Part D – Understanding and improving industry performance (PDF ...

Chapter 9.
9. Alternative visions
and approaches to
taxi regulation
Key messages
• Worldwide, there are different approaches
being used for taxi and hire car regulation.
This gives Victoria an opportunity to learn from
good and bad experiences in overseas cities
and countries.
• There is an international trend towards relaxation
of regulatory controls that is consistent with
open entry, setting maximum fares and an
emphasis on improving driver and vehicle
quality. In this context, while all systems involve
regulation, the role for government and areas for
regulatory focus vary widely between the highly
restrictive and more open schemes.
• In markets that have removed controls on
entry to the taxi market, entry has usually
been much greater than anticipated at the
time of entry relaxation. This may reflect
a number of different factors, including a
significant level of unmet demand, fares being
set too high and over-optimism by drivers
who want to become operators.
• Based on available information, the inquiry’s
view is that closed entry systems offer no
discernable benefits over open entry systems
in terms of better service quality or better
remunerated drivers, but they have fewer taxis
and likely higher levels of unmet demand.
• Few international jurisdictions have access
to the depth and detail of information that is
required to fully assess industry performance.
• Better taxi and hire car systems make
more effective use of competition and
promote efficiency.
• Technology has the potential to greatly
increase competition and efficiency.
• Generally, while the immediate aftermath
of entry liberalisation can be disruptive, the
availability of taxis, service quality and the
range of services offered improves over
time, benefiting consumers, provided quality,
safety and fare setting issues are dealt with
appropriately in the new environment.
Victoria is not alone in seeking to improve
the performance of its taxi and hire car
industry. Many other places around the
world have experienced similar problems
with point-to-point transport services and
a number have undertaken regulatory
reform to address these concerns and
improve services for consumers.
An investigation of Australian and international
jurisdictions was carried out in accordance with the
inquiry’s Terms of Reference which require the inquiry
to ‘examine, evaluate and report on other models and
new approaches in the taxi and hire car sectors both
in Australia and overseas’. This chapter summarises a
selection of approaches to undertaking regulatory reform
of taxi and hire car services, as well as different visions for
the structure and operation of these services. 1
Examining national and international models has enabled
the inquiry to learn from the achievements and mistakes
of other jurisdictions. This has assisted in forming the
inquiry’s core findings and recommending the right
reforms to shape a successful future for Victoria’s taxi
and hire car industry.
9.1. Overview of global trends
Globally, there is no single ‘best practice’ model
for regulation of taxi and hire car services. Different
objectives are set and a variety of approaches adopted
depending upon the political, spatial and demand
characteristics of each place, as well as the general level
of public transport services provided and extent of private
vehicle ownership.
9.1.1. Basic approaches to
regulatory reform
Essentially, there are two basic visions for taxi regulation:
a restricted or ‘closed entry’ model and a liberalised or
‘open entry’ model. These visions frame the discussion
about regulatory reform, with most of the approaches
adopted in other jurisdictions falling somewhere along the
regulatory spectrum between these two extremes.
Closed or restricted entry
Closed or restricted entry models involve government
restrictions on the number of taxi vehicles allowed to
operate in the taxi market (beyond any restrictions implied
by safety or other considerations).
1 For further information, see Jaguar Consulting Pty Ltd (2012),
Overview and analysis of possible transitional strategies: Moving
from a tightly restricted supply model to an open entry taxi industry –
Prepared for the Taxi Industry Inquiry, available at the inquiry’s website
158