The NSW taxi mafia is facing a major conundrum following the NSW government’s decision to put a freeze on new taxi licences for the next four years, a decision intended to protect the value of existing licences from total collapse so it can avoid a possible legal challenge.
On the one hand it wants more cabs on the road, as that’s how the networks make their money, on the other, it wants to be seen to be supporting its plate owners. As a result a pretend public stoush has sprung up between Cabcharge and the NSW Taxi Council.
by Peer Lindholdt
Despite having seen the value of their plates chopped in half, from $430,000 to $200,000 over the past 4 years, there is still a stack of plate owners out there who believe the sun shines out of the backside of their network and the NSW Taxi Council aka the NSW taxi industry mafia.
Despite the Taxi Council being a ‘club’ exclusively for the networks, controlled by Cabcharge and to a lesser degree Silver Top, whose sole purpose is to increase their own profits at the expense of all other stakeholders, these naive characters still hang on to their delusion. However, the number of ‘true believers’ is dwindling following the revelation in the media that Cabcharge is lobbying the NSW Government to lift the freeze on new plates.
“To arbitrarily go, ‘Right, no more licences for four more years, you can’t grow’ – I think that’s nuts,” Cabcharge chief executive Andrew Skelton told Fairfax Media.
“Taxis have to be able to evolve and grow into this massive transport opportunity … not at some contrived pace to protect some licence holders. The taxi industry is not licence holders.”
Massive transport opportunity for who, Uber and ihail?
Taxi Council CEO, Roy Wakelin-King, responded that the priority should be to let the market settle before the government considered releasing more taxi licences.
He said a freeze on taxi licences was sensible because a large number had been released in recent years, resulting in an oversupply of cabs.
“However, the council is open to changes to the number of taxi licences at some point in the future to ensure the industry does not put itself at a disadvantage to competitors”.
Yes, there is an oversupply of taxis, but not for that reason. Most of the 860 licences sold by tender by Transport for NSW since 2010 have been handed back. UberX conquering 20-30% of our market is what has caused the oversupply.
Given that both CEOs work out of the same offices in the Cabcharge Bunker in East Sydney and Cabcharge is by far the largest stakeholder on the Council one would have thought they would be on the same page ... and of course they are, but it is important for both of them to maintain the hapless plate owners’ loyalty to the Taxi Council for just a bit longer to keep the illusion alive that it is their chief advocate and protector.
In 2009 OZ Cabbie obtained a government printout, delivered in a brown paper bag, of a list of every taxi plate in NSW with the names of their owners. It revealed that the Cabcharge-owned Combined Communications Network (CCN) was the largest plate owner in Sydney with more than 300 plates, most of them obtained over the years as ‘gifts’ from government. They had a value back then of a cool $120 million. All other Sydney and urban networks also received their share of free plates, proportionate to their number of affiliated cabs.
What’s the bet that over the past six years, while the gravy train was still running, they have quietly and slowly flogged their holdings to gullible ‘mum and dad’ investors? Slowly as not to flood the market.
Thus, with the legalisation of ridesharing in NSW, the new taxi reforms and the launch of its ‘ihail’ app next month, the taxi industry mafia has no longer any incentive to protect the value of plates. On the contrary; the lower it goes, the cheaper the lease fees, the lower the fares can go, making the industry more price competitive against UberX and other ride-share apps. Well, that’s the logical assumption and will be great for operators who lease plates and for drivers. Cheaper fares equals more fares. Right?
That’s the argument Uber use when they suddenly drop their rates as they recently did in Queensland and Victoria, by a massive 20% and 15% respectively. Under the new NSW Transport Act, yet to be passed by parliament, taxi-booking services can set their own fares for bookings whilst the government will continue to regulate the fares for rank and hail. For ihail to be successful and profitable for its shareholders it needs to claw back the millions of bookings they have lost to Uber, ingogo and goCatch since 2012. There are only two ways to achieve that: lower fares and better service. And how can they achieve that? By any means they deem necessary. The new Act gives them total control over how they treat their drivers and how low they set their fares. They can and will become as unethical as Uber and for the same reason: Because they can.
If you thought cabbies were treated like serfs now you ain’t seen nothing yet. With unemployment set to explode from 2017 there will no shortage of desperate workers clamouring to work in the new-age deregulated point-to-point transport industry at considerably less than the minimum wage.
In the four months to April 2016, Cabcharge had 850 new drivers accredited, compared with just 214 in the same period the year earlier. Not surprising as it has reduced its training course to just a few hours provided at no cost to the ‘students’.
Recently an UberX driver proudly showed me his brand new taxi DA. I asked him why he didn’t just get one for hire cars, which is still easier and cheaper to obtain. “Should Uber kick me out, its easier to get a job driving a taxi than a hire car”, he replied.
He may be in for a surprise as an increasing number of single-cab driver-operators are deciding it is more profitable to drive one-out than employing bailees. It allows them to cherry-pick their work hours and save on insurance, maintenance and wear and tear. As there is no age limit on cabs in NSW anymore they have a big incentive to keep their car in top nick for a lot longer than the previously six-year age limit, but none to keep it on the road 24/7. Very soon only fleet owners will need bailees.
If Cabcharge and its ‘co-conspirators’ in ihail Pty Ltd want more cabs on the road they may have to buy the licences and the vehicles themselves and manage their own fleets again so they can engage all the new drivers they are allegedly mass-producing. Whether cabbies can earn a decent living, who cares? There has never been a better time to be an Australian … monopoly, cartel, oligopoly or mogul … or international corporate terrorist like Uber for that matter. Australia is open for business, big business. •