ACT Government leads the way on ride-sharing reform

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The ACT leads the way in enabling the sharing economy while reducing the operating costs for taxi operators. Taxis will retain their exclusive rights to operate from taxi ranks and to be hailed from the street, whereas ride-sharing operators will operate in a similar manner to hire cars.

Speaking on ABC 666 AM this morning, Chief Minister Andrew Barr outlined the first phase of deregulating the taxi industry while introducing measures to regulate ride-sharing. Some of the changes include significant reductions in government fees for taxi operators while adding new fees and requirements, such as vehicle inspections, for ride-sharing operators.

Uber General Manager David Rohrsheim welcomed the changes. Uber have been calling for ride-sharing to be regulated appropriately for some time although their tactics have been rather aggressive.

A spokesman for the ACT taxi industry also welcomed the level playing field but is concerned that insurance requirements should also be similar.

How the ACT Government's rule that drivers who work exclusively for one ride-sharing provider will be deemed to be employees will intersect with the ATO's requirement that Uber drivers register for and collect the GST remains to be seen. But the move by the ACT goes some way to address some of my earlier concerns with ride-sharing.

One seemingly minor change that will be most noticeable, however, is that taxi drivers will no longer be required to wear uniforms. But once the symbols of regulation fall away, the tenuous status of taxi drivers will certainly be reduced. Whether the decrease in taxi operating costs will reduce taxi fares remains to be seen.

But the ACT Government is to be applauded for phasing in transport reform ahead of Uber's ride sharing service being offered in Canberra. The ACT is the first jurisdiction to address the challenges being brought about by ride sharing.

Uber Regulatory Test Case: Who is in charge?

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While many consumers are celebrating the rise of Uber, those who have invested in the taxi industry are rightly upset by Mr Turnbull's support for the multinational's "disruptive" business model. It is timely that a national test case is being heard in the courts to see whether this is a truly "disruptive" business model or otherwise an illegal thwarting of existing regulations.

I have argued previously that Uber's business model does not take into account numerous externalities, in particular, those that relate to the pay and conditions for its own drivers. Of course, consumers appear not to care about what it costs to pay an Uber driver, as long as it means cheaper fares for consumers. At least while the cheaper fares last.

But taxis are one of the few remaining regulated monopolies in the country, and taxi drivers share none of the regulatory advantages that Uber is cashing in on. Indeed, ACT Liberals Opposition Leader Jeremy Hanson recently spoke on 666 ABC Canberra and faced an uphill battle to convince the host that Uber were doing anything other than providing a cheaper, better service.

In my travels, I have heard others suggest that Uber's system works better than government regulation. One simply gives a driver a low rating, states they were taken the "long way", and then the company sympathises and offers a refund. That may be well and good, but while an existing regulatory monopoly is under threat, governments have done little to deregulate taxis or to make the market truly competitive.

And herein lies the real problem. Operating a taxi is expensive. Not because it necessarily is expensive, but because the regulatory model makes it so. Uber seems to be changing transport policy through sheer economic power rather than through government adopting a coordinated approach to dealing with the so-called "digital disruption".

If any new start-up can run rough-shod over existing regulations, then government needs to get ahead of the game. So far, however, government has buckled to pressure to the point where they are more or less congratulating Uber for upsetting a regularity model that government itself created.

The national test case means that government policy has yet again been left to the courts. Thankfully, the courts seem to take their unelected role more seriously than our elected representatives. Uber appears to be in a good position, but the current two-tiered regulatory model is more a result of poor policy than the case of Uber's smart business model.

Any business model that makes prices for consumers cheaper while paying workers less is hardly a recipe for success. Yet taxi operaters who comply with the law are currently being punished for doing so. That doesn't mean that Uber have it all wrong, but is does not auger well for other heavily regulated sectors of society when a foreign company enters the market and starts telling Australian governments how to regulate. 

Taxi operators are quite rightly upset. They played by the rules but the rules have been changed based on the pushiness of a multinational. Sure, transport reform is timely, but government waiting until a cheeky competitor like Uber comes along with plenty of money to get its own way is yet another example of sovereign risk that does not bode well for the future. 

Why bother to innovate while foreign companies like Uber appear to be running the whole show. Government needs to get its act together.

Is Australia ready for High-Speed Rail?

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Many Australians are in awe of transportation systems overseas like Hong Kong's MTR and the super-fast Japanese and European bullet trains. But what about having a bullet train that travels past one's own backyard?

