Samuel: We support greater taxi competition

ScreenHunter_2355 May. 09 08.58

By Leith van Onselen

It seems that I may have been too hasty in claiming that the former head of the Australian Competition and Consumer Commission (ACCC), Graeme Samuel (now head of Victoria’s Taxi Services Commission), has moved to block greater competition against taxis by discouraging ridesharing applications like Uber.

According to reports in The Age, Samuel’s office has approached Uber directly to establish operations, but has so far been snubbed by the company. The Taxi Services Commission is also offering private car licences for unlimited vehicles for just $40,000, which Uber could easily apply for:

To comply, Mr Samuel said Uber would need to obtain a $40,000 private hire car licence for unlimited vehicles and have accredited drivers.

Mr Samuel said he wasn’t about being anti-competitive…

Instead he said the Taxi Services Commission was about “enhancing” the position of consumers. “I’ve talked about how for too long strong, vested interests in the industry have dominated the industry to the disadvantage of drivers, operators and consumers,” Mr Samuel said.

I was surprised to read that a private hire car licence allows an unlimited number of drivers, since it is unclear on the Taxi Services website that this is the case. Regardless, it is a huge development and one wonders why Uber has not already applied for a licence and just got on with business. Presumably the publicity gained from breaching the existing regulations is worth more to it than the fines issued to its drivers, which maybe it is paying on their behalf?

That said, the devil is in the details. For example, what does “and have accredited drivers” mean?

Previously, Samuel has stated that “drivers would have to use registered commercial passenger vehicles, and have passed the relevant tests”. Victoria’s Transport Minister, Terry Mulder, has made similar statements:

“All taxi and hire car drivers go through a rigorous accreditation process before they are allowed to drive a taxi or hire car – this is for both the safety of drivers and passengers.”

These statements seem odd when viewed in light of the common perception that taxi drivers are some of the most erratic and worst drivers on our roads.

If the accreditation and testing system is not too onerous, then it shouldn’t act as a significant barrier to competition against taxis. But if rideshare drivers are subject to more onerous accreditation than your typical taxi driver, then competition will obviously be stifled.

As I argued last time, 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. To his credit, and contrary to my earlier reporting, Graeme Samuel at least appears to recognise these benefits and seems open to greater competition.

Let’s hope that Uber puts its animosity aside and works with the Taxi Services Commission to establish a legal ridesharing operation in Victoria, paving the way for Australia’s other jurisdictions to follow.

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Comments

  1. Why is it $40,000? Can they justify the charge for the license in the same way that banks were taken to court to justify their penalty fees?

    Uber should go to court to challenge the license fee and the level. One should also ask Samuel if he thinks that the level of the fee might well be a disincentive or effective competition blocking fee at that level. If he was true to his word, he would be doing all he could to drive the license fee as low as he can to enable as many entrants as possible.

    • Yes, what is the rationale for a $40,000 plate fee?

      Sounds like there is no rationale beyond the government enjoying the profits of selling a slice of the economic rent action.

      Some licence fee may be necessary to support the regulatory infrastructure but anything beyond that is nothing less than selling an entitlement to gouge the public.

      Having said that, Uber would probably be wise to pony up $1M and acquire 25 licences and use that fleet as 24/7 marketing to the public explaining why the hire car plate fee should be dropped down to something far more reflective of the cost of providing minimal regulation.

      Simply pointing out how much of the fare is due to the government plate fee should get the message across to the travelling public how much the govt is shaking them down.

      The public will quickly put 2 and 2 together and work out how much of the much higher cab fare is due to the $400,000 gouge for a taxi plate.

      A few thousand for a Hire Care plate fee should be more than enough.

      • Why would they need 25 licenses?

        “The Taxi Services Commission is also offering private car licences for unlimited vehicles for just $40,000, which Uber could easily apply for:…”

      • There is no magic in 25 licences.

        I was thinking more along the lines of how many Hire Cars decked as promotional vehicles would be enough to raise the profile of the issue.

