Taxis are an important part of our urban transport system. The recent inquiries in NSW and Victoria show they are among the least efficiently managed industries in our community. The issue of reforming them is difficult because of the evident need to compensate those who have paid huge amounts for licences with any deregulation. But one reform is self-evident and should go through immediately. I think no-one but the shareholders of a single firm could argue with this one.
Cabcharge has substantial monopoly power in the market providing electronic/non-monetary payments for taxis. It controls 97% of the market and levies a 10% fee on fares for providing this service – that’s true whether you use a taxi voucher or a credit card. The average fee for similar services in the rest of the community is 2% and the cost of providing the service about 1% of revenues. Cabcharge’s move into operating taxi networks intensifies its monopoly position.
The Reserve Bank should legislate to limit such charges to something less than 5% as is now currently proposed. The fee as it stands unnecessarily damages the taxi industry and taxi driver incomes as well as commuters because, by substantially increasing the cost of taxi travel, it reduces the quantity demanded of taxi services.
The stock market seems to be forcecasting that this reform will go through. Yesterday’s Cabcharge share price was $3-93 down from its peak of $6-57 this year. (1691)