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The NSW government is giving the taxi industry $250m in compensation after legalising Uber

Uber X will be legalised in New South Wales, with the Baird government handing over $250 million in taxpayer funds in an industry adjustment package for taxi and hire car licence plate owners

Transport minister Andrew Constance announced this afternoon that Uber would be legalised from midnight on December 17 in a massive blow to the taxi industry, which has lobbied hard against the US-based ride-sharing business as it eats into the hire car industry.

“Customers, taxi and hire car operators, drivers and new entrants have all made clear they want change and today we are making it happen,” Constance said.

Under the reforms, taxis will still have exclusive rights to pick passengers up from streets, ranks and airports, but smartphone apps for ride-sharing services will be legal. Drivers will need a hire car authority to work and the cars will need to be registered during the transition period.

A stand-alone regulator and Commissioner will be set up to deal with customer safety and enforce the new rules.

“These include the ability to name and shame companies, seek court-imposed fines of millions of dollars and in the worst case scenario a two year prison term for their company personnel,” the minister said.

“For the first time the buck will stop with the company making profit from the services – not just the driver.”

The government says it will immediately repeal more than 50 taxi and hire car regulations, which the minister claims will generate $30 million in benefits via reduced regulatory annually for the industry.

The owners of around 5,800 taxi plates will receive compensation under the government plan, receiving $20,000 per plate, up to a maximum of two plates, because the value of the once-lucrative plates will fall dramatically as the market is flooded with competition.

But the government plan means big taxi companies who own large number of plates could be left with just $40,000 in compensation.

Even more money has been set aside to further compensate owners who only recently purchased plates.

“It’s important that we don’t forget those who have poured their savings into taxi licences over the past decades and ensure they get equitable assistance,” Constance said.

The government is introducing a $1 per trip temporary levy on all point-to-point transport providers, for a maximum of five years to help pay for the compensation package.

Drivers for the ride-sharing service will now have to pay a licence fee to drive, as well as have their cars regularly put under safety checks on top of mandatory criminal background assessments.

Uber general manager David Rohrsheim, said NSW made history as the first state to back his company.

“This important step forward is an incredible reflection of the way Sydneysiders have embraced ridesharing over the past 18 months,” he said.

“We applaud the Government’s leadership in listening to the people of New South Wales and embracing the future.”

Today’s decision is a marked turnaround from just 3 months ago when the NSW government suspended the registration of Uber X cars.

NSW is the second state or territory to legalise ride sharing-services, following the ACT in October.

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