Taxi Industry Innovation Review Discussion Paper


Reforms | Community Consultation | Additional background information | FAQs | Contact Us

Executive summary

New digital technologies and emerging alternative business models are presenting exciting opportunities for the on-demand public transport industry in Australia and around the world. These include smartphone applications to book, track and pay for taxis, and ‘ridesharing’. They offer the ability to expand the range of, and access to, reliable and convenient transport options for consumers, and promote competition in value and service.

Through the Taxi Industry Innovation Review (the Review), the ACT Government intends to find the right way to allow such technologies and innovative approaches to benefit users of the Territory’s transport services. The Government embraces change that improves the passenger transport experience and keeps passengers and the broader community as safe as they are today. This will be our focus.

More innovative and differentiated public transport solutions fit key Government priorities. They can support economic growth in the Territory, provide a competitive environment that serves consumers well, and contribute to making Canberra a leading digital city.

Innovation has the potential to promote change for the better. Notwithstanding, there needs to be appropriate regulatory settings to support the broader public good and ensure a level playing field for competition to flourish.

Role and regulation of taxis

The taxi industry plays an important role in the overall public transport system in the Territory. Taxis are a source of mobility for many people, particularly for people with a disability. The ACT Government has an interest in ensuring that taxis and hire cars support a strong public transport system that provides consumers with safe and accessible travel choices.

Throughout Australia, including the ACT, the taxi and hire car industry is subject to regulation. In the ACT, the regulatory framework includes elements such as licensing and accreditation, quality standards and, for taxis only, restricted market entry and maximum fares. The objectives of the regulation have been to promote community and driver safety, consumer protection, and sustainable and efficient supply.

New technologies

In recent years, new and innovative technologies and business models have emerged in a number of capital cities in Australia (and the world) through smartphone apps. These involve booking and payments systems, and ridesharing services – using private vehicles for passenger transport and reward.

These platforms can provide an extension of the on-demand transport market. As for other examples of the ‘sharing economy’, these platforms make it easier for consumers to negotiate and engage directly with service providers. Consumers are also provided with a higher level of information and opportunity for price comparison in advance. As a result, these newer interfaces involve different risks from traditional arrangements such as rank and hail work, where a taxi driver picks a passenger up from the street.

Existing members of the taxi industry are also engaging with new practices. Many taxi networks, for example, have their own app-based booking systems.

Ridesharing and app-based booking systems have been readily taken up by consumers where they have been introduced, with companies that provide booking platforms gaining market share in Australia and overseas. These market trends will have significant implications for all of the stakeholders in the taxi and hire car market – from consumers, to drivers, operators and taxi networks. In particular, taxi networks and licence plate holders with significant investments will face increasing competitive pressures.

The opportunities and challenges

Because of the significant innovations noted above, the ACT Government is undertaking a review to examine how its regulatory approach can continue to meet its objectives while promoting innovation. Other Australian and international governments and regulators are also working on their responses. Some have already acted to allow innovation or preserve existing practices; others are in the process of determining their responses.

The Commonwealth Government’s Competition Policy Review supports regulatory reviews of the taxi industry, with a view to consumer-focused regulation that does not inhibit innovation or protect existing business models.5

The ACT Government will also consider related factors, such as compliance with disability standards and current levels of surcharges applying to electronic payments for taxi services. Some Australian jurisdictions are currently acting to reduce surcharge levels through regulation.

The Review has the objective of ensuring the best possible outcomes for consumers and the broader community under a framework that is fair to owners and drivers. To achieve this, the Government is assessing the current regulatory framework and considering whether any changes are required to respond to the new technologies and systems.

The goal of any changes will be to provide a well-targeted regulatory framework – one that addresses the different risks involved with the different aspects of on-demand transport work and provides a level playing field for competition. The Government will be seeking fair and equitable outcomes for both existing industry providers and any new entrants.

To assist in this Review, the Government seeks feedback from industry and the community. A range of key questions are outlined throughout the document. Responses will help the Government to assess the impacts of market trends and new technologies and determine appropriate reforms.

1. Review process

1.1 Purpose of the Discussion Paper

This Discussion Paper is intended to inform readers of the role of on-demand transport in the ACT, the regulatory approach currently used and key changes affecting this industry. It outlines opportunities and challenges facing the industry, and seeks information and stakeholder opinions on how best to respond to ensure innovative, safe and sustainable transport for our community.

The Discussion Paper is part of the community stakeholder consultation process for the ACT Government’s Review. In preparing the Paper, the Government has considered input from industry stakeholders through targeted initial consultation, the work of the Commonwealth Government’s Competition Policy Review, a report prepared for the Canberra Taxi Industry Association (CTIA) and other research, including reviews of the industry being conducted by other Australian states and territories.

Feedback from the community and from industry will help to shape the Government’s position on reform.

1.2 Scope of the Review

The Review will evaluate whether there are opportunities to reform taxi and hire car regulation, including having regard to the emergence of online (app-based) booking services and their potential to increase competition and provide differentiated transport services to the public in the ACT.

Matters to be considered as part of the review include:

The Review will also consider matters arising from:

The Review’s full Terms of Reference are at Appendix A.

The Review also recognises the earlier work of the 2010 ACT Taxi Industry Review, in which a series of recommendations were made to improve a number of aspects of the taxi industry. Further discussion of the 2010 Review and previous Government initiatives in the taxi and hire car industry is in Appendix B.

1.3 Methodology

The ACT Government is taking a systematic and evidence-based approach to assessing potential changes to the regulation of the ACT’s on-demand transportation industry.

As part of its approach to the Review, the Government will gather data and generate analysis from internal and stakeholder sources. It will also use The Centre for International Economics (CIE) to provide advice on the state of the industry and the impacts of potential changes and strategic advice on aspects of the Review and reform proposals.

Process

The Review will include several stages. The indicative timelines are shown in Table 1.

Table 1: Milestones of the Taxi Industry Innovation Review

Milestone Date
Review Announced 28 January 2015
Industry stakeholder consultation February 2015
Release of Discussion Paper May 2015
Formal community consultation 6 weeks
Government consideration of reform August/September 2015

Source: Regulatory Reform Team (RRT)

1.4 Outline of the Discussion Paper

This Discussion Paper outlines the state of the market and regulatory practices, community and business needs, and the implications of new technologies. The Paper is structured as follows.

2. Vision for on-demand transport reform

On 28 January 2015, ACT Chief Minister Andrew Barr MLA, and the Minister assisting the Chief Minister on Transport Reform, Shane Rattenbury MLA, announced the Taxi Industry Innovation Review. The Ministers outlined a vision of a public transport system in the Territory that facilitates the uptake of new technologies to improve outcomes for consumers.

The ACT welcomes innovation, and seeks a modern integrated transport system. The Government wants to encourage change that promotes consumer choice, while ensuring public policy outcomes such as safety and accessibility.

The Government seeks to promote a level playing field that does not discriminate between market participants. The goal is to achieve a regulatory framework that is tailored to the different risks involved with different areas of market activity. Regulation should be based on risk and adaptive to change.

Any reforms to the on-demand transport market will also take into account the ACT Government’s overarching objectives for public transport. These strategic objectives are outlined in Transport for Canberra – Transport for a Sustainable City 2012–2031 and include the following elements:

2.1 Improved outcomes for consumers

The value of on-demand transportation is in providing services that people want. Factors that passengers rate as important from taxi and hire car services include:8

The aim for on-demand transport is to improve outcomes for users of these services in the ACT. Innovation in delivery is a key mechanism to improve outcomes for consumers.

2.2 New technologies and business models are changing industries

New methods

The marketplace for on-demand transport is changing. First, technology used in taxis and hire cars is evolving so that the process of booking and paying for travel is becoming increasingly efficient. Second, new transportation business models closely linked to digital technology innovations are also rapidly emerging outside of traditional transportation businesses. A prominent example is ridesharing,9 which, through smartphone apps, matches prospective passengers with drivers in private vehicles, and a trip is provided for a fee. Third, similar passenger–driver matching apps, created by third-party vendors, have also emerged for use by existing members of the taxi and hire car industry.

These new business models, like ridesharing, have attractive service and pricing features, and have established substantial passenger bases in Australia and in markets globally; for example, in Sydney10, Singapore and San Francisco. These innovations have rapidly changed customers’ expectations of on-demand public transport.

From these business models, passengers may benefit from new transportation experiences, and choose from a variety of transport options. They may also benefit from the safety features that are inherent in some business models, and from additional safety rules that have been set by the providers of these models.

Market disruption

Many alternative digital-based business models can be considered ‘disruptive’ technologies. In this case, such business models may be a driving force for change to the existing transportation environment, and perhaps not in a way that the community or government can readily envisage at this point in time. Outside of the transportation sector, this potential for change has been evidenced by significant structural shifts in a number of industries promoted by technology, particularly the retailing of books, music and video entertainment.

This view is supported by other parties such as the New South Wales (NSW) Independent Pricing and Regulatory Tribunal (IPART), which considers that competition in NSW from new entrants such as rideshare are ‘irrevocably changing the landscape for the taxi industry in a fundamental way’.11

2.3 Regulation needs to keep up

New business models often enter markets before government has given policy and legislative consideration to them. These innovations and business models present on-demand transport markets with opportunities, risks and the need for broader industry and policy consideration.

In the ACT, regulation is applied to public-passenger transport providers to support public safety (including passenger and driver), access for people with disabilities, consumer protection outcomes, and taxi supply and commercial practices.

The nature of the service involves the operation of a vehicle and, as such, poses a range of safety risks to those involved. These risks need to be managed. One obvious example of this is a need to ensure the driver is competent to drive the vehicle.

The 2014 report An Evaluation of the Current State of the Act Taxi Industry, prepared for CTIA, recommends that the ACT Government work with the taxi industry to regulate the use of taxi-related apps, taking into consideration several issues.12 This is in keeping with a principal aim of the Review.

2.4 What are the risks associated with on-demand transport?

Public transport is an important element in the delivery of a range of community, social and economic outcomes for the Territory. For it to operate effectively, there must be public confidence in the provision of safe and reliable services.

Types of risks

Safety

When a person takes a journey in a taxi or hire car, they expect to travel safely. They do not expect to experience unsafe driving or to be involved in an accident. They do not expect to be mistreated. Different people have different levels of vulnerability to harm.

Similarly, drivers should be able to feel safe when working. Drivers face the risk of picking up a passenger who is disagreeable or potentially violent.

Consumer protection

Similar to many marketplaces, consumers of on-demand transport services face the risk of being taken advantage of. This could involve being overcharged or being taken along an unnecessarily lengthy route. If a market does not provide an appropriate minimum level of service acceptable to consumers the market may fail and/or governments may be called on to regulate.

Sustainable and efficient supply

On-demand public transport services play a critical role in providing mobility to the public. The Government has an interest in ensuring that an acceptable level of supply exists to service the market to support community services and the ACT economy.

