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Asking for justice: repair the suffering, pain and loss caused by the 2017 reforms.

Nov 25, 2020 | Advocacy, News, Parliament

Today, Member for Eastern Metropolitan and the leader of the Transport Matters Party, Rod Barton moved that the house recognise that perpetual taxi licences were valuable items of property and asked that the Andrews Labour Government properly compensate the industry.

As a former member of the Taxi and Hire Car Industry, Rod, like many others, ‘thought that fairness and justice would prevail and that someone would stand up to acknowledge the carnage, stem the bleeding and heal the wound.’

No one did. 

 

 

Repair the Past

Asking for Justice…Rod moved for the government to acknowledge that taxi licences were valuable items of property and to repair the damage of past reforms.’I…

I have never made it a secret why I am here.

I have come to this place to represent the taxi and hire car industry to work to repair the past and help pave the way for a fair and sustainable future.

For experience players in the game like me, the effects of being trampled on and ignored by successive governments and countless reforms had become too much.

Now is enough.

Someone needed to step into this place to have the conversations no one is willing to have.

We need some luck on our side but, having been around the block a few times, I know that luck is random.

I am not a gambling man and I don’t like leaving things to chance. I prefer to create my own luck which is why I stand before you all now seeking your help.

 

For those of you not familiar with the plight of the taxi and hire car industry, I thought I would start with a story about a bloke who was born in this country to ten-pound poms.

They worked hard and instilled in their kids a good sense of right and wrong, a strong work ethic and a desire to contribute to the community and to our society.

That kid grew up, dropped out of school at the age of 15 and took on the responsibilities of adult life.

It wasn’t long before he tried his hand at driving a cab and stretched limos.

He may have had a limited education but what he lacked there he made up for with a level head, the gift of the gab and an ability to find common ground with people of all different backgrounds. This had always served him well. He enjoyed his job and he was good at it.

That was over 30 years ago and in 1999 with a family to support and the energy and drive to give things a crack, he went out on a limb and started his own hire car business.

Traditional hire car licences never traded as high as taxi licences but they were expensive none the less. The real outlay was in the luxury vehicle attached to it, the cost of maintaining high standards and the effort to engage private clients and retain them. He was at their beck and call 7 days a week for many years, providing an impeccable service to the corporate elite both native and international.

With the help of the bank, that little hire car business grew and was stable for many, many years.

Over time it became lucrative enough that it gave the bloke some satisfaction with what he had built and the confidence to look ahead and plan for the future.

He and the wife had a dream.

They bought a home on a few acres in Stanhope. It was going to be their forever place and they spent years renovating it and tending to the surrounding land.

They were looking forward to the day they could shut up shop, leave the business to the kids, go up to their home with the ducks, the chickens, the vegie patch and be surrounded by their grandchildren.

They wanted nothing more BUT unfortunately it was never to be.

 

In 2014, Uber entered the taxi and hire car market illegally. Their cars did not carry a valid licence to operate in the industry and the fares they were charging were below cost of delivery, subsidized by international corporate entities with deep pockets. They came in like poachers and pirates and helped themselves to destroy the existing market and get a foothold for themselves.

Everyone was enamored by the shiny new toy and the dirt cheap cost of a ride. No one it seemed tried to stop them with any great effort much less cared that the cheap ride was only possible by exploiting the driver.

The industry regulator didn’t know which way was up, they still don’t. The tech wizards from Silicon Valley pulled their pants down and helped Uber to evade enforcement. All the while the big players were moving in looking for a free kick.

Overnight, the business took a dramatic turn. The bloke was now running on earnings reduced by 40-50%. He tried desperately to keep the bank at bay servicing the loans for his licences, his limousines and his home in Stanhope with all the home improvements costs.

But just like that, and through no fault of his own, everything slipped through his fingers.

Suddenly, that man was drowning in debt and instead he lost it all.

That man was me, Rod Barton.

 

The home in Stanhope was the first to go. That was our only home, there was no beach house, there were no investment properties, there was no share portfolio. That was it. Approaching 60 years of age at the time, I knew then that we would never own another.

The business limped along surviving on my most loyal and long serving clients while we waited for the government to act.

Surely, we thought, when you have done nothing wrong, followed every rule and every regulation and met every requirement expected of you over the years that someone would step in to help.

We all thought that fairness and justice would prevail and that someone would stand up to acknowledge the carnage, stem the bleeding and heal the wound.

It was expected that those who worked within the law would be protected by the regulator from those who were breaking the law. That simply did not happen.

No one came to our aid. We were hung out to dry.

 

Instead, in 2017, the Andrews Labor government responded to the illegal entry of rideshare by deregulating the industry and revoking all taxi and hire car licences. To my knowledge, Victoria is the only State or Territory to have compulsory revoke all licences and to my knowledge, this has not happened anywhere else on the planet to accommodate the taxi company. How bizarre.

