Commercial Passenger Vehicle Industry Bill 2017 | Samantha Dunn

Commercial Passenger Vehicle Industry Bill 2017

I rise tonight to speak on the Commercial Passenger Vehicle Industry Bill 2017...
Thursday, June 22, 2017 - 9:45am
Samantha Dunn

Ms DUNN (Eastern Metropolitan) — I rise tonight to speak on the Commercial Passenger Vehicle Industry Bill 2017. It certainly has been a long wait for this bill. Uber, the largest rideshare network operator in the world, arrived in Melbourne in January 2013. The Baillieu and Napthine governments failed to act during the entire latter half of their term, so none of the issues created by the advent of ridesharing in Melbourne were addressed.

As for the Andrews government, the taxi and hire care industry ministerial forum was formed early in its term, but there were few public pronouncements as to what it achieved. As a result, under the guidance of the Minister for Public Transport, the approach to legitimising rideshare and dealing with the fallout in the established taxi and hire car industries has been a hurry up and wait — until March of that year, that is, when a sense of urgency suddenly sprung from the minister's office.

The Greens welcome the legitimising of ridesharing. This is a transportation mode that is used by many thousands of people in Victoria. It has the potential to be highly beneficial to the movement of people around this city. It may contribute to a reduction in private car ownership, a reduction in congestion and a reduction in transportation costs as the share of the cost of living and a reduction in transport-related greenhouse gas emissions. I stress that all of these outcomes are not inevitable because it depends on how ridesharing is integrated with the mass transit system.

That in turn depends on how it is regulated. For example, if policy encourages a mode shift of passengers from trains to ridesharing, that of course would be detrimental. On the flip side rideshare-enabled carpooling that is synchronised with train schedules would be beneficial.

The Greens do not applaud the regulatory engagement approach of Uber, which could be generously summarised as 'It's better to seek forgiveness than ask permission', yet we have to accept the fact that Uber, or at least the ridesharing business model that Uber champions and that has been enabled by smart phones and their locational and mobile capabilities, is here to stay. As long as ridesharing was kept in the legal grey zone there was going to be a risk of adverse outcomes for passengers. The passenger protections and driver and operator responsibilities that apply to taxis and hire cars would not apply to ridesharing. The government would be failing the public if it were to let such a situation continue. Bringing ridesharing into the regulated transport sector was the only sensible option.

With respect to understanding the future of this industry the government's approach to creating a unified commercial passenger vehicle industry makes the following major prediction: within a few years, in a mature and dense market such as metropolitan Melbourne, there will be no substantive difference between hailing a liveried cab and electronically hailing a rideshare vehicle. If there is no differentiation in service definition, then having different regulations for each would lead to perverse outcomes. This would most likely be to the detriment of liveried taxi operators, with their high-cost regulatory compliance burden. This is a big call. It is a different approach to the approach taken by other jurisdictions, such as New South Wales, where taxis and rideshare vehicles are in different licence classes and taxi licence plates continue to be tradable assets.

In steering the industry towards this long-term vision the government has caused significant grief and confusion for hundreds of people through the abolition of existing taxi licences. There is clearly a legitimate compensatory claim created by this abolition. Taxi licences were an asset class created by government. Their continued existence depended on government, and their abolition was at the whim of government. For an asset class created and regulated by government it does bother me that the regulator, the Taxi Services Commission, does not have a comprehensive dataset which advises when each licence was purchased, how much was paid for it and how much estimated revenue has been gained by each licence-holder to the current day. It would appear that the state government has more comprehensive records on every private vehicle sale in the state through stamp duty administration than it does on the regulated transfer of an asset created by government. The Taxi Services Commission must be admonished for this failure to properly monitor the taxi licence market.

Prior to the disruption of the industry, a taxi licence was effectively a perpetuity. It had a floating price marked by a monthly average sale price, but it had a pretty consistent income. Some of these licences would have recouped their purchase value many times over. Some were only purchased a couple of years ago at very high prices and would have only recovered a very, very small fraction of their purchase price. In the apparent absence of differentiating detail, the government has proposed it will provide a uniform transition payment to each licence-holder for their first licence and a half payment for their second through to fourth licences. This one-size-fits-all approach is inelegant. Some transition payments will only marginally improve the bank balances of taxi barons. Other payments will be reinvested in whole by taxi operators in adjusting to the new industry, and other payments will go some way to providing badly needed relief to families that mortgaged their house to buy a licence at market peak.