Addressing different risks

The existence of a risk does not necessarily imply that government intervention is required. Rather, it is important to consider the extent to which existing market incentives, such as reputation and competition, are able to address risks and provide positive outcomes in the absence of government intervention. The ACT Government considers that it should only regulate where it is necessary to provide clear economic, social or environmental benefits.

Information

Information is a means by which a range of risks can be addressed. Information supports decision-making and can influence behaviours.

In on-demand transport, the information available varies between rank and hail services (picking a stranger up from the street) and booked services. Rank and hail services do not provide consumers with an opportunity to check readily the reputation of a company or individual, and do not provide an opportunity to compare prices easily beforehand. When a consumer books a trip in advance, however, they are better able to seek comparative pricing and other information to support their decision to acquire services.

It is possible to recognise the information risks in the way the ACT Government regulates the hire car market differently from the taxi industry. Hire cars cannot offer rank and hail work.

New app-based business models have the potential to improve the information that is available to consumers (and other stakeholders) and, therefore, help to manage risk. For example, the rating component of app-based models provides a strong reputation-based incentive for good customer service and good behaviour from passengers. In doing so, the new models have the opportunity to promote competition and consumer choice.

Payments

App-based models allow drivers and passengers to settle payment electronically (without having cash or credit cards on hand) and provide records to account for services. This reduces an area of potential risk relating to the threat of theft or fraud to drivers and passengers.

Questions to Consider - (Risks)

Do the information differences between rank and hail, and booked work present different risks? To what extent do new technologies and business models reduce the risks involved with booking services?

2.5 Key policy issues

There are a number of key policy issues that the ACT Government will need to consider and address as part of ensuring that its regulatory approach can accommodate innovation. The following overarching questions are presented as a guide for the Government’s interests and thinking.

Can consumer outcomes be improved in on-demand transport services?

On-demand transport plays an important role in the overall public transport system and the economy. It services a broad range of people within the community with different requirements and expectations, from people with disabilities to business people and tourists.

Services are obtained in a variety of ways, from booking through a call centre or smartphone app, to hailing a taxi off the street. Traditionally, services are provided by taxis and hire cars; although new models such as ridesharing are emerging.

What role can new technologies and business models play?

New technologies can provide higher levels of information and accountability to consumers and drivers, and can lead to improved incentives for customer service and better outcomes for consumers. The introduction of new technologies can also facilitate new business models such as ridesharing. This has the potential to lead to greater competition, choice and safety in the on-demand transport market.

What are the risks posed by new technologies and business models?

The risks involved with the new technologies and business models need to be understood, as well their potential to help to manage existing risks that are currently addressed through regulation.

The ACT Government regulates the existing taxi and hire car industry in a number of ways, from licensing restrictions to maximum fares. These regulations have a number of objectives, including public safety, access, consumer protection and sustainable supply.

What impacts could new technologies have on existing stakeholders?

The introduction of new technologies and business models could have a range of implications for existing stakeholders in the on-demand transport market. For example, passengers could benefit from increasing competition and choice. The impacts on access and services for consumers with disabilities also need to be understood.

The introduction of new booking models could provide taxi drivers with alternative methods and greater options for securing business. Taxi networks and existing licence holders would face additional competition arising from the new business models.

What are the necessary reforms to establish risk-based regulation of the market and effective competition between the different business models?

The ACT Government is open and positive to new technologies and business models in the market. The regulatory framework should:

3. Transport in the ACT

Transportation activity in the ACT is diverse. A variety of passenger types cut across geographic, socio-economic and purpose-of-travel lines. The Territory’s population is distributed across urban, suburban and rural zones, and its population is growing and ageing. In comparison to other cities, the Territory’s population is not geographically dense, however, future development in the ACT will incorporate urban infill activity.

Residents and visitors to the ACT can use public transport provided by the ACT Government. At present this is in the form of scheduled bus services. Light rail services are under development. Alternatively, the community can use on-demand public transportation modes, comprised of taxis and hire cars, operated by private enterprises.

Finally, there are diverse, unscheduled means of travel available, such as private or rental cars, community buses and popular active modes, such as cycling and walking.

Table 2 summarises current and planned transportation methods in the ACT.

Table 2: Transport in the ACT

Type Description
On Demand
Standard taxis * Point-to-point, spontaneous and booked transport services
Wheelchair accessible taxis (WAT) * Point-to-point, spontaneous and booked transport services provided for people with disabilities
Hire cars * Pre-booked transport services generally provided by higher end or specialised vehicles
Scheduled
Public bus network * ACTION bus network services link residential areas to major centres, attractions and events 
School service network * ACTION buses operate along individual school bus routes, for morning and after-school service
Rural buses services * ACTION bus service provided to: Tharwa, Majura Road, Hall and Uriarra
Airport bus * Private scheduled service between the Canberra Airport, Russell Offices and West Row
Capital Metro - Light rail * A proposed multi-stop rail route, linking the Canberra city centre with Gunghalin, via Northbourne Avenue
Unscheduled
Tour & charter buses * Service provided by ACTION and privately operated buses
Flexible community transport * Localised, point-to-point bus service for passengers with physical difficulty accessing regular bus service
Private vehicles * Personal motor vehicle transport
Rental vehicles * Personal motor vehicle transport in vehicles offered for rent by private vendors

Source: RRT, Territory and Municipal Services Directorate (TAMS)

3.1 The on-demand transport industry

On demand public transport in the ACT is provided by taxis (standard and wheelchair accessible taxis) and hire cars that deliver point-to-point services for passengers.

A key point of difference between taxis and hire cars relates to the ability to pick people up off the street through ‘rank and hail’ work. Taxis are allowed to service this market, which involves a higher level of risk to the public, while hire cars are not and must be pre-booked by the passenger.

The number of taxi licences is also capped by regulation, however, the number of active taxis can vary as operators may surrender their Government-issued licences. The ACT Government can release more licences, through a ballot system (which is discussed in Appendix C). Hire cars licences are not subject to a regulated cap.

Taxis

Standard taxis

Standard taxis provide services to passengers within the ACT and in the City of Queanbeyan under a cross-border agreement with NSW. They do so under accredited taxi networks or as independent taxi operators. There is a cap of 332 standard taxi licences that can be issued in the ACT. Currently, there are 288 such vehicles licensed and operating. (See Table 3.)

All ACT-based standard taxis are permitted to pick up and drop off passengers in NSW.13 Similarly, 19 Queanbeyan-based standard taxis are able to transport passengers to and from the ACT.

Wheelchair accessible taxis (WATs)

WATs provide priority services to passengers in wheelchairs (although they often also serve passengers without disabilities conducting standard and high-occupancy hirings when not giving priority to WAT hirings). Their standard bookings are offered from their affiliated network booking system. All wheelchair hirings and the booking of these jobs, however, are coordinated through the WAT Centralised Booking Service (WCBS). The service is provided under a contract with the Government, and operated by a third-party booking service.14

There is a regulated cap of 26 WATs, of which 19 are currently operating. More WATs are expected to be operating in the near future. On 15 April 2015, the Minister assisting the Chief Minister on Transport Reform announced that seven additional WAT licences would be made available to eligible applicants through the taxi-licence ballot process.15

Table 3: Types of taxi licences – Affiliations and regulatory caps As at March 25 2015

Taxi type Aerial Capital Group Cabxpress Independent Total Cap
Standard 267 19 2 288 332*
WAT 12 5 2 19 26
Total 279 24 4 307 358

Source: Road Transport Authority (RTA).
* The table excludes 19 cross-border licences issued in NSW but includes one conditional standard taxi; see Appendix C.

Hire cars

Hire cars also offer point-to-point service, although services are typically pre-booked further in advance than taxis. Hire car services are provided by independent operators and various booking services.

As at March 2015, there were 38 hire cars operating in the ACT, and 79 restricted hire cars, which can only be hired for weddings and school formals.16

3.2 Structure of the taxi industry

Chart A: Industry structure for a standard taxi

Taxi networks

These organisations provide a range of support services to their affiliated taxi service operators, see Chart A. Their services include dispatching hirings to member taxis received through their booking services, installation and maintenance of equipment installed in taxis (not all networks provide this service), and complaints handling. Some networks also provide financial services, broker insurance for vehicles and operators and management services for perpetual plate owners.

There are three networks operating in the ACT – Canberra Elite and Silver Service (both of Aerial Capital Group Limited), and Cabxpress. Aerial Capital Group is the dominant provider with operating agreements with 279 (or over 90 per cent) of the standard and WAT fleet on the road in the ACT. Cabxpress has affiliations with 24 taxis (see Table 3).

Networks commonly establish corporate by-laws requiring taxi operators, drivers and vehicles to meet certain commercial and regulatory standards if they are to become, and remain, affiliated with the network fleet. Many of these requirements match ACT regulatory requirements for which networks are required to ensure compliance by members (discussed in Section 6).

Networks obtain revenue from operators through the payment of network fees and other charges or levies. They also obtain income from related technology and business systems, including payments.

Aerial Capital Group and Cabxpress are private businesses. In general, the income of networks is expected to be affected by taxi numbers, the level of on-demand passenger activity in the ACT and the amount of demand served by each network.

Taxi operators

Accredited taxi operators provide the vehicle. They can own the taxi licence plate (perpetual plate), lease a plate from an owner, or lease a government-issued plate. They may operate one or more taxis. Operators may be owner–drivers but may also engage drivers to undertake the driving task (see Chart A). In the ACT, operators are legally separate businesses. It is a regulatory requirement, however, that ACT taxi operators affiliate with an ACT taxi network (except for during the recent Independent Taxi Operators Pilot (ITOP), see below).

Under regulation, taxi operators are responsible for the day-to-day operation, financial management and presentation of their taxis. They also ensure that all drivers using their vehicles are properly authorised to drive a taxi. This is discussed in more detail at Appendix C.

The economic viability of a taxi operator’s business is affected by a range of factors, including: passenger demand; the number of taxis in the market; and their revenue and cost structure, especially where a separate driver is sharing the driving task. Profit-sharing arrangements vary but, commonly, there is a 50/50 bailee arrangement between the driver and the operator.17 Of the typical fixed costs, the largest three are: licence lease fees, network affiliation fees and insurance premiums. The largest variable costs are typically for fuel, repairs, maintenance and cleaning.

Taxi drivers

To obtain a public vehicle driver authority to drive a taxi (see Appendix C), drivers must complete, amongst other requirements, a taxi driver training course. A driver can be an operator/owner of a perpetual or government-leased taxi, or a driver that drives for an operator on a full or parttime basis.

A drivers’ income is sensitive to overall passenger demand and driver supply.

Independent taxi drivers/operators

A trial to test the viability of independent taxis was launched in the ACT three years ago, through the ITOP. Operators chose to disaffiliate with a taxi network and, instead, derive their business through rank and hail hirings and repeat business built through their own positive reputation and exemplary service delivery.

Currently, there are two independent standard taxis and two independent WAT taxis operating. Permanent implementation of the independent operator model is due for consideration by the Government, pending conclusion of the Review.18

As with more traditional participants, independent taxi operators are also sensitive to overall passenger demand and supply in the industry.

