14 April 2015
The Independent Pricing and Regulatory Tribunal (IPART) is recommending that taxi fares be frozen at current levels in areas outside Sydney.
As well as a fare freeze, the draft report of IPART’s Review of taxi fares outside Sydney to apply from July 2015, released today, also recommends reform of the way taxis are licensed outside Sydney to address an undersupply of taxis in many regional areas.
IPART Chairman Dr Peter Boxall said the report has found that while fewer people use taxi and other point-to-point transport services in regional and rural areas than in Sydney, in many areas demand is growing faster than the supply of taxis.
“Taxis play an important role in transporting people from place to place, particularly outside Sydney where there are often few public transport options and taxis may be the only means for people to reach shops, medical appointments or other engagements,” Dr Boxall said.
“But despite growing demand in some areas, we have found that the current taxi licensing arrangements inhibit effective entry to and competition in the taxi industry outside Sydney.
“In particular, the method for calculating the issue price of new licences creates a barrier to entry in areas where new licences are most needed. This has resulted in an undersupply of licences in many areas, and passengers paying more than the efficient cost of providing the service.”
Dr Boxall said the cost of taxi licences and other expenses varies considerably across the 160 taxi operating areas in NSW. Between April 2011 and December 2014, licences traded for less than $10,000 in three areas but more than $400,000 in another three (see table below).
“Many of these licences are more expensive than they need to be because new licences are issued by Transport for NSW in areas at ‘market values’, entrenching high licence costs in the system which are ultimately paid for by passengers,” he said.
“Added to the high cost of licences is the lack of transparency about how licences are issued and how much they cost, inconsistent and overlapping licence areas, lack of quantifiable information about operating costs in different areas, and the higher network charges faced by country taxi operators.”
Dr Boxall said the draft recommendations support reform of taxi licensing outside of Sydney as a priority to better match the supply of taxis with demand for their services.
IPART is also recommending that regional and rural areas be included in a statewide review of the regulatory framework for point-to-point transport in the face of increasing competition from hire cars, car sharing and other alternative point-to-point transport.
This review was first recommended in IPART’s draft report on Sydney taxi fares and licences released in late 2014. If adopted by government, the review would look at the regulations necessary to ensure safety and consumer protection.
Submissions to IPART’s draft report and the proposed fare freeze to apply in Newcastle, Wollongong and all areas outside Sydney, will be accepted until 15 May 2015. IPART will be holding public roundtables on its draft report in Newcastle, Wagga Wagga and Port Macquarie before finalising its recommendations.
The draft report, along with further information about IPART’s review and public roundtables, is available at IPART’s website.
Media contact: Julie Sheather (02) 9290 8403 or a/hours 0409 514 643
Average licence transfer values in various NSW towns
(April 2011 to December 2014)
Note: The towns listed for each group are in alphabetical order, which does not correspond with series order.
Data source: IPART analysis of Roads and Maritime Services data from Transport for NSW.
IPART provides independent regulatory decisions and advice to protect and enhance the ongoing interests of the consumers and taxpayers of NSW.