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

McQuillen review
Without undertaking further research or analysis, the
author of the McQuillen review reached a different view
in relation to zoning. He felt that there appeared to be a
strong argument for the retention of the Frankston and
Dandenong zones and added that there was anecdotal
evidence of service shortages in outer suburban areas,
particularly in the Shire of Yarra Ranges and the City
of Werribee. There was no consideration of whether
restrictions on licence numbers in general may have had
this effect. McQuillen further commented:
The continuing metropolitan sprawl into Pakenham,
Berwick, Cranbourne, Lilydale, Hoppers Crossing,
Craigieburn etc. does raise some concerns about the
maintenance of good service. I am not confident, on
the information and time available to make a
judgement one way or the other. I recommend that any
decision on the future of zoning be deferred until such
time as a proper study can be made of the issue. 87
The Victorian Government responded to the KPMG
and McQuillen reports in 2002 by issuing a 17 point taxi
and hire car reform program, which included the
following points:
13. The country zone structure establishing separate
taxi markets will be reviewed in 2002/03 to
ensure the structure meets customer needs.
14. The requirement for taxis to operate from a
taxi depot will be retained to ensure there are
centralised booking and dispatch services.
15. Future arrangements to apply in the outer
metropolitan taxi zone will be reviewed in 2002
and will be considered in light of taxi performance
standards and a measure of existing service levels
in those areas. 88
The inquiry notes that no subsequent study of the merits
of retaining the outer suburban zone occurred.
A study was undertaken in 2004 of country zones by
a consultant to the VTD. This review (which does not
appear to be publicly available) focused on areas where
neighbouring zones were likely to have a significant
amount of traffic between them. The review was
nominally aimed at improving service for consumers,
although the consultant appeared to rely entirely on
representations from the VTA and from operators within
the zones studied. 89
Perhaps unsurprisingly, the consultant was able to find
few problems with the current arrangements – noting
minimal complaints by consumers to operators – and
primarily focused on problems that occur when taxi
operators do work that is completely out of their zone.
Little primacy was given to the costs of the current
arrangements on operators (reduced operator viability
impacts on consumers when the regulator takes this into
account when deciding whether to issue new licences).
Recommendations from the review were to make
the zoning restrictions more restrictive by preventing
operators from one zone doing pre-booked work entirely
within another zone.
10.4.3. UK Department of Transport and
other analyses of zoning
Zoning is a common feature of the taxi industries in most
jurisdictions and countries. The UK government has
developed a best practice guide in relation to taxi industry
regulation for local authorities that supports the abolition
of zones.
Zoning tends to diminish the supply of taxis and the
scope for customer choice – for example, if fifty taxis
were licensed overall by a local authority, but with
only twenty five of them entitled to ply for hire in each
of two zones. It can be confusing and frustrating for
people wishing to hire a taxi to find that a vehicle
licensed by the relevant local authority is nonetheless
unable to pick them up (unless pre-booked) because
they are in the wrong part of the local authority area.
Abolition of zones can also reduce costs for the local
authority, for example through simpler administration
and enforcement. It can also promote fuel efficiency,
because taxis can pick up a passenger anywhere in
the local authority area, rather than having to return
empty to their licensed zone after dropping a
passenger in another zone. 90
An interesting study on zoning-type restrictions was
undertaken by Flores-Guri, with specific application
to the inefficiencies caused by the separate Boston-
Cambridge zones in the United States. Flores-Guri found
that eliminating zones between closely aligned areas can
improve market performance, even if one is obliged to take
account of the profits earned by operators in both zones:
87 McQuillen, Rob PSM (2001), Op. Cit , p.28
88 See chapter 7 for more detail about the 17 point program
89 McQuillen, Michael (2004), Review of Zoning Arrangements for
Country Taxi Cab Operations, January 2004, Appendix 1
90 UK Department of Transport (March 2010), Taxi and Private Hire
Vehicle Licensing: Best Practice Guidance, London, para. 90
208