Study A: Driver viability

Driver earnings can impact on consumer outcomes through service quality and availability.

2010 Review actions

The 2010 ACT Review of the Taxi Industry considered taxi operator/driver viability. As part of measures from that time, the ITOP trial was put in place to investigate reducing costs associated with network affiliation. As of January 2015, indications are of a steady improvement in the viability of the business for the independent operators. Compliance with ITOP standards has also been considered exemplary by the Road Transport Authority (RTA).19

For WATs, lease fees were reduced and purchase and modification of vehicles subsidised if the vehicle was less than two years old.

Other states and territories

Victoria has also acted to improve driver viability. After 30 June 2014, the Victorian Government set new conditions for all driver agreements with operators. These new conditions include:

Industry changes

Third-party booking applications may provide new opportunities for taxi and hire car operators and drivers to obtain business. They potentially complement existing actions in the ACT, such as ITOP.

Questions to Consider - (Supply)

How are drivers faring in the current taxi industry? What about operators? What further actions or industry developments would promote viability and consumer outcomes? Are there regulatory improvements that could be made to reduce driver costs, for example the costs of driver licensing?

3.3 Users of on-demand transport services

Taxis

The taxi market provides an integral, 24/7 source of on-demand public transport services to a range of community and business passengers.

Passengers can access taxi services at dedicated taxi ranks or from the road or kerbside (‘rank and hail’), or through a booking service. All taxis can be booked by telephone direct with a driver, through a network, via the networks website or by smartphone app where available. ACT Government estimates and advice from industry suggest approximately half the number of trips are obtained through rank and hail and the remainder through booked services.21

Daily, weekly and annual demand for taxis services varies markedly. Two peak demand periods occur during the workday, and are aligned with commuter rush hour, and the arrival and departure of morning and evening flights at Canberra Airport. Evening demand surges on Friday and Saturday nights, with hospitality and entertainment-industry activity. Demand for taxis also increases during Parliamentary sitting weeks and major events that occur throughout the year.22

Standard taxis

Standard taxis provide service to a range of passengers including:

Standard taxi services can also be important to passengers with limited mobility and other disabilities, such as the vision impaired, elderly and other vulnerable individuals who cannot use WAT services, or other forms of scheduled or semi-scheduled public transportation services.23

WAT passengers

WATs provide 24/7, point-to-point service for passengers with various disabilities who use wheelchairs, and for whom other forms of travel may not provide an adequately accessible, safe or convenient transportation experience.

As an essential community service, WATs are subject to regulation and standards24 for services to promote efficient supply and service quality. For example, WAT drivers are trained to load, secure and unload passengers, and assist with fare transactions.

WAT passengers have greater risks during transport compared to other passengers due to limited mobility or other incapacities. From initial discussions as part of the Review,25 the Government understands that people with disabilities use taxi services because the regulated nature of the services means they are reasonably assured that the driver is a reliable person of good character, who has undergone appropriate training. Further, in the event of misconduct or poor service, passengers are supported by a complaints system.

The WCBS is operated under a contract and funded by the ACT Government. This was implemented following recommendations of the 2010 ACT Taxi Industry Review. The WCBS plays a critical role in the accessibility of passengers with disabilities to medical and commercial services, family, and the broader community.

Questions to Consider - (Equity)

How can we best ensure WAT services are maintained or improved?

Hire cars

The regular private hire car industry is relatively small in the ACT and comprises 38 vehicles that are owned, managed and driven by 22 operators. Hire cars typically offer higher levels of customer service in more prestigious or luxury vehicles. The restricted hire cars operate to provide transport for a weddings and formals only.

Hirings are through pre-bookings only, which are often made in advance (hours or even days). Hire cars may not obtain business on ranks or by hailing and cannot tout for work. Drivers obtain business through reputation and repeat business, and to a lesser extent, through hire car booking systems, which are not regulated.26

Fares for hire car services are normally negotiated in advance, and payment is usually made at the time of the booking.

Questions to Consider - (Technology)

How might services change with a new environment?

4. Regulation of on-demand public transportation

4.1 Taxi and hire car regulation

In the ACT, regulation is applied to public-passenger transport providers to support public safety (including passenger and driver), access for people with disabilities, consumer protection outcomes, taxi supply and commercial practices.

Consumer outcomes are regulated due to the service involving public and community services, and limited consumer choice. For example, in the ACT there is a dominant taxi network which limits choice, while in rank and hail circumstances there may not be the opportunity for the consumer to shop around for price or service. In other industries, competition provides a mechanism to deliver consumers what they want – competition and consumer choice generally provide a more effective approach than regulation.

Application of regulation

Regulation applies to networks, operators, drivers and vehicles that are used to transport passengers under a contract for payment where the service is provided on a road or other area to which vehicles have public access. In addition to classes of taxis and hire cars, vehicles include buses and demand responsive transportation (DRT).

Public-passenger services regulations require the operator of the service to seek accreditation to provide the service, and are regulated under the Road Transport (Public Passenger Services) Act 2001 and the Road Transport (Public Passenger Services) Regulation 2002.

The ACT Government, through regulation:

Study B: Disability standards

The Disability Standards for Accessible Public Transport 2002 (Cth) (DSAPT) requires that certain public-transportation vehicles operating across Australia, which include standard and WAT taxis, provide equivalent response times to passengers with disabilities. Hire cars are not subject to DSAPT.

The ACT Government assists public transportation service and infrastructure providers to comply with the DSAPT requirements through the 2013–2018 Action Plan for Accessible Public Transport in the ACT.27, 28

Examples of standards referred to in the DSAPT include:

For WAT hirings, there are regulatory requirements on networks (regarding booking services) and drivers (regarding acceptance of jobs) to provide for the timely provision of services.

The introduction of ridesharing to the ACT could see the introduction of a fleet of vehicles of varying makes and models providing public transport services.

In undertaking the Review, the Government is considering the alternative service models provided through booking and payment apps and ridesharing, and how they can be accommodated while continuing to meet the objectives of the regulatory approach.

The following table outlines the range of regulatory requirements used by the ACT Government. Further detail on regulatory requirements is provided at Appendix C.

As part of the Review, the Government is conducting a controlled sample survey of Taxi Subsidy Scheme (TSS) recipients. Broadly, the survey will gauge the experiences that people with disabilities have with the ACT’s taxis, hire cars and related infrastructure. The survey will also seek comment on the level of compliance with DSAPT requirements.

Table 4: The current approach to addressing regulatory objectives


Standard taxis WATs Independent taxis Hire cars
Passenger and community safety and access
  • Vehicle standards including:
    • age
    • inspections
    • signage
    • fire extinguisher
  • Disability access standards
  • Compulsory third party personal insurance
  • Driver licensing including:
    • driver age and training
    • police checks
    • medical checks
  • No regulatory requirement, but networks typically require that affiliated taxis have safety cameras and complaints mechanisms.
  • Vehicle standards including:
    • age
    • inspections
    • disability standards
    • signage
    • fire extinguisher
  • Disability access standards
  • Compulsory third party personal insurance
  • Driver licensing including:
    • driver age and training (additional to standard taxi
    • police checks
    • medical checks
  • While not a regulatory requirement, networks have complaint mechanisms, and typically require that affiliated taxis have safety cameras.
  • Vehicle standards including:
    • age
    • inspections
    • signage
    • fire extinguisher
  • Disability access standards
  • Compulsory third party personal insurance
  • Driver licensing including:
    • driver experience, age and training (as for standard taxi or WAT)
    • police checks
    • medical checks
  • Vehicle tracking, safety camera, complaints mechanism.
  • Vehicle standards including:
    • inspections
    • fire extinguisher
  • Compulsory third party personal insurance
  • Driver licensing including:
    • driver age and training (not as extensive as taxis)
    • police checks
    • medical checks
Driver safety
  • Passenger conduct requirements
  • Safety camera operating standards, if installed
  • No regulatory requirements, but networks typically require that affiliated taxis have:
    • safety cameras
    • GPS tracking
    • duress alarms
  • Passenger conduct requirements
  • Safety camera operating standards, if installed
  • No regulatory requirements, but networks typically require that affiliated taxis have:
    • safety cameras
    • GPS tracking
    • duress alarms
  • Passenger conduct requirements
  • Safety cameras (and operating standards)
  • GPS tracking
  • Duress alarms
  • Business plan
  • Passenger conduct requirements
  • Safety camera operating standards, if installed
Consumer protection
  • Regulated fares and metering
  • Operator and driver service requirements
  • Reporting requirements
  • Network performance standards
  • Regulated fares and metering
  • Operator and driver service requirements
  • Reporting requirements
  • Network performance standards
  • Regulated fares and metering
  • Operator and driver service requirements
  • Reporting requirements
  • Performance and disciplinary program
  • Operator and driver service and reporting requirements
Sustainable and efficient supply
  • Number of licences restricted (to 332)
    • periodic release of Government-owned licences through a ballot system at a price of $20,000
    • ‘perpetual’ licences traded in private market
  • Network financial capacity
  • Network service requirements
  • Number of licences restricted (to 26)
    • periodic release of Government-owned licences at a price of $100 or $1,000 (for existing taxis)
  • Subsidies for users and operator/driver incentive payments
  • Network financial capacity
  • Network service requirements
  • Subject to ITOP
  • No limit on the number of licences at a price of $4,600

Source: RRT; Road Transport (Passenger Services) Act 2001; Road Transport (Passenger Services) Regulation 2002; RTA

Questions to Consider - (Safety and consumer protection)

Are the current standards appropriate to the types of risks posed in the taxi and hire car industry today? What elements of these standards should apply to alternative business models?

Other regulation

Other regulatory requirements that are not specific to public-passenger transport may also apply. The ACT Government expects that parties would comply with applicable laws such as those for work health and safety, and tax purposes.

With regard to taxation, all taxis and hire car operators and drivers are required to register for GST regardless of turnover. The Australian Taxation Office (ATO) has advised that it is considering the tax implications of ridesharing as part of a broader review of shared services and collaborative consumption.29

Work health and safety requirements apply under law in respect to employers/persons conducting a business or undertaking.  For taxis and hire cars, various elements are dealt with under specific regulatory requirements about passenger and driver safety (see Table 4).  The Review will consider similar implications with the operation of ridesharing.

4.2 Regulatory costs

Industry participants are faced with a range of costs outside of the general operation and maintenance of the vehicles arising from the regulatory and industry framework designed to provide for public safety and access, consumer protection and commercial supply.

These costs are ultimately borne by passengers through fares and the community (Government subsidies).

Networks

For networks, direct regulatory costs include application fees (of currently $600) to establish/reapply for accreditation every six years. There is also an annual fee of $100 per car for each affiliated taxi.

To be accredited taxi networks must provide a 24/7 service, which may result in operating costs over periods when a non-regulated business might consider shutting down. There are also compliance and reporting costs associated with their operations.

Questions to Consider - (Supply)

Can the new models support around the clock service? Would new models of providing services have different requirements to taxi networks, such as is currently the case for hire cars?