Considering that some taxi licence plate holders have found themselves in a bad financial state due to the cancelling of their licence plates, it would be unfair if these compensation payments were to be treated as taxable income. The Greens therefore support the recommendation by the economy and infrastructure committee that the government qualify the status of the payments to ensure recipients are not financially disadvantaged.

The second mechanism available to taxi and hire car industry participants is the Fairness Fund. I welcome advice that the Fairness Fund has started processing hardship claims, although I note that it has yet to start making payments. However, the Fairness Fund has been set up with an arbitrary cap of $50 million. While this may have been a cap established by the government to ensure that tardiness in addressing the industry tumult does not hurt the state budget bottom line, it may be a case that the hardship needs exceed the $50 million. It is too early to say that all hardship applications have been fully assessed. Therefore the Greens support the committee's recommendation that the government remove the $50 million cap on the Fairness Fund to ensure that all legitimate claims for compensation can be honoured, and we are pleased to see that the government supports that recommendation, too.

I want to turn for just a moment to the inquiry into the Commercial Passenger Vehicle Industry Bill. I must say I was very pleased to be a participant on that committee on behalf of the Greens. I think what was particularly telling when we took evidence in relation to the bill was the evidence we received from Professor Denis Nelthorpe about the assistance his organisation WEstjustice provided to over 150 taxi licence holders who were making applications to the Fairness Fund. Professor Nelthorpe stated that of those applicants around 130 were experiencing significant financial difficulties.

He also noted that many taxidrivers were referred to his service due to personal difficulties. He said as part of his evidence:

… a significant number who were referred by a social worker for personal or relationship counselling, financial counselling, mortgage stress counselling, but that's a program only available in the outer west and we had that project, if the program had been more widely available there would have been more and we had some 16 applicants who were followed up because of serious concerns about their welfare. If you don't want to say exactly what that fear was, but it was a very serious concern. Now, we've had discussions with the four major banks about the financial circumstances of a lot of those clients and we've asked them not to take action anyone that we notify them of.

Mark Shehata, operations manager at Exclusive Cab Management, as part of his evidence considered that payments through the Fairness Fund should be honoured regardless of whether the bill passes or not.

It is important that we look at the issue of vulnerable passengers, because there are some members of the community that have a very high dependence on inclusive, efficient and affordable point-to-point transport, including people with disabilities and particularly those people reliant on wheelchairs. The impacts of this bill on the provision of point-to-point transport services compliant with the commonwealth Disability Discrimination Act (DDA) have not been assessed. This is of concern to the Greens.

The Minister for Public Transport made quite a song and dance of the potential benefits to wheelchair users of the changes to the commercial passenger vehicle industry, including making an announcement with a representative from London Rides on 22 February. There may be some benefit of new types of commercial passenger vehicles on our roads, but London Rides black cabs are not accessible for some types of wheelchairs and are not DDA-compliant. As for existing rideshare providers, Uber has yet to provide a DDA-compliant vehicle in Victoria or indeed in any other Australian jurisdiction.

There is a major risk of market failure with respect to the provision of accessible transport. The loss of existing multipurpose taxi program DDA-compliant cabs due to competition from non-DDA-compliant vehicles would be devastating to many wheelchair users that need fully compliant, rear-loading, power-lift van taxis. The Greens are not yet satisfied that wheelchair-accessible, point-to-point transport will be protected under the brave new world ushered in by this bill. The government has tried to quieten concerns about wheelchair accessibility by throwing a bunch of money at the issue from the Fairness Fund and appointing a disability commissioner for the Taxi Services Commission. The specific details of how the system will transition have not been provided or perhaps not yet determined. Will there be a dedicated wheelchair service subsidised by government? Will there be a voucher system? How will it be monitored? What will be the performance standards? None of this is clear.

