TAXI FARE SETTING – OUT WITH THE OLD AND IN WITH THE NEW!
The Victorian taxi services are facing a revolution in the way that services are provided, how they are 'sold' and how those services will be 'purchased' by taxi users.
This revolution follows the extensive Victorian Taxi Inquiry headed by Professor Allan Fels AO and his team.
The Victorian government has endorsed 138 of the 139 recommendations put by the inquiry in the Final Report which was provided to government on 29th September 2012.
The ONLY recommendation that was not adopted was that concerning the suggestion that a Commissioner of the Taxi Services Commission sit as a Member of the Essential Services Commission (ESC) while the latter body considered the setting of taxi fares.
That suggestion was strongly rejected by Dr Ron Ben-David (Chairperson of the Essential Services Commission) in the ESC's response to the 31st May Draft Report of the Taxi Industry Inquiry.
Dr Ben-David argued that it may not be possible to insulate the ESC from the potential for 'regulatory capture' of the Taxi Services Commission by industry participants and we commend the ESC response to readers and direct them to page 18 of the response:-
In view of the imminent commencement of competition, the Essential Services Commission will, of necessity, take a very different approach to the task of setting future taxi fares in Victoria.
Firstly, maximum taxi fares (which may be discounted by pemit holders) will replace regulated taxi fares.
Secondly, taxi fares will not be set for Zones 3 & 4 (the smaller country markets) and there operators will self-set fares and advise the Taxi Services Commission of the tariffs which will be published on the TSC website and advertised elsewhere (perhaps local newspapers, etc.). This system is known as “price notification” and should serve customers well.
The ESC will only set fares for taxis in greater Melbourne and other areas of Victoria not subject to price notification arrangements.
Thirdly, the ESC has already announced that increasing demand – new customers and lots of them – is the way forward and the way to confront competition from WITHOUT. That competition will be provided by PBO's (all hire car licenced vehicles) and will 'threaten' the pre-booked work of taxis.
Competition will also come from WITHIN taxi-world as smaller fleets innovate and introduce 'clever' pricing and service strategies to win passengers (pre-booked and 'rank & hail') away from other taxis.
The ESC has clearly enunciated that the method of “cost-stack-and-divide” will no longer be appropriate and, indeed, will not be invoked.
As the very first step in the fare-setting process, the ESC has invited submissions from the taxi service providers and the general public (that includes current taxi users and those potential “new” taxi users) to provide the ESC with a raft of new ideas that will generate that much-needed and significant increase in revenues to guarantee the very survival of the taxi services that currently exist in a highly-regulated market.
Innovation does not usually flourish in a regulated environment but it is essential for survival in a competitive market.
On 11th September 2013 the ESC ran a series of advertisements in mainstream media and also requested that the Victorian Taxi Association, the Victorian Taxi Families, the Taxi Services Commission and others ensure that taxi service providers be alerted to the ESC “requests for ideas” initiative.
We provide the appropriate link to the ESC website:-