At its peak, a perpetual taxi licence traded for half a million dollars and just prior to the reforms taxi permits were available without restriction from the regulator itself for around $23,000 per year. Indirectly, this set the price of the rental return on the open market for privately held licences, the government was an operator of over 2000 permits and have now for gone over $180 million over the last 4 years, all to accommodate the taxi campany known as Uber .

When they were revoked, these licences attracted an arbitrary payment of $100,000 for the first taxi licence per entity and only $50,000 for a second, third or fourth taxi licence and nothing for any additional licences.

A hire car licence was paid $25,000 through the industry transition assistance scheme for the first licence per entity and half thereof for additional licences up to the fourth and nothing whatsoever for anymore. At one time, a perpetual hire car licence traded for upwards of $80,000.

These payments did not reflect that a licence is property and that each one was valued equally on the open market and netted a comparable investment return.

Completely by chance rather than by design, the way the transition payment scheme was structured favoured those people who had purchased licences under different entities – individually, in the wife’s name, jointly, the super fund, the family trust, the company etc – you get the idea.

Each entity was paid $100,000 for their first taxi licence even though the beneficiaries may have been the same.

Compare someone who may have owned 4 taxi licences under 4 unique entities who received $400,000 to someone who held all 4 licences within the one entity and received $250,000.

It gets worse.

I know a family well who worked together over many decades building a business with 18 taxi licences all in the name of a single entity with 6 beneficiaries feeding 5 households. They too, were paid $250,000 for all 18 of their licences.

I am told of another family who owned 10 taxi licences in 10 separate entities who received $1 million dollars.

The absurdity beggars belief but these are the consequences of the government treating licences as though they are tokens found in a box of cereal.

People had structured their financial affairs to suit their own unique personal circumstances and business operations. Not one person planned for this outcome yet by fluke alone some people received substantially more than others.

The inequity is staggering and farcical.

The transition assistance payments were grossly inadequate and poorly conceived.

My perpetual hire car licences, the last of the assets I owned, were also revoked and I was paid only a fraction of their worth. To this day, I continue to pay loans for licences which no longer exist but which I had purchased as a legal requirement to operate in the industry.

I am not Robinson Crusoe.

Even though I lost everything, I consider myself fortunate. There are many who have paid a much greater price with their mental health and some with their lives. The reforms have torn through marriages, families and friendships in a way that only profound financial stress, inequity and uncertainty can.

 

Deregulation of the industry dismantled the historical licencing structure with complete disregard for those stakeholders who had participated over decades. The system was replaced with an annual registration where anyone could enter the industry for the bargain price of $55 a year.

This gave a lot of people out there a free kick.

I was not one of them.

The reforms suited the new-comers, but for those of us who had invested in the industry compliant with the laws of the day, we were now wearing cement shoes in a rising tide.

The industry was promised a level playing field but that field was under water and only the new players could swim.

Anyone who had operated under the pre-existing industry structure has had their carefully laid plans evaporate. They are handicapped by legacy debts and by the hollow left by long gone assets and income which they had rightfully structured their financial future around. It is not fair.

 

Not long ago, this very chamber was presented with the Marine and Fisheries Legislation Amendment Bill 2019 which sought to revoke commercial fishing licences in the Gippsland Lakes.

It included a very generous compensation package where licences were assessed by the Valuer General and paid $371,000 for each and every one. The fishos also received a $60,000 allowance for redundant fishing vessels, which they were able to keep, and further compensation for the loss of income based on three times the annual catch value, calculated over a three-year golden harvest period.

The Bill passed into legislation by majority vote, as it should have because it was the right thing to do.

In this instance, the government had recognized that a commercial licence is property and they paid out accordingly.

Just like commercial fishing licences, a perpetual taxi and hire car licence is not just a right to operate a business, it is also an asset.

It was ruled by the High Court of Australia in 1998 that a taxi licence is a valuable item of property because it has economic potential. It allows its holder to conduct a profitable business and it may be sold or leased for reward to a third party.

Taxi licences are described as assets in the Centrelink assets test.

The tax office and APRA allowed licences to be included in superannuation funds.

Banks lended up to 80% of their value and held them as collateral.

The Victorian Bracks Labor government established a trading facility for licences on The Bendigo Stock Exchange.

And a licence could be leased allowing people to derive an income.

Industry stakeholders thought they were safely putting their nest eggs into an asset created by government, sanctioned by government and where participation was encouraged by government. They had no reason to believe otherwise.

Victorian perpetual taxi and hire car licences were entrenched in the lives of those who owned them and relied upon in every way any other income bearing property would be considered.

