Taxi industry blames states for unfair playing field

Ongoing disruptions caused by new ride-sharing services, such as Uber, and the launch of taxi booking apps, including goCatch and ingogo, have sparked the Australian Taxi Industry Association (ATIA) to demand for taxi competition regulations to be revised.

In its submission (PDF) to the Competition Policy Review, ATIA highlighted that when "disruptive innovation" such as goCatch and ingogo were launched, the companies responsible for each product "assumed that they should be allowed to dispatch taxi services using their apps without any compliance with the rules applicable to taxi dispatch under respective State Transport Legislation".

"Faster innovation and deployment of new technologies must always be encouraged," the ATIA said. "However, so-called disruptive innovation should not allow some competitors to enjoy and exploit significant cost advantages over other competitors where those cost advantages principally emanate from the unlawful avoidance of costs associated with complying with necessary regulations (e.g. safety regulations)."

ATIA also slammed the NSW, Victoria, and Queensland state governments for failing to regulate the appropriate requirements that goCatch and ingogo needed to comply with for taxi dispatch, claiming they allowed the companies to "escape the costs associated that compliance, while at the same time providing no relief or latitude for authorised dispatch companies to do similarly, created an unlevel and unfair 'playing field'."

ATIA continued: "These governments effectively abandoned their responsibility to 'protect' competition (i.e. the level playing field) by allowing a discrete subset of competitors to ignore or avoid the requirements that they continued to impose on the rest of the market’s competitors."

ATIA's submission comes as a response to the Competition Policy Review's Issues Paper that was released on 14 April 2014. The independent review led by Professor Ian Harper commenced in March this year, following an election promise that the Liberal Party had pledged during its 2013 election campaign after recognising the Australian economy has changed since the last major review of the competition policy in 1993.

In another section of the submission, ATIA highlighted that it does not believe existing competition laws are working effectively to "promote competitive markets in the presence of the so-called sharing economy", drawing on the entry of Uber's UberX service in Sydney, Melbourne, and Brisbane as an example.

The Association claimed that given UberX is a ride-share service (RSS), which it defined as being hired on-demand by paying passengers for transportation, and suggetsed that Uber is therefore running an unlicensed taxi service.

"The fact that Uber has been able to introduce UberX, and continue its operation, demonstrates a clear failure in Australia's competition laws and/or their enforcement," the ATIA said.

"Uber's actions are not some misadventure or misunderstanding of the legislative framework and its requirements. UberX represents a stark example of the ineffectiveness of the competition laws (as currently enforced) to deal with a large and aggressive multinational in the sharing economy."

Based on the ATIA's definition of an RSS, recent start-up RideSurfing may possibly also fall into the category of running an unlicensed taxi service.

The ATIA concluded by recommending that both the federal and state government develop and implement new polices to deal with the sharing economy, as well as any new disruptive innovation.