Australian government is helping taxi license holders after Uber destroyed their value

By John McGregor, a translator and researcher on political violence

Uber’s various predatory tactics, as well as its underlying economic problems, have been well documented by Hubert Horan. In Australia’s NSW state, the government has responded to the disruption beloved by the tech industry by paying taxi drivers compensation for the depreciation of their taxi licences.

When Uber started operating in Australia, it did so illegally. Ride-sharing drivers in New South Wales broke the law and risked hefty fines for a number of years before the government introduced new legislation in 2016 covering all taxi, car hire and ride-sharing services. As in much of the world, documentation of this plan to break the law I order to break the market was revealed in the Uber files.

As Uber made its way into the Australian market, the price of local taxi licenses plummeted. In October 2012, the year Uber first came to Australia, a NSW taxi license was worth around A$400,000. A license is currently worth around AUD 100,000.

With almost 6,700 taxi licenses in NSW, this represents a combined loss in value of around A$2 billion. Of course, this is a catastrophic loss for the 4-5,000 taxi license holders in the state, with Uber shareholders benefiting from this loss.

When the NSW government decided to capitulate to Uber and legalize its operations in the state, the decline in the value of the licenses was very predictable. At the time, to calm the outrage among taxi drivers, the NSW promised to introduce a compensation scheme.

Under the euphemism of an “industry adjustment package”, the government pledged to distribute A$250 million to taxi licensee holders in compensation to mitigate the fall in value of their licenses (which they would keep).

A Passenger Service Levy of AUD$1 was introduced in February 2018 for all ‘point-to-point’ transportation journeys (taxis, hire cars and ridesharing). Prior to the recent changes, the website for Transport for NSW reported the following:

The levy will last no longer than five years or until it raises the full amount needed to fund the industry adjustment support package, whichever comes first.

As previously mentioned, the amount to be raised was A$250 million, which had actually been raised by June 2022 (despite the impact of Covid-19). Despite this, the PSL was initially extended to 2027 and on Wednesday to 2029.

In addition to this extension, the amount of compensation has exploded. Current Liberal NSW Treasurer Matt Kean revealed that A$145m has already been paid out and a further A$500m will be paid out.

At the time the initial decision to allow Uber to operate was made, then-Liberal Prime Minister Mike Baird attempted to explain why these very small businessmen needed bailing out:

What has made the taxi/rideshare situation difficult to manage is that unlike other companies that are facing disruptions (e.g. to the mums and dads and investors who own these panels.

Despite asserting that the government has a responsibility to provide protection to an industry it regulates, Baird did not conclude that the problem was that his government failed to enforce the laws against Uber’s illegal operations (but instead enforced its predatory ones). legalized operations).

Under the current Perrottet Liberal government, the extended compensation packages will now offer existing Sydney taxi license holders A$100,000 for each licence, up to a maximum of six; Outside Sydney the payment per license is AUD$130,000 with no limit on the number of licences.

In connection with this increase in the “industry adjustment package”, the government announced plans to deregulate the point-to-point industry completely. The Treasurer claimed that this deregulation “will create a level playing field across the sector, enabling the taxi industry to compete better while driving improved and more innovative services to customers”. It will of course further radically erode the value of taxi licenses in NSW.

To justify why the payments were higher and unlimited in regional areas, the government press release said:

“Regional Transport and Roads Secretary Sam Farraway said the taxi industry is vital in regional areas where ride-sharing is simply not as available as it is in the city.

This package of grants will help the regional taxi industry move forward and expand its important role in providing transport services across the NSW region,” said Mr Farraway.

It is difficult to imagine how these two goals can be reconciled. Rideshare services are already allowed to operate in regional areas, but as Farraway notes, they haven’t expanded into that market. This is mainly because their model does not work well in regional areas. The deregulation of taxi licenses could well lead to an increase in taxi drivers in regional areas, but these new drivers would clearly not receive the financial support “intended to help the regional taxi industry move forward”. It is more likely that closing the gap between regional and Sydney taxi licenses will result in city taxi numbers increasing at the expense of regions, as metro licenses already account for almost 80% of NSW taxis.

Instead, the expanded industry adjustment package is just the next phase in a plan by the Liberal government to channel money into its small business constituency while implementing its corporate payers’ deregulation plans. The end result of this dual loyalty is that the Australian consumer is forced to pay so the Liberal Party can keep the peace. Whichever type of point-to-point travel they choose, NSW consumers will be forced to help rescue a small subset of drivers, established taxi license holders whose investments are being stretched in the face of aggressive American capital and takeover the NSW government’s failed corporate interests.

The NSW Government has already grappled with several strikes by railway workers in recent weeks and continues to face others, including a plan to shut down ticket machines that is expected to cost A$1.5million to A$2million a day if implemented becomes. At the heart of these disputes is a plan by the NSW Government to operate a new range of vehicles as driver-only trains, meaning with no guards on board. Despite this, the NSW Government has opted not to put any funds into public transport infrastructure or wages, and instead into the last generation of regulated NSW taxi drivers. The government has offered no explanation as to why it should offer protection to the 4-5,000 taxi license holders but not to the 350+ “mums and dads” who work as guards on intercity trains.

Faced with Uber’s illicit market entry strategy, the NSW government, like many others, neglected the law and eventually collapsed, with disastrous consequences for the local taxi industry. Unlike other governments, after Uber swallowed A$2 billion of value in the local taxi industry and increased its share price at the expense of NSW taxi owners, the NSW government decided that whatever the form of point transport, NSW consumers should pay that price , which they choose. Having paid to bail out taxi owners, NSW consumers will still be stuck with a fully deregulated point-to-point market at the mercy of the same forces that caused the collapse of the formerly regulated taxi industry.