Taxi industry inquiry



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Setting a new direction


The inquiry’s final reform package continues to pursue three core aims: increasing and improving the supply of taxis and hire cars, restoring consumer trust in the taxi industry and boosting demand and competition in taxi and hire car services. The inquiry’s key reforms are summarised below.

        Increasing and improving supply


These reforms aim to remove restrictions on the number of taxis and hire cars on the road, encourage greater competition and innovation in the market for pre-booked services and open up more opportunities for entry into the taxi and hire car markets. Customers will benefit from greater availability and choice of services, and from more reliable and accessible services. Over time, growth in the number of taxis and hire cars will no longer be subject to regulatory oversight. Instead, the decision to enter the market will rest with those who are best placed to make commercial judgements: individuals and firms already in the industry and those outside the industry who are willing to risk capital in a new competitive venture. This is an important and significant shift in the way the industry operates.

The inquiry notes that licensing reform is fundamental to changing and improving the industry as it will enable new entry (at manageable levels), encourage more owner-drivers, boost competition and innovation, and lead to cheaper assignments (reducing operator costs and providing scope for service improvements).

It is clear that the licence value  hovering around the $475,000 mark at the start of the inquiry  produces nothing in terms of customer value. In effect, it is a ‘dead weight’ on the industry. It is clear that, without the necessity of propping up this value (that is, servicing the capital costs on inflated licence values), the industry would have a much greater capacity to reduce fares, pay drivers more and boost operator profitability.

Key reforms are:

Rationing taxi and hire car licences by price, not quantity, and making all new licences available at any time to approved applicants at a fixed annual price (see chapter 3)

Making all new taxi licences non-assignable (chapter 3)

Establishing a four tier system of taxi zones:

 Metropolitan zone  covering metropolitan Melbourne, with conventional licences available for $20,000 per year and WAT licences available for $16,400 per year

 Urban zone  covering outer metropolitan areas and the regional cities of Ballarat, Bendigo and Geelong: $16,000 for a conventional licence and $12,400 for a WAT licence per year

 Regional zone  service areas with populations of around 10,000 to 20,000: $10,000 for conventional and WAT licences per year

 Country zone  covering all other parts of the State: $3,000 for conventional and WAT licences per year (chapter 3)

Aligning hire car zones with taxi zones and making licences available at any time to approved applicants for a one-off set price: $40,000 for a Metropolitan Pre-Booked Only (PBO) licence and $20,000 for a Country PBO licence (chapter 4)

Lifting the restrictions on the type of vehicles that can be used as taxis and hire cars, and introducing a limited subsidy to encourage the uptake of purpose-built vehicles (chapter 5)

Removing the requirement for uniform yellow livery in the Urban, Regional and Country zones (chapter 5)

Allowing advertising on taxis and permitting networks to adopt their own dome light designs (chapter 5)

Removing the requirement for taxi operators to affiliate with a network (chapter 6)

Minimising the entry and approval requirements for networks (chapter 6).

        Restoring consumer trust in the industry


Service standards and driver quality will improve through the introduction of a new streamlined permit system and better training, testing and remuneration of taxi drivers. Taxi permit holders (operators) and Authorised Taxi Organisations (networks) will be directly responsible for the services they and their members provide, information about service performance will be readily available to consumers, and there will be clear avenues to resolve complaints.

In response to concerns raised with the inquiry by operators, the inquiry has modified its draft recommendation relating to the driver share of the fare box from a 60/40 split (in the driver’s favour) to a 55/45 split. The inquiry considers that this provides the optimum balance between improving driver remuneration, maintaining operator viability and moderating new entry to the taxi market.

Key reforms are:

A package of measures to improve the industry’s ability to attract and retain good, experienced drivers  including more stringent entry requirements, an independent Knowledge exam for drivers in the Melbourne and Urban zones and replacing unfair bailment arrangements with a mandatory Driver Agreement that provides for a 55/45 split of the fare box (chapters 3 and 7)

Requiring operators to have insurance policies covering third party property damage and to indemnify drivers in relation to any vehicle damage arising from the use of the operator’s taxi (chapter 7)

Amending the relevant legislation to put beyond doubt that taxi drivers are covered by accident compensation provisions and occupational health and safety laws (chapter 7)

Removing the exemption for Victorian taxis from the mandatory use of child restraints (chapter 7)

Extending the current Taxi Rank Safety Program and developing a strategy for reducing the incidence of anti-social and criminal behaviour by passengers (chapter 7)

Establishing a Public Register of industry participants that is readily accessible to the public (chapter 9)

A new streamlined regulatory process that replaces accreditation of operators with a permit system (chapter 9)

A suite of reforms to significantly improve the accessibility of taxi services, including a new Central Booking Service for WATs and an expansion of the Multi Purpose Taxi Program (chapter 10)

A shift to outcomes-focused regulation that places greater responsibility on the industry for performance, while giving networks and operators greater flexibility in meeting prescribed outcomes (chapters 9 and 11)

A comprehensive package of recommendations to build a much more effective industry regulator with good governance arrangements, appropriate resourcing and sound monitoring and enforcement practices (chapter 11).

        Boosting demand and competition


Fare competition, a better fare structure and other measures will increase the demand for taxi and hire car services. There will be more opportunities for taxis and hire cars to develop new and more flexible services, provide more personalised services and complement public and community transport services. These opportunities will also provide the potential to raise industry revenue and operator income.

Key reforms are:

The removal of impediments to the introduction of group hire services, such as taxi shuttles and share rides with flat fees (chapter 12)

Measures to better integrate taxis and hire cars with public and community transport (chapter 12)

Increasing taxi access to bus lanes along freeways and major roads (chapter 12)

A two-stage process to move from fare regulation to fare competition in Melbourne, with fares changing from being prescribed fixed amounts to maximum fares in the short term (chapter 13)

The replacement of fare regulation with fare notification and publication in country areas (chapter 13)

A major fare restructure, including an increase in the flagfall and a reduction in the price per kilometre in the Metropolitan zone (to address short fare refusals); replacement of the ‘Tariff 3’ 50 per cent surcharge on the distance rate with a flat fee of between $10 to $15 (to address the issue of WATs queuing at Melbourne Airport rather than providing services to wheelchair using passengers); and the simplification of ‘multiple hire’ charging (to support the industry in offering more flexible and innovative services) (chapter 13).




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