        You would not want to buy too many at $40,000 plate when the whole point of your campaign is to end the business model where the government is selling a slice of the public transport economic rent gig.

        If your campaign is an instant success and the government refuses to refund you the licence fees you paid you would only be down $1M – which will make your venture capital Rand nuts wince but they can easily ease their pain with a bit of horse whipping by the heroine.

        The price of a hire car licence should reflect nothing more than the cost of providing efficient regulation sufficient to ensure public safety.

      • “You would not want to buy too many at $40,000 plate when the whole point of your campaign is to end the business model where the government is selling a slice of the public transport economic rent gig.”

        I think we’re talking at cross purposes (and my emphasis wasn’t strong enough)

        $40,000 buys you a license for an UNLIMITED number of cars so they would only need to buy one.

      • “$40,000 buys you a license for an UNLIMITED number of cars so they would only need to buy one.”

        I could be wrong but I don’t think that is correct – my understanding is the licence is for a vehicle to operate as a hire car.

        I think the offer that Samuel is making is unlimited licences at $40,000 per vehicle. Which from his point of view might be generous because he is saying that provided they are willing to cough up $40,000 he will supply as many as they want.

        Notice that the current market value is a bit less than the issue price.

        http://www.taxi.vic.gov.au/about-us/overview/industry-statistics#hire

        http://www.taxi.vic.gov.au/drivers/fees-and-charges

        http://www.taxi.vic.gov.au/owners-and-operators/hire-cars

      • “I could be wrong but I don’t think that is correct – my understanding is the licence is for a vehicle to operate as a hire car.”

        Ah, OK. I don’t have any particular knowledge and the wording seems ambiguous so you may well be correct.

      • I suspect that Pfh007 is correct – this appears to be a per vehicle fee, unless there was a special offer to Uber, which I doubt.

        The application form http://www.taxi.vic.gov.au/__data/assets/pdf_file/0004/31468/Application-for-a-commercial-passenger-vehicle-licence-metropolitan-hire-car-licence.PDF has room for a single vehicle only.

        Incidentally the TSC issues VHA or VHB plates and you have to get the vehicle registered with them at VicRoads before the license is granted. It’s not a light weight process, just a lot cheaper than the taxi route.

      • Another article

        http://www.smh.com.au/business/intelligent-investor/killing-the-cabcharge-dinosaur-20140512-3856x.html

        It makes reference to GoCatch as a new booking system that uses cabs.

        http://www.gocatch.com/home/about/

        Does anyone know of a Uber /GoCatch app driven booking service in Sydney that is specifically for Hire Cars?

        I am curious why GoCatch is limiting the vehicles it uses to Taxis and not also Hire Cars.

        Is there a catch to using Hire Cars to provide Uber style services or is that something that some bright young sparks are working on as we speak.

    • The Patrician

      +1 Clarity from the Samuel from the word go would’ve been helpful.

      Is he trying to be delberately obtuse?

      Why is is it necessary for the govt to be issuing $40,000 licences for two consenting adults to arrange a lift home?

      • drsmithyMEMBER

        Why is is it necessary for the govt to be issuing $40,000 licences for two consenting adults to arrange a lift home?

        Holy disingenuity, Batman !

        It’s not necessary “for the govt to be issuing $40,000 licences for two consenting adults to arrange a lift home”.

        However, if someone wants to run a business driving people around, then there are legitimate issues around competency, liability and safety that need to be considered and addressed – and since we know from experience that businesses are, as a general rule, incapable of self-regulating, unfortunately that means The Man has to get involved.

    • If this $40,000 fee really existed wouldnt you have thought that the taxi license holders and investors would have already jumped on this bandwagon, after all what would you rather pay $40,000 unlimited/private license or $250,000 for a taxi license????
      I know what I would choose.

  2. “Regardless, it is a huge development and one wonders why Uber has not already applied for a licence and just got on with business.”

