MELBOURNE taxi drivers will have to pass a knowledge exam and customers will pay more on weekends in the biggest ever overhaul of the industry.
Premier Denis Napthine announced annual taxi licence fees will be $22,000 in metropolitan zones – allowing more entry to the market – and taxi drivers will get a guaranteed 55 per cent of takings – up from 50 per cent.
There will be lower fares for customers at off-peak times, but weekend revellers will face up to 20 per cent higher fares on Friday and Saturday nights.
In some cases, fares will move from prescribed amounts to “maximum fares”, allowing customers to haggle for discounted rates if they are travelling to the airport.
The service fee for card payments will be slashed from 10 per cent to five per cent.
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A new “knowledge exam” will be introduced for drivers in metropolitan areas with drivers only accredited if they pass.
The test will cover driving skills, English language proficiency and key sights and routes around Melbourne.
Some restrictions on the number of new taxi licences will be removed and a four-tier taxi zone system will be brought in.
The watchdog overseeing the system will have new powers in a bid to clean up the industry.
Dr Napthine said the reforms were the biggest the industry had ever seen and would give passengers a better deal following the 16 month inquiry headed by Professor Allan Fels.
He said it would take up to three years for the taxi industry reforms to be fully implemented.
“Our reforms will create a more flexible, responsive and innovative taxi industry that puts the customer first,” Dr Napthine said.
He said the knowledge exam and changes to driver pay would be good for Victorians.
“They will provide customers with higher quality, more reliable and safer services and ensure drivers are properly remunerated, trained and knowledgeable,” he said.
Public Transport Minister Terry Mulder said new fares would not be implemented until next year.
He said he would refer the potential fare hikes to the Essential Services Commission.
Victorian Taxi Association CEO David Samuel said the industry was concerned with how the reforms would impact licence plate holders.
He said licence plates, currently valued at about $350,000, would decrease and there were concerns for people who owned them.
“There are areas of concern. That won’t come as a surprise to the Government. We are concerned about the future of taxi operators and taxi licence holders,” Mr Samuel said.
“What we are concerned about is open entry to the industry, which could see massive oversupply, a decline in service standards for customers, an increase in price and also taxi businesses being put up against the wall.”
Changes to licences
The Premier announced annual taxi licence fees will be $22,000 in metropolitan zones, $17,000 in urban and large regional areas, $11,000 for regional locations and $3,400 in country areas.
Fees will be indexed to CPI minus 0.5 per cent, which is contrary to recommendations from the taxi industry inquiry.
In his report last year, Prof Fels recommended a flat $20,000 annual fee for taxi licences.
The annual fee to be introduced for licences will relieve pressure on fares, the Government said.
Cab driver Steven Kowalski told the Herald Sun that more licences on the market would mean fewer customers for drivers.
Mr Kowalski said this would make their salaries worse overall despite the pay boost per fare.
“We are going to put more cars on the roads,” he said.
“There’s too many cars on the road already. Nothing will change for us.”
Dr Napthine said perpetual licence holders could rent their licences out for $25,000 or $26,000 a year.
“The difference between what Allan Fels recommended and what we are introducing is two-fold. Firstly we have gone from $20,000 to $22,000 (a year for new licences),” Dr Napthine said.
“Secondly and most importantly we have introduced an indexation rate on top of that and the indexation rate is CPI less 0.5 per cent.
“The economists that we’ve consulted suggest that that will secure the value of perpetual licences.”
Dr Napthine said the Government opted for the indexation over Prof Fels’s suggestion of possible compensation for existing licence holders.
“The Government did consider those matters but in consultation with the industry the indexation outcome was seen as a much better outcome for existing perpetual licence holders,” he said.
Mr Mulder said the real issue for the Government to come to grips with was licences.
“We believe the indexation, the $22,000 annual fee provides licence holders with a sense of security,” Mr Mulder said.
New Taxi Services Commission
Former chair of the Australian Competition and Consumer Commission, Graeme Samuel, will chair a new Taxi Services Commission from July 1 this year.
Mr Samuel said the changes would see more competition introduced.
He said the quality of service and problems getting cabs at Melbourne Airport were key concerns.
Victorian Taxi Association CEO David Samuel said he thought plate holders would be concerned but said it was too early to comment on the rejection of compensation for those people.
He said he was also concerned about the axing of mandatory affiliation because it raised concerns about passenger safety and service levels.
“Obviously when you book a cab you want one to turn up. The more access those companies have to cabs the easier it is to get a cab to those locations.
“Passenger safety can be affected if you are not affiliated because it can make it harder to track that journey … and provide in car safety equipment like safety and alarms.”
13CABS spokesman Simon Purssey said the industry needed “a bit of a shake up” and the company welcomed the Government’s response.
“What they have announced today we see that as a positive as a taxi provider,” Mr Purssey said.
He said he didn’t know if the company would lose business after the Government announced it would accept Prof Fels’s recommendation to axe mandatory affiliation.
Currently all cabs are affiliated with networks, including 13CABS and Silver Top.
“We as a company are really happy with the outcomes of today. We are going to go forward, work hand in hand with the commission to get a better service for the travelling public,” he said.
He also welcomed the move to give drivers a mandatory 55 per cent of the fare box and the introduction of the knowledge exam for drivers.
But he said the new fare structure needed “a little bit more work”.
‘Big test’ for Napthine Government
Prof Fels said he welcomed the Government accepting most of his 139 recommendations but said the changes to licensing costs would take the edge off the otherwise extensive reform.
He said the move would cause licence values to increase, which would in turn put pressure on fares and force customers to pay investors heavily.
“This compromise is a significant limitation of the proposed licensing reforms,” he said.
“These are the foundations of the many changes needed if the poor performance of and lack of competition in the industry are to be fixed. Every year as licence prices rise under the Government plan, new entry will become harder rather than gradually easier.”
Prof Fels hopes indexing will be reviewed in three years before any harm is done.
“Industry leaders are causing the slow death of the industry by their heavy lobbying for protection from competition,” he said.