Taxi Industry law reform: an update from NSW

Jul 01 2016

By David Grant, Partner and Eliza Buchanan, Solicitor, Logie-Smith Lanyon

In early June 2016, the NSW government commenced the second phase of the wider taxi industry reform which is currently sweeping across the country in the wake of the introduction of Uber and other ride hail services.

The first step introduced by the Baird Government was the legalisation of ride hail services such as UberX. The legality or otherwise of UberX in Victoria remains questionable, despite recent judicial consideration in the County Court.  We note the Andrews Government’s swift action to repeal section 159, the section which established a form of technical (and unanticipated) defence for Brenner in the recent appeal.

Entitled the “Point to Point Transport (Taxis and Hire Vehicles) Bill”, the NSW Bill applies to all passenger transport services of 12 passengers or less, and seeks to address issues facing the industry such as:

  • decreasing regulation, in order to promote greater competition between various services;
  • decreasing red tape with a view to decreasing the cost of providing taxi services;
  • subsidising taxi license holders for the loss of value of their taxi license plates, and providing additional financial support for taxi drivers, owners and operators, supporting them through the changes;
  • introducing a passenger service levy of $1 per trip, in order to fund the $250 million assistance package for the industry;
  • ensuring safety standards are strictly enforced, including criminal checks of all directors and managers of service booking providers;
  • reducing the compliance requirements and fees for hire car operators;
  • increase in accessibility to transport for the disadvantaged and disabled, including reductions in licensing fees for Wheelchair Accessible Taxis, and increases in subsidies available to passengers and drivers of such services; and
  • appointing a Point to Point Transport Commissioner with wide ranging, and tough powers, to regulate the industry, and prosecute those found breaching the new legislation.

It is of interest to note that the Point to Point Transport Commissioner will have the power to prosecute those found delivering taxi services who are unauthorised, with the ability to seek an initial fine of $50,000 for an individual, and increasing per offence, up to a maximum of $10 million for a body corporate.

The ability to seek such huge fines is a significant step in the policing of the delivery of illegal services in the industry. These powerful fines will have the necessary effect of deterring those blatantly flouting the law, unlike those currently in place in Victoria, which are a meagre $1,500.

The clear driver behind such significant deregulation (of compliance, of fares, of licensing and accreditation requirements, of various fees) is to promote greater competition within the industry. However, we note that there are several key areas of difference between the regulation of traditional taxi services and the rules that apply to ride hail. Those differences rely upon an outdated notion of a distinction between ‘rank and hail’ and ‘booked’ work which technology is rapidly eroding, if it has not all ready done so. The maintenance of two-tiered regulation could prove to act as an impediment to the very type of fair competition which the reforms seek to facilitate.

Whilst the reforms focus on increasing competition to foster a greater focus and provision of service to customers, there are significant measures in place in NSW to protect the taxi drivers and owners. For example, the availability of a hardship fund for those suffering as a result of the loss in value of taxi license plates, with a focus on drivers or plate owners nearing or facing retirement. Whilst the impact on licence holders has been recognised in the reforms, the reservation of the ‘rank and hail’ market as the exclusive domain of taxis seems to have been used to justify low levels of compensation.  It is not apparent that the rank and hail market will provide Taxi’s with any exclusive benefit in either the short, medium or long term. It should be noted that the exact process for the allocation of compensation funds beyond the $20,000 payment per licence is yet to be known.

The hardship fund, and other compensation packages, will be funded by the passenger service levy, a $1 additional charge on eligible taxi services, in accordance with Schedule 4 of the Act. The Bill also specifies that the passenger service levy, despite is name, is, and has the effect of, a tax. 

Again, whilst sound in theory, we understand consideration is still being given to how such a levy can be effectively and fairly applied and collected.

Consideration has also been given to providing a mechanism for more sustainable and consistent income for taxi drivers. In this regard, the Bill has been referred to the NSW Legislative Assembly Committee for Transport and Infrastructure, who have been tasked with reviewing the industrial relations issues affected by the proposed reforms.

The NSW Government has tried to strike a balance between increased consumer protection and service, decreased costs of service delivery for drivers and operators, and protection for drivers and operators during this period of significant change.  It remains to be seen whether they have got this right.

Further debate of the Bill in the Legislative Assembly will follow shortly, before the Bill is read for a third time, and sent to the Legislative Counsel for additional debate and discussion.

 

Next article