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Point to Point Independent Review 2020 1 7 Structural Adjustments 38 Transport for NSW Point to Point Transport Independent Review 2020 Report to the Minister for Transport and Roads and the Minister for Regional Transport and Roads July 2020 Contents Foreword 3 1 Executive summary 4 2 Summary of recommendations 7 2.1 Further structural adjustments 7 2.2 Further industry assistance 9 2.3 Sustaining point to point services in regional locations 9 3 Introduction 10 3.1 Background 10 3.2 Review established – Terms of Reference 11 3.3 Consultation and data analysis 12 4 Glossary and acronyms 14 5 Context 16 5.1 What is point to point transport? 16 5.2 Future Transport 2056 17 5.3 Other Australian jurisdictions 18 5.4 International experience 20 6 A dynamic point to point transport market 23 6.1 Customer usage 24 6.2 Customer satisfaction and perceptions 26 6.3 Demand trends 28 6.4 Supplier trends 34 6.5 Possible future developments 36 NSW Government Point to Point Independent Review 2020 1 7 Structural adjustments 38 7.1 Supply 38 7.2 Fares 50 7.3 A level playing field for services for the transport disadvantaged 56 7.4 Access to road and kerbside infrastructure 64 7.4.1 Use of bus and transit lanes 64 7.4.2 Kerbside access 67 7.5 Compulsory third party insurance 70 7.6 Other matters raised by industry 72 8 Industry assistance 76 9 Point to point services in regional locations 96 10 Conclusions 112 References 114 Endnotes 118 2 NSW Government Point to Point Independent Review 2020 Foreword Point to point transport is vital for connecting members of the NSW community – for their journeys to work and education, for visiting friends and family, engaging in social and recreational activities, getting to the doctor or other health or community care – and helping visitors to our state to get around. Point to point transport can operate as an adjunct to public transport, or an alternative where public transport is not available or suitable to customers’ circumstances. The NSW Government’s principal interest is to regulate the safety of these services, but in shaping this regulation, government must be mindful of the need to support and not impede the development of innovative services to suit the varied needs of a diverse customer base in metropolitan and in regional locations. Government regulation should be designed to provide for this diversity, and especially to provide room for the application of technology to benefit customers – both to improve service quality as well as safety outcomes. The past several years have been a tumultuous time for point to point transport, not just here in NSW, but throughout Australia and globally. The emergence of ride‑sourcing, ride‑pooling and ride‑sharing platforms – as part of the new sharing economy – has challenged the traditional model of the taxi industry worldwide. When rideshare entered NSW it did not readily fit within existing regulatory frameworks, but while industry and regulators grappled with how to respond, customers ‘voted with their feet’ by booking rides with the new providers. It is now five years since the NSW Government legalised rideshare, and four years since the passage of the Point to Point Transport (Taxis and Hire Vehicles) Act 2016, establishing a safety based framework which sought to minimise government interference in the way point to point transport services are delivered. Customers can now safely choose from a variety of service providers. The overall market for point to point transport has grown. Notwithstanding the consumer benefits, the changes have been challenging for traditional industry participants. This review has heard from many industry incumbents about the difficulties they face. The conclusion of this review is that the industry, as well as its customers, are best served by government allowing participants to adjust their service offerings, not interfering in day‑to‑day operations. The review makes a range of recommendations, including freeing the taxi industry to better compete, and changes to level the playing field across the sector. It also recommends government involvement in local transport planning to ensure that point to point transport services continue to be available in regional and remote areas at risk of losing services, in particular wheelchair accessible services. It has also recognised the impact of both the changes to date and the proposed further deregulation on industry incumbents by proposing additional assistance. The review response is framed by an understanding of the point to point transport industry up to the time of the impacts of the coronavirus pandemic. The review acknowledges the operating environment for transport services may be very different in a post‑pandemic world. Many organisations and individuals, from within industry, business and government, have participated in this review during a difficult time for everyone in NSW due to the impact of the coronavirus pandemic; the generous contribution of their time and considered views during the consultation process is acknowledged and much