Heard the one about the one about the service industry that doesn’t provide a service? The WA taxi industry has and so, unfortunately, have many West Australians who are being let down by an industry that clearly can’t keep up with the State’s boom.
Former Tourism Council of WA CEO Scott Henderson agrees the taxi industry is struggling. Big hotels in the city, he says, have guests who sometimes miss flights because they can’t get a cab to the airport.
But the problems facing the sector are not about to get any better if sections of the industry — who recently had the audacity to threaten to strike over Government steps to end the taxi shortage — continue to pretend the crisis stems from a lack of drivers, not cabs, as the Taxi Industry Forum of WA does.
For services to improve there must be an increase in the number of cabs. Simple as that. And a short history lesson will show why.
Like every other State, the WA Government controls the number of taxi licences. Why? Well, ironically, because it was once believed that limiting the number of people owning taxi plates was the best way to maintain safety and service standards.
Leading taxi economist Christian Seibert says these controls, and the shortages they lead to, don’t make sense. “Imagine if the government suddenly capped the number of planes that could fly, and told airlines what price they must charge their passengers per kilometre that they fly,” he says.
Because taxi plates are restricted they are valuable. But this comes at a cost: to consumers who are forced to wait too long for a cab and to taxi drivers who lease these plates.
In the mid-1980s, it cost $50,000 to buy a plate on the secondary market. Now it’s about $220,000. Not a bad return for half the plate owners who don’t even drive cabs and see the plates as an investment, making a return by charging drivers up to $380 a week in leasing fees. This equates to an estimated 25 per cent of a driver’s weekly income.
No wonder the Taxi Forum claims the industry’s problem is a lack of drivers. When you add rising LPG prices and insurance costs to high lease fees, why would you drive a cab?
In an effort to solve the taxi shortage, the Government recently announced plans to issue 185 new full-time and 100 cheaper peak period plates, that allow anyone with a suitable car to pick up fares at weekends and peak times in the morning for just $50 a week.
It’s a start, but given that the number of jobs still not covered by the industry is considerable, clearly we need more cabs.
So what’s the best way to achieve this?
David Greig, from economic consultant ACIL Tasman, was heavily involved in the deregulation of the New Zealand taxi industry in 1989, where overnight the government liberalised controls on cabs. Effectively anyone with a suitable car, who met driver licensing requirements, didn’t charge more than a maximum fare and passed a police check, could ply for business. Plate values went from $50,000 to zero, the number of cabs trebled and waiting times fell.
After a transition period, Mr Greig says the industry settled into three tiers of service: cheap and cheerful, a good quality standard service, and a premium silver service. “It’s now easy to get cabs,” he says. “They wait for passengers rather than the other way round.”
But while a New Zealand-style deregulation would benefit passengers in WA it would hurt some drivers who, encouraged by previous government policies, have their life savings tied up in taxi licences.
A less swift, but ultimately as effective, solution was undertaken by the Northern Territory Government in 1999, when it bought back all taxi plates and re-leased them at a lower fee, which funded the buy-back. Once the money is recouped — in about a decade — the Government will lease the plates at an even lower fee and the industry will be deregulated save for driver and car safety regulations.
While monitoring of driver standards had to be tightened, cab numbers in Darwin jumped 35 per cent in the two years after the buy-back as cheaper licences encouraged workers into the industry.
A local buy-back was supported by the WA taxi industry in 2001 as plate values slumped amid uncertainty about the new Labor Government’s plans for the sector, but rejected in 2003 when values rebounded.
Now some sections of the industry are crying poor as the Government pursues the only real option left to solve the shortage: issuing more Government-leased taxi plates. This has at least put a lid on the soaring value of conventional full-time plates.
Planning and Infrastructure Minister Alannah MacTiernan has pledged to gradually keep issuing more plates.
“We’re trying to be fair and make sure we don’t destroy honest people that have bought a plate, but making it clear that investing in taxi plates is not the way you invest because it destroys the industry,” she says.
The reality though is that until the stranglehold of high plate values on the industry is broken, the Government is unlikely to be able to fully reform it.
Perhaps recognising this, the Minister has called on industry leaders to revisit a buy-back, saying that the Government, with their support, would consider one next year.
It’s time for the taxi industry to get on board, and for passengers to get a better deal.
