Taxi industry inquiry
Inquiry’s response to submissions
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- Transmission of trip data to the TSC
- Taximeters
- Removing the requirement for uniform livery
- Developing a better quality taxi fleet
Inquiry’s response to submissionsA core element in the inquiry’s package of reforms is to boost competition within the taxi industry and between the taxi and hire car sectors. It is difficult to see how this can be achieved while taxi operators and networks remain highly constrained in the types of vehicles and equipment they can use and their ability to differentiate their service offerings. Accordingly, the inquiry welcomes industry comments that express a willingness to embrace greater competition and service innovation.
One of the problems facing those seeking to develop and implement taxi regulation and policy is the limited operator and trip data available. As the inquiry noted in its Draft Report, successful, effective and sustainable reform must be evidence-based. While the inquiry obtained more information about the Victorian taxi and hire car industry than previously and undertook extensive analysis and modelling based on this information it was constrained in a number of areas by inadequate data due to the inability (and, in some instances, the unwillingness) of the industry to provide data and the failure of the regulator to collect such data. The absence of a reliable, verifiable and comprehensive source of operator and trip data undermines effective regulation, constrains competition, hinders consumer choice and makes it difficult to better integrate taxi and hire car services with the broader transport system. This situation should not be permitted to continue. The inquiry remains of the view that the best way to obtain this information is directly from the cab. The inquiry sees no reason why in-vehicle equipment cannot be installed or reprogrammed to meet all relevant requirements to transmit data to the TSC in real-time, irrespective of whether a permit holder is affiliated to an ATO and irrespective of whether they are based in a metropolitan or other zone. The inquiry shares the views of TISV, CabFare, the ATDA and others regarding the importance of this recommendation and the need to implement it as a priority. In relation to privacy concerns raised about the data gathering powers of the TSC, the inquiry’s view is that these concerns are misplaced and reflect a misunderstanding of the nature of the data being collected and the use to which it will be put by the regulator. There is no need for individual passengers to be identified in collecting this data and other details are no more than any other regulated industry should be expected to provide to the regulator. In addition, Victoria has stringent privacy laws and protections in place that can be applied to this process if necessary. The TSC will need to ensure that appropriate risk mitigation and data protection mechanisms are implemented that will prevent public identification of individuals. The New York City Taxi and Limousine Commission has demonstrated that such an approach is possible and workable over the past three years and (in tender documents released during 2012) is now advancing to a new generation of technologies that extend these capabilities.100 The inquiry reiterates that the benefits to both consumers and industry from the regulator having access to this real-time operational data are substantial. Without such data, it is difficult to see how policy makers and the regulator can assess the success or otherwise of current regulations and policies, or design and implement effective new policies. It also acts as a constraint on competition, as consumers have no means of comparing performance between taxi networks and/or operators. The inquiry sees access to this data as being critical to the successful implementation of industry reform and to improving services for customers.101 The inquiry further notes that initiatives relating to data collection are often overlooked when undertaking significant industry reform, partly because of the costs involved or the practical difficulties in obtaining and collating large volumes of information. However, the technology is now available to collect this data in real-time without involving the industry or the regulator in substantial additional costs. The inquiry acknowledges that there are complexities associated with reaching the point where the entire taxi fleet is transmitting real-time data to the regulator, and that the full and effective delivery of this initiative will take time and most likely evolve as new technologies come on-stream. However, the inquiry sees this initiative as a priority for the new regulator and urges the TSC to immediately start work on timelines and policies for its implementation.
In relation to the cost concerns about new taximeters raised in some submissions, the inquiry found that, irrespective of the implementation of its proposed reforms, most meter and despatch system suppliers are already advanced in their development of integrated in-vehicle technologies. Some of these systems, such as the Cabcharge Fareway system, are now in production for deployment.102 The inquiry expects that industry suppliers will encourage operators to take up these new systems with various options for leasing, deferred payment and other methods of cost offsetting and commercial incentives for operators. The inquiry has also been told by long term operators that in-vehicle equipment assets are able to be treated as depreciable items. Meter costs contribute to the cost of doing business and can be claimed as legitimate operating costs for taxation purposes. This means that costs are effectively defrayed over a three to five year period. The inquiry disagrees that NMI oversight is unnecessary for the reasons already stated in chapter 23 of the Draft Report. Taximeter suppliers sell equipment across Australia in multiple jurisdictions and told the inquiry that they had difficulties coping with the different regulatory approaches adopted in each state for very similar equipment. Industry participants and suppliers also told the inquiry that earlier attempts to apply international standards for taximeters to an Australian context failed. They indicated that this was due to being unable to convince the various authorities that these international standards needed be adapted to better reflect the needs of Australian jurisdictions. The inquiry has held discussions with the NMI and the Institute has confirmed that there is an immediate opportunity for Australian regulators to participate directly in a forthcoming review of international taximeter standards. The NMI have told the inquiry that suppliers, regulators and other relevant industry participants are able to work together to collectively contribute to ensuring that Australian needs are adequately reflected in a revised set of global standards – and that this work can commence immediately.
