Wednesday, October 28, 2009

Cab reform comes at cost

Pack of Australian Racists and Shiekh Haron have to be part of taxi industry debate.

THE price of new taxi licences being released as part of a reform package will be set high enough to protect existing players in the multibillion-dollar industry, according to a memo circulated to Labor MPs yesterday.
The new licences were needed because ''taxi supply has generally not kept up with demand'', the memo said. This meant drivers' costs and fares had increased.
Despite this, however, the fee for the new lease-only licences will be set ''having consideration'' to what it costs to lease a plate today - about $27,000 a year.
''It is … unlikely there will be a flood of new licences,'' says the caucus briefing note, obtained by the Herald. If the fee was too high it could mean the claimed benefits of the reforms - more taxis and increased competition - might not materialise.
A bill to enact the changes is expected to be introduced to Parliament this year. But the memo suggests there is little chance of a boost to Sydney's taxi fleet in time for the busy Christmas period.
Earlier this month, the NSW Transport Minister, David Campbell, said he would reform the way the Government managed taxi licences - many of which are worth almost $400,000.
His announcement followed an investigation by the Herald which revealed the influence of Sydney's powerful taxi networks, especially Cabcharge.
Those networks have been given millions of dollars worth of free taxi plates by successive governments. The Government would not demand the return of those, the memo confirmed.
The NSW Taxi Council, which represents those networks and which has the same address as Cabcharge, has told Mr Campbell that releasing new licences would harm businesses. It believes there is a risk the market will become flooded, reducing incomes and eroding licence values.
Mr Campbell's office told the Herald recently the Government had not considered compensation because ''we don't expect the value of licences to be affected''.
Peter Abelson, a Sydney University economist, said a readily available renewable licence could be an improvement on the existing system.
''The effectiveness of the reform will be greater if the licence fee is set at levels significantly below the current high levels caused by restricted supply and the licences are renewable with guarantees on no future increases in fees.''
Mr Campbell told the Herald ''it's difficult to please everyone''. ''What we are trying to do is balance the existing plate and lease values, while also encouraging more people into the industry.''
The memo says any shock to the market would ease over time.
''Government intends to set the new licence fee at a level that encourages gradual growth to meet existing demand and will consider current market lease rates as part of that process,'' the memo says.
''Current low fleet growth, with waiting lists for some leases, suggests there may be pent-up demand, but this should settle.''

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