Operators

Taxi operators (operating standard taxis) are subject to a range of Government-regulated and related network costs:30

There are also compliance costs with regulatory requirements, including vehicle signage and system costs (for example, booking and security services), all of which are part of network charges.

Holders of perpetual taxi licences may face management costs from the network and/or variations in the traded value of their licence (depending on expectations of future income). The purchase of a perpetual licence is a substantial investment, with licences trading for around $250,000.31 As outlined at Appendix D, perpetual licence values have been in decline since 2010, with 2014 prices now similar to those in 2004.

The value of perpetual licences is related to their scarcity (due to regulatory caps on supply) but can also be influenced by annual taxi licence fees and general economic conditions. The CTIA Report calls for an increase in annual taxi licence fees to reduce an ongoing loss in the real value of perpetual licences.32 This presents a trade-off between returns to perpetual taxi license holders against the viability of other taxi operators and costs to consumers.

Questions to Consider - (Equity)

How can we have a model that allows innovation but also recognises (historic) regulatory costs borne by current participants?

For WATs, there are additional specialised vehicle costs involved with the transport of disabled passengers. Depending on the set up these can vary from $15,000 to $35,000. In recognition of this, annual licence fees are substantially below that for standard taxis at $100 (dual WAT) or $1,000 (single WAT). There are also incentives provided for drivers and operators including, for example, on call and on time payments.

Questions to Consider - (Equity)

How can we maintain or improve service standards to those with a disability or vulnerable people under the new models?

For hire car operators, annual licences costs are $4,600, with registration (including CTP) of around $3,300. Compliance costs also apply.

All operators (taxi and hire car) are required to take out public liability insurance on their vehicles, with some operators also opting to hold comprehensive vehicle insurance.

Study C: Comparing costs

There may be marked differences in the costs facing taxi operators and drivers, and ridesharing drivers. If it is assumed that rideshare operators/drivers will operate with no additional regulatory burden, there will be material differences arising from the costs of taxi network affiliation and annual public-passenger licence requirements. While ridesharing drivers do not incur annual network fees, they do face costs through fare-revenue payments to transportation network companies (TNCs), such as Uber.

Table 5 highlights major costs items faced by the different on-demand transportation modes. It is important to note that costs can differ significantly between individual taxis and ridesharing vehicles, depending on their trip activity, vehicle-financing arrangements and other factors.

Costs can also vary based on the different regulatory requirements for types of taxis – standard versus WAT and independents – and for hire cars. Similarly, insurance premiums vary significantly depending on the type of public-passenger vehicle (and other factors, such as insurance claim history). The insurance costs for vehicles used for rideshare purposes are also expected to vary from those applied to private vehicles.

Table 5: Comparison of major cost items – Taxis, hire cars and ridesharing

Category Taxis Hire car Rideshare*
Vehicle financing Yes Yes Yes
Insurance Yes Yes TBA
Annual government registration** Yes Yes Yes
Annual network fees Yes † No No
Fare-revenue sharing by rideshare driver and TNC - - Yes
Annual public-passenger licence fees Yes †† Yes -
Variable vehicle operating costs Yes Yes Yes

Source: RRT; RTA
Note: The categories above represent current and significant fixed and variable costs for public-passenger services. When jurisdictions such as the ACT establish regulatory frameworks for ridesharing, significant vehicle costs may emerge.
* For rideshare – a vehicle is not commonly purchased specifically to undertake ridesharing. Registration costs (including CTP insurance) would be expected to apply, however, their cost has not been not determined. Further insurance and licensing requirements specific to rideshare also remain to be determined. As stated above, network fees may not apply, but other payments may be applicable.
** Includes CTP insurance, with costs varying between taxis and hire cars.
† Except for ITOP (independent) taxis.
†† Discounted for WATs.

Drivers

Taxi drivers face a range of training costs and checks to obtain their licences. Current training costs are approximately $1,050 (plus English language assessment and a medical). Training is undertaken over three days.33

Training for WAT drivers is more extensive and encompasses the skills required for the management of the safety and care of passengers with significant disabilities in transportation vehicles. The additional training is offset by service incentives, such as government subsidies including lift fees on wheelchair hirings and hiring performance.

Hire car drivers face accreditation fees of $350, with training undertaken over one day and comprising a more limited set of parameters.34

Booking services

A party providing booking services for taxis is required to be an accredited taxi network (except for WCBS). A provider of booking services for hire cars is not regulated.

Ridesharing owner-drivers

Ridesharing services are not operating in the ACT. Rideshare owner-drivers are, therefore, not currently subject to regulation-related fees and charges, as they are not permitted to operate in the ACT.

Other parties

Costs can also be incurred by other parts of the economy that rely on on-demand transport. Effective and efficient services can deliver benefits and costs to the broader economy. These rely on appropriate market environment, including regulatory settings.

Current arrangements for capping supply of taxis may affect the industry’s ability to meet supply needs to events or businesses. For example, the Canberra Airport has made repeated public calls, based on examples of transport delays impacting on their business, for additional taxi supply to service its passengers, particularly during peak periods.35

Other incentives for taxis to service the airport or other parties/events could be provided with additional fare allowances. Currently, fare rates stand at $9.20 before a taxi leaves the airport. Different passenger types may have different levels of sensitivity to such charging levels. For example, business passengers who can claim expenses for tax purposes may be less concerned than families or tourists.

Questions to Consider - (Competition)

Are there regulation-related costs that could be revised, while maintaining equity and a level playing field, in a new on-demand transport environment? What is needed to allow a smooth transition to a new environment?

5. The evolving on-demand transport environment

5.1 How do taxi and hire car booking and payment apps work?

Taxi apps

Taxi booking and payment apps enable passengers to book and pay electronically for a ride with a participating traditional taxi in any local Australian market.

The app matches passengers with a nearby taxi driver who is registered with the app. Once the trip is complete, the passenger pays the fare using the app. The local taxi fare structure is utilised for the ride and there may be additional charges levied by the booking/payment service itself.

Booking and payment apps can be administered by traditional taxi networks or a third-party provider. Examples of third-party providers of a taxi-booking app include goCatch, an Australian company, or uberTAXI, the taxi-app sub-brand of Uber.

Hire car apps

The hire car industry uses a variation of the taxi app and shares many features of the taxi app booking process. Existing hire car vehicles, provided that they fit within the quality and features parameters of the brand, may be utilised in the business model, just as with taxis already in service.

There can however be substantial differences in how fares are structured. A third-party hire car app, like UberBLACK, may use a structured fare plus potential surge pricing.36 This contrasts, for example, with the fares that are normally negotiated between the hire car driver and passenger in the ACT.

5.2 How does ridesharing work?

Ridesharing is the sharing of motor vehicle transport for-profit or reward using a booking service. The private cars are not owned by a TNC, and the drivers are independent third party transport providers.37 These services and relationships are similar to those for taxi and hire-car in the ACT.

TNCs, like uberX or Lyft, use digital applications to facilitate the matching of passengers with ridesharing drivers. TNCs also generate estimates of the fare, enable payment for the ride through electronic means and provide additional service elements, such as rating of the driver and the passenger.

TNCs share revenue with drivers and take a percentage of a rideshare fare. For example, Uber takes 20 per cent while the driver receives 80 per cent. Drivers are responsible for their vehicle and related ridesharing expenses. TNCs are responsible for the cost of managing the application, operations and other corporate expenses.

In comparison to taxis and hire cars, individual rideshare drivers may only operate for a relatively limited period of time over the week. In Sydney, one TNC’s partner-drivers are claimed to drive on average 20 hours per week in 2014.38

Study D: The ridesharing experience

The following outlines Uber’s rideshare approach (for illustration purposes only):

Different service offerings from technology providers

TNCs can provide differentiated services, not just ridesharing. Uber, for example, provides:

Another TNC, Lyft,43 provides differentiated rideshare offerings including:

The goCatch TNC provides ‘taxi booking app’ services.44

Fare structure

Fare setting for the ridesharing model can be comprised of both structured and dynamic pricing.

Structured pricing involves a fixed fee and a set rate based on distance or time travelled.

Dynamic pricing allows fares to be further determined by the level of demand and supply at any point in time of day or night. The process involves an algorithmic calculator determining the fares for geographic locations. If there is a higher level of demand in a particular area the fare will increase to attract vehicles resulting in increased supply to meet demand.45 As demand is met or declines, fares will reduce.

Under dynamic pricing fares can shift substantially in periods of high demand; for example, during New Year’s Eve in a major city centre. Large surges in price have been subject to public criticism and the level of dynamic price uplifts is subject to maximum limits in some jurisdictions.46

Ratings system

The driver and passenger ratings systems of TNCs can be used to promote passenger service and driver workplace outcomes. Poor ratings or complaints can result in termination of driver or passenger access to TNC services. The termination process may vary between TNCs but may include a series of warnings and, for drivers, training opportunities to address performance. Disputes regarding termination may be subject to applicable laws and contract arrangements.

Study E: How are other places responding to ridesharing?

Australia

At the time of writing, other Australian states and territories are determining regulatory responses to ridesharing.47 Some are undertaking compliance action to address concerns of illegal operation under current regulatory arrangements. For example, in NSW, Victoria and other jurisdictions where they are operating in Australia, uberX drivers are facing prosecution and fines related to alleged breaches of the relevant transport legislation.

Despite concerns of illegal operations, industry in other states is already experiencing competitive impacts from ridesharing, with flow-on implications for other current regulatory settings. For example, IPART estimates that, despite their illegality, ridesharing services have been used by 11 per cent of Sydney residents.48 In response, it proposes to freeze taxi fares for a year from July to help the industry compete with aggressive new entrants.49

The Commonwealth Government’s Competition Policy Review recommends that states and territories ‘should remove regulations that restrict competition in the taxi industry, including from services that compete with taxis, except where it would not be in the public interest. If restrictions on numbers of taxi licences are to be retained, the number to be issued should be determined by independent regulators focused on the interests of consumers’.50

Overseas

Internationally the approach to rideshare is similarly mixed and shifts between review and amendment of the regulatory settings to allow for innovation and competition, to bans on rideshare activity.

6. Potential impacts of new business models

App and smartphone technologies have continued to evolve and expand in use in the ACT since the last decade and, in particular, since the ACT Government’s last review of the industry in 2010. The use of taxi booking and payments through these services has increased since that time.

goCatch has stated that, by September 2013, over one quarter of all taxis in the ACT were using its booking and payment app, and that it had generated $70,000 in fares for those taxis in the six months prior to that time.56

As of 17 November 2014, Uber claims to have facilitated 1.5 million rides in Australia and that Australia represents one of their fastest growing markets.57 An independent estimate, made in January 2015, provides that in Australia there is about $1 spent on Uber services for every $12 spent on taxis. 58

6.1 Economic impacts

In general terms, sharing economy models offer the ability to better use the capacity of existing assets and individuals. To the extent that these new models promote competition, they may increase the efficiency and quality of service in an industry with flow-on productivity benefits to other areas of the economy. In the case of ridesharing this reflects a fuller use of private vehicles and individual employment to provide additional public transport supply. A consequential reduction in waiting times after the introduction of ridesharing may improve consumers’ ability to travel cost effectively.