While mandated yellow livery makes taxis instantly visible and identifiable, the inquiry found that further benefits are not significant. A competitive taxi industry must be able to brand its products and a single fleet colour makes it very difficult to do so. While NSPs currently brand their taxis with the network name, most taxi users have trouble identifying the particular NSP to which their taxi is affiliated. The inquiry finds it disappointing but hardly surprising in a highly regulated industry such as the Victorian taxi industry that there was little appreciation of the competitive benefits of distinctive branding. There are many cities, in Australia and elsewhere, where taxi livery is not uniform and where customers appear to have little difficulty in identifying a taxi vehicle and regulators are able to maintain a ‘professional’ image across the taxi fleet. Easier identification of taxi companies also has the capacity to improve safety as customers are more likely to recall which ATO is responsible for their taxi if its livery is distinctive. The inquiry recognises the strong support from industry elements, business groups and the broader community for retaining the yellow livery requirement in Melbourne and is recommending that the requirement be removed in the first instance for taxis operating in Urban, Regional and Country zones (where the greatest benefits will accrue to operators through reduced costs). In these areas, operators would be permitted to adopt their own livery subject to meeting requirements to maintain a professional image. The inquiry’s view is that the TSC should issue guidelines about how it expects taxis to look: for example, that their livery should ensure they are not easily confused with other vehicles, such as emergency services vehicles. The inquiry anticipates that the TSC’s role will be one of assessing whether liveries fall within these guidelines and that approval from the regulator should be swift and not become a hurdle for operators and ATOs. In the Metropolitan zone, the requirement for yellow livery would be maintained. Given the competition benefits that flow from distinctive branding, the inquiry recommends that ATOs be allowed to adopt their own dome light designs (consistent with outcomes set in regulation). This will enable ATOs to adopt designs that are distinctive and that customers can easily recognise. Other cities, notably Tokyo, have adopted this approach with considerable success. The inquiry is recommending that the TSC continue to monitor this issue and consider removing the uniform livery requirement in the Metropolitan zone if it emerges as a significant impediment to greater competition between ATOs. If Urban zone networks move to adopt new distinctive liveries, the introduction and operation of the new shared zone (see section 3.6.2) may provide an opportunity to monitor the effects of different liveries on consumer choice and competition.
The inquiry considers that a strong case exists for improving the vehicles used as taxis in Victoria. At present, most taxis are second hand ‘executive’ vehicles that have been purchased at auction and retro-fitted to meet regulatory requirements, such as being painted yellow, having a dome light fitted and being converted to LPG. While retro-fitted safety screens offer some protection for drivers, they are not comfortable and many drivers prefer not to use them.103 Further, these vehicles are not wheelchair accessible; nor are they particularly comfortable or spacious for passengers, especially those carrying luggage or prams. The inquiry considers that, in the absence of further government intervention, the kinds of vehicles used by taxi operators do not deliver the full safety and accessibility benefits available from using better quality vehicles.104 The inquiry has also found that there are likely to be benefits from adopting a comprehensive, rather than piecemeal, approach to questions of vehicle security, safety and accessibility. Purpose-built taxis, of the kinds used in London and more recently in New York, have considerable advantages over retro-fitted sedans or commercial vans. They are safer for drivers (as they have built-in separation between passengers and drivers), more accessible for passengers (and often wheelchair accessible), offer greater passenger comfort (including more seats and greater luggage capacity) and can incorporate specific features (such as automatic doors, meter displays in the passenger section and separate climate controls in the driver and passenger sections). An improvement in vehicle quality across the Victorian fleet, and particularly a move towards a purpose-built taxi, could be pursued in a number of ways: Through regulation that would prohibit the use of vehicles that do not meet minimum standards of safety and accessibility (with the costs of these better vehicles factored into the regulation of fares) Through regulation that encourages the use of better vehicles through more favourable regulatory treatment (such as extending vehicle age limits for better, more expensive vehicles) Through direct incentives such as a vehicle subsidy scheme or cheaper new licence prices or other kinds of subsidy. The inquiry recognises that, to the extent possible, any regulatory action should minimise the costs imposed on either Victorian taxpayers or taxi users. One issue for the inquiry has been to determine the additional costs associated with the acquisition and use of purpose-built vehicles. The inquiry understands that the cost of these vehicles has fallen substantially in recent years, suggesting that a move towards these vehicles could be achieved at relatively low cost to taxi users or government. The inquiry understands that the cost of procuring a purpose-built taxi would be around $50,000.105 The maintenance costs of such a vehicle would also be higher. However, at face value, the capital costs associated with a new vehicle at $50,000 with a 10-year vehicle life are only slightly more than the capital costs of a used vehicle acquired for $23,000 with a four-year vehicle life (that is, acquiring a 2.5-year old sedan and running this vehicle until the end of its 6.5-year allowable age).106 Accordingly, the inquiry considers that only relatively small financial incentives might be required to induce more operators to choose purpose-built taxis. Alternatively, only a relatively small increase in taxi fares might be required to incorporate the additional costs of these vehicles. In addition, in a more competitive market, these taxis would be preferred and sought by passengers and thus have higher occupancy.
Weighing these advantages and disadvantages, the inquiry is recommending the introduction of a limited purpose-built vehicle subsidy to encourage the uptake of these vehicles and to assist in determining the costs of converting all or a larger part of the taxi fleet to these vehicles in the longer term. In regards to the concern of Blind Citizens Australia about the danger of hybrid vehicles, the inquiry considers that this issue needs to be addressed when taxi vehicle specifications are next reviewed. The inquiry understands that these devices cost very little and considers that it should be mandatory to install them in all hybrid taxi vehicles. In relation to VDAC’s concern about the inability of WATs to carry particularly large scooters and wheelchairs, the inquiry refers to work underway through the Disability Standards for Accessible Transport (DSAPT) review process that aims to have government, the taxi industry and mobility aid manufacturers working together to ensure these mobility aids can be carried by taxis.107
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