A review has been ordered into the ACT taxi industry.
The taxi industry is one of the few remaining industries regulated on the basis of economics as well as safety. Governments do not determine how many hairdressers Canberra should have, or how many newspapers, landscape gardeners or electricians. Why should they determine how many taxis there are?
Governments should ensure that taxis are safe and that the drivers are competent, in the same way they regulate electricians and plumbers. Those matters are in the public interest. However, the ordinary rules of supply and demand coupled with a general principle of freedom of enterprise should govern the number of taxis.
Some regulation is desirable. The driver should pass a competency test (run by either the Government or the industry). The car should be safe, appropriately marked and insured. The test should be the public interest. There is a public interest in a limited amount of regulation. But there is no public interest in a restricted market with high entrance costs which are passed on to the consumer.
At present there is a plate licensing system in Canberra and the number of taxis is restricted to about 200. As a result the price of a taxi plate is about $250,000. Some people buy plates as a capital investment as much as a taxi business. They are traded on the private market. But their property value lies solely in the fact that legislation limits the number of taxis by prohibiting new entrants. The trouble is that the interest required to service the $250,000 is passed on to customers. Moreover, limiting the number of taxis can result in poorer service.
That said, the Government must be fair to existing plate holders. A sudden deregulation would be unfair. Rather the Government should announce an orderly reduction of economic regulation over, say, 10 or 15 years.