Uber sells itself on the promise of cheaper fares, but for the next 250 million rides in New South Wales, passengers will be paying more as the price for legalising the service in the state.
NSW transport minister Andrew Constance announced that taxi licence holders can apply from today for $20,000 transitional assistance payments as part of the Baird government’s $250 million industry adjustment package to pay for Uber’s arrival.
The taxi industry will get $98 million for licence holders – at $20,000 each for up to two licences held before 1 July 2015. The compensation scheme is $10,000 less than the South Australian version and is being funded by a $1 surcharge on all ride share and taxi fares.
Passengers in NSW will need to take 250 million rides with the $1 levy to pay for the Baird government’s $250 million compensation scheme, which also includes $142 million for taxi licensees facing hardship as a result of the changes; and up to $10 million for a buy-back scheme for perpetual hire car licensees.
According to the taxi industry, a licence in NSW in 2014 was worth $367,000, and there were 174.6 million passengers at an average fare of $24.75.
That means passengers in NSW are facing an average of around a 4% increase in fares for the next 18 months to pay to let Uber into the market.
The NSW Government is writing to more than 4,000 eligible licence holders to explain how to apply for compensation and applications close in January 2017.
Minister Andrew Constance says the changes will give customers more choice and increased competition.
“In recognition that these reforms have liberated the point to point market, we’ve put in place one of the most generous industry adjustment packages in the world for taxi licence holders,” he said.
Uber is a Netherlands-based global giant valued at more than $US60 billion. Uber Australia is a wholly owned subsidiary of Uber International Holding BV.
Uber Australia paid $403,000 in corporate tax over a three-year period between 2013 and 2015. It lodged accounts for 2013 with ASIC in 2015 reveal that in 2013, when it was still illegal in all states, it had revenue of $804,399.
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