King Canute Should Run the NSW Government!

I was out for a walk the other day and I saw this advertisement on a bus shelter:

As King Canute pointed out to his courtiers, it is impossible to stop a tide – it is controlled by a higher entity! The tide in this case is ride sharing services.

I was quite amazed that the Government would display such a bad message – hire cars are not illegal because they are licenced by the State Government and ride sharing isn’t illegal as such, otherwise getting a lift to work by a colleague would be out.

Clearly the taxi industry is working in conjunction with the Government to stop all comers from getting a slice of the personal transport market – and why wouldn’t they? Taxi drivers pay a premium called a licence to operate and this has shrunk slightly over the past 3 years. In 2013 it was up to $36,000 and has dropped down to around $31,000 per year, paid to the State Government for a licence plate.

That equates to around $120 per day assuming that the driver works for 5 days in a week. Potentially the first 2 to 4 fares per day goes straight into Government coffers and then the next few probably cover the operating expense of the vehicle or rental if the driver is connected to a taxi company.

It is no wonder that the industry is worried about Uber, Lyft and the other home-grown ride share systems. Firstly the newcomers are not encumbered by the licence fee, however Uber does take 20% of the total fare charged to a customer. When you think about it, without the taxi licence fee, the Uber driver starts to earn faster than a taxi driver does.

There are pros and cons to each system – many articles I have read suggest that the average Uber driver earns $20-25 an hour, which would be based on the number of rides provided and the ride surge fee dependant on the time of the ride or availability of drivers.

Both sets of drivers will have to cover wear and tear plus other operational costs and the Uber driver might be invalidating the insurance on their car by using it commercially which is a concern.

I think the campaign to claim that taxis are the only choice is a poor decision by someone in the civil service. As Canute showed, you cannot command a wave to stop and it is better to deal with it in other ways. For the State Government, they need to realise that there are new competitors in the market and reduce the taxi licence pricing such that more people would consider buying one. Perhaps they could adopt an Uber-style policy and charge 20% from each fare so that the cost is spread across the year and drop the licence fee down to a mere $1,000 or so.

The problem that the State Governments in Australia have, is that the taxi licence fee is a good cash cow that they have grown used to. A new revenue model will need to be developed anyway as the economy changes and this could be one of the old established fees that finally goes.

By all accounts King Canute was a wise and successful ruler who looked after his subjects, helped the economy grow and strengthened the currencies of the countries he ruled. The NSW Government needs Canute today to guide it out of the mess it has created for itself.