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Uber’s unhindered entry into the Victorian CPV market and their influence on the reforms of 2017.

Sep 1, 2022 | Advocacy, Motions, News, Parliament

I have never made it a secret why I am here. I came to this place to represent the taxi and hire car industry and have done exactly that for almost four years now. No-one is going to be able to say that we have left any stone unturned. I can stand with pride and say there has been barely a time in this place when I have not shone a light on the injustice that occurred as a result of the deregulation which formed part of the industry reforms of 2017. Some in the Andrews government might be of the view that what is done is done. Some in the opposition roll their eyes every time I speak about the taxi industry, but the chickens are finally coming home to roost, and I feel vindicated.

In July of this year the Guardian newspaper published a series of articles, ‘The Uber files’, exposing the contents of 124 000 leaked confidential documents. They consisted of emails and messages between Uber’s most senior executives as well as a whole suite of other documents. The data reveals how Uber knowingly flouted the law, duped police and secretly lobbied governments across the world during its aggressive global expansion. For those in the game, there is nothing to see here; the Uber files confirm what the taxi and hire car industry has known for a very long time. In Australia these claims form the basis of an ongoing class action lawsuit against Uber, represented by Maurice Blackburn, on behalf of licensed taxi and hire car operators around the country, something I am very proud to be a part of.

Dalia Gebrial, an English political commentator and journalist, said it best:

What the #UberFiles confirm, is that Uber’s rise is not some ‘free market’ success story.

It was a co-ordinated theft of our urban economies, based on exploitation + aggressive lobbying.

Much of which was—in the words of Uber execs—

f-bomb—

… illegal’.

Uber bulldozed their way into cities with little regard for taxi regulations and simultaneously lobbied aggressively for those same laws and regulations to be altered to accommodate them. Despite Australia’s state laws requiring taxis and hire cars to obtain licences prior to operating, Uber set up shop in Australia in 2012 and in Victoria early in 2014 without the required permits. Many taxi licence holders were from working-class migrant backgrounds and had invested enormous sums of money to acquire taxi licences in a full and regulated market. Yet Uber operated illegally, without the required permits, for over three years, and they did this without consequence while the regulators were asleep at the wheel—some would say they were in a self-induced coma. This caused the value of licences to be severely impacted, leading to devastating financial consequences, the legacy of which continues today. People lost their livelihoods, they lost their homes, they lost their superannuation and, sadly, in some cases lives were lost. Many continue to pay debts for licences they no longer own. I should know—I am one of them.

This entire situation presents a serious case study of regulatory failure. State governments and politicians across the spectrum should have been far more resistant to bullying by a large private company entering the market. The enthusiasm of governments to embrace the vision they were sold has resulted in the baby being thrown out with the bathwater at the expense of law-abiding small business owners and at the expense of the most vulnerable consumers.

Put simply, decision-makers were sold a lemon. With the industry reforms of 2013, Uber’s market entry in 2014 and then further reforms of 2017, all sides of government have played a part in the destruction of the industry here in Victoria—blue, red and green. Prior to the reforms there were around 8000 registered commercial passenger vehicles, including 5500 taxis and the remainder were hire cars, stretch limos, special vehicles et cetera. Fast forward to today, and there are now over 90 000 registered vehicles, including 10 000 taxis and almost 120 000 drivers. That is over a tenfold increase in supply in just five years and a doubling of taxis in the same period. The market has not grown at the same rate. This is irresponsible on so many levels. You only need to look at wheelchair taxis to see why. The regulator reports that the number of these vehicles has increased each year since the reforms, but the taxi networks have a conflicting view. They say they are seeing a year-on-year decline in numbers of 10 per cent.

On 20 August an ABC news article highlighted a shortage of wheelchair-accessible taxis, particularly in regional towns. This confirms our inside knowledge and makes a mockery of the regulator. They simply do not know which way is up, because the registration of a commercial passenger vehicle does not reflect the activity in the industry. For all the data that is collected, I am yet to hear the regulator ask the right questions or interpret what is found in a meaningful and accurate way, yet they can tell you how many times the doorhandle on a vehicle was cleaned during COVID and which products were used. The regulator was warned of a decline in wheelchair services. In a deregulated market with jobs diluted tenfold by an influx of vehicles it simply becomes financially unsustainable. Uber conducted a wheelchair taxi service trial in Newcastle, New South Wales, a number of years back and learned very quickly it was financially unviable for them. Since then they have stated publicly that they have no further intentions of entering this market, which they said at the recent multipurpose taxi program inquiry.

The reforms of 2017 promised consumers more choice and cheaper fares, particularly with deregulation of booked fares, but one is more true than the other. It was thought that by deregulating taxi fares and deregulating booked fares competitive pricing would see an overall decrease in the cost of travel. At least that was the tune Uber played, and the regulators danced to it. The architects of deregulation were patting themselves on the back, but the industry is like no other. Five years on the reality has not followed the textbook examples. It is all too obvious now that the industry is in a state of disrepair. We have all heard the reports of eye-watering surge pricing, particularly around notable events in town. Just last week Channel 7, Channel 9 and 3AW reported about taxidrivers refusing to turn on their meter, instead quoting ridiculous fares for a ride.