Rideshare is available in most major Australian capitals (not Canberra) and a few smaller centres. uberX, the first TNC to facilitate ridesharing in Australia, entered the Australian market in April 2013, but was not legally recognised by any state or territory at that time.

Uber has made a series of assertions that it could help drive economic activity in Australia by creating jobs, breaking the monopoly of the taxi industry and relieving traffic on congested city roads. These claims have been contested by the Australian Taxi Industry Association.59

6.2 Do the features of the new models support consumer outcomes?

Safety features

The new models present a range of features that are comparable to currently regulatory requirements for taxis and hire cars, and some new features that may reduce risks involved with on-demand transport activity.

Information

Smartphone apps offer a level of information, transparency and service above that available through traditional rank and hail or telephone bookings. This increased information can affect safety and consumer protection outcomes. For example, increased knowledge about parties to the transaction (including the ability to rate passengers and drivers) and route details (including GPS tracking) can reduce incentives for misconduct. This also provides reliable data directly to passengers on the effectiveness of particular services. The RTA is already using such information to monitor WAT services.

Accordingly, the need for current requirements such as certain branding elements, in-car driver identification or security cameras may be affected as potential harms are addressed by alternate means.

The availability of personal information creates the need for a responsible approach to the handing of personal details. Privacy and access arrangements require management, along with the application of appropriate review and complaint processes.

Change brings a need for education of the affected parties. New service providers and industry associations are providing a range of information on the use of services. Consumers and industry participants require particular knowledge to support change. For example, people with disabilities may require targeted information to enable them to use these services effectively and minimise their exposure to harm.

Driver standards

The ridesharing model may incorporate a range of features designed to address consumer and public safety concerns. TNCs can impose a range of direct standards on the rideshare drivers that they connect with passengers. The exact elements may vary between TNCs.

Drivers may be subject to age, character and driver experience requirements as evidenced by drivers having to hold:

TNC standards for driving and criminal records vary between jurisdictions and are often shaped by the regulatory authorities of those jurisdictions.

Insurance

Insurance in the event of incident is regulated for taxis and hire cars. Some booking app services and rideshare services require and provide insurance solutions.

On top of the individual comprehensive insurance that is held by the rideshare driver, a TNC may hold insurance cover for the ridesharing activity. For example, in Australia, Uber supplies each of its uberX rideshare driving partners with an additional US$5,000,000 insurance policy that covers incidents related to ridesharing activity.60 (Notwithstanding this coverage, the Insurance Council of Australia has warned active and prospective rideshare drivers that they ensure that their insurance arrangements are adequate for the protection of both drivers and passengers.)61

Vehicle condition

Vehicles may be also be required to be assessed as being in a roadworthy condition through maintenance and condition requirements including with regard to the vehicle’s age. In Australia, Uber vehicles are subject to regular inspection and cannot be more than nine years old.62

Risk factors can be determined by comparing these requirements with the various regulatory and industry requirements that are applied to taxis and hire cars.

Driver safety

For drivers, the use of cashless payments can support driver safety. TNCs may also prohibit access to booking services for customers that are reported to be violent or abusive. The times of service and operating profile of rideshare drivers may be different from taxis and, therefore, pose and be subject to different risks.

Consumer outcomes

Passenger ratings and access to reviews can incentivise a consumer focus. With TNCs, if a driver falls below a certain quality level, they may be removed from the booking service. The prospective passenger has the opportunity to read that driver’s passenger reviews to see if they wish to accept a ride from a particular driver. Compliance and complaints services operated by TNCs also support consumer outcomes.

Vehicle specifications, such as car size and type, ensure a level of comfort for a specified number of passengers.

Competition effects

The mix of an ability to shop around through app-based booking services and competition (particularly if additional supply is available through rideshare) could promote price and service improvements in the public-passenger transport industry, and provide broader economic benefits. Incentives like ratings schemes diminish the need for consumer protection via regulated price and service requirements.

Vulnerable users

Vulnerable users, however, may still require additional regulatory support, such as priority bookings or specialised driver training because of potential limitations on their ability to access services and a need to ensure service levels.

Questions to Consider - (Safety and consumer)

Are the features of the new models supporting customer experience and safety in practice?

6.3 Is a level playing field provided by regulatory standards?

Regulatory requirements should allow for effective competition and consistent management of risks associated with public safety, access and consumer protection.

Competition and types of service

Third-party booking and payment service providers offer points of competition to the operation of the traditional taxi network. Currently, the ACT Government requires taxi operators to be affiliated with a network (excluding ITOP operators) that provides access to booking and payments services. WAT operators are also required to be network affiliated, and have an additional government-funded booking service for wheelchair hirings only.

Rank and hail taxi services are not directly impacted by the alternate booking or rideshare model technologies. Effective service competition could, however, lead to some people choosing to use booking services instead of rank and hail.

In contrast, and similar to the rideshare model, hire cars operate in a more deregulated market for booked services without network requirements, but they are not permitted to undertake rank and hail work.

Questions to Consider - (Safety and consumer)

Should new service delivery methods be treated differently to taxis because they operate within the booked market only?

Independent taxis

The ITOP has been operating with a limited number of taxi operators. The operator viability component of the trial may be complemented by additional means to obtain business through alternate booking services.

Supply

The rideshare model opens up the issue of market supply. The supply of taxis is subject to a regulated cap on numbers, whereas hire cars are not.

Supply levels and related lease fees and income expectations affect trade in perpetual taxi licence plates.

Questions to Consider - (Safety and consumer)

Should supply restrictions be retained in the delivery of rank and hail services? If so, how should future supply caps and releases be determined?

Regulated pricing

Taxis currently have maximum prices determined by the ACT Government. Hire cars can choose their own prices.

Questions to Consider - (Safety and consumer)

Should prices be regulated or monitored for new ways of providing services? If there is effective competition in booked services, should maximum prices be removed for this market? Is there a need to maintain maximum prices in the rank and hail market?

6.4 Payment surcharges

Taxis and hire cars currently operate with various forms of passenger-payment mechanisms, including cash, credit and debit cards, and other forms of electronic payment. App-based booking services operate exclusively with electronic payments mechanisms. Third-party payment-processing companies normally provide payment facilities in the Australian and ACT taxi industry. Surcharges are levied on taxi passengers for the convenience of using these payment mechanisms.

In Australia, and specifically the ACT, there has been a steady growth in the use of electronic forms of payments in taxis and hire cars.63 Over the years, however, there has been general concern across jurisdictions that electronic payment surcharges have been markedly higher than what is necessary to cover the resource costs of providing the services, and that there has been uniformity in the level of these surcharges across payment-processing companies.

Surcharge levels can be driven, in part, by costs stemming from a higher risk of fraud and an apparent unwillingness of banks to deal directly with taxi operators. These two factors have presented an opportunity for third parties, or ‘intermediaries’, to facilitate electronic payments in the taxi industry.64 Additionally, consumer demand for electronic payment services is relatively insensitive to the costs of the payment services. This has been shaped by an absence of price competition in fares, a lack of opportunity to choose a lower-cost means of making electronic payments and, finally, the presence of few competing paymentprocessing companies. Further, some payment-processing companies use loyalty programs to deliver a portion of the surcharges to drivers and operators who use their systems.65

At the time of preparing this Discussion Paper, payments via a debit card, credit card, or taxi-specific charge card can, in the ACT, be subject to a surcharge (including GST) on top of the trip’s fare of between 10 to 11 per cent.

The ACT Government will consider the surcharge levels that are charged in the Territory in the broader context of:

National factors affecting surcharge arrangements

Several recent developments have occurred with respect to electronic surcharge levels in other jurisdictions.

Victoria

In February 2014, Victoria introduced legislation that capped the amount of surcharge taxis (not hire cars) could charge, at 5 per cent. This initiative was undertaken in response to a finding by the review of taxi services that assessed an amount of 10 to 11 per cent as too high (discussed further below).

New South Wales

NSW has followed the Victorian initiative with legislative amendments to cap the surcharge at 5 per cent. These changes came into effect on 12 December 2014 and they apply to both taxis and hire cars.

Media reports suggest that the payment service Live TaxiEpay is threatening legal action claiming the new NSW legislation is anticompetitive.66

Commonwealth

The Australian Competition and Consumer Commission (ACCC) and the Reserve Bank of Australia (RBA) have policy interests in electronic payment surcharges through, respectively, national competition legislation and credit card standards.

Surcharging in the ACT

Three companies offer payment processing in the ACT on-demand market: Cabcharge, Live Payments, and goCatch, through its taxi booking and payment app.

Currently in the ACT, the following cards attract a surcharge: Cabcharge, American Express, Diners Club, MasterCard, Visa, MotorPass, JCB and all authorised debit cards. The surcharges are as follows:

Arguments for different surcharge rates

Different arguments are made against a regulated reduction of electronic surcharge levels.

Industry seeks to retain the current surcharge levels and suggests that they represent reasonable compensation and that the new regulated caps in some jurisdictions are ‘unfairly low and would potentially put drivers in danger if electronic processing companies decided to cease operating’.70

The income of taxi networks is understood to be supported by the return of a portion of surcharges via commissions or loyalty payments. If the surcharge were reduced, the impact on taxi operators could be material. In such an event, networks may seek to recoup monies through an increase in base fees and an increase in taxi fares.

There are competing arguments for acting to lower surcharge rates.

Rates of 10 to 11 per cent are inappropriately high compared to a range of rates charged by credit card companies in other service and retail settings. Surcharges applied by merchants in other industries typically range from a combined average of 1.4 per cent in the Visa and MasterCard systems to a combined average of 2.4 per cent in American Express and Diners Club.71

The surcharge rates in the taxi-industry setting may, therefore, in part be a product of the absence of meaningful competition among payment-processing companies in taxis and hire cars. It remains to be seen whether any introduction of third-party taxi and hire car apps, and ridesharing, would provide sufficient competitive pressure as a factor alone to reduce surcharges.

As to loyalty payments or commissions to taxi operators, these are hidden costs embedded in surcharge payments and lack transparency for the consumer. The need for payments could be more accurately tested through regulated fare settings.

Locally, if the surcharge reduction to 5 per cent in NSW remains in place, there would be a competitive advantage for Queanbeyan-based taxis operating in the ACT. Addressing the surcharge issue is, therefore, in line with the ACT Government’s priority of supporting a competitive business environment and pricing that is appropriate to a competitive industry.

Questions to Consider - (Consumer)

Should the ACT Government be acting to reduce surcharging levels? Would the new models provide downward pressure on current surcharges? Should the ACT Government action remain in place permanently?

6.5 Do the new on-demand models support broader public transport integration?

With innovation in on-demand transport services, the ACT Government is exploring ways to leverage change to support improvement in other modes of public transport.