    I suspect it’s largely because of the ideology of the CEO. This is far from an isolated incident with Uber.

    http://pando.com/2012/10/24/travis-shrugged/

    When Uber was forced to shut down its yellow cab hailing service in New York last week, founder Travis Kalanick threw a fit that PandoDaily’s Nathaniel Mott described as “downright adolescent… just short of [Kalanick] stamping his feet.”

    In fact, as Mott explains (and as sources close to the negotiations have independently confirmed), there was precisely one reason why UberTaxi failed to take Manhattan: Travis Kalanick himself. For one thing, the TLC is bound by contracts with existing vendors not to allow any other credit card processing in NY cabs until next February. Likewise, changing laws on handheld devices and pre-booked pickups cannot happen overnight. But unlike in Washington and Boston, where the company has also fought with regulators, New York was more than amenable to the idea of innovation. A compromise was on the horizon.

    Uber, however, does not profit from compromise. Kalanick is a proud adherent to the Cult of Disruption: the faddish Silicon Valley concept which essentially boils down to “let us do whatever we want, otherwise we’ll bully you on the Internet until you do.” To proponents of Disruption, the free market is king, and regulation is always the enemy.

  3. Thanks spam filter.

    Can anyone explain why is it unable to differentiate between posts from long-time users and those that have just signed-up?

    Uber’s behaviour here is simply a reflection of the immaturity and ideology of its founder. This is far from an isolated incident as my previous post would have showed if it was allowed to be displayed.

    Try some of the results from this search:

    https://www.google.com.au/search?q=uber+ceo+ayn+rand

    • While I don’t have a great deal of enthusiasm for the ultra-rand enthusiasts, it often takes an extremist to take issues like this head on.

      If Uber takes a hard line and refuses to play ball, they will soon find that one of the many other similar services starting up overseas will enter the space and start with the over priced HC licenses and then use that as a platform for campaigning for the lowering of the Hire Car licence fee.

      After all there are plenty of already licensed Hire Cars who are likely to be interested in using a booking system that works well and increases their business.

  4. In the infringement notices issued to drivers, the TSC alleges that Uber has misled drivers about their legal responsibilities. If that’s so, Uber has aided and abetted the drivers’ offences and can be prosecuted accordingly. Instead, the TSC has chosen to make an example of the drivers. In this, the TSC has shown itself to be a bully, a coward, and a thug.

    If Uber is paying the drivers’ fines, that is not good enough, because the drivers’ convictions are likely to have consequences beyond the fines.

    Accordingly, I maintain that the drivers should use all available legal trickery to force the TSC to withdraw the fines.

    • I can see you aren’t a lawyer but play one on the internet.

      Infringements are not criminal offences so there are no convictions. The offence set out in the infringement notice has to be one identified in the legislation or the regulations enabled by the legislation. I’m sure you now this much from your slicing and dicing of the definition of supply in the GST legislation.

      To pursue Uber for encouraging someone else to commit an offence is not something which can be done on an infringement notice. This would require a criminal prosecution and would take much longer. The TSC would be a laughing stock if they appeared to do nothing because they pursued Uber instead of the drivers. They may well be pursuing both but the drivers cop it first.

      My guess is that there will be a test of whether the section 87 exemption applies. My money is on the TSC winning that one, assuming competent legal representation and the battle being fought in the legal courts and not the public opinion courts.

      • EmptySea wrote: “Infringements are not criminal offences so there are no convictions.”

        So, if the infringement against your name is not called a conviction, what is it called? And whatever it’s called, what’s to stop an insurance company from requiring you to disclose it as a condition of coverage, and raising your premiums accordingly, and denying your claim if you haven’t disclosed it? (Apparently they make a veritable industry of denying claims for that reason.) And what’s to stop a prospective employer from requiring you to disclose it as a condition of employment, and sacking you if you haven’t disclosed it?

        “To pursue Uber for encouraging someone else to commit an offence is not something which can be done on an infringement notice. This would require a criminal prosecution and would take much longer.”

