In what is a textbook case of electioneering stupidity, the Victorian Labor Party has vowed to lessen competition in the taxi industry and hand over taxpayer funds to licence holders if it wins office at the month’s state election. From The Age:
Labor will create a $4 million hardship fund for disadvantaged taxi licence owners and limit the number of taxi licences that can be issued, to stop a flood of taxis hitting the road…
The pledge was applauded as “fair and equitable” by the taxi industry, which has fought painful change in the past four years as the Coalition shook up the industry to improve poor service standards.
Central to those reforms was the removal of a restriction on taxi licence numbers and a huge reduction in the cost of a licence, from a peak of more than $500,000 three years ago to just $22,000 per year plus CPI.
Labor said there was a role for government in setting the number of taxis on the road to avoid the risk of a damaging oversupply…
The hardship fund would be made available to licence holders who could “demonstrate severe financial distress as a consequence of the reforms”, Labor said.
Seriously, you cannot make this stuff up. What Labor has failed to mention is that the only reason why taxi licence values escalated to $500,000 is because the number of licences were artificially restricted via government regulation. This resulted in too few taxis on Melbourne’s roads, leaving many customers unable to find a taxi during busy times of the day. The lack of competition also meant that there was minimal incentive to improve performance and provide better service, while driving a wedge between the driver, who typically earns a pittance, and the customer, who pays too much for the service.
Instead of embracing the Coalition’s sensible taxi reforms, Labor is effectively promising to spend taxpayers’ money to reduce their public transport options, all the while pandering to wealthy taxi fleet owners and garnering praise from industry barons. So much for being the party of the ordinary worker!
Here’s a novel idea for the Victorian Labor Party: how about you let the free market work out how many taxi’s are needed. When there is over supply, then numbers will drop naturally as there wont be a profit. It’s hardly rocket science.
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