Buses

Taxi ranks are located within the vicinity of bus stops and major hubs. This arrangement may present an opportunity to integrate taxi services with scheduled bus services in certain scenarios. One such integration scenario is being explored in the BusPlus trial program.

BusPlus involves the development of a demand-responsive hub and spoke system in which taxis feed passengers to and from a trunk system of scheduled bus services. On arrival by bus at a hub facility, passengers are met by a taxi that ferries them to the suburban bus stop closest to their destination. Passengers would pay for the trip electronically.

The ACT Government is working with National Information Communications Technology Australia (NICTA) to introduce a trial of the BusPlus system into a select area of the ACT in the latter part of 2015. Preliminary discussions have been held with the taxi industry and other stakeholders.

The BusPlus program might present an opportunity to efficiently utilise taxi capacity during traditional off-peak hours. The Review will be coordinated with the development of the BusPlus initiative.

Capital Metro

Capital Metro is Canberra’s light rail project and an important part of the ACT Government’s vision to deliver a truly sustainable and creative city as set out in the Canberra Plan – Towards our Second Century (2008).

The first stage of Capital Metro is a 12-kilometre route running from the city to Gungahlin, along Northbourne Avenue and Flemington Road. It will deliver high-quality, reliable and frequent public transport down one of Canberra’s busiest corridors. The Light Rail Master Plan is underway to identify the city-wide network and roll out of future stages. Forward-looking public transport infrastructure is critical to the future growth of Canberra. Its unique town-centre design, along with a projected population growth to 600,000 people by 2050, ideally lends itself to a fast, efficient and reliable light rail system.

The first stage of Capital Metro will lay the foundation for a city-wide integrated public transportation network with light rail as its spine. It will be complemented by a feeder bus network and will support cycling and pedestrian access.

It is estimated that approximately 3,500 direct and indirect jobs will be supported during the construction phase of this project.

Questions to Consider - (Integration)

What further opportunities are there with the emerging business models and existing taxi services to support greater integration of transport services?

Interstate transport links

ACT taxis are permitted to provide services in the City of Queanbeyan, NSW, and similar arrangements are in place for Queanbeyan taxis to service the Territory under a cross-border agreement with the NSW Government.

Taxi ranks are located near interstate transport services, including bus, rail and air.

Canberra Airport

Currently transport services to and from the airport comprise taxis, hire cars, Airport Express Bus shuttle services and private vehicles.

Taxi services have a dedicated rank at the airport, with commissionaires to direct passengers to waiting vehicles. An additional charge is included in taxi fares from the airport when the commissionaires are present, to pay for commissionaire services. A parking facility and waiting lounge close to the arrivals terminal is also available to facilitate airline passenger pick up. Canberra Airport has advised that this area could potentially be used for rideshare passenger pick-ups.

QUESTIONS TO CONSIDER - (Integration)

What further opportunities exist with the emerging business models to support greater integration of interstate services, in particular for scheduled services? Could the new models work with existing facilities and infrastructure? (Competition) What are the implications of the new business models for cross-border taxi services?

7. Way forward

The ACT Government seeks the community’s views on the issues presented in this paper. Responses provided will be considered in the development of a package of possible reforms, as outlined in Section 1.3.

Taxis and hire cars provide services that are integral components of the Territory’s public transport system. For some users, taxis also represent a trusted essential service that allows them to access vital support services and engage with the broader community.

The ACT Government recognises that changes may be needed to regulatory settings to allow for innovation and competition in the taxi and hire car market. At the same time, risks to public safety and access, consumer protection and the ongoing provision of services by industry (on a level playing field) need to be addressed.

Other taxi and hire car markets in Australia and around the world are experiencing significant new entry to markets and consumer take up. Regulators are recognising the new business models as disruptive and a driver of change in traditional taxi markets.

As outlined in this Paper, in the ACT market there are different requirements in place between taxis and hire cars. Taxis provide a 24/7 operation that includes bookings and rank and hail work off the street with regulated fares. Hire car business is based on bookings through advertising and reputation with negotiated fares. In addition, independent taxis operate without network affiliation.

The new app-based business models involve on-demand passenger booking and payments. To a degree, these services are already in use in the ACT through existing network providers and taxi and hire car operators. There is no current rideshare activity.

The level of information provided through the app-based booking models for identification and behaviour purposes raises the opportunity to revise regulation on public safety and consumer protection risks related to the parties to the transaction of the services. As evidenced through ITOP, network affiliation need not be an automatic requirement to ensure consumer outcomes.

Rideshare provides an opportunity for competition (and additional supply) in the market. Competition protects consumers who are able to shop around for price and service. As evidenced in other jurisdictions, regulatory requirements can be adjusted to allow for rideshare while addressing risks.

The impact on access to services by the vulnerable and people with disabilities in these business models remains to be investigated further. The ACT Government currently ensures service provision to this segment of the market through regulation, subsidies and funding of WCBS.

For drivers (character and training) and vehicles (condition and insurance), existing requirements will need to be considered against the operating conditions of the business models. Rank and hail services could see reduced risks through greater use of cashless payments services, but do not benefit from the greater transparency that is available through new booking services.

Existing taxis and hire cars may be affected by changes in demand and supply for services. Their existing circumstances will need to be recognised when considering possible ways forward. To provide a level playing field, regulatory requirements will need to be equally matched for risks that apply and the transition to a new environment determined.

The need for performance standards may be reduced in a competitive environment. There may also be further opportunities for integration with other forms of public transport for existing (and new) on-demand transport providers.

Appendix A – Terms of Reference

A.1 Purpose

To evaluate whether there are opportunities to reform taxi and hire car regulation, including having regard to the emergence of digital public transport booking services and their potential ability to increase competition and provide differentiated transport services to the public.

Matters to be considered as part of the review include:

The review will also consider matters arising from:

A.2 Responsibilities

An inter-directorate working group chaired by Chief Minister, Treasury and Economic Development Directorate and including Justice and Community Safety Directorate will oversee the review.

Consultation will involve initial industry stakeholder meetings, the development of a discussion paper, and broader community engagement to commence in early to mid-2015.

The working group will report to Government during the latter half of 2015.

View the Background on the Review.

Appendix B – Taxi reviews and industry actions

B.1 2010 ACT Taxi Industry Review

The aim of the 2010 Review was to ‘comprehensively appraise the performance of the ACT taxi industry and recommend ways to improve service levels in regard to quality of service, safety for consumers and drivers and accessibility and the effectiveness of regulation in the ACT.’72

The Review issued 61 recommendations that covered several topics, including:

Four major changes to the industry involved:

WATs

Prior to the 2010 Review, stakeholders were concerned about the quality and timeliness of the networks’ response to WAT hirings and the capacity of WAT vehicles to meet demand. The ACT Government contracted a third party, 13WATS, to provide WCBS. Complaints about the service declined markedly after these changes were made and the number of hirings increased dramatically in the first two years of operation.75

From July 2011, policy required that new or replacement WAT vehicles would be fitted to accommodate two or more wheelchair passengers.76

Finally, paper vouchers used to facilitate payment for WAT service through the Taxi Subsidy Scheme (TSS), were replaced with electronic payment cards. The electronic cards have helped significantly to reduce fraudulent use of the TSS, and the record keeping burden of the fare payments process.

Standard-taxi fleet

After the Review, 41 new and surrendered non-transferable Government licences were issued. This has contributed to a decline in peak-hour wait times and complaints about wait times. Today, the RTA receives few complaints about peak-hour wait times.77

Peak demand service responsiveness

An airport commissionaire service was established at Canberra Airport to organise the queuing and distribution of passengers to waiting taxis. This has helped to improve the efficiency of passenger movements from the airport and lower overall wait times.

Independent taxis

The Government implemented the ITOP to increase passenger choice for on-demand service, and provide operators with the opportunity for increased business viability and a choice of building a business independent of a network affiliation.

ITOP, which was launched in March 2012, ran for three years and included four independent taxi operators. The RTA advises that the quality of service from the operators has been strong, due to operators driving their taxis and being able to expand their business by providing good customer service.

A decision on the permanent introduction of independent taxis operators in the ACT has been delayed pending the outcomes of this Review. The existing four independent operators have been permitted to continue as independents until a Government decision is made.

B.2 Actions in the ACT taxi industry – 2000 to 2009

A number of initiatives and actions have been taken prior to the 2010 Review. They are summarised in the Table B1.78

Table B1: ACT taxi reforms – 2000 to 2009

Date Action
1999–2000 National Competition Policy Review of ACT Taxi and Hire Car Legislation.
2001–2002 Release of 20 additional Wheelchair Accessible Taxi (WAT) licences.
2002 Implementation of legislation providing requirements for taxi operator accreditation and taxi network accreditation.

Introduction of standards for security cameras in taxis, taximeter standards and taxi network performance standards.

Introduction of cross-border taxi arrangements which allow Canberra and Queanbeyan taxis to provide seamless services in the Canberra/Queanbeyan region.

Independent Competition and Regulatory Commission (ICRC) Review of the Future Direction of the ACT Taxi and Hire Car Industry.

2003 Introduction of a ‘lift fee’ for wheelchair accessible taxi hirings.
2004 The Road Transport (Public Passenger Services) Amendment Act 2004 gave effect to the 2002 Government response to the ICRC review of taxi and hire car industry.
2005 Introduction and implementation of legislation providing for demand-responsive transport services.

Wheelchair Accessible Taxis Reference Group established by Minister for Urban Services; recommended subsidy for micro-management of wheelchair hirings and expansion of the lift fee program.

Development of new taxi licence release program focusing on release of licences leased from Government (that is, no more perpetual licences).

2006 Introduction and implementation of legislation providing for nontransferable taxi licences. Six-year licences leased from Government.
2007 Accreditation of new taxi network, Cabxpress.

Amendment to taxi fares schedule to allow vehicles with seating for five (rather than six) passengers to be high occupancy taxis (HOTS).

2008 Commencement of Nightlink Taxi service.

Introduction of new fare rate for HOTS carrying eight passengers or more.

Provided financial incentives for WAT drivers to work at times when it is difficult to attract drivers, such as over the Christmas period.

Consultation on legislative amendments relating to taxi operation.

2009 Investigation of viability and continuance of Nightlink scheme, including a new fare structure. The Nightlink scheme was subsequently discontinued in December 2009.

Source: RRT; RTA

Appendix C – ACT Government regulation

C.1 Safety and access requirements

A suite of road transport legislation supports the safety of passengers, drivers and members of the community in the ACT.

Standard taxis and WATs

Networks

Taxi networks play a supervisory and oversight role in the safety of taxi services. Networks are required to:

Operators

Taxi operators are required to:

Drivers

A taxi driver must obtain a ‘T-condition’ on their driver’s licence and hold a Public Vehicle Driver Authority Card (PVDAC). To obtain these they must:

Driver training consists of a three-day course, including two days of comprehensive theory and one day of practical training. The practical training covers defensive driving techniques that are required by National Standards and the program covers the seven required National Units of Competency. The course costs $1,050.81

WAT drivers require additional specialised training on how to provide services to passengers with disabilities.82

Vehicles

Taxi vehicles must be maintained by operators in a condition specified by the:

Taxi vehicles are also required to be fitted with identifying approved signage/livery of the taxi network with which the operator is affiliated.

