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

A further example is the decision to release 330 new
WAT licences. This decision followed a recommendation
from the ESC that 15 per cent of the fleet should be
wheelchair accessible and that meeting this goal would
require an additional 330 WATs. However, the ESC
also stated that performance monitoring should be
undertaken and “if performance monitoring reveals that
there are significant differences in the level of service
being provided to WAT users and other taxi customers,
further WAT licences should be released until this
difference is removed.” 34 The inquiry understands that
this performance monitoring is not linked to further
licence releases in any quantifiable way in metropolitan
areas, although it may be used by the VTD in determining
whether issuing further licences might be in the public
interest in country areas.
A particularly concerning feature of recent licence
releases is that, other than WAT performance data, there
is no reliable information collected about waiting times
for consumers or of the financial state of the industry
(other than assignment prices). This makes it very difficult
to predict the effect of new licence releases on either
consumers or operators. Other states in Australia have
models in place that at least provide some predictable
‘triggers’ for the release of new licences, using relevant
industry data.
Internationally, a field of inquiry based on estimating
“significant unmet demand” has also developed. This
has primarily come from the UK, where local authorities
have the power to restrict entry in certain circumstances.
Commonly, studies of significant unmet demand are
undertaken which estimate that unmet demand as a
function of:
• Passenger delay during normal times during the week
• Passenger delay during peak demand periods
• Latent demand, estimated by asking consumers
whether they have been dissuaded from attempting
to procure a taxi due to concerns about availability.
On the one hand, the collection of information about these
variables is a significant improvement on what is done in
Victoria. It would lead to more informed conclusions about
the true state of demand in a market. Judgements on this
basis would be more transparent. Nonetheless, it may also
be subject to the criticism that it assumes a regulator can
better determine market demand that investors who are
willing to risk their capital that a profit is there to be made.
There is no strong basis for the use of any particular index
or group of indexes; how should one weight the interests
of users at peak times against those of the industry at offpeak
times?
When does waiting time become “too high”? A marketbased
approach would offer a much less information
intensive approach and one that leaves commercial
judgements in the hands of those in the industry.
What’s happening in other places?
New South Wales
In late 2009, the NSW Government introduced
major changes to taxi licensing in Sydney. The
new supply-based model for taxi licence release in
Sydney requires the Director-General of Transport
NSW to determine the number of annual taxi
licences, excluding wheelchair accessible taxis, to
be released each year. The model takes account
of various demand factors, including growth in
State final demand, population, the unemployment
rate, airport passenger numbers, real value of
licences, network bookings and other performance
measures. WAT licences are available at all times
for $1,000 per annum.
Western Australia
In 2004, the Western Australia Government began
to lease new licences instead of releasing them
to the market. This aimed to address availability
issues and to stimulate additional competition in
the industry. The Government determines a number
of licences to be leased each year based on a
demand formula which primarily takes into account
waiting times and ‘no shows’. This demand
based formula is intended to provide incentives
to taxi operators/drivers to improve services via
increased availability and reliability, as the risk of
non-performance by operators/drivers is a release
of more licences and thus more competition.
Tasmania
From 2006 to 2007, the Tasmanian Government
undertook a review of taxi industry legislation. The
result was a significant change to taxi licensing
arrangements. The intention of the changes was
to shift the industry focus to service provision and
away from investment in licences as assets. As
such, new licences issued are non-assignable
owner-operator licences. These new licences are
made available via a tender process and the sale
price must be greater than a predetermined reserve
price. A maximum of five per cent of the number
of current licences on issue can be released in
a single year, and at least one licence must be
released in the year.
34 ESC (2008b), Final Report – Taxi Fare Review 2007/2008,
Melbourne, p.34
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