Hundreds have rushed to lease one of the Napthine government’s new cut-price taxi licences since they were released on July 1, prompting a warning from industry that Melbourne’s streets could be swamped with empty cabs prowling for fares.
New figures published by the Taxi Services Commission reveal that 255 new taxi licences have been issued in Victoria since June 30, when the government made them available for $22,000 a year.
Previously, licences were issued in perpetuity and their numbers were tightly controlled by government. There is now no cap on the potential number of taxi licences.
All but 11 of the 255 new licences are for the Melbourne “metro” zone.
David Samuel, chief executive of industry group the Victorian Taxi Association, said it would take time for the rush of new licences to turn into an influx of cabs on Melbourne’s street, but that this would happen in time.
“The likeliest outcome is that those 255 licences will become 255 new taxis on the road eventually,” Mr Samuel said.
He said the rush on licences in no way reflected an increase in demand for taxi services among the public.
“We hope to see this surge tail off very quickly because if it continues it will be unsustainable,” he said.
Harry Katsiabanis, of large taxi operating company TaxiLink, said the number had spiked because operators were abandoning licence holders who refused to drop their assignment prices to match the government’s cheaper rate.
“It’s a transition stage for licence holders who have been slow to understand that the new assignment rate is set by government,” Mr Katsiabanis said. “Prices are going to have to come down.”
Perpetual taxi licence holders — some of whom paid more than $500,000 for a licence when values peaked three to four years ago — rented their licences at an average rate of $24,264 last month, figures show. This is more than $2000 above the price at which a licence can be leased from the government regulator.
Taxi Services Commission chair Graeme Samuel said some licence holders were learning the hard way that they were now operating in a more competitive environment.
Mr Samuel said the market was “working perfectly”, dismissing predictions taxi numbers will soon soar.
“I can’t imagine there is going to be 255 new taxis on the road, the market would say that doesn’t make a hell of a lot of sense, but we’ll see about that,” Mr Samuel said.
“But what it’s going to mean is that there’ll be a number of owners of perpetual licences who’ll just be hanging there holding them because they didn’t appreciate that there was a competitive market there for licence prices.”
The government has imposed major reforms on a deeply reluctant taxi industry in a bid to improve poor service standards.
Reforms have included raising the driver’s cut of the farebox from 50 per cent to 55 per cent, halving the credit card surcharge from 10 to 5 per cent and changing fare structures so taxis are cheaper in quiet times and more expensive at busy times such as weekends.
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