Barnett gives taxi rent seekers the bird

By Leith van Onselen

There’s nothing like watching a rent-seeking industry fall on its own sword.

After staging a mass protest outside Parliament House in May against ridesharing company Uber, whereby some 200 drivers parking their cars, shutting off their meters, and blockading streets, Premier Colin Barnett has flagged that the Government will likely change the law to permit Uber ridesharing:

“I’d have no hesitation using Uber if I wished to, but I’d use other normal taxis as well,” he said.

He told 720 ABC Perth the State Government could not ignore Uber’s popularity and would look at legislative changes to legalise it.

“Uber doesn’t operate within the law, we all know that,” he said.

“The reality that I have to face and the Transport Minister has to face is people are using it…

“So we would like to somehow bring Uber within the law … maybe it means them adjusting, maybe it means the law adjusting, maybe it means the taxi industry adjusting”…

“I think if Uber is to continue to operate here they do have meet safety requirements,” Mr Barnett said.

“But the public will choose, and I know a lot of people do have confidence in the Uber service, particularly younger people.”

Great to see.

As argued frequently, 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…..

All that should be required to operate a ridesharing service is meeting basic performance standards, a valid driver’s licence, and a registered and road worthy car. People should be free to choose their transport options, not have them dictated to by the government for the purposes of protecting the Taxi cartel’s ‘licencing’ monopoly, which gleans an economic rent from purposely-limiting the number granted.

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Comments

    • Anecdotally, my parent’s last taxi trip to the airport was with an out of work engineer (with two mortgages to pay)…

      • I’m a FIFO worker and I Uber it to the airport and back every swing.
        I talk to every driver. Most came for the boom and are bummed out that its over.
        They won’t stay.

  1. but…

    I paid over 500k for me taxi license

    I need to get return on my investment!!

    if that means the poor customer gets charged 10% for using cabcharge or cc, then so be it

    • What do you get for a $500k taxi licence? Can you return it and get your $500k back? Sounds ridiculously expensive.

      • u get a ‘T’ on your plate

        never mind that taxis in Australia are some of the most expensive in the world

        talk about the taxi little cartel

      • Dan with all the cartels on the planet you take exception at Taxis, how about diamonds or lobbyists or think tanks.

        Skippy… yes we know ideologues are stoopid and vote….

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    as an example

    half your fare goes to the driver, that’s why they don’t care about service levels

    • PantoneMEMBER

      Half your fare goes to the driver then they have to pay for petrol. Taxi drivers get shafted. I don’t know why they exist.

    • That was 9 days ago…….. Ancient history……..

      Except if it is decades ago and involved unions.

  3. Where I am, the licence is controlled by local Government. It’s a lot of money that the Government has obtained over the years. Hard not to feel sorry for the people that bought into what was meant to be a secure job for a lot of money. The idea of a licence as some sort of investment isn’t looking so good.

    • If the taxi license was purchased for an inflated value on the secondary market, the Government got nothing.

      If the Government does compensate license holders, it should be for the initial plate cost (‘float price’) only.

      • Ventura Spleen

        Absolutely — the ultimate rent seekers here are the state governments who run the plate cartel, not the embattled drivers. If state govt changes the law, then plate holders have a right to compensation.

        Difficult to applaud Barney as the hero here — unless he has a compensation scheme ready to roll out. Plate prices (state govt taxes, effectively) are embedded into the price of every taxi fare.

        Why not issue taxi plates for a nominal sum? In Singapore it’s cheaper to licence a taxi than a car … sensible!


    • The idea of a licence as some sort of investment isn’t looking so good.

      Shame.
      I guess if that one’s down the drain, and Perth RE isn’t looking too flash, people in Perth looking to invest will have to find somewhere productive to stick their money if they want a return. Imagine if that took hold in other parts of this wide brown land.

      And why should what is basically a kind of permit with supply set completely arbitrarily ever have been thought as an investment, or even have been transferable?

      • Limits for taxi plates should have been qualitative rather than quantitative, and the fees set at the level to cover administrative costs.

      • Ventura Spleen

        Spot on Hamish. I find it hard to paint taxi drivers as the villains in this debate.

        Uber deserves to win on the basis of it’s efficiency, technology, convenience etc — not because it’s bypassing the State Govt administrated plate cartel.

