Independent MLA Michael Moore has been attacked by both the Labor Party and the monopoly taxi provider in Canberra over his policy to deregulate the taxi industry. The aim of his policy is sound; they way he proposed it should be implemented needs further thought. The ACT has 202 taxis and the price of a plate is $241,000. In total, it is $48 million “”worth” of taxi plates. That “”worth”, however, is not value in the sense that a tangible resource is valuable. The value of taxi plates is a purely artificial creation of Government.
The Government limits the number of taxis on the road by law and therefore the value of having a part of this artificial monopoly is extremely high _ $241,000 to be precise. This cost, of course, is passed on tot he consumer in the form of higher taxi fares. True, the fares are regulated but when fares are set the cost of the plate is taken into account. In effect, the $241,000 is a government revenue-raising exercise and one that results in higher fares and fewer taxis on the road for the convenience of Canberrans.
The only requirement for a taxi plate should be that the car is safe and clearly marked and that the driver is suitably qualified as a driver, navigator and person who deals with the public. Suggestions by the taxi industry that financial deregulation of the industry necessarily means lowering of safety standards is self-serving nonsense. Mr Moore did not suggest abandoning reasonable safety requirements on cars and drivers. That said, it would be manifestly unfair to deregulate overnight. Present owners have a legitimate expectation that their artificial $241,000 worth of plate will not be discounted overnight. The solution has to be long-term. Mr Moore proposes that the Government buy back the $48 million worth of licences. That would be far too disruptive of both the industry and the ACT Budget. A better solution has been suggested by the Industry Commission and elsewhere.
The Government should announce a long-term aim of financial deregulation. It should start auctioning a lot more licences. The plate value would then fall. The money raised would be paid as compensation to existing plate-holders. More auctions would be held over time with ever decreasing plate values. Until the time would come when anyone who satisfied strict safety requirements for car and driver could ply the streets. The three essential points are: gradual moving to financial deregulation; fair compensation to existing plate-holders; strict safety requirements for the financially deregulated industry.
The present system in effect imposes a large tax on taxi users. Mr Moore may seem naive to release his policy at a time when present taxi-owners are chatting about the election up and down the town. More credit to him for his honesty. However, it may be that many of the drivers are not plate owners and have no chance of getting the $241,000 entry barrier to owning their own taxi. The drivers, who are also plying the town at election time, might find Mr Moore’s idea quite attractive.