Taxi industry inquiry
Issues raised in submissions
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Issues raised in submissions
Despite hosting a hire car forum following the release of the Draft Report and undertaking a mail-out to industry participants, the inquiry has received relatively few submissions from the hire car industry. The main concerns from those who did respond related to the impact of the new licence price on the value of incumbent operators’ licences and business viability. As with taxi licence holders, many hire car licence holders considered that the recommended fee of $40,000 was unfair to existing licence holders and that, if the recommendation was accepted, they should receive compensation from the Victorian Government. Owners of hire car licences argued that the proposed licence value will make little difference to the variable and fixed operating costs of a hire business, and will represent only a minor saving in terms of interest repayments over a year. Southern Cross Chauffeurs suggested it will only equate to a two per cent decrease in the first year’s operating costs if the full value is borrowed. These figures demonstrate how licence value is very much a ‘sunk cost’ with little impact over the life of a hire car business. Almost all hire car operators agreed with the abolition of the Country-Metropolitan zone boundary. One city based operator observed that this will remove the “imaginary halo around metropolitan Melbourne that is an unenforceable regulation”.74 However, some submissions raised concerns that the proposed set price of $40,000 is too high to encourage any growth in hire car numbers in country areas. These submissions suggested that growth may actually decline and there may be an incentive for operators to purchase more restricted hire car licences vehicles and run them like PBOs. The removal of the luxury vehicle tax threshold was not widely supported within the hire car industry. Generally, operators considered that this will ‘cheapen’ the industry and lower current high standards of service. Many supported the continued differentiation of taxis and hire cars, opposing the inquiry’s proposals to make these two types of service more competitive. These submissions called for any new PBO licence to be clearly distinct from the current VHA/B/C classifications. Hire car operators remain concerned that unlicensed operators and SV licensees working outside their licence conditions will continue to operate in the market under the inquiry’s recommendations. For example, the Wedding Car Association of Victoria (WCAV) made detailed suggestions to improve the new RH licence to discourage fraud and touting. Overall, the Association supported the proposed changes, observing that while there will be some ‘short term financial pain’ incurred by this sector of the hire car industry, “the reduction of restrictions and the simplifying of processes will benefit all concerned” in the longer term.75 Some licence holders considered that the proposed review of PBO licences after three years and the prospect of a further devaluation in licences would discourage new entrants. At the inquiry hearings, Mr George Kapnias from Southern Cross Chauffeur Drive commented on the likely impact of further reviews on investment in his company: All of the infrastructure that is involved and the technology that is involved in getting that scale of business up and by constantly having reviews, which we feel undermine the stability of the industry it actually discourages operators such as ourselves to continue making those investments.76 However, the Essential Services Commission supported the review of PBO licences after three years, observing that it will be of value in tracking the progress of industry reform. The ESC noted the importance of collecting reliable industry data on the PBO and taxi markets for the purposes of the review, including the number of licences issued, demand for services, trip distances and customer satisfaction surveys. While supporting the proposed changes at Melbourne Airport, hire car operators maintained that issues around touting are the result of poor enforcement by the regulator and that much stronger powers and a regular presence at the airport are required to tackle touting.