        Interestingly, I’ve just been using taxis and Ubers in Singapore and they come out at around the same price. I vote Uber for convenience and I prefer chatting with young, interesting, tech-savvy, motivated drivers as opposed to embittered old taxi types any day of the week. But the taxi plate subsidies up there means the taxis actually have a cost advantage over Uber. You get a discount for licensing a taxi in Sing (more efficient use of roads) and your licence gets revoked if you don’t clock up 250kms per week, so a driver told me.

        Yet again, the Sinaporeans lead the way in common sense and efficiency.

  4. I catch a taxi once a month from Perth airport and the drivers (mostly Indians) i talk to reckon that the mining downturn and uber have cost them about 50% of their business. It has been wiped out.
    It still seems to cost the same though.

  5. This is all just phase one anyway. Within 10 years, Uber will have brought out their own line of driverless cars with Tesla or Google and you can say goodbye to drivers for good. For that matter, I’d say in Urban areas most people will have ditched owning a car within 20 years. No point when your driverless Uber will be cheaper and on your doorstep within a couple of minutes.

    • Ventura Spleen

      Will Uber bother with such a capital intensive business? Why not own the platform and let others buy the cars?

      My guess — we’ll all own driverless cars as an investment and put them to work 24 hours a days (earning a passive income) on Uber/GoogleCab.

      An example of the future robotics-based economy that’s in store?

      • So as usual, the holders of capital will reap reward through technological advancement whilst displacing labour. I’m all for advancement and reduction in labour, but I detest the flow of income from those with time to those already with resources. When will a tax-efficient community investment structure be set up to pool the limited wealth of the many to benefit from these advancements?

        I’d love to see de-centralised communism, with small communities pooling wealth to invest in technology, ‘paying’ rates and membership to the community through labour and reaping the rewards with a subsidised lifestyle. Anyone here with the know-how to design such a structure?

      • The ordering system is really a commodity. I have used 4 different taxi ordering systems since living in Asia. I honestly don’t get Uber’s long term advantage.

        Slowly but surely each attractive market will get cherry picked and driven lower in price which is great for people eschewing car ownership.

        If you bought and deployed 10 autonomous cars in a city you could offer your own booking service at a fee under Uber’s while also using Uber flow. Eventually it will be super competitive as opposed to the monopolies of today.

        Car manufacturers will get the first ‘look’ into each market I reckon.

        For those worried about the consequences – contemplate where the money saved from not owning cars will go in the rest of the economy… Transport costs driven to the bone means more money for other things

      • drsmithyMEMBER

        For those worried about the consequences – contemplate where the money saved from not owning cars will go in the rest of the economy… Transport costs driven to the bone means more money for other things

        People will not give up private car ownership. They will buy them in the future for the same reasons they buy them today.

    • drsmithyMEMBER

      Within 10 years, Uber will have brought out their own line of driverless cars with Tesla or Google and you can say goodbye to drivers for good.

      Outside of a flagship luxury service, it is a struggle to see Uber owning any vehicles. It would be a complete reversal of their current “facilitate a legally questionable service but hive the risk off to arms-length contractors” business model.

    • Private car ownership in developed nations was in decline for a decade before uber was thought of.

      As an additional alternative to the cost of owning a car, wider prevalence of car sharing won’t arrest that trend and has a decent chance of encouraging it further.

  6. Piece of advice for all politicians.

    Keep up the great work sliding Australia into 3rd world status.
    Just fasten it up a bit so our people will be forced to fight back, and maybe (some would say, hopefully), have a REVOLUTION.

    • FFS stop posting the same stupid comments on multiple articles! If you’re really in favour of sharpening the pitchforks, then I think your approach does your cause a harsh injustice.

  7. This is happening because uber has contracted a lobby firm with former WA lib politicos as lobbyists.
    Thats why they are making some inroads here.

  8. When a parent kneels down and stares into the beautiful adorable eyes of their children, and hears them talk, everything else disappears.

    When that same parent turns their attention to what is being done, or should I say, not being done in terms of the country in which their children are to grow, and live, by politicians and by a privileged generation, surely their thoughts turn to anger.

    Surely, there must be a growing mass of people become more angry and hostile by the day?