        And would be the decent thing to do. In the mean time, there are things called interim injunctions.

  5. drsmithyMEMBER

    Regardless, it is a huge development and one wonders why Uber has not already applied for a licence and just got on with business.

    Because it’s run by one of those hardcore libertarian types who doesn’t believe in regulation ?

    That said, the devil is in the details. For example, what does “and have accredited drivers” mean?

    It’ll mean they need a transport-for-hire driver authorisation, which is a separate little bit of plastic you get to say you’re allowed to drive taxis or limos.

    It’s been 10+ years since I used to drive cabs, but back then (and in Qld), it was pretty trivial – go to a day-long training course at one of the cab companies where they show you how to use the radio, booking system, meter, etc., get a general blurb on being a taxi driver, pass a multiple-choice exam on common locations, crossroads, etc in the relevant locale, provide a medical certificate to say you’ve passed a physical, then go pay the Dept of Transport some nominal fee.

      • drsmithyMEMBER

        Thanks for the clarification. Much appreciated.

        No worries. The specifics will vary from state to state, and it’s probably become a bit more bureaucratic over the years, but ultimately getting a DA is never going to be too onorous or expensive (at least for the driver), purely because of the demographic who will be most interested in it.

  6. The simple reality is: Car sharing is about “sharing” not hiring. If so, why not HITCH HIKING? Of course, Uber made it easy to cut corner because of technology. So in reality, sharing in this case become hire car service. That makes legitimate hire cars and taxis in an unfair disadvantage. Do you know how much insurance will be if “sharing” becomes business operation? For ppl think you can get away with Uber’s idea, why don’t you try to set up a shop inside Westfield without paying rent? If you people really care about planet and want to reduce footprint, why don’t you do it by asking bus passengers in a bus stop to get a free ride to your destination. Of course, you don’t trust them or likewise. Neither, Uber won’t give this serive under the condition that only small fee will be charged. Instead, they want profit as well. So they want to avoid any fee that makes their “business” less cheap. Simple.

    • “For ppl think you can get away with Uber’s idea, why don’t you try to set up a shop inside Westfield without paying rent?”

      That seems like a very strange and irrelevant analogy.

    • McPaddyMEMBER

      Blue must own a taxi plate…

      Sorry, mate, but your arguments are just as weak as anything I’ve seen come from the industry. Only a truly self-interested participant could come up with that bilge.

      Pretty simple really:
      – More flexibility in the supply of the service. Extra drivers on the road at peak times, significantly reducing headache for passengers.
      – Laughably easy to equal the level of “service” provided by the majority of taxi drivers, assuming this is actually going to be an equal requirement. (I doubt it.)
      – A practical way of providing instant feedback to weed out the bad drivers (ie. via the app itself instead of some crappy helpline … “Your call is important to us”)
      – Simple payment system that reflects the value of the service provided. If you’re prepared to pay extra in peak times, do so. Good for the driver, good for you.
      – Removal of the dead loss of taxi plates from the equation. I have zero sympathy for those who make losses when their conspiracy to gouge the public and drivers is crushed. That’s business for you. But this is far less tragic than your usual business failure.

      • For your comment about: I wish I am a plate owner. But I am the one on bottom of food chain. I am just a humble cabbie. I can tell you my record vacant time waiting for a fare is 177 minutes. I make average 12 bucks a hours. I return no less than 30 mobile phone over my job history. I have not yet received on compliment from the property owners. In the cab base, there are many over qualified drivers of migrants who have skill that can’t find a job in here. Or retrenched workers who would never be possibly find an emplyment because over 50th. If you think to flood this industry with corner cutting competition from venture capital backing operators, you know what? You don’t have much FAT to trim off this industry. If you can help me to off load regulation and make every driver in this country a “cabbie”, it doesn’t worry me at all. I can tell you that I have this so called “payin” about $50k to the privilege as cab driver. Do you know how many hours that equal to? Well, 30 to 40 hours per week. That is, I don’t make any money before this. Let me tell you my recent observation of so called app. When it is busy, both radio booking system of cab and app are flooded. When it is quite, the app has no magic job. If you think these app are silver bullet, trust me, they are just side players.

