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

10.6. Regulations stipulating the
functions of taxis, hire cars and
other forms of point-to-point
transport
Taxi and hire car licence conditions contain a number of
provisions that are likely to have the effect of restricting
competition between taxis and hire cars, and between
these kinds of vehicles and other forms of public and
private transport.
10.6.1. Competition between taxis
and hire cars
Features of regulation
As noted in chapter 4, a number of regulatory features
distinguish hire cars from taxis. In addition, a range
of regulations that apply to taxis do not apply to hire
cars, including common carrier obligations, availability
requirements, livery and branding standards, mandatory
affiliation with a network and dispatch and hiring
preferences for disabled passengers.
Moreover, vehicles cannot undertake particular sorts of
hirings that would move their regulatory status from taxi
or hire car services to bus services. For example, if a
vehicle has capacity for more than 10 passengers, it is
classified as a bus and is regulated accordingly (including
in some instances being precluded from offering some
services that have been contracted exclusively to a
particular bus company). In addition, if taxis or hire cars
run to a fixed route and passengers share the ride, this
can be classified as a bus route and bus regulation
and restrictions again apply. This makes it very difficult
for taxis and hire cars to offer more flexible transport
solutions in Melbourne’s outer suburbs and regional areas
where bus services may not be economic. It may also
preclude them from offering other innovative services.
Themes raised in submissions
Submissions that raised the issue of competition
between taxis and hire cars generally did this within the
context of hire car ‘touting’ at Melbourne Airport. The
inquiry has received few submissions seeking increased
competition between taxis and hire cars.
One submission did argue that there are unjustifiable
restrictions on hire cars that prevent more effective
competition with taxis. The ESC argues that by
preventing hire cars from having a meter in their vehicles,
this may lessen their ability to compete with taxis as
straight fare comparisons are not available:
At present, hire cars are prohibited from having a
fixed fare schedule – for example, a price per
kilometre, or per passenger. They must agree a total
fixed fee for the journey before it commences. This
constraint to the pricing of hire car services is highly
unusual, and appears to be directed to limiting their
effectiveness as competitors to taxis by preventing
customers from being able to make clear price
comparisons. It is recommended that this constraint
be removed, thereby enabling hire cars to pursue
pricing strategies that most effectively enable them to
compete with each other and with taxi and other
passenger services. 108
The VTD submission argues that the primary rationale for
regulating the hire car sector is to:
…protect consumers (e.g. probity of licence holders
and vehicle quality) and to maintain an appropriate
balance between the taxi and hire car markets. 109
Further, the VTD argues that as taxis are highly regulated,
similar services such as hire cars should also be
regulated to ensure that “taxi services are not duplicated
by services that fall outside the regulatory framework…
it may be appropriate to consider a similar, but lighter,
accreditation scheme for hire car operators”. 110
The VTD also notes an odd feature of the requirement
that vehicles, when new, have to be subject to the luxury
car tax threshold. This feature is that the strong Australian
dollar has made luxury vehicles cheaper, but has pushed
the value of these vehicles below the threshold – meaning
that a vehicle that previously qualified no longer qualifies.
Analysis in previous reviews
In 1999, KPMG reviewed the restrictions on competition
that were perceived to exist through regulation. The
KPMG analysis suggested that there were two main
restrictions on hire car licences compared to taxi-cabs:
• Age and other vehicle restrictions
• The requirement that hire cars must be pre-booked.
108 ESC (2008b), Op. Cit., p.15
109 VTD, Op. Cit., p.40
110 Ibid.
216