    If not, have you all killed yourselves through cynicism to the reality that is a dying Australia as we once knew it, but 457s know no different, so will just accept declining living standards over war?

    Yes….the growing irrelevant local youth….stealthily but surely being replaced by a growing replacement workforce of immigrants.

    Now call that racism. Some call it fact.

  9. Equilibrium is a myth, not that licenses should be ludicrous, but monopoly’s are a duplicitous affair.

    Skippy… some people are deluded with concept of price mechanics in a vacuum.

    • drsmithyMEMBER

      Is there any reason taxi plates should be quota controlled or be priced higher than the costs of administering some base standards (vehicle safety, recording devices, insurance, driver background checks) ?

      • Should there be quotas, should JB Swift own over 50% of the beef market whilst wiping out decades of multi generational independent operators due to its market scale.

        That’s Ubers game, operate at a loss, but burnish expectations for investors, whilst a very small few make the big bucks.

        Like Peter Thiel, libertarians love monopoly’s, if their the one running it, government monopoly’s are ev’bal.

        Skippy…. half our wage dramas come from all this sub contracting hiving off risk tropes….

      • drsmithyMEMBER

        Should there be quotas, should JB Swift own over 50% of the beef market whilst wiping out decades of multi generational independent operators due to its market scale.

        That’s Ubers game, operate at a loss, but burnish expectations for investors, whilst a very small few make the big bucks.

        That’s a complete non-sequitur.

        I don’t disagree about Uber & co hiving off risk, but it’s an entirely different discussion.

      • @The Patrician,

        Kant

        That some think criminal enterprise is the way to fix anything should go back in time, screw with all the laws and firewalls then work for Wall st., since that worked so well.

        Skippy… libertarians… externalize failure and repeat… if that does not work… increase proselytizing and methodology…

      • Drsmithy,

        I’ve already linked the data to support those statements, Uber spends a packet on lobbying [bribes], not to mention the dramas with their so called ratings system, et al. If your not aware of JB SwIfts modus operandi, ignorance is not an excuse nor bases for argument.

        Skippy… Just saying non sequitur is in itself a rebuttal, reality does not always conform to simplistic logic exercises couched in pre forma mental abstractions.

      • drsmithyMEMBER

        I’ve already linked the data to support those statements, Uber spends a packet on lobbying [bribes], not to mention the dramas with their so called ratings system, et al.

        I’m sure, but that has zero relevance the question of whether or not taxi plates should be issued as requested, and cost no more than the administrative overhead they entail, or subject to an arbitrary quota.

        I have no love for Uber, but having spent several years driving taxis, I have similarly little for the taxi cartels.

      • My point is – its a tempest in a tea cup, tho if you have a corruption problem in government [cartels?] the solution is not to add another layer too it.

      • drsmithyMEMBER

        My point is – its a tempest in a tea cup, tho if you have a corruption problem in government [cartels?] the solution is not to add another layer too it.

        Your answer makes no sense at all.

  10. No it is not. Been WA Lib party policy for over a year. Passed at their last state meeting and was pushed by WA young Libs.

  11. Some might say the following……

    THE MUPPET THAT IS HOCKEY
    THE PUPPET THAT IS ABBOTT
    THE RORT THAT IS BISHOP
    THE FRAUD THAT IS SHORT
    THE JOKE THAT IS LABOR
    THE HOAX THAT IS LIBERAL
    THE LAUGH THAT IS AUSTRALIA
    THE POOR THAT IS YOUTH
    THE NUMB THAT IS OLDER

    PLAIN AS DAY – LEAVE AUSTRALIA TO THE BOOMERS

    BRING ON AN OVERDUE REVOLUTION

  12. “The reality that I have to face and the Transport Minister has to face is people are using it…

    “So we would like to somehow bring Uber within the law … maybe it means them adjusting, maybe it means the law adjusting, maybe it means the taxi industry adjusting”…

    Hmm, why not the same attitude to the hugely expensive and failed war on drugs?

  13. drsmithyMEMBER

    All that should be required to operate a ridesharing service is meeting basic performance standards, a valid driver’s licence, and a registered and road worthy car.

    Plus suitable insurance coverage, and mandatory video/audio recording within the vehicle.