A major review of competition policy in Australia has come out in favour of taxi apps such as Uber, ingogo and GoCatch to make cab rides cheaper and more available.
“Reform of taxi regulation in most jurisdictions is long overdue,” says the Competition Policy Review Panel’s draft report.
“Regulation limiting the number of taxi licences and preventing other services from competing with taxis has raised costs for consumers, including elderly and disadvantaged consumers, and hindered the emergence of innovative transport services.”
The taxi industry is unique among customer service industries in having absolute limits on the number of service providers.
The scarcity of taxi licences has seen prices paid for licences reach more than $400,000 in Victoria and NSW.
But technological change is disrupting the taxi industry.
“Traditional booking methods are being challenged by the emergence of apps such as GoCatch and ingogo, as is the industry itself through rideshare apps like Uber that can connect individuals wanting a lift to drivers willing to take them for a fee,” the review report says.
The emergence of Uber has been controversial as regulatory agencies have been questioning its legality and fining drivers, despite considerable public demand for its services.
The review says this indicates existing regulation is more concerned with protecting a particular business model than being flexible enough to allow innovative transport services to emerge.
“More affordable and convenient taxi services give consumers options,” the review says.
Reform in the taxi industry needs to focus on reducing or eliminating restrictions on the supply of taxis and ensuring that technological change which can benefit consumers is not discouraged.
“Mobile technologies are emerging that compete with traditional taxi booking services and support the emergence of innovative passenger transport services,” the review says.
“Any regulation of such services should be consumer-focused and not inhibit innovation or protect existing business models.”
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