RAC taxi review finds high consumer cost

Western Australia’s unfair and inefficient taxi industry has unnecessarily cost consumers hundreds of millions of dollars, according to a leading economist commissioned by motorist advocacy group RAC to review the sector.

David Cousins who, along with fellow consumer and competition regulator Allan Fels, co-led the review of the state’s taxi industry said private ownership of taxi licence plates had inflated taxi fares by 16 per cent, or $3.30 for every ride.

Speaking at the launch of the RAC-funded review today, Professor Cousins said he believed the failure by successive governments to end restrictions on licence plate numbers, recommended initially in 1999, had been expensive for consumers in monetary terms alone.

“It is probably cost hundreds of millions of dollars to consumers that those restrictions were not removed when it was recommended,” he said.

While his tone was measured, Professor Cousins’ words were scathing, especially when it came to the industry’s lack of choice for both users and many participants.

His speech offered liberal doses of expressions such as ‘anti-consumer’, in regard to various restrictions placed on some entrants, and described the bailment system that ties drivers to dispatch services as a ‘master-servant relationship’.

The report launched by the RAC today does not go so far as to push for full deregulation, but it does recommend the end of quantitative restrictions on taxi plate licences, along with several other impositions that make it difficult or unattractive for new entrants to join the market – both in terms of drivers and taxi service operators.

While highlighting the fact that WA’s system has gone further down the deregulation route than many other heavily restricted markets, Professor Cousins was by no means suggesting government should leave it alone.

In fact, he criticised global ride-sharing service Uber for ignoring regulations and laws governing the sector, even though he highlighted that provider as simply the result of a consumer response to a system that had become archaic.

Professor Cousins said all dispatch services, including those driven by smartphone apps such as Uber, ought to be required to registered.

Furthermore, his co-authored report recommended an annual fee for licence plates for conventional ‘rank and hail’ taxis be retained, albeit at a lower rate set across the board. Professor Cousins’ preferred level is $10,000 per year but an alternative was $13,390, being the current rate applied to those leased from the government. Private plate lease rates are around $18,000 per year.