Review calls for taxi reform to accommodate ride-sharing apps

Australia's taxi industry is ripe for a regulatory revamp in order for it to accommodate new transport services provided by ride-sharing apps such as Uber, according to the final report of the Australian government's Competition Policy Review.

The so-called Harper Review, which examined Australia's competition regulatory framework and was led by economist professor Ian Harper, released its final report (PDF) on Tuesday. It makes 56 recommendations aimed at encouraging the country's continued economic growth.

The report, which bolstered the findings foreshadowed in the review panel's draft report from September last year, said that the reform of the taxi industry in Australia's states and territories is "long overdue", and that the regulatory framework governing the sector should be further reviewed.

"The regulatory framework for taxi regulation could be enhanced considerably through independent regulators having the power to make determinations (rather than recommendations), including on the number and type of taxi licences to be issued," the report said. "Mobile technologies are emerging that compete with traditional taxi-booking services and support the emergence of innovative passenger transport services.

"Any regulation of such services should be consumer focused, flexible enough to accommodate technical solutions to the problem being regulated, and not inhibit innovation or protect existing business models," it said. "Further regulatory review of the industry is necessary to take account of the impact of new technologies."

The review panel suggested in the report that reform in the taxi industry needs to be twofold, including the reduction or elimination of restrictions on the supply of taxis, and the encouragement of technological change that can benefit consumers.

Uber, which has faced intense industry and regulatory opposition in many of the markets around the world where it operates, has unsurprisingly viewed the review's findings favourably.

"Uber welcomes the Harper Competition Policy Review's call for governments to introduce sensible, safety-based ride-sharing regulations that put the rights of everyday Australians ahead of entrenched interests," said Uber Australia and New Zealand general manager David Rohrsheim. "Importantly, the report recognised the differences between taxis and ride sharing."

For its part, the taxi industry has rejected the review's findings, with the New South Wales Taxi Council saying that the report's findings do not properly reflect the competitive nature of the industry, and fail to acknowledge the work of governments and industry to improve services to the public.

"There is substantial evidence that deregulating the taxi industry will result in reduced levels of service and higher costs for the consumer," said NSW Taxi Council CEO Roy Wakelin-King. "Ride-sharing companies, for example, provide a transportation service without any regulation, meaning no public safety, no vehicle standards, no insurance guarantees, no work cover, no capped pricing, and no anti-discrimination provisions, to name just a few of the shortcomings.

"The experiences of surge pricing overseas and increasing exploitation of drivers, as well as the social disaster that arose from mini-cabs in London, are very good examples of why deregulated taxi services don't work," he said.

The final report of the Competition Policy Review also recommended changes to the country's intellectual property (IP) system, suggesting that there is a case for conducting an independent, framework-style IP review.

"The review should have regard to recent reviews of specific aspects of IP, look at competition policy issues, new developments in technology and markets, and international trade agreements," the report said. "In the majority of cases, granting an IP right is unlikely to raise significant competition concerns.

"That said, IP rights, like all property rights, can be used in a manner that harms competition. The use of IP rights should therefore be subject to the CCA [Competition and Consumer Act 2010]," it said.

Additionally, the report recommended that the telecommunications access and pricing functions currently handled by the Australian Competition and Consumer Commission (ACCC) and the National Competition Council should instead be undertaken by a single national access and pricing regulator.

"The panel does not foresee any conflict in a single regulator performing both functions, and anticipates that there may be benefits," the report said. "The panel notes that under the current telecommunications access regime ... the ACCC performs both the declaration and arbitration functions.

"The Access and Pricing Regulator should be constituted as a five-member board. The board should comprise two Australian government-appointed members, two state and territory-nominated members, and an Australian government-appointed chair[person]," it said.

The ACCC has welcomed most of the findings laid out in the report, but warned that changes to the law should not weaken Australia's cartel laws.

"The panel's recommendations to expose more sectors of the Australian economy to competition show the considerable scope for reform. The ACCC particularly supports the report's findings on roads, shipping, intellectual property, and parallel imports," said ACCC chairman Rod Sims.