Insurance

Vehicles registered as taxis must have ‘taxi vehicle class 6’ public-vehicle insurance as well as a compulsory public-passenger vehicle policy for at least $5,000,000 for the vehicle. The insurance policy must be issued (or renewed) by a corporation authorised under the Insurance Act 1973 (Cth). The policy must insure the accredited operator of the public-passenger vehicle against liability in relation to damage to property caused by, or arising out of the use of the vehicle anywhere in Australia (whether or not on a road or road-related area).86

Hire cars

Drivers and operators

A hire car driver must obtain an H-condition on their driver licence and hold a Public Vehicle Driver Authority Card (PVDAC). To do this they must:

Driver training consists of a one-day course that covers defensive driving, the planning and navigation of routes, and customer service skills.88 The course costs about $500. Language training is not required of hire car drivers.

If a hire car operator employs a casual driver, he must keep a record of the drivers contact information, licensing status and hire car driving activity.89

Vehicles

Hire car vehicles must be maintained in accordance with:

  1. the vehicle manufacturer’s maintenance and servicing standards, and with vehicle inspection after a predetermined number of kilometres; and
  2. requirements outlined in the Road Transport (Vehicle Registration) Regulation 2000 that the hire car must be inspected once per year by the RTA.90

Insurance

Vehicles registered as hire cars must have ‘private hire car class 7’ public-vehicle insurance as well as a compulsory public-passenger vehicle policy for at least $5,000,000 for the vehicle. The insurance policy must be issued (or renewed) by a corporation authorised under the Insurance Act 1973 (Cth). The policy must insure the accredited operator of the public-passenger vehicle against liability in relation to damage to property caused by, or arising out of the use of the vehicle anywhere in Australia (whether or not on a road or road-related area).91

Conduct

Driver and passenger conduct are subject to regulatory requirements under the Road Transport (Public Passenger Services) Act and Regulation.

For taxi operators and drivers, regulations include:

For passengers, there are restrictions on:

Access

An outline of disability standards is provided at Study B of the Discussion Paper.

C.2 Consumer protection

Fares and metering

The Minister for Justice determines the maximum taxi fares that can be charged under the Road Transport (Public Passenger Services) Act 2001. Current fares can be found on the rego.act.gov.au website.92

Determination of maximum fares occurs as a result of a review and price-related direction submitted by the taxi industry and is checked on behalf of the Minister’s Directorate by an independent consultant. The taxi cost composite index (TCCI) is used in this process to determine fares. Amendments to the TCCI were suggested during the 2010 Taxi Industry Review, however, these were not accepted as there was bias in the data that required industry verification. The CTIA Report calls for amendments to the weightings to address changes in the industry since the TCCI was introduced in 2004.

In NSW, competition arising from new entrants to the industry has led the pricing regulator IPART to recommend a freeze on fares to support a level playing field for existing taxis.93 Legal requirements also apply in relation to the operation of taxi meters, including the start and end of recording during the hiring period.

Service quality

Waiting time performance standards are regulated for taxis (as outlined in Table C1). WATs are eligible for performance incentives with government payments for hirings undertaken within 18 minutes.

Service quality is also related to the conduct requirements outlined in Section C.1 ‘Safety and access requirements’.

Table C1: Waiting time performance standards

Peak periods All other times

Standard taxis

Monday–Friday: 8.00 am – 10.00 am & 3.00 pm – 5.00 pm

85% of all hirings have a maximum waiting time of no more than 18 minutes

95% of all hirings have a maximum waiting time of no more than 30 minutes

85% of all hirings have a maximum waiting time of no more than 10 minutes

95% of all hirings have a maximum waiting time of no more than 20 minutes

WATs
Monday–Friday: 8.00 am – 9.00 am & 2.00 pm – 4.00 pm

85% of hirings involving a wheelchair in a WAT have a maximum waiting time of no more than 18 minutes

95% of hirings involving a wheelchair in a WAT have a maximum waiting time of no more than 30 minutes

85% of all hirings have a maximum waiting time of no more than 10 minutes

95% of all hirings have a maximum waiting time of no more than 20 minutes

Source: RTA

Complaints

Industry participants are subject to procedures for customer complaints and dispute resolution as well as the handling of lost property.

The RTA also maintains complaints services for all passenger services, including taxis and hire cars.

C.3 Industry supply

Networks

Networks are required to demonstrate that they have the financial capacity to operate and provide booking services at all times. They must ensure the use of accredited taxi drivers and vehicles.

Taxi licences

The classes of taxi licences that are issued in the ACT are standard, conditional, restricted taxi licenses (WATs) and cross-border taxis registered in NSW. The ACT Government applies a regulated cap on licence supply, as per Table C2. At present, the number of active licences that are held by operators is less than the regulated cap.

Private perpetual licences

formerly issued by the ACT Government, they are privately owned and can be bought and sold in the taxi community. Historically, each carries a monetary value that primarily reflects expectations about the cash flow that will be generated from the taxi it licences. Other, lesser, factors also affect prices.

The value of perpetual licences will change depending in large part on perceived and actual demand for taxi travel in the future, and the supply of on-demand transportation to meet demand. Perpetual licences have, therefore, substantially fluctuated in value over time (see Appendix D). Owners of this class of licence may experience realised or unrealised investment gains or losses, depending on industry and economic factors, and when the licences were bought or sold.94

Individuals or entities can hold private perpetual licences as passive investments, and do not have to own or operate a vehicle.

Transferable Government licences

10 of these licences were issued in 2006 and they can be bought and sold among taxi owners. While the plate holders must pay a lease fee to the ACT Government, some plates have sold at a positive value. This reflects expectations that income generated from operating taxis over time will exceed the annual lease payments.

Non-transferable Government leased licences

These licences are issued by the ACT Government and cannot be transferred among taxi operators. They were created by the Government to enable increases and decreases in the taxi fleet over time. A cap of 104 of these licences is currently in place.95

Non-transferrable Government conditional licences

These are issued for vehicles that are wheelchair accessible, but must also carry at least six passengers. These vehicles are not obliged to give priority to wheelchair passengers.

Non-transferable Government leased restricted taxi licences (WAT licences)

These are issued to the operators of vehicles that are equipped to carry two wheelchair passengers and must give priority to wheelchair hirings.96

Table C2: Types of taxi licences, and authorised caps As at March 25 2015


Licence type (authorised cap) Total
Ownership Standard Conditional standard Wheelchair accessible
Privately-owned Perpetual licences (217) N/A N/A 217
Government-owned Transferable government licences (10)
Non-transferable government licences (104)
Non-transferable government conditional licences (1) WAT licences (26) 141
Total 331 1 26 358

Source: RTA Note: This excludes 19 cross-border licences issued in NSW that allow their vehicles to operate in the ACT.

Allocating plates

Currently in the ACT a periodic ‘ballot’ system allows the release of taxi licences to industry. This release occurs on the basis of a formula employed by the Government and developed following the 2010 Review that determines if the supply of taxis matches demand for service.

As plates can be surrendered to the Government by taxi operators who no longer want operate, the supply of taxis can also vary from the nominated cap on supply. There are currently 44 standard and seven WAT plates under the cap that can be allocated by ballot.

The Government has proposed a ‘list’ system to release taxi licenses (up to the cap) on an ongoing basis. The system would enable prospective operators to enter the industry more rapidly and with greater certainty, provided that they are successfully accredited.

Existing operators and drivers may be impacted by a list system that allows more efficient entry of competitors to the industry.

The CTIA Report calls for changes to the taxi license release model to more accurately reflect changes in taxi supply and demand. This call questions the key performance indicators that are used to calculate required numbers of taxis to meet demand.

Hire car licences

Hire car licences are leased from the Government. There is no cap on how many are issued.

Appendix D – Taxi licencing history

D.1 History of taxi licencing

Perpetual licences

The licencing of taxis in various forms has been ongoing since the industry began in the 1920s. Present-day perpetual licences, which number 217, were issued by the Commonwealth, NSW and the ACT governments until the mid-1990s. They were issued under four general programs:

The first public auction of new taxi licences started in 1990 and four subsequent auctions took place throughout that decade (1991, 1993, 1994 and 1995).

Historically, these licences have changed hands between passive investors and taxi operators in the industry. Their trading values have changed over time, and reflect, among other factors, perceptions of future supply and demand in the taxi industry. An operator can lease or own more than one perpetual and government leased taxi licence, and some operators lease many.97

Government-owned, leasable licences

In 2006, the ACT Government introduced non-transferable leased taxi licences, issued on a periodic ballot basis. Today, 105 such plates are authorised for potential use on the road.

During 2006, 10 transferable leased taxi licences were also released. These licences have a history of changing hands in the industry, and have attracted some equity for operators.98

D.2 Sales of licenses

History of trading and prices of perpetual plates

The last documented release, or sale, of a perpetual licence directly by the ACT Government occurred during 1995. It was sold through an auction process. Table D1 provides a history of the average price of perpetual licences released by the Government, by ballot and by auctions, between 1986 and 1995. Note that licences were released prior to those identified in the chart below.

Table D1: History of ACT standard perpetual licences ballot and auction prices – 1986 to 1995

Year Number released Method Average price Total revenue
July 1986 17 For senior drivers $250 $4,250
July 1986 7 Ballot $80,000 $560,000
November 1990 9 Auction $132,000 $1,188,000
September 1991 5 Auction $164,000 $820,000
November 1993 6 Auction $226,000 $1,356,000
July 1994 8 Auction $241,000 $1,928,000
October 1995 15 Auction $162,000 $2,430,000

Source: RTA

Table D2: ACT standard perpetual licences – Purchases and sales since 2004

Year Average price yearly Licences sold
2004 $240,263 18
2005 $238,093 18
2006 $253,441 20
2007 $286,595 29
2008 $262,375 8
2009 $277,591 11
2010 $294,462 17
2011 $267,142 7
2012 $260,166 6
2013 $257,500 4
2014 $244,900 8

Source: RTA

History of lease fees on Government-issued taxi licences – standard taxis

Government non-transferable leased licences have been leased at $20,000 per annum since first issued in April 2006. Similarly, Government transferable leased taxi licences have been leased at $20,000 per annum since first issued in August 2006.

History of lease fees on Government-issued taxi licences – WAT taxis

Between 1999 and 2007, the Government leased WAT licences at $1,000 per annum.

Between 2007 and 2010, the Government distinguished between and single and dual chair WAT licences. Single WAT licences were leased out at $3,000 per annum, and $1,000 per annum for dual WAT licences. From 2010 onward, single WAT licences have been leased for $1,000 per annum, and $100 per annum for dual WAT licences. This most recent change to lease pricing was brought about following the 2010 Taxi review.