Home > Commentary > Opinion > Fare go: WA just needs more taxis on the road
Fare go: WA just needs more taxis on the road
Heard the one about the one about the service industry that doesn’t provide a service? The WA taxi industry has and so, unfortunately, have many West Australians who are being let down by an industry that clearly can’t keep up with the State’s boom.
Former Tourism Council of WA CEO Scott Henderson agrees the taxi industry is struggling. Big hotels in the city, he says, have guests who sometimes miss flights because they can’t get a cab to the airport.
But the problems facing the sector are not about to get any better if sections of the industry — who recently had the audacity to threaten to strike over Government steps to end the taxi shortage — continue to pretend the crisis stems from a lack of drivers, not cabs, as the Taxi Industry Forum of WA does.
For services to improve there must be an increase in the number of cabs. Simple as that. And a short history lesson will show why.
Like every other State, the WA Government controls the number of taxi licences. Why? Well, ironically, because it was once believed that limiting the number of people owning taxi plates was the best way to maintain safety and service standards.
Leading taxi economist Christian Seibert says these controls, and the shortages they lead to, don’t make sense. “Imagine if the government suddenly capped the number of planes that could fly, and told airlines what price they must charge their passengers per kilometre that they fly,” he says.
Because taxi plates are restricted they are valuable. But this comes at a cost: to consumers who are forced to wait too long for a cab and to taxi drivers who lease these plates.
In the mid-1980s, it cost $50,000 to buy a plate on the secondary market. Now it’s about $220,000. Not a bad return for half the plate owners who don’t even drive cabs and see the plates as an investment, making a return by charging drivers up to $380 a week in leasing fees. This equates to an estimated 25 per cent of a driver’s weekly income.
No wonder the Taxi Forum claims the industry’s problem is a lack of drivers. When you add rising LPG prices and insurance costs to high lease fees, why would you drive a cab?
In an effort to solve the taxi shortage, the Government recently announced plans to issue 185 new full-time and 100 cheaper peak period plates, that allow anyone with a suitable car to pick up fares at weekends and peak times in the morning for just $50 a week.
It’s a start, but given that the number of jobs still not covered by the industry is considerable, clearly we need more cabs.
So what’s the best way to achieve this?
David Greig, from economic consultant ACIL Tasman, was heavily involved in the deregulation of the New Zealand taxi industry in 1989, where overnight the government liberalised controls on cabs. Effectively anyone with a suitable car, who met driver licensing requirements, didn’t charge more than a maximum fare and passed a police check, could ply for business. Plate values went from $50,000 to zero, the number of cabs trebled and waiting times fell.
After a transition period, Mr Greig says the industry settled into three tiers of service: cheap and cheerful, a good quality standard service, and a premium silver service. “It’s now easy to get cabs,” he says. “They wait for passengers rather than the other way round.”
But while a New Zealand-style deregulation would benefit passengers in WA it would hurt some drivers who, encouraged by previous government policies, have their life savings tied up in taxi licences.
A less swift, but ultimately as effective, solution was undertaken by the Northern Territory Government in 1999, when it bought back all taxi plates and re-leased them at a lower fee, which funded the buy-back. Once the money is recouped — in about a decade — the Government will lease the plates at an even lower fee and the industry will be deregulated save for driver and car safety regulations.
While monitoring of driver standards had to be tightened, cab numbers in Darwin jumped 35 per cent in the two years after the buy-back as cheaper licences encouraged workers into the industry.
A local buy-back was supported by the WA taxi industry in 2001 as plate values slumped amid uncertainty about the new Labor Government’s plans for the sector, but rejected in 2003 when values rebounded.
Now some sections of the industry are crying poor as the Government pursues the only real option left to solve the shortage: issuing more Government-leased taxi plates. This has at least put a lid on the soaring value of conventional full-time plates.
Planning and Infrastructure Minister Alannah MacTiernan has pledged to gradually keep issuing more plates.
“We’re trying to be fair and make sure we don’t destroy honest people that have bought a plate, but making it clear that investing in taxi plates is not the way you invest because it destroys the industry,” she says.
The reality though is that until the stranglehold of high plate values on the industry is broken, the Government is unlikely to be able to fully reform it.
Perhaps recognising this, the Minister has called on industry leaders to revisit a buy-back, saying that the Government, with their support, would consider one next year.
It’s time for the taxi industry to get on board, and for passengers to get a better deal.
• Subscribe
Subscribe now and stay in the loop with our giving appeals, event alerts, newsletters and research updates.
We are always pleased to hear from you. If you have any questions or feedback, please contact us here: