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

11.8.3. Affiliation with more than
one network
Current regulation does not expressly restrict an operator
from affiliating with more than one network where this
opportunity does in fact exist. However, the inquiry
understands that the relevant provisions are interpreted in
this way by the VTD. The objectives in excluding multiple
affiliations are unclear. Somewhat superficial reasons
such as that the driver will be unable to wear the uniform
of two NSPs at one time have been offered as relevant
considerations.
The impact of this restriction is that it limits NSPs from
competing for additional subscriptions for taxis in what
may potentially be a lucrative market. If this limitation is
removed, NSPs may contribute to greater competitive
tension and thereby provide greater choice to taxi
operators and taxi consumers. Affiliating with more than
one NSP under the current pricing arrangements could
entail significant additional costs for operators. Without
this limitation, however, NSPs could choose to offer
tailored pricing packages for operators to encourage
them to subscribe to their network at certain times or
for certain services. This offering would then become a
‘value decision’ for operators who presumably will only
subscribe to the network’s package if they can see a
net benefit. In turn, NSPs may then have an incentive to
seek out niche markets or expand services beyond the
traditional market.
11.8.4. Driver and passenger safety
As discussed in chapter 17, the inquiry has identified
significant problems with the existing emergency
warning systems currently in use. One reform option is to
develop minimum standards to ensure that acceptable
performance thresholds can be met without mandating
how an operator meets these standards and thresholds.
While acknowledging that a strong case exists for a
system to monitor the safety of passengers and drivers,
NSPs do not need to be the exclusive providers of such
as system. The development of minimum outcome
standards will enable other providers to enter the market
where they consider they can obtain sufficient take-up of
their product by taxi operators.
11.8.5. Barriers to entry at the taxi
network level
As mentioned earlier in section 11.4, NSPs are required
to obtain an accreditation with the VTD. The accreditation
scheme is a barrier to new entrants to the industry
to some extent and is difficult to justify in light of the
impediments it has presented to the industry in achieving
quality services themselves.
The inquiry recognises the importance in the ongoing
regulation of networks however any scheme should
and only be imposed provided measurable benefits for
consumers can be demonstrated. Any such scheme
should not serve to restrict competition in this market.
A significant step here would be to recognise that
operators could link to any NSP, not just one within their
zone. This would immediately increase contestability
among NSPs and reduce entry barriers.
Some of the requirements of the current scheme that
have delivered little value, in the view of the inquiry, include
the requirements to demonstrate financial suitability and
business capability. In the case of financial suitability,
general laws regulated by the Australian Securities and
Investment Commission already prohibit an organisation
from trading while insolvent. In the case of business
capability, the inquiry is aware that this provision is
interpreted broadly in practice, and can be an onerous
hurdle for a new network. In general, the market is a better
regulator of business capability by allowing those networks
with the best business capability to prosper.
The inquiry acknowledges that there is a case for
retaining a character assessment for relevant persons
however, there appears to be considerable scope to
rationalise this assessment given the different relationship
NSPs have with customers as compared with drivers or
other industry participants.
Under a future scheme where self-regulation and the
market are relied on more to deliver benefits to the
community, the regulatory scheme for networks could
be used to aid data collection and proper identification
of organisations. These measures would be necessary
in order to publish performance information to assist
taxi customers.
Inquiry findings
è Reforms are needed to lower the barriers
to new taxi networks forming and to give
operators greater bargaining power and
choice, while still protecting the safety of
drivers and customers.
Understanding industry performance CUSTOMERS FIRST 249