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

Of course, appropriating these benefits will depend on
the nature of entry restrictions that remain for taxis and
hire cars.
In any event, the inquiry observes that any beneficial
aspects of these regulations have never been formally
made out or subject to independent review. From a
review of the history of hire car regulation, it appears
that the primary goal of many of the hire car regulations
are to restrict their ability to compete with taxis; in
particular, that they should be a superior service charging
‘appreciably’ higher fares than taxis. 115
The inquiry’s view is that regulations on hire cars,
particularly vehicle restrictions, have created unnecessary
costs without offsetting benefits and that a new set of
regulatory objectives needs to be determined.
This does not mean that there are no legitimate grounds
for distinguishing between hire cars and taxis in
regulation. A distinction may be made on the basis that
one type of vehicle services the pre-booked market only,
while the other is permitted to do rank and hail work, and
that a different balance of competition and regulation may
be needed to deliver safe, high quality services in both
market segments. In particular, the inquiry’s view is that
there are better grounds for relying on competition to
deliver higher service quality in the pre-booked market,
as operators in this market rely on repeat business to be
successful. In contrast, the operation of taxi ranks and
‘hailing’ means that competitive pressure will likely be
less successful in delivering high quality services.
Inquiry finding
è Regulation of hire car vehicle standards
unnecessarily restricts competition between
hire cars and taxis.
10.6.2. Competition between small
commercial vehicles and
public transport
Regulations also limit competition between taxis and
hire cars versus other forms of transport. As set out in
chapter 4 and section 10.1.2, the inquiry’s view is that
public transport is not likely to be a strong substitute
for taxi and hire cars services. This suggests that these
regulations might impose costs on the community but
offer few benefits in return: removing the regulations will
not necessarily enhance competition between modes,
but will improve the efficiency of the transport system
more generally.
For example, if regulation prevents a successful
commercial service running a fixed route between two
train stations that are currently not served by a bus route,
or running a taxi service using a vehicle with a larger
seating capacity than 12 occupants, then there is a risk
that the community loses out on a service for no gain.
Indeed, to the extent that the services offered would be
complementary to public transport then the result is less
use of public transport as well.
If regulation is genuinely required then it should not
prevent, to the greatest extent possible, these market
niches from being filled by taxis and hire cars. Currently,
the key regulations preventing this from occurring are that:
• Taxis operating on a set or fixed route are considered
to be acting as a bus and are therefore captured by
regulations requiring them to have a service contract
with the Victorian Government.
• Taxis cannot operate using a set fare. 116
These restrictions are further analysed in chapters
19 and 20.
Inquiry finding
è Taxis and hire cars appear to be prevented
from living up to their potential by restrictions
on competition between the two modes as
well as with other modes, such as buses.
115 See Transport Regulation Board (1983), Review of Hire Car and
Related Services, 20 April 1983
116 Case studies, comments and potential new service options in relation
to taxi-bus services are discussed in section 19.4
218