appreciated. The review was ably supported by a review team within Transport for NSW (TfNSW). The enthusiasm and diligence of this team has been remarkable and they deserve great thanks. Thanks are also extended to the Ministers and the NSW Government for the opportunity to lead this review as the Independent Reviewer and in doing so to contribute to the ongoing success of the point to point transport sector in this state. Ms Sue Baker‑Finch, 13 July 2020 Independent Reviewer NSW Government Point to Point Independent Review 2020 3 1 Executive summary Since the 1840s, when horse‑drawn cabs appeared on Sydney streets, taxi‑like services have been regulated through the grant of a limited supply of licences and control of fares and safety. In time, regulation expanded to cover limousines and other vehicles for hire. The level of intervention has varied and taken different forms, but the focus has consistently been threefold: safety, supply and fares. In April 1995, all Australian jurisdictions, including NSW, signed the Competition Principles Agreement (CPA), agreeing that legislation (including taxi and hire car regulation) should not restrict competition unless it can be demonstrated that: • the benefits of the restriction to the community as a whole outweigh the costs, and • the objectives of the legislation can only be achieved by restricting competition. Subsequent reviews have consistently found that ensuring safety of services is necessary and appropriate in the public interest, but other aspects of taxi industry regulation, in particular caps on supply, have cost impacts that are not necessarily outweighed by the benefits to the community, and that greater benefits would accrue from less regulation.1 In recent years, new service models entered the point to point transport market, expanding choice and opportunity for customers. Their operating costs are lower, and this presents a significant challenge to the traditional taxi model. In 2017, following the legalisation of ridesharing in most Australian jurisdictions, the Productivity Commission found that deregulation of taxis was ‘unfinished business’, observing: ‘Previous reviews have identified the benefits of deregulation, further reviews are not needed.’ (Productivity Commission 2017, p 225)2 This review has found that deregulation of the point to point transport industry in NSW remains ‘unfinished business’. The 2015 Point to Point Transport Taskforce (the Taskforce) Report and the government response went a good part of the way to open the market by ensuring that booked services were legally available to the public with minimal appropriate regulation to ensure safety. NSW consumers can choose the point to point transport service provider appropriate to their needs. Surveys indicate customer satisfaction is higher than ever. On the other hand, caps on supply of taxi licences and maximum fares were maintained, and the government decided not to change the existing taxi licencing regime. The post‑2015 reforms were well‑intentioned in seeking to preserve the position of taxi industry incumbents and to ensure a thriving rank and hail taxi service, especially in Sydney. However they have left the taxi industry in an increasingly difficult position. The higher costs inherent in the tradeable and leasable taxi licence model, including the common separation of the licence owner from the business that operates the licence, most notably in Sydney, coupled with the cap on supply, mean that taxis struggle to compete with a largely deregulated and uncapped booked sector. Following consultations, consideration of reform elsewhere, and analysis of the available industry and market data, including evidence of significant differences in how point to point transport services operate in Sydney and outside Sydney, this review concludes that further piecemeal assistance or adjustment is irrelevant in the face of the need to finish the task of deregulation. There is evidence of increased competition in the point to point transport sector, bringing with it an increased diversity of transport options with a range of prices and service offerings. Customers are ‘voting with their feet’, choosing the new rideshare and app booked service models in increasing numbers. This level of enthusiasm seems to have been underestimated when the 2015 reforms were developed. 4 NSW Government Point to Point Independent Review 2020 The overall market has grown, particularly in the city, but taxi supply is controlled so only unlimited rideshare services can respond quickly to meet increased demand. On the other hand, when demand falls (as in the coronavirus pandemic), it is easier and less costly for rideshare to scale down its operation in response. Meanwhile, it seems the Taskforce may have overestimated the value of exclusive access to the rank and hail market. Similarly, the Taskforce’s concerns about the need for the government to manage supply to ensure the viability of individual operators in the rank and hail market may have had adverse outcomes for industry viability overall.
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