Illogical to reject Uber over safety concerns

It’s disappointing the Queensland Transport Minister Scott Emerson has been swayed by the taxi industry’s argument that safety regulations and supply restrictions (i.e. a limited number of taxi licences) are both needed to ensure passenger safety (Brisbane no closer to Uber app approval). The argument is illogical because you can have safety regulations without supply restrictions. The Government can regulate industry standards and require criminal checks, but it doesn’t have to limit the number of taxi licences as it does now. With taxi licences costing hundreds of thousands of dollars, it’s pretty clear that licences are valuable because they earn super profits for licence holders. Licences would cost much, much less (possibly only several hundred dollars each) if the licence fee simply had to cover the cost of Government safety regulation.

In a 1999 research paper on the taxi industry, the Productivity Commission pointed out that safety regulations can be implemented without massively restricting supply, which simply increases the profits of licence owners (pages 11-12):

The Commission acknowledges that there is a role for regulation in specifying minimum safety standards for taxis. This reflects the very limited ability of passengers to determine the mechanical condition of the taxis they use, as well as concerns about the safety of third parties. But the most efficient way to pursue safety objectives is by targeting them directly — not indirectly through income support measures. These latter measures provide no guarantee that safety will be improved. This is most evident in the case of leased plates where the higher income is appropriated by the owner of the plate, not the taxi operator — the person responsible for vehicle safety. [emphasis added]

I’ve previously commented on the Uber confusion. And my friend and colleague Brad Rogers has made some interesting comments on the Queensland taxi industry in recent months:

Queensland taxi licences and drunken violence

Brad’s radio interview on taxi deregulation

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