Taxi regulation in Adelaide – Darryl Gobbett

Regular contributor Darryl Gobbett on taxi regulation:

The attitude of the SA Government to the licensing of Uber in SA should get us all thinking about what is the purpose of the regulation of taxis in the SA metropolitan area. (As an aside readers should note Section 45 (2) of the Passenger Transport Act 1994 does not require non  Metropolitan taxis to be licensed by the Minister.)

Specifically, we should be looking at whether the current Objects of the Passenger Transport Act 1994 are relevant to the needs of the SA metropolitan population. We should also be asking if those Objects are currently being met.

While the objects include being focussed on serving the customer; being safe; and efficient use of physical and financial resources, there is no mention of cost to the consumer. Presumably that is encompassed within the “serving the customer”.

We should consider cost to the customer as including the actual fare  structure and the non price costs such as access, delays, lack of choice etc.

This cost is very much the responsibility of the Minister and at his discretion. He regulates the fare structure and determines the number of licenses.

There is nothing in the Act that limits the number of licences. There is also  no requirement that the Minister report on what is an appropriate number or why there should be any limitation. (There were reportedly 1036 general taxi licenses at 30/6/2015).

We can only assume the limitation on the number of licences is in the interest of “serving the customer”, presumably because it raises the quality of the service and lowers the cost compared with an limited access with the same accreditation requirements.

Information regarding who gets a licence (13 were issued in 2014/15), what they pay, the terms or other conditions etc does not seem to be publicly available.

Presumably it is “commercial in confidence”. I have emailed the Minister asking if this information is available. I will relay any response.

Professor Alan Fels was reported in The Australian of May 6, 2013 as saying a SA Taxi licence was then costing $390,000. It is probably now higher. Using that 2013 value, however, the current licences on issue would be valued at some $400 million. At an interest cost say of 6% pa, that is a $24 million cost per annum presumably to be extracted from the customer. That excludes any amortisation of the capital cost.

There were reportedly 8 million taxi trips in 2014/15 so that implies an average interest cost per trip of $3. That may well be more than most of the drivers get paid per trip. Lower licensing costs could well mean lower fares, more trips and higher driver incomes. Not our choice however.

The non-price costs such as delays that result from limited licences are also the responsibility of the Minister. We can be comforted here too.

Reading the 2014/15 Annual Report of the Dept of Planning Transport and Infrastructure, the average wait time in 2014/15 was 8.97 minutes, within the 12 minutes set as an accreditation condition.

But is 12 minutes or 8.97 minutes what taxi consumers want? Presumably the DPTI have done the surveys, entered the data and run the optimisation algorithms.

Far better to have that all controlled and running smoothly than give consumers the messy choice of different public transport providers offering a choice of fares, wait times, vehicles etc.

By the way, Uber is unlikely to be the only threat to taxis. More on that later.

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