Perth’s much-maligned taxi industry is getting ready for another long, busy summer.
With another holiday season nearly upon us, Perth is preparing to celebrate as end-of-year office parties, cocktail events and Christmas lunches are scheduled in congested diaries across town.
Inevitably, this means the taxi industry will again be under pressure as it tries to cater for the hordes of revellers.
For the past two years, the rate of booked taxis failing to arrive in peak periods for pick-up in the December quarter has reached more than 10 per cent, according to data from Western Australia’s Department of Planning and Infrastructure.
In response to this annual bottleneck, Planning and Infrastructure Minister Alannah MacTiernan recently announced 30 extra peak period taxi plates, 130 of which have been released so far.
However, some within the industry have claimed that this is a knee-jerk response to a much larger planning issue, which will achieve too little, too late.
Regardless of the extra demand created by the festive season, the taxi shortage within Perth is more entrenched than a seasonal gridlock, with recent data showing that about 330 extra taxis are needed at 8pm on a typical Friday night.
According to Joanna Ammon, chief executive officer of the Taxi Council of Western Australia, elevated demand in the context of the mining boom has compounded this situation.
“The WA economy is booming and demand has spiked, and has spiked earlier than usually occurs coming into the festive season,” she said. “Taxis are a good barometer of consumer confidence.”
The mining boom has been a mixed blessing for the taxi industry, for although business is plentiful in these more affluent times, the industry is being curtailed by the skills shortage, with both dispatch services and independent operators struggling to find drivers.
Some within the industry argue that releasing more taxi plates would fail to address the taxi shortage due to the labour issue.
Ms Ammon said releasing extra plates for new taxis would not resolve the underlying issues of driver shortages and anti-social behaviour in popular nightlife areas.
“In terms of medium- and long-term sustainability, that is the issue,” she said.
“Number one, you couldn’t find anyone to drive them; number two you’re not going to solve the anti-social problems, these are not taxi issues – and number three you can’t remove taxi licences once they are issued,” she said.
The taxi industry believes a pooling of resources is required during peak times to utilise existing mass transit systems and distribute some of the demand.
The Nightrider bus in Fremantle was the DPI’s answer to late-night congestion in the port city and has been welcomed by the Taxi Council of Western Australia and dispatch provider, Swan Taxis.
A similar service has been proposed for the Northbridge precinct, but has yet to be confirmed.
Ms Ammon said the anti-social behaviour of some customers in Northbridge and Fremantle was compounding the problem of unmet demand in these areas.
“Until some of those issues can be addressed, the quantity of extra taxis is almost irrelevant,” she said.
“It’s an all of agency issue. It’s time that the local and state government authorities came together.”
Plate owners who elect not to drive on Friday and Saturday nights must lease out their taxis or face a fine of between $200 and $500.
However, there is no requirement for drivers to service busy taxi ranks in the nightclub precincts of Fremantle and Northbridge.
Historically, the taxi shortage can be attributed to the continuing regulation of the industry, as well as legislative changes over time and a prolonged absence of new plates.
The last time taxi plates were available for outright ownership was 1989.
Until this point, taxi plates were issued by the government at an interest-free price of 75 per cent of the market rate, allowing drivers to own their plates after six or seven years.
Following a 14-year period without any new plates, the DPI introduced a new leasing arrangement in 2003, whereby drivers could lease plates directly from the government.
By the end of this year, the DPI will have made 375 plates available for lease under this system, adding to the 1,071 privately owned conventional plates.
The leasing arrangement has been opposed by the taxi industry, which argues that it will decrease plate transfer value for existing owners.
Kevin Foley, managing director of the state’s biggest dispatch operation, Swan Taxis, a co-operative in which membership is restricted to taxi plate owners, is critical of this arrangement, believing it restricts the ability of new entrants to have a stake in the industry.
Mr Foley notes that the government is receiving about $60,000 per week in rental fees for taxi plates.
“The leasing of plates and shifts will eventually drive down value,” Mr Foley told WA Business News.
However, Planning and Infrastructure Minister Alannah MacTiernan said the state government’s introduction of leasing had addressed the issue of rising prices, which had been created by scarcity.
"In reality, it hasn’t caused plate values to go down, but it has stopped prices from escalating," she said.
The value of a conventional taxi plate has increased from less than $50,000 in the mid-eighties to more than $240,000 in September this year, frequently exceeding the median house price.
While the government is opposed to outright deregulation, it has been forced to consider alternative strategies to address the scarcity of taxi plates, which has increased value over time.
A government-initiated buyback of taxi plates was previously touted as an alternative path to deregulation in 2003, when a report commissioned by the DPI recommended a private sector funded, voluntary buyback scheme.
Macquarie Bank, which owns the Sydney-based premium wheelchair-accessible Lime Taxis, was believed to be a potential player.
Although the Taxi Council of WA does not support a buyback or deregulation, one commentator suggested that drivers may support a buyback at the average plate transfer value over the past 12 months. The average value of a metropolitan conventional taxi plate in 2006 is $230,873 for the year to October.
Based on figures nominated by plate owners in a 2003 survey, the approximate cost of a buyback of plates would be $246m, inclusive of all types of plates.
Ms MacTiernan told WA Business News she believes that private plate ownership is not economically reasonable but Government has no plans to revive the proposal to buy back taxi plates after such a proposal was previously rejected by the taxi industry.
"We would be reluctant to invest too much time and effort given the appallingly irresponsible about face performed by the Taxi Council when we developed a buy-back proposal in 2003," she said.
"I believe that getting the speculative value out of plates is necessary for the long-term health of the industry. Buy-back was one method of achieving this."
Ms MacTiernan said if a buyback took place would most likely be privately funded and only occur with industry support.
"It would probably be difficult to get government to agree to (funding). We would be adding to government debt levels, when there are far more urgent issues," she said.
"If it were going to happen, I would imagine it would be a privately funded buyback.".
Macquarie Bank was understood to have been a possible funder of a plates buy back when the issue was last considered by government three years ago.
Industry sources have suggested an average of this year's price - which has hit as much as $240,000 during the year - may be seen as acceptable to plate owners.
"The alternative path is to proceed with leasing plates directly to those who drive cabs and thereby dramatically reducing their operating costs," she said.
Ms MacTiernan believes the most significant issue currently facing the taxi industry is a shortage of taxi drivers.
"The problem in getting drivers is the same problem every industry is facing," she said.
Ms MacTiernan said the government had commenced an advertising campaign to attract new drivers to the industry and was offering a discount to people applying for a taxi driver's licence.
The government is also offering a lease-free period for new taxi plates.
