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Regulation of the taxi industry

Commission research paper

This paper was released on was released on 2 December 1999. The paper contains an analysis of key issues facing State and Territory governments reviewing the regulation of taxis and hire-cars, under the National Competition Policy.

It builds on the work contained in the 1994 Industry Commission report on urban transport, particularly its assessment of the rationales for entry restrictions and fare regulation, and its analysis of compensation and adjustment issues.

The paper is intended to complement other individual reviews by providing policy makers in different jurisdictions with a common framework for assessing key issues in taxi regulation.

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  • Media release
  • Contents

Most State and Territory governments are in the final stages of their National Competition Policy reviews of regulation governing the taxi and hire car industries. To assist governments to make decisions regarding future regulation of taxis, today the Productivity Commission has released a research study — Regulation of the Taxi Industry. The study builds on previous work of the Commission and presents a framework for assessing the level of regulation that is appropriate.

Consistent with the findings of some State/Territory reviews, the Commission finds that the removal of regulations that restrict the number of taxis would result in significant benefits for consumers through lower prices, shorter queues or a combination of both.

But it would also result in large losses for current licence holders by eroding most of the premium currently being paid for a licence — up to $250 000 or so.

The Commission says that because of differences between taxi markets and associated administrative arrangements in different parts of Australia, questions of compensation and adjustment assistance may require different responses by individual State and Territory governments. The report offers a framework to assist governments in deciding on the nature and extent of any such transitional assistance.

The research paper also explores whether there is a need for government regulation of other aspects of taxi operations — in particular, regulation of fares and of the 'quality' of taxi services.

Cover, Copyright, Foreword, Contents, Summary

1 Introduction

2 The nature of taxi markets
2.1 Market segments
2.2 The rank and hail taxi markets
2.3 Phone bookings

3 Assessing the need for existing regulations
3.1 Safety and quality regulation
3.2 Regulating entry
3.3 Fare regulation
3.4 A different regulatory regime for hire-cars?

4 Compensation and adjustment assistance
4.1 Some general principles
4.2 Compensation for taxi deregulation
4.3 How much compensation?
4.4 Concluding comments


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