Is it possible that Australians are happy to use new transportation technologies elsewhere, as long as it doesn't affect them at home?

This is an interesting theme - one which a colleague suggested recently - and one I will explore further here.

I tend to view things as an historical institutionalist. This means that I see path dependencies and limitations in individual behaviour resulting from institutions - what March and Olsen (1989: 22) and North (1990: vii) see as the formal and informal rules of the game - and to view the co-evolution of institutions and technologies via a model of punctuated equilibrium.

There are some academic issues with this view but it is difficult to understand why a rich, well-educated and otherwise techno-savvy country like Australia lags so far behind the world in high-technology. 

As with broadband, high-speed rail is a case-in-point.

Much of the problem associated with infrastructure deployment has been a growing trend in governments avoiding debt. Even though interest rates are at their lowest in living memory.

But what makes things even more bizarre is that there is plenty of private sector investment money that is not being captured for investment in Australian infrastructure. Is this a case of yet another Australian policy regime?

Wilson (2000 citing Dougherty & Pfaltzgraff 1997) suggests that a policy regime consists of the following characteristics:

First, there is an organizational dimension made up of states, social or political institutions. Second, regimes consist of mutually accepted decision-making procedures and agreed upon rules for action. Third, regimes contain shared principles, norms, and beliefs. Finally, regimes are organized around a particular issue.

I can't help but see policy regimes in the communications and transport sectors in Australia. Even though we will often hear complaints about the way policy is "done" in this country, we never hear the idea of the "policy regime" invoked to explain the reluctance to envisage different approaches to deploying infrastructure. For some reason, most likely related to the political benefits government can gain from fixing communications and transport issues, there is little scope for a systemic change to how we "do" networked infrastructure policy.

There seems to me to be a general agreement that government is responsible for solving our networked infrastructure problems, which includes high-speed rail. To date, acceptable "unsolicited" private sector proposals for infrastructure development, in particular from Transurban, have been focused on roads.

Meanwhile Spain has constantly pushed its high-speed rail barrow, yet there has been little traction in this area. Even though Australian estimates of the time to deploy high-speed rail are rather long (according to the Spaniards), domestic media still push the NIMBY aspects of corridor preservation rather than the benefits of more efficient ways to travel. It beggars belief.

The first and most obvious impediment to infrastructure deployment is commonly (and often pejoratively) referred to as ‘nimbyism’ (from NIMBY, an acronym for ‘not in my back yard’ – see Shepherd in Butcher 2008: 122-23).

Much of the resistance repeats what is happening in the United States. Australia and the United States share their reliance on the private motor vehicle at the expense of other forms of transport. For example, the Dallas-Houston high-speed rail link has been bogged down with utter nonsense. One "resistance group" even goes so far as to suggest that:

We need more roads for citizens to travel to ease our existing roadways... We do not need a high-speed railway in Texas that will only benefit a few, while at the same time disturbing thousands of citizens within its path.

You can't build your way out of congestion. Yet in Australia we see the American context repeating: an entrenched use of private motor vehicles as the most desirable way to travel.

So what does it mean? Well, if I had the answer I'd have plenty to do rather than blog my thoughts on transport policy. But what is clear is that there is a reluctance to try new transport technologies, and this most likely has something to do with entrenched ideas scaffolded by a policy regime..

But it is strange that these ideas seem only to exist in Australia and the United States. Maybe the idea of our "Washminster" system was much more than a federation superimposed over the system developed by our less-than-democratic forebears?

In the meantime, we seem to be satisfied with less-than-ideal systems such as Sydney's light rail and Canberra's Action bus service, even though using these services for the first time is an inside job requiring inside knowledge.

Maybe we are in awe of Hong Kong's MTR because it makes sense. You buy an Octopus card simply by following the instructions, then you turn up to the station and point yourself in the right direction until a train turns up. Simple.

But why we can't have the same thing here seems to be a conflation of history, entrenched preferences, and a policy regime that can't see past the end of the next road. And I think there-in lies the problem. Australia will not be ready for high-speed rail until the government says so.

References:

Butcher, J. (ed.) (2008). Australia Under Construction: Nation-building past, present and future. Canberra: ANU e-Press.

March, J.G. & Olsen, J.P. (1989). Rediscovering Institutions: The Organizational Basis of Politics. New York: The Free Press

North, D. C. (1990). Institutions, institutional change, and economic performance. New York: Cambridge University Press.
Wilson, C.A. (2000). Policy Regimes and Policy Change. Journal of Public Policy, 20(3): 247-274.