Many submissions from taxi industry participants disagreed that there is a need for another service offering such as a PBO model or that greater competition in the pre-booked market is desirable or beneficial. Many within the taxi industry suggested that there was a direct correlation between the inquiry’s proposed PBO model and the London minicab model. These submissions used the minicab model to highlight concerns around safety.77 The VTA.78 and Black Cabs Combined79 (13CABS) considered that touting at airports and other venues could extend ‘to the streets’ if a PBO model is introduced, posing safety issues for passengers if illegal operators cannot be controlled. TISV noted that the recommendations mean that a “low priced hire car … is being allowed to enter the market … and openly compete with taxis for pre-booked work.”80 TISV stated:
A number of taxi licence holders and operators objected to the possibility of more hire cars operating in country towns, suggesting there is already insufficient work for incumbent operators and that a surge in PBO licences will lead to a significant reduction in gross earnings for operators. Submissions from the taxi industry viewed the enforcement of licence conditions under an expanded market as being a major challenge for the successful operation of a PBO model. Many of these views reflected the industry’s ongoing concerns about the current state of compliance, with touting continuing to be a major issue at particular city venues and Melbourne Airport. Some submissions from the taxi industry also suggested that a new PBO licence will be confusing for customers. In support of the current hire car licence price structure, the VTA argued that the $40,000 price for a statewide hire car licence will be an even greater impediment to entry to the market in country Victoria. Riviera Taxis posed the question:
The VTA did not oppose the relaxation of vehicle standards on hire cars but suggested they should be higher than simply requiring Victorian registration. Generally, the taxi industry welcomed the inquiry’s draft recommendations for improving hire car operations at Melbourne Airport, giving greater enforcement powers to the regulator and reviewing penalties for touting. However, the taxi industry did not support the introduction of a PBO booking kiosk at Melbourne Airport, with submissions arguing that it will not solve any of the issues associated with touting, but will instead ‘legitimise’ the behaviour of touts. TISV argued that the kiosk “effectively legitimise[s] touting practices by luxury hire car operators”83 and is inconsistent with the definition of ‘pre-booking’ in place at all other major Australian airports. TISV also considered that the kiosk has the potential to increase the number of hire cars going to Melbourne Airport and may actually result in increased touting (as those engaged in touting are unlikely to want to use the kiosk). TISV suggested that touting at the airport can be addressed through full time, on-site policing by the regulator, funded by the industry.
Outside the hire car and taxi sectors, there was support for the proposed PBO model. Yarra Ranges Shire Council expressed strong support for the model, particularly for its potential to increase transport options for residents with a disability or elderly people who are unable to access public transport in Melbourne’s outer suburbs: While increasing the opportunity for more PBO taxis would result in more competition for providers, it should also provide an improved service for passengers, as drivers ‘compete’ for ongoing provision of services.84 The Council also supported the removal of zoning and vehicle restrictions on hire cars, seeing it as offering greater transport flexibility to the poorly serviced Yarra Valley tourist area. The Eastern Transport Coalition also saw benefits in the PBO model in outer suburban areas where bus services cannot cater for individual transport needs. The Victorian Tourism Industry Council and the Victorian Events Industry Council also supported the introduction of a PBO model. Noting the current taxi shortages experienced at peak event times, these groups supported more flexible vehicle models provided the same standards as taxis are maintained. However, they suggested that monitoring will be needed to enforce compliance with PBO licence conditions and to ensure there is no encroachment on taxi businesses. Melbourne Airport noted the competitive benefits of a new PBO licence and acknowledged that a PBO kiosk operated by a third party may be a better way to manage the operation of hire cars at the airport, as well as offering real-time convenience for arriving customers. However, a number of logistical, pricing and operations issues will need to be addressed to meet customer expectations for a convenient, timely PBO service including additional investment in appropriate infrastructure. Melbourne Airport recognised the risk that touting may become a bigger issue under a PBO scheme and suggested that the inquiry make compliance with airport processes an explicit requirement of the PBO licensing regime. A stronger presence and more effective enforcement activities at the airport by the regulator will be needed. Melbourne Airport also pointed out that sufficient opportunity must be provided for taxis to work at the airport, given that the taxi industry provides services ‘around the clock’ while hire cars are mainly available in peak business travel periods. CabFare endorsed the concept of a kiosk at Melbourne Airport, but noted that a single operator may limit the advantages of such a kiosk as this will not allow competitive forces to play out. CabFare also raised the importance of online bookings in the future and suggested this be explicitly addressed in recommendations around touting. CabFare argued that online bookings should be recognised as a legitimate form of pre-booking a PBO to allow emerging services and technologies to thrive.
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