The impact of these reforms has become a social justice issue. Good, law abiding people have been stripped of their assets and left in debt with no income and no superannuation. Many self-funded retirees are now reliant on government benefits.

What did we do wrong?

 

The other major impact of these reforms has been the introduction of $55 annual commercial passenger vehicle licences. The result of this has seen a flood of cars and drivers enter the industry naively thinking they might make a buck. $55 a year sounds a whole lot better than paying $23,000 a year to lease a taxi licence to this Andrew’s Government.

No one seems to contemplate that just prior to the reforms in October 2017 there were around 8,000 taxi and hire car vehicles on our roads. Fast forward only 3 years and we now have over 86,000 registered commercial passenger vehicles, rising month on month even throughout the pandemic.

The pie has not grown proportionately. This is not sustainable or viable, even at $55. The flooding of the market with excess vehicles is economically and socially irresponsible and shows a lack of industry understanding from the department and the regulator.

Driver exploitation is worse than it has ever been. They earn no holiday pay, no sick pay, no superannuation and no parental leave and are expected to survive on less than $10 an hour. There would be no surprises to hear that driver turnover is high but that does not diminish the severity of the exploitation at play.

Then there is also the cost to the environment. Pre-COVID, the city and surrounds would be swollen with traffic particularly on the peak nights of Friday and Saturday with drivers circling like gulls looking for a hot chip at the beach.

For all the progress that has been made in workers rights and conditions over the years, we seem to have lost our way. The problem is endemic and at such scale it is becoming impossible to ignore. I fear the gig economy and the impact it has on the most vulnerable working people.

The evidence of this has been so clearly demonstrated throughout the current pandemic.

When you have a sector of people who attend for work regardless of the best health advice or government directives, it sheds new light on the level of desperation that must exist for this to happen. They are our new working poor, chasing their tail on the financial treadmill unable to stop or risk falling flat on their face with no one to pick them up.

There has been no life-line for our lot in the taxi and hire car industry throughout the COVID pandemic. The majority of stakeholders are non-employing sole traders who received not a brass razoo in financial support for their businesses.

Many are locked into vehicle leasing agreements and hold pre-existing loans for licences they no longer own, often with second and third tier lenders who have been less than understanding.

And so very many individuals in this industry have no superannuation to tap into even though the rules now allow.

With the airport all but closed and the movement of people highly restricted – much of the taxi and hire car industry has not turned a dollar since March of this year.

This has spelled disaster – the reforms have built a house of cards and they have come crashing down spectacularly.

 

Change is needed. We can do better. We must do better.

 

I have asked of the regulator recently whether they have a plan in place to support the industry on the road to recovery. Their only response has been to grab a rag, clean the door handles and record the time of doing so.

As helpful as this advice might be, and it may be the bleeding obvious, we have been doing so for the last nine months. There doesn’t seem to be any thought or leadership to guide the industry through the challenges that lie ahead – they go far deeper than the threat of this virus. The industry is on its knees.

My vision is to support and rebuild the industry to make it proud once more. The taxi and hire car industry provides an essential service and is the life blood of the city and this state. It is integral to the transport network.

I am calling on the house to accept my proposal to properly compensate the industry for the poorly constructed reforms of 2017.

Taxi and hire car licences are property, just like commercial fishing licences, and their compulsory acquisition through revocation must be compensated accordingly – each and every one.

We need to release people from the financial shackles they carry as a legacy of their compliance for regulations no longer in place.

It can be done.

Funding for the industry transition payments is being raised through the per trip dollar levy imposed on the industry. I can tell you the levy is leaking like a sieve. We are yet to tap into sectors of the industry who are not registered with the State Revenue Office to remit the levy. As a start, getting that right would increase substantially the available revenue stream to right this wrong. There are also other options which make this doable, although I wont elaborate here.

Further, we must aim to create an environment for those people who choose to take part in this industry to be able to make a living wage.

We have a social and economic responsibility to adopt a plan to restructure the industry to support a better balance of market forces so that it can prosper once again.

It may not have been the intention of the reforms to wipe away over a billion dollars in privately held assets, to destroy families and businesses and create an underclass of workers who will never get ahead. But this is precisely what has happened.

Mr President, it is possible to fix this. We, as elected representatives have a moral obligation to recognise and repair the damage of past reforms. I have spoken to many of you and you have understood that what has happened wasn’t right.

You can sit here today, shrug your shoulders and say oh well, what’s done is done.

But for me and for my friends, our nightmare will never be over until it is fixed.

I stand before you today more determine then ever in my effort to achieve what I have set out to do, but this cannot be done alone – I need your help.

I urge all parties from across the chamber today to consider their moral obligations and hope that this motion receives widespread support.

I will leave the fate of the families, small business owners and self-funded retirees of the commercial passenger vehicle industry in the hands of the members of this house.

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