plate.

      But I have no sympathy for those who then purchased these plates on a secondary market. Speculation on plates is rife under the assumption that Govt would continue to limit the supply of plates indefinitely. This is no different to land.

    • Denis413MEMBER

      Sounds like housing…

      How are we supposed to improve productivity when vested interests prohibit change.

      The “first mover” price paid by society in Australia is what is holding us back!

    • Existing licence holders should suffer some loss, as many businesses do when competing innovators emerge. Moreover, it would be good to undermine the faith of rent seekers generally in the permanence of regulated monopolies.

      That said, one option may be just to grant every existing licence holder another licence.

      • It seems like a few posters have only just been introduced to spleenblatt’s style of commentary.

    • A few points:

      “That all grants and monopolies, … are contrary to your Majesty’s laws” – i.e., licensing is a monopoly that is contrary to law. This is entrenched imperial law – cannot be repealed only ignored.

      “That all grants and promises of fines and forfeitures of particular persons before conviction, are illegal and void.” but but but… the government wants to issue fines and then get you to initiative court action by deception, likely to be in a non-court (i.e., Infringements Court which is nothing other than dodgy registrars and a computer).

      “Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only;” oops…GST deals with goods AND services, that is more than one subject. Unconstitutional but does the government care?

      • Dear MrMedved,

        Far be it from me to defend cartels or unconstitutional taxes, but…

        “This is entrenched imperial law – cannot be repealed only ignored.”

        Er, no. Imperial laws overriding the legislative powers of the States were un-entrenched by the passage of the Australia Acts (Imp. & Cth.) 1986 (later than the Act that you have cited). The only remaining exceptions are the Commonwealth of Australia Constitution Act 1900, the Statute of Westminister 1931, and the Australia Acts themselves — and even the exceptions are not completely entrenched, but merely harder to amend than ordinary legislation.

        But you may be right on s.55. I’ve written about it here.

      • @ Gavin R. Putland

        Australia Acts are dubious at best, but the Commonwealth will ignore arguments against them. After all, the Constitution is still merely part of an Act of British Parliament (which could alter, amend or repeal if they choose). The issue is not legal argument but the ability to obtain a fair and impartial hearing (i.e., not likely sunshine!).

        Disclaimer: IANAL.

  6. Oh, we need a new industrial/service revolution, which can smash the monopolies in every sphere of our life. It will come, that is sure, but first we have to suffer enough to get bolder against all rent-seekers.

  7. Doublethink – when a former(?) Goldman Sachs employee decries the protectionism of the taxi “cartel”, but forgets to mention the most insidious banking cartel that has laid waste to the wealth of the western world (Uber is a product of this cartel, which is why this is being promoted). If the average Joe Schmuck tried this shit, he would be shut down faster than you can say collectivist oligarchy.

  8. Obviously Samuels was deeply committed to his role at the ACCC.

    Does anyone know if the VTC has the right to issue fines?

  9. Only you ppl have a look at the midnight Goerge st Sydney then you understand how tough cabbies are to make a living. Ppl wish to “share” a ride don’t use cabs if they can. When these drivers from “sharing” app drive you home, do you seriously think they have everything properly checked? Try yourself to register with the app, you see what I mean. Till someone got in a bad experience, don’t expect Ubaer has every mechanism in place to find out what went wrong. Taxi expenses are a pyramid distribution from many layers. If you want more “competition”, expect worsen taxi serive. Or no taxi at all.

    • Cry me a river.

      When in Central Asia I ALWAYS ride share. Most of the time windscreens are cracked, and seat belts missing. Guess what? I make my choice and accept the consequences of my decisions. At least I have choice – unlike in the Oz nanny state.

      The safety line is a furphy to distract from the fact people are getting unbelievably ripped off – by both the taxi cartel and the government.

      • Well you Sir. Go to Asia, you live like Asian. You are in OZ. Live like OZ. Don’t like what it is in here? You have too many shit bother you. Shit happens.