The Greens will closely monitor this situation and be a strong voice for the needs of people with a disability. On that, just referring back to the inquiry into the bill, the committee did hear from Graham Newman, representing the All Aboard Network. He highlighted the impact of the levy particularly on people with a disability. He said:

The majority of people with disabilities who depend on wheelchair-accessible taxis are not usually particularly well off and therefore we feel that $2 levy could be quite significant for them, especially considering that they often do very short trips, for example, from home to their GP et cetera.

I want to turn now to the levy itself. The government proposes to fund compensation, hardship payments and industry transition through the imposition of a flat $2 levy, indexed annually, on every passenger trip taken. The $2 value is an ambit claim. The government does not have confidence in any projections of the number of commercial passenger vehicle fares that will occur per year, therefore they are actually not confident in providing a time line for when they think the levy will fully recoup the funds paid out to taxi licence holders.

The Greens believe the levy should not be just a means of injecting funds into consolidated revenue. The levy should be explicitly linked to industry transition needs, as per the recommendation in the committee's final report. The proposed $2 levy has few friends in the industry. Taxi operators, rideshare drivers, rideshare network operators, taxi booking service providers and passengers have all expressed their concerns with the levy.

If the Labor government is committed to recouping the cost for industry transition from the industry itself and not from consolidated revenue or through a tax on another sector, then they are rather constrained in what they can do. The levy is flat because under the GST agreement with the commonwealth the state government cannot apply a proportional consumption tax on any good or service. A flat levy is regressive. The levy applied to a 5-minute taxi trip from a hospital to home for a pensioner in Ballarat is the same as that applied to a limousine ride from a private jet at Essendon Airport to a CBD office suite. While it is to be expected that stakeholders in any industry would opt for no tax rather than any tax, however implemented, there are some very rational concerns on the part of industry stakeholders about how this levy will be collected, remitted, accounted for and monitored.

The issue that is of grave concern to the Greens is how the levy will affect vulnerable groups. I turn now to seniors, particularly those located in regional Victoria and the suburbs. If their regular taxidriver is the only way they can get to the shops or the doctor, the imposition of a $2 levy on the cost base of the service provider would add up to hundreds of dollars per year in serving just one customer. Added to that is the fact that the compensation paid to country taxi plates is far less than that paid to metropolitan taxis, yet the government has proposed that the levy value be the same regardless of geography. This bill effectively creates a wealth transfer from the country to the city.

This is a good point to talk to the amendments being proposed by the Greens, and I would ask that those suggested amendments be circulated.

Greens amendments circulated by Ms DUNN (Eastern Metropolitan Region) pursuant to standing orders.

Ms DUNN — In terms of the suggested amendments, which I will talk to more in the committee of the whole, they really pick up on some issues raised as part of the inquiry into the bill. Recommendation 1 of the report, in dot point 3, talks about providing for 'a reduced rate of levy in rural and regional areas'. That picks up on the issue of wealth being transferred from the country back to the city, in terms of evidence provided on this matter.

We heard that the cost of the levy would impact residents in rural and regional areas, where trips are often shorter and more frequent. Eleanor Fitz noted that regional taxi services provide twice the number of short trips compared to urban services. She said:

In regional Victoria short taxi fares are our norm. We do fares as low as $4. To put a $2 levy on that is very significant. The elderly, the unwell, the low‑income families, a lot of these people in inclement weather — very hot, very cold, very wet; you name it — will take a bus to the shopping centre and they will get a taxi home to manage all their parcels and shopping et cetera, and to put that levy imposition on is cruel and unjust. It will make taxis unaffordable; they will not take them.

She also noted, very importantly, the lack of alternative public transport options in these areas that contributed to this.

In terms of the amendment, it simply takes zones that already exist for taxis, that being Melbourne metropolitan, urban and large regional areas, and conversely identifies regional and country areas where the Greens are suggesting the levy would not apply at all. In terms of managing this, what it means is that there would be a multitiered system in relation to taxis. The reality is that taxis are currently operating in a multitiered environment. In terms of what that technically means for ridesharing operators is that they would have to commence a process of geo-fencing. This would be to ensure that there was a process in place so that they know where the travel commenced from and its destination — whether it was in fact inside a metropolitan area or outside of the metropolitan area, where the Greens are proposing that the levy would not apply.