How to lodge a submission

The Taxi Industry Innovation Review is an inclusive process. We would like to hear from you.

You can provide a written response to this Discussion Paper by 29 June 2015, either by post, email or facsimile.

Postal Address: Project Officer ACT Taxi Industry Innovation Review ACT Government GPO Box 158 CANBERRA ACT 2601

Email address: taxiinnovationreview@act.gov.au

Facsimile: (02) 6207 0025

Unless a submission is clearly marked “In confidence”, it will be treated as a public document and made available to on the website of the Chief Minister, Treasury and Economic Development Directorate.

You can follow the Review:

List of acronyms

ACCC Australian Competition and Consumer Commission
ACT Australian Capital Territory
ATO Australian Taxation Office
CBS centralised booking service
CIE Centre for International Economics
CMTEDD Chief Minister, Treasury and Economic Development Directorate, ACT Government
CTIA Canberra Taxi Industry Association
CTP Compulsory Third Party [insurance]
DRT demand responsive transportation
DSAPT Disability Standards for Accessible Public Transport 2002 (Cth)
GST Goods and Services Tax
HOTS high occupancy taxis
IPART Independent Pricing and Regulatory Tribunal, New South Wales
ITOP Independent Taxi Operator Pilot
JACSD Justice and Community Safety Directorate, ACT Government
LTA Land Transport Authority, Singapore
NICTA National Information Communications Technology Australia
NSW New South Wales
RBA Reserve Bank of Australia
RRT Regulatory Reform Team, CMTEDD, ACT Government
RTA Road Transport Authority, Access Canberra, ACT Government
RTO Registered Training Organisation
TAMS Territory and Municipal Services Directorate, ACT Government
TCCI taxi cost calculator index
TNC transportation network company
TSS Taxi Subsidy Scheme
WAT wheelchair accessible taxi
WCBS Wheelchair Accessible Taxi Centralised Booking Service

List of terms

App Application – a digital product that can be downloaded onto a smart phone, tablet or other electronic device. 1
Dynamic pricing(also known as surge pricing) Pricing that changes and is formed around the current demand for and supply of a particular type of on-demand transportation, such as ridesharing.
Hire car

A vehicle (other than a bus, taxi or demand responsive service vehicle) that:

  1. is used, or is intended to be used, for the transport of passengers under a contract; and
  2. does not stand or ply for hire for the transport of passengers along a road or road- related area.2
On-demand public transport Unscheduled, point-to-point passenger transport provided for a fee or charge.
Ridesharing The providing of passenger transport for profit or reward using a private vehicle and an app-based booking service.
Sharing economy An economic model in which individuals are able to borrow or rent assets owned by someone else.3
Taxi A vehicle (other than a bus or demand responsive service vehicle) that stands or plies for hire for the transport of passengers along a road or road-related area.4
Standard taxi Taxi that is not designed specifically to accommodate passengers in wheelchairs.
Wheelchair accessible taxi (WAT) Taxi that is designed specifically to accommodate passengers in wheelchairs.

Footnotes

1. Macquarie Dictionary Online, 2015, Macquarie Dictionary Publishers, an imprint of Pan Macmillan Australia Pty Ltd, www.macquariedictionary.com.au

2. Road Transport (Public Passenger Services) Act 2001, s. 42, http://www.legislation.act.gov.au/a/2001-62/default.asp

3. ‘Sharing economy’, Dictionary, Investopedia.com, www.investopedia.com

4. Road Transport (Public Passenger Services) Act 2001, s. 45.

5. The Australian Government Competition Policy Review Final Report, March 2014, p. 135

6. The Australian Government Competition Policy Review Final Report was released on 31 March 2015.

7. ACT Government, Transport for Canberra – Transport for a Sustainable City, 2012–2031, Environment and Sustainable Development (ESDD), Canberra, 2012, p. 18

8. See Taverner Research, Survey of Taxi Use, Surry Hills, December 2014,

9. The new ridesharing models are discussed in greater detail in Section 5.

10. Independent Pricing and Regulatory Tribunal (IPART), Sydney Taxi Fares to Apply and New Licences to be Released from July 2015 Transport — Draft Report, December 2014, p. 14

11. IPART, p. 16.

12. D Nicholls, An Evaluation of the Current State of the Act Taxi Industry, Canberra Taxi Industry Association, 27 June 2014, p. 6.

13. Road Transport Authority (RTA), Access Canberra, ACT Government.

14. RTA.

15. S Rattenbury, ‘Ballot to Release Wheelchair Accessible Taxis Licences’, media release, 15 April 2015,

16. RTA.

17. Australian Taxi Industry Association (ATIA), ‘State and Territory Taxi Statistics’ 2014,

18. RTA.

19. RTA.

20. Taxi Service Commission, ‘Taxi and Hire Car Reform’.

21. RTA; Aerial Capital Group.

22. RTA.

23. RTA.

24. Disability Standards for Accessible Public Transport 2002, see the outline of these standards in this Paper at Study B. The scope of the Review includes consideration of compliance with the standards and any variation in driver service and quality of WATs vehicles.

25. For example, the ACT Government has consulted with People with Disabilities (PWD) ACT, a not-for-profit, consumer-run systemic advocacy organisation.

26. RTA

27. Action Plan for AccessiblePublic Transport in the ACT 2013–2018.

28. Submissions to the Review may include comment on current compliance by existing taxis.

29. Australian Taxation Office.

30. Road Transport (General) (Public Passenger Services Licence and Accreditation Fees) Determination 2013

31. The upfront investment for holders of perpetual licences will vary; for example recipients of early exservicemen and seniority scheme allocations receive free or highly subsidised plates. See Appendix D. Others may have also recouped the cost of their investment through returns on their plates over time.

32. Nicholls, Evaluation of the Current State of the ACT Taxi Industry, p. 15.

33. Road Transport (Driver Licensing) Public Vehicle Driver Training Course Approval 2015 (No 1),

34. Road Transport (Driver Licensing) (Hire Car Training Course) Approval 2010 (No 1),

35. Canberra Airport has provided to the Review examples of third-party commentary from airport passengers noting the significant delays that they have experienced waiting for taxis.

36. Uber, ‘Sydney’

37. Uber, ‘Legal’. The status of drivers as ‘independent contractors’ is subject to legal action under state labour laws in the United States of America. See: James Niccolai, ‘Uber and Lyft Fail to Convince Judges their Drivers are Merely “Contractors”’, CIO, 12 March 2015,

38. Jordon Condo, Head of Public Policy Asia Pacific, Uber, letter to Professor Ian Harper, Competition Policy Review Secretariat, 17 November 2014, p. 2,

39. Uber, ‘Help

40. Uber; D Flynn, ‘Travel Gear: Uber Chauffeur Drive Service’, Australian Business Travel, 18 March 2014,

41. Uber, ‘Options’,

43. Lyft,

42. Uber has also announced the launch of a new service, uberASSIST, where its drivers will provide additional assistance for people with accessibility needs, for example to accommodate wheelchairs.

44. goCatch,

45. Some apps will also help guide rideshare drivers to areas of high demand.

46. Caitlin Fitzsimmons, ‘#SydneySiege: Uber Offered Free Rides After Surge Pricing Stuff-up’, BRW, 16 December 2014,

50. The Australian Government Competition Policy Review Draft Report, September 2014, Canberra, p. 30

47. RTA.

48. IPART, p. 2.

49. IPART, p. 18.

55. Lomas, ‘France Bans UberPop’.

51. Government to review taxi rules after Uber campaign.

52. L Owsiany, ‘DC Council Approves Pro-Uber Legislation’, The Hoya,

53. Land Transport Authority, ‘New Regulatory Framework for Third-Party Taxi Booking Services to Protect the Safety and Interests of Commuters’ , press release, Singapore, 21 November 2014,

54. N Lomas, ‘France Bans UberPop Starting January 1’, TechCruch, 15 December 2014,

56. Megan Doherty, ‘Booking App Sparks Taxi Turf War’, Canberra Times, 27 September 2013,

57. Condo, letter, p. 2.

58. B Tan, ‘The Rise And Rise Of Uber In Australia’, Gizmodo Australia, 16 January 2015,

59. D Lewis, ‘Uber Offers to Share Transportation Data, Create Jobs in Exchange for Regulation in Australia’, ABC News, 13 February 2015,

60. Uber, ‘Uber’s Letter to the Transport Ministers of Australia’, 6 November 2014,

61. Insurance Council of Australia, ‘Car Ride Share Warning’, media release, 3 June 2014,

62. Uber

63. A Fels, Final Report - Customers First: Service, Safety, Choice, Taxi Services Commission, 2012, p. 208,

64. Fels, Final Report, p. 208.

65. Fels, Final Report, p. 208.

66. S Drummond, ‘Cabcharge Rival Live TaxiEpay May Sue NSW and Victoria Over New Taxi Payment Laws’, Sydney Morning Herald, 12 September 2014,

67. Now the Competition and Consumer Act 2010 (Cth).

68. Reserve Bank of Australia (RBA), ‘Reforms to Payment Card Surcharging’, March 2013,

69. Fels, Final Report, pp. 208–09.

70. A Carey, ‘Taxi Fares to Fall as Card Surcharge is Halved’, Age, 2 January 2014,

71. RBA, ‘Reforms to Payment Card Surcharging’.

72. ACT Government, ACT Taxi Industry Review Discussion Paper, Department of Territory and Municipal Services (TAMS), 2010.

73. ACT Government, ACT Taxi Industry Review Discussion Paper.

74. ACT Government, ACT Taxi Industry Review Discussion Paper.

75. RTA.

76. RTA.

77. RTA.

78. ACT Government, ACT Taxi Industry Review Discussion Paper, Appendix C.

79. ACT Government, ‘Becoming a taxi operator’, fact sheet, RTA, Canberra, p. 2.

80. RTA.

81. RTA (as at 13 March 2015).

82. Road Transport (Driver Licensing) Public Vehicle Driver Training Course Approval 2015 (No 1).

83. Road Transport (Public Passenger Services) Regulation 2002, s. 93, p. 96,

84. Road Transport (Vehicle Registration) Regulation 2000, s. 32B, p. 25,

85. Road Transport (Public Passenger Services) Regulation 2000, ss. 04–07, pp. 104–07.

86. Road Transport (Public Passenger Services) Act 2001, s. 111.

87. RTA.

88. Sutton Road Training Centre, Transport Industry Skills Centre (TISC),

89. Road Transport (Public Passenger Services) Regulation 2002, ss. 182, 183.

90. Road Transport (Public Passenger Services) Regulation 2002, s. 179.

91. Road Transport (Public Passenger Services) Act 2001, s. 111.

92. RTA,

93. IPART, p. 18.

94. RTA.

95. RTA.

96. RTA.

97. RTA.

98. RTA.

© Australian Capital Territory, Canberra May 2015

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from Chief Minister, Treasury and Economic Development Directorate, ACT Government, GPO Box 158, Civic Square ACT 2601.

For further information, phone 13 22 81 or email taxiinnovationreview@act.gov.au