At one time the public could accept rideshare surge pricing because they had the reliability of taxi fares to fall back on. At one time the public could accept rideshare, but taxis do not operate as a charity service. With only a single taxi fare increase in 14 years and the extreme flooding of cars onto the market fighting for work, was this any surprise? The only way for fares is up. Drivers have to be able to cover their costs and put food on the table. Taxi and rideshare drivers are some of our most vulnerable and underpaid workers. They have no sick pay, they have no superannuation, they have no holiday pay and they have no other benefits.

When fares are cheap they come at the expense of the driver. This is called exploitation. Rank and hail at metered taxi rates is becoming a thing of the past. Many more drivers are taking matters into their own hands—and I cannot blame them—and engaging with potential customers in private, one-sided negotiations.

Consumers are being held to ransom. They just want to get home. For all the hoo-ha about consumers having more choice, technically this is correct, but in practice during peak times the choices are surge pricing or set-price taxis with surge pricing—and this is what we call extortion. It is not good enough—you cannot have it both ways. From the stalwarts of this industry—we hate to say ‘We told you so’ but—we told you so. On one side we have a highly regulated price structure and trading constraints versus a commercial operation entirely devoid of any controls and, on top of that, saturation on the supply side of the market.

 

Uber’s unhindered entry into the Victorian CPV market and their influence on the reforms of 2017.

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The playing field is not level, and there is an urge for the industry participants to find their own equilibrium any which way they can. It is simply illogical to think that you can have two different business models offering exactly the same service with, at times, vastly different price points and not expect a situation to develop that has everyone chasing their tails. All aspects of the industry are interconnected. It is impossible to pull one lever without creating an unintended consequence elsewhere. Maximum regulated fare rates for unbooked taxis to ensure that vulnerable consumers are provided an element of price certainty is great in principle; however, this can only be achievable if there are available taxis offering a metered service to meet their transportation needs—and around the circle we go again.

The situation is black and white in my view. Either fares need to be entirely regulated to provide fair and consistent pricing for every trip or the government has to stop meddling in the system and let the wolves roam. One would hurt multinational corporations while the other would hurt the consumer. Mind you, the driver will never come out on top unless the supply side of the market is better controlled. The industry is in a mess, and no-one seems to be concerned because all the data collected by the regulator, the Department of Transport and the Essential Services Commission does not support the view. What I say and what the recent parliamentary inquiry into the multipurpose taxi program concluded is that when you put bad data in you get bad data out. The current system is encouraging rogue operations, and all of this is happening underneath the radar. No-one is collecting this data, because the regulator has lost control of the market. They have no idea who these people are, which vehicles they drive, what they are charging or how many trips are even conducted. This brings me to the trip levy.

The $1 trip levy was to fund the industry transition assistance package for holders of revoked taxi and hire car licences. For all the trip data collected by the regulator there are tens of millions of trips annually that are going unrecorded. I have no doubt that the passengers are paying the levy and no doubt that the drivers are pocketing it, but the numbers do not stack up when you look at the levy revenue supported by the State Revenue Office. The levy is leaking like a sieve. We guesstimate up to $30 million per year is being stolen from the travelling public. It needs to be returned to the intended recipients and those most damaged by the industry reforms and the inadequate transition package. The reforms have been a failure, orchestrated by a multinational corporation to suit their business model. The Uber files prove this. If Uber and their business approach is the poster boy for the gig economy, then we are in serious trouble.

It is the time to start working with those who have lived experience of success in the industry. As an organisation Uber are yet to turn a profit globally, despite their market share. This in itself is telling. Mark MacGann, Uber’s former chief lobbyist, was the whistleblower behind the Uber files.

He says Uber’s senior executives knowingly sold people a lie about the economic benefits to drivers of the company’s gig economy model. He now claims it is his duty to speak up and help governments and parliamentarians right some of these fundamental wrongs. Morally he believes he has no choice in the matter. I could not agree more with him; now is the moment to right those wrongs. Hindsight has 20/20 vision. Moving forward we must recognise and accept the failures before things get worse. I am not here to try to reverse the past, but we can repair it. There is a remedy, and I have shown the government the plan. It needs execution.

As in the case of Mr MacGann, time and reflection have brought this matter forward morally. There is no choice but for Australian state governments across the country to clear their consciences and own their contribution to the financial destruction and decimation of a once viable and prosperous industry. With the revelation of the Uber files, it is time we called for a serious, considered evaluation of the way the local taxi and hire car industry was allowed to unravel, the part Uber played in steering these outcomes for their own benefit and the way the regulators enabled this. Both sides of government need to reflect on the course of events that has led us here. I call for an independent review of the circumstances surrounding Uber’s unhindered entry into the Victorian commercial passenger vehicle market and their influence on the industry reforms of 2017.

 

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