The Victorian Government today announced a package of regulatory reforms designed to reduce barriers to entry into the taxi and other commercial passenger vehicle market. This will formally allow news types of “ride sharing” operators, such as Uber, to legally provide services.

Key elements of the proposals include:

  • A removal of licensing for all vehicles, with the replacement by a registration process
  • A shift towards accreditation of drivers with a remaining focus on safety rather than quality
  • A move towards more flexible fares with some residual protections relating to the “rank and hail” market

A support package of around $450 million has also been developed by the Government to assist licence holders with the financial burden of reform and ensure the provision of accessible services into the future. This will be part funded by a $2 per trip levy on all commercial passenger trips – including both taxi and Uber trips.

The proposals by the Victorian Government have followed those in other states of Australia, but are a more far-reaching and holistic attempt to design an optimal regulatory framework for commercial passenger vehicle services. As we argue in our bulletin, Uber regulated?, holistic approaches to the regulation of Uber and its competitors are so promising because they can foster the competition that is needed to get the most out of taxi markets, and reduce the scope of regulation that has so bedevilled taxi markets. By facilitating the introduction of new competitors, and also reducing the barriers to entry for taxi operators, regulation can now properly focus on basic, low cost protections for ensuring driver and passenger safety.

Key elements of the proposals will undoubtedly require further work in the coming years. This includes the $2 levy to be applied to network service providers and taxi operators, and to maintain services that are accessible to all users. Nonetheless, the proposed framework is laudably ambitious. If it can deliver on its promise, the long policy delay in Victoria will have been worth the wait.

Frontier (Asia-Pacific) advised the Victorian Government on the likely impacts of regulatory changes using economic modelling of the Melbourne taxi market. We have discussed the regulation of the “sharing economy” and Uber in the following bulletins, Uber regulated? and Levelling Up.

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