18 December 2014

The Independent Pricing and Regulatory Tribunal (IPART) is recommending that the Government freeze taxi fares and maintain taxi licence numbers in Sydney in the face of increasing competition from hire cars, car sharing and other alternative point-to-point transport.

Research conducted as part of IPART’s review of Sydney taxi fares and licences has found major changes in the way people use services such as hire cars with drivers, commercial car sharing and ride-sharing as alternatives to taxis.

IPART Chairman Dr Peter Boxall said a survey of Sydney residents has found that:

  • the use of hire cars with drivers has grown from 14% of Sydney residents to 18% since 2012
  • commercial car sharing services are now being used by 13% of Sydney residents, and
  • in the six months that ride-sharing services has been operating in Sydney they have been used by 11% of Sydney residents despite being illegal.

“As a result, changing consumer demand is driving down taxi licence lease costs faster than any regulatory changes.”

“Demand for point-to-point transport is linked to population growth and business and tourism activity, and all the indications are that these sources of demand have continued to grow in Sydney since 2011, yet demand for taxi services has dropped over the same period. We can only conclude that this demand is being taken up by competitors to taxis.”

“In this environment, increasing fares would simply encourage more passengers to choose alternative transport more often, further eroding the competitiveness of taxis.”

Notwithstanding taxi fare increases in recent years, IPART’s research shows that taxi drivers and operators are earning less now in real terms than they were in 2011, demonstrating that fare increases do not benefit drivers or operators.

In order to maintain the stock of Sydney taxi licences at its current level, IPART is also recommending releasing 40 unrestricted licences and 99 peak availability licences to replace those expected to be relinquished or not renewed during the year, as well as two fringe licences for Richmond/Windsor to replace two that were relinquished during 2014.

IPART is seeking public comment on its draft recommendations to freeze fares and maintain the number of taxi licences in Sydney at current levels for 2015/16. IPART is also recommending that a review of the regulations for all point-to-point transport be undertaken.

“We need to ensure that decisions about future taxi fares and licence numbers do not happen in isolation of these significant market changes,” Dr Boxall said.

“Competition has the potential to drive service improvements and more choice for consumers, but competitors should be operating on a level playing field. Appropriate regulation for safety and protection of drivers and consumers needs to apply to all services.”

IPART is seeking feedback on its proposed approach, including the draft recommendation that the NSW Government appoint an independent body to make recommendations on the regulation of point-to-point transport that:

  • applies to all point-to-point transport services
  • takes account of the impact of new technology
  • focuses on the safety of drivers and passengers as well as customer protection
  • encourages innovation and competition.

Submissions to the draft report will be accepted until 30 January 2015. The draft report and both the passenger and driver/operator surveys, along with further information about IPART’s review, is available at this link.

Media contact: Julie Sheather (02) 9290 8403 or a/hours 0409 514 643