Taxi industry inquiry
Issues raised in submissions
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- Mandatory NSP affiliation
- Requirements for GPS tracking, safety monitoring and emergency response
- Removal of requirement for taxis to operate under control of depots located in their specified zones
Issues raised in submissionsResponses to the Draft Report’s recommendations relating to networks came mainly from industry participants concerned about the impact of these reforms on their businesses. Generally, non-industry respondents were silent on these issues, while being supportive of moves to improve the reliability of taxi booking services.
The inquiry’s proposals for ending mandatory NSP affiliation, relaxing entry requirements for new ATOs and removing licence conditions that bind taxi operators to depots located in particular zones attracted a mixed response. Around 60 per cent of online submissions either supported or were neutral about these proposals; around 40 per cent were opposed. The strongest opposition came from current NSPs, while the strongest support came from taxi operators. The VTA strongly opposed the removal of mandatory affiliation on the basis that “the booking characteristics of Melbourne taxi users, along with safety issues for both passengers and drivers, make it vital in the Victorian context”.111 The VTA disputed that there is widespread consumer dissatisfaction with taxi booking services, arguing that “there is a gap between the evidence of customer satisfaction regarding taxi booking companies and many of the views posited by the [inquiry]”.112 The VTA cited research conducted on its behalf that shows 79 per cent of Victorians believe it is easier to book a taxi with only two main phone numbers. The VTA also noted that the primary NSPs have provided the technological investment necessary for the regulator to access reliable and high quality real-time data. While acknowledging the ‘boom’ in taxi booking technology, the VTA cautioned that:
The VTA recommended reviewing the need for mandatory affiliation in five years once a ‘better picture’ has emerged in relation to new booking technologies and their impact. Black Cabs Combined (13CABS) had no objection to greater competition through new NSPs entering the market, but considered that allowing taxis to operate independently of an NSP will undermine safety and service standards. Black Cabs Combined considered that the Taxi Services Commission (TSC) and Victoria Police will find it almost impossible to track down non-affiliated taxis involved in accidents or incidents and passengers will find it very difficult to identify the particular taxi in which they were travelling without a network association. Many NSPs in regional Victoria opposed the removal of mandatory affiliation. A number expressed doubts about the practicality of having more networks in smaller country markets that are largely booked services. Submissions from smaller country NSPs differed markedly from the large metropolitan NSPs, with most voicing feelings of vulnerability to competition in their current markets. Some were concerned that independent permit holders with potentially lower overheads and reduced regulatory obligations will ‘cherry pick’ work at the most lucrative times and places. Others believed that it will make it impossible to plan for adequate coverage within an area, making services unreliable. These NSPs are mostly small businesses where a few people juggle multiple roles to sustain the delivery of taxi services in local communities. The main concerns raised by individual operators who opposed the recommendations were that independent drivers will be harder to hold accountable for service quality; that affiliation is necessary for driver safety; that consumers will be confused by multiple brands; and that the NSPs play a critical role in monitoring drivers and operators and preventing ‘rogues’ from entering the industry. There were also concerns that the TSC will ‘lose control’ of the industry if it has to monitor more small NSPs. In contrast to the VTA, TISV generally welcomed the opportunity for competition in the provision of network services and supported the inquiry’s recommendations, with a caveat on allowing the affiliation of Pre-Booked Only (PBO) cabs to the proposed new ATOs. TISV observed that “if the [inquiry’s] findings are accurate, the report card for the large metropolitan NSPs is anything but complimentary”.114 TISV was particularly concerned about the inquiry’s discovery that the two largest NSPs in metropolitan Melbourne only deal with 30 per cent of total trips (in contrast to the general industry belief that 50 per cent of all trips are pre-booked). Along with a number of operators, TISV was also concerned about the revelation that around 25 per cent of calls to NSPs go unanswered. These findings by the inquiry appear to have reinforced the belief of many taxi operators that they are not receiving value for money from their NSP affiliation and are effectively being forced into a commercial arrangement they neither want nor need. TISV argued that operators should be able to associate with multiple NSPs to increase their opportunities to secure pre-bookings, stating that “this approach is more likely to deliver the personalised, customer friendly service the public is asking for”.115 A very small minority of regionally based NSPs supported the removal of mandatory affiliation. Some of these reported bad experiences with larger NSPs and argued that allowing one NSP to have a monopoly in a particular town or area imposes high costs and leads to low demand areas being poorly serviced (with the examples advanced including the Bellarine Peninsula and Shepparton).116 Individual operators supporting the removal of mandatory affiliation believed it is unfair to force them into a relationship with an NSP; that high NSP fees do not represent value for the services provided; and that they should be free to choose commercial arrangements that best suit their businesses.117 Dr Peter Abelson from Sydney University’s School of Economics agreed with the inquiry’s observation that mandatory affiliation is no longer necessary: It is anti-competitive, costly to operators and has not achieved demonstrable benefits. In effect, the taxi networks have enjoyed regulatory protection from competition and been able to require operators to purchase various services through them. This has doubtless increased the income and profits of the networks…It is hard to see why any business should expect to receive permanent protection especially when there is no social case for it and there are clear gains from deregulation…the freeing of operators and drivers from network controls will enable operators and drivers to develop their own businesses and goodwill. This is fundamental to both service quality and to potential driver income.”118
There was widespread support for the adoption of outcomes-based regulations requiring GPS tracking, safety monitoring and emergency response capability. However, the VTA and current NSPs challenged the proposition that such services could be provided by means other than through primary NSPs. The VTA commented that “allowing security functions to be outsourced will only add another layer of cost to the operator and/or the driver and, therefore, ultimately the customer”.119 Smaller country NSPs were also concerned about the costs of implementing this recommendation, stating they do not have sufficient economies of scale to support these capabilities (which, in any event, are largely unnecessary outside Melbourne and large regional cities).
Most submissions opposed to this recommendation were also opposed to changes in zoning. These operators argued that the current requirement ensures drivers have good local knowledge and understand local needs; prevents drivers from coming into high demand areas and ‘poaching’ work; and ensures a ‘fair share’ of work can be allocated within a given zone or local area.
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