      • McPaddyMEMBER

        Blue, I’m sorry I jumped to that conclusion and thanks for taking the time to reply.

        FWIW, I think drivers would be better off under Uber. Currently you end up working to pay off the plate owner’s investment. Take that cost (monopoly) out of the picture and you can charge less while making more money per ride and there will be more passengers (lower prices), so less down time.

        Also, it seems that Uber varies its charges when demand is high, which would be more money in your pocket. Isn’t that only fair?

        If you’re really a good driver, you would be able to benefit from that when demand is low – an incentive to high performance which currently does not exist. It seems drivers can also rate passengers – wouldn’t you like to do that?

        If taxis weren’t so regularly awful people would not be jumping at this, but unfortunately the system we’ve got is completely broken. I say that as a consumer but I think that drivers too would be far better off with Uber. It’s only the plate owners who would suffer.

        Allow me to take out the world’s smallest violin for their troubles …

      • Yep,

        Blue the current system is terrible for drivers. You are working hard so the plate owner can earn a return on their ‘speculation’. A few years ago I had a plate owner gloating to me how much he was earning from the hard work of his drivers.

        You would be much better off with a low cost Hire Car plate ($40K for a HC plate is a ripoff) and building a profile for yourself as a good driver.

        I have sympathy for those plate owners who coughed up lump sums to the govt for their plates and they should certainly get a refund.

      • Read all my comment. Not just selectively.

        Ok. Here is the points. Westfield has it’s right to operate shopping mall for the conditions just like cabs and hire cars received its right to operate passengers business. There are cost involve to the stardard it must comply with. What Uber does only pick the cream parts. So if you think that Uber can do this, what is the difference?

  7. “All taxi and hire car drivers go through a rigorous accreditation process before they are allowed to drive a taxi or hire car – this is for both the safety of drivers and passengers.”

    Well thats clearly not true. I had one guy try to take the first exit off the freeway from the airport on the way to Melbourne CBD, and another fall asleep at the wheel.

    The regulation would be fine if it ensured that passengers got a better safer service, but its just a revenue exercise.

    • Of course the accreditation is a nonsense. If we’ve acquired a drivers license haven’t we all already been deemed fit and proper to drive on the road?

      Are there really some secret rules and safety concerns that only taxi drivers are privy to during accreditation?

      • drsmithyMEMBER

        The two big and most important ones are probably a background check for criminal convictions and a record of your driving history (eg: if you have lots of DUIs you might struggle to get a Taxi DA).

        You have to pass a medical exam.

        You have to demonstrate English proficiency (stop laughing) and an ability to navigate the major roads, services, attractions, etc, of the area (I said stop laughing down the back).

        Then there’s stuff about being able to use the radio system, safety and security procedures and “customer service”.

        This is in QLD. I imagine it’s basically the same in other states.

      • “I said stop laughing down the back…”

        I tried to stop but your material was too good.

    • Peer reviewing individual drivers (Uber style) is the only way to ensure you are getting into a car with a competent driver…

    • You can complain to the cab company to flash these drivers out of industry. Did you do that? I don’t think majority cabbies are like that. There are bad apples in every business. But most likely people only has good memory of bad experience. There is sticker in every cab with phone number you can ring if you are not happy with the service.

  8. Backseat is set to work more on the ‘sharing’ theme, no fees but an agreed ‘donation’ to cover the occupation of an otherwise empty seat… I’d love to see this flourish. Backseat.me

    • Only the true tree huggers will do this. I think most drivers will not go for it especially corner cutting operators who want to make a living.

  9. “$40,000 private hire car licence for unlimited vehicles” seems fair. What Uber does certainly can be construed as private car hiring. If they claim it cannot, I do not know what can.

    If you follow Uber’s line, I could start providing taxi service without any licence today.