Yesterday’s Sunday-Mail reported that Katter’s Australian Party (KAP) will introduce a bill into the Queensland Parliament to increase penalties for Uber drivers. Regarding the taxi industry that he is intending to defend, Robbie Katter notes: “They move a million wheelchairs per annum at no cost to the Government—it’s cross-subsidised from other routes.” Mr Katter considers this an argument for defending the taxi industry, but it actually illustrates the poor design of our current taxi industry policy. The cross-subsidy that Mr Katter is talking about comes at a cost to other consumers of taxi services, and it is not transparent, which is typically considered poor form in policy design.
From the community’s point of view, it may be better for the Government to deregulate the taxi industry and develop an explicit financial support program for Queenslanders with disabilities to help them meet any additional costs associated with their transport. They could use this support to help pay for a taxi or Uber ride. I cannot see any barriers to Uber drivers purchasing an appropriate vehicle and catering to this market segment. While there would be a cost to the Government budget from the explicit financial support, it is not a new cost to the community as a whole, because consumers are already paying for this support through the cross-subsidy that Mr Katter has referred to.
The benefits to the community that would come from a deregulation of the taxi industry and through allowing Uber to flourish are so large that we should resist attempts such as KAP’s to protect the taxi industry. As has been argued by commentators such as my friend Brad Rogers in the past, the current restriction on supply in the Queensland taxi industry imposes high costs on consumers (see Queensland taxi licences and drunken violence). This cost has been recently quantified by the Economic Policy Group in the Queensland Department of Premier and Cabinet at $40 million per year (see this ABC News report).
The Government must realise that the current protection of the taxi industry comes at a high cost to the community through higher fares than otherwise (and through a shortage of taxis at peak times) and this is what makes Uber so attractive in comparison. Consumers are highly supportive of Uber, and government regulation should change so that it is in line with community views.