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

The inquiry’s view is that there is little case for secondary
networks to continue to be accredited for their activities;
similarly, there appears to be no rationale for excluding
secondary networks from being permitted to display
branding on the interior and exterior of the vehicle. If it
is necessary for the regulator to know which secondary
networks exist in the industry a simple registration
scheme could operate instead, although it is not clear
whether the regulator needs to know this detail.
11.4.4. Industry self-regulation
Regulation of the taxi and hire car industry is not just
a matter for the Government. There is a long tradition
of industry self-regulation particularly through depots
in the past. As described in section 11.3, depots had
rules and procedures for affiliates or members to follow
and they enforced those rules. The operations of these
organisations are subject to general laws, including the
Australian Competition and Consumer Act 2010 (Cth), so
that their conduct must be within the limits of these laws.
Whilst the rules and procedures of depots were
particularly focused on the effective operation of their
collective booking systems, including equipment in
vehicles, they also covered many other aspects that
impinge on service performance, safety and competition.
For example, there were rules which cover appropriate
driver behaviour toward customers, as well as other
drivers; there are rules covering vehicle standards and
cleanliness; and there are rules relating to behaviour at
ranks and rostering.
Industry self-regulation can be exercised collectively,
for example through depots or NSPs, as well as by
individual firms in the industry. Self-regulation can apply
where firms have some discretion in their conduct; that
is, their conduct is not totally determined by government
regulation or competition (market regulation).
In response to concerns about the adequacy of industry
performance and the perceived unwillingness of networks
to take full responsibility for improving performance,
the Government introduced accreditation for networks
(and licence holders and operators). To be accredited,
networks had to meet certain prescribed standards and
had to adhere to Business and Service rules prescribed
by the Minister. This has raised a number of issues,
which arguably have had a negative, rather than positive,
impact on performance. First, the Government’s move
signalled to the industry a shift in emphasis away from
self-regulation toward regulation by the Government.
Since in many ways the Government was in a weaker
position to ensure regulation of service performance was
adhered to than the industry was, this move, although
well intended, was not necessarily desirable. Second, the
move also resulted in unnecessary regulatory duplication
and confusion. Government regulation covered
some similar ground to that covered by the rules and
procedures of networks and government regulation itself
was confusing in that it was not easily accessible being
located in the Transport (Compliance and Miscellaneous)
Act 1983, regulations, Business and Service Standards
and accreditation conditions set by the regulator.
When asked who was responsible for delivering high
quality taxi services in Victoria 23 per cent of taxi users
considered taxi companies (networks) were, 15 per cent
thought the Victorian/State Government were and 12 per
cent thought the VTD was responsible. 40 This highlights the
confusion about roles and responsibilities in the industry.
The potentially important role of industry self-regulation
in promoting good industry performance is widely
recognised by the OECD and Australian and Victorian
Governments. This is not to suggest that industry
self-regulation should always be seen as an alternative
to government regulation, but rather that industry
self-regulation and government regulation need to be
effectively coordinated and unnecessary duplication
between them avoided. As the OECD has commented:
Industry self-regulation is not always an appropriate
alternative to government regulation. When the
risks of a particular behaviour or non-behaviour are
high it is more likely that government regulation in
some form will be needed. ….. It is clear, however,
that many of the public policy outcomes sought by
traditional government regulation also can be
achieved through effective industry self-regulation
while not necessarily incurring the costs and
inefficiency of formal regulation. Rather than utilising
a single regulatory model, the optimum response to
behaviour within a market may consist of a mixture
of government regulation, self-regulation or other
alternatives to traditional regulation. The challenge
for policy makers is to find the right mix of market
forces and intervention to achieve policy objectives
and ensure efficient social, economic and
environmental outcomes. 41
Self-regulation can be particularly effective where it seeks
to promote standards which are higher than the minimum
acceptable level and when competition is active.
40 Ipsos Social Research Institute, (2012), Op. Cit., p.11
41 OECD Committee for Consumer Policy, Engaging with Industry to
Achieve Better Consumer Outcomes: a report discussing industry
self-regulation as a complement or alternative to government
regulation, including case studies, 30 September 2009, pp. 10-11
234