A second example for us where the levy is particularly detrimental is the short trips to and from train stations taken by school students, for whom there is no effective bus feeder service and when their parents are unable to do the pick-up or drop-off for them. The government has tried to assure my colleagues and I that in all likelihood taxi fares will drop due to more deregulation rather than increase due to the levy. Unfortunately they have not provided the evidence in the form of financial modelling to demonstrate that this would be the case, and they have asked that we take them on their word.

One of my observations as a committee member of the inquiry was that when operators were asked whether they would pass on the levy or incorporate the levy into their operation, on every occasion operators said they would be passing on the levy. The Greens have decided that the initial $2 dollar levy value is an ambit claim by government, and we are concerned that it will lead to an increase in fares for short trips for vulnerable people in the community. We realise, however, that the government will not budge from its intention to fund the industry transition with a new revenue source from industry itself. Therefore the Greens will be moving a further amendment to reduce the initial value of the levy from $2 to $1. We believe this will go a long way to assisting those vulnerable users of commercial passenger vehicle services.

Further Greens amendments circulated by Ms DUNN (Eastern Metropolitan) pursuant to standing orders.

Business interrupted pursuant to standing orders.

Sitting extended pursuant to standing orders.

Ms DUNN — The projections of the revenue collected from the levy seem to be very, very conservative. In evidence to the Standing Committee on the Economy and Infrastructure last month, officials from the State Revenue Office said that the levy would collect $44 million in the first year with the levy set at $2. Even subtracting administration costs, this seems very low when the number of commercial passenger vehicle trips when ridesharing is included is much likely higher than 22 million trips per year.

Last month's state budget was even more conservative. The revenue from the levy was set at zero. While this is sensible, considering this bill and the levy are not yet law, the fact that there is a $1.8 billion surplus this financial year alone makes this levy seem like a revenue-raising measure not tied to any dire need for financing to fund compensation and Fairness Fund payments.

The State Revenue Office and the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) have expressed confidence that the state government would be able to pursue levy collection from entities in foreign jurisdictions despite concerns on this matter expressed by locally domiciled industry participants. This is a major issue because companies such as Uber offshore their billing and customer relationship management infrastructure and have sophisticated regulatory avoidance systems that can be rapidly implemented in the event of a raid by authorities.

The approach espoused by government agencies appears to be: go after the rideshare driver if they are operating on a non-compliant booking service provider and this non-compliance has been publicly disclosed. It is incumbent on the driver to stop using that booking service and switch to an alternative compliant booking service provider. Several assumptions are at play in this scenario. It assumes that there exists sufficient competition in the commercial passenger vehicle market to allow for seamless switching between providers by drivers. It also assumes that services such as Uber do not have a stickiness to them that leads to customer loyalty overriding the perceived risk of using an illegal service.

Furthermore, Uber has proven it is comfortable operating as a booking service provider outside the bounds of regulation, and the Taxi Services Commission has shown it struggles to prosecute Uber drivers. Hence booking service providers such as Uber may still operate regardless of being non-compliant with the collection of the levy. Drivers may continue to use the platform and passengers may continue to use the service. Nevertheless, as noted by the committee, Uber has complied with levy requirements in other Australian jurisdictions, so their opposition to the levy should not necessarily be seen as an intention to fail to comply.

In conclusion it has taken an overly long time for government to address the disruption to the taxi industry and the risks that it has created for industry stakeholders and passengers. As lawmakers and servants of the public, we should not be nearly half a decade behind in properly addressing the disruption of legacy industries. This bill is an imperfect response to a complex and evolving situation. I do believe, under the circumstances of the schedule of this Parliament and the need for financial relief to be provided to some industry incumbents, that it must be passed.

The Greens will continue to be a strong voice for the needs of vulnerable members of our community who are dependent on a functional point-to-point transport system. The Greens are concerned with the value of the levy at $2. We believe a reduction of $1 and an exemption in country Victoria would make this bill much fairer for passengers, and I will certainly be discussing those amendments as we proceed to committee of the whole.