DRIVE A2B June 2017 edition


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DRIVE Voice of the Victorian Point-to-Point Transport Industry JUNE 2017 NO 02 incorporating TAXIOF THE TVAOXIICINEDUSTRY on the ranks MAGAZINE since 1966 IT’S TIME for the Victorian Government to make the fair and right decision. READ ABOUT WHAT’S BEEN HAPPENING IN YOUR INDUSTRY TAXIS HIRE CARS RIDE SOURCING OWNERS DRIVERS SERVICES


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HELLO ... and WELCOME to DRiVE Voice of the Victorian Point-to-Point Transport Industry magazine! The Directors of Trade Promotions Pty Ltd (publishers of Taxi Talk) believe that to remain competitive and relevant to this industry – the commercial passenger vehicle industry – it’s time for Taxi Talk – Voice of the Taxi Industry to be rebranded. Taxi Talk was published for 51 years (1966 - 2017) and the new brand of DRIVE A2B - is incorporating everything from Taxi Talk in DRIVE A2B plus more. We didn’t sell Taxi Talk, we have simply rebranded it DRIVE A2B - Voice of the Victorian Point-to-Point Transport Industry, to keep current and competitive with this digital technologically savvy age we are living in. We pride ourselves on reporting news of the Pointto-Point Transport industry, both in Australia and overseas, when it happens as it happens. Everyone is entitled to have their say and DRIVE A2B magazine gives everyone the opportunity to do just that! Delivering news on all the different facets of this commercial passenger vehicle industry. DRiVE Voice of the Victorian Point-to-Point Transport Industry incorporating TAXIOF THE TVAOXIICINEDUSTRY on the ranks MAGAZINE since 1966


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CONTENTS REGULARS 14 Uber fails in Europe Hans Althoff takes a look at why Uber has failed, and is failing, in Europe. 16 Surviving tough times Taxis and hire cars must survive through the hardest times yet. 18 VHCA update A summary of what the VHCA has been up to in the past month. 28 Your say Letters and emails received by DRIVE A2B regarding the point-to-point transport industry. 30 Industry statistics Figures for last month’s Victorian taxi and hire car industry statistics. 32 Interstate news Report on what’s happening around Australia in our industry. 38 Overseas news Updates on the point-to-point industry all around the world. FRONT COVER Travelling the countryside by Anna Grigorjeva FEATURES 10 CPVI Bill It was handed to the Economy and Infrastructure Committee for deliberation and reporting and we have an update from the meetings. 22 Government has it wrong Graham Watt MP gives his view on the current status of the Victorian taxi and hire car industry. Editor Mrs Toni Peters Publisher Trade Promotions Pty Ltd PO Box 2345, Mount Waverley Vic. 3149 Advertising enquiries Mrs Toni Peters P 0400 137 866 E · W Media Pack containing advertisement sizes and costs can be downloaded from our website. Deadline All articles, editorial and artwork must be submitted by the 15th of the month prior to publication date. Home delivery subscription $40 for your copy of DRIVE A2B to be mailed to you for one year. Payment options Direct Deposit to Trade Promotions Pty Ltd BSB 033065 ACC 312786 REF your name Mail Cheque to Trade Promotions Pty Ltd PO Box 2345, Mt Waverley VIC 3149 DRIVE A2B magazine · June 2017 5


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Welcome to the June 2017 edition of DRiVE Voice of the Victorian Point-to-Point Transport Industry Editorial Last year the government created a Hardship Fund to help those in the taxi industry with an immediate financial need. Apparently all the $4 million has been paid out in full - with 50% of the Hardship Fund going to the fund administrator. How is that fair? And then there’s the $50 million Fairness Fund that some 1,500 taxi licence holders have lodged applications for assistance. Not one penny has been seen from this Fairness Fund. Apparently Minister Jacinta Allan is waiting to get the $2 levy in place before giving any assistance to those in need. The government, in this case specifically the Taxi Services Commission (TSC), has made many of us wary of trusting the government. Over the last 18 months the TSC has cracked down on compliance by taxi drivers and hire car operators, whilst completely ignoring the conduct of unlicensed operators. This is not just Uber, SheSafe, GoCatch but also private operators running private cars, not attached to a Network Service Provider and transporting people for monetary return. Time and time again the TSC has been made aware of these instances but have failed to enforce the law. This inability, or unwillingness, to reprimand the unlicensed entities working illegally inside the taxi and hire car industry has devastated the belief of thousands in the fairness and basic reliability of government. Currently the Taxi Services Commission is leasing 2,000 taxi licences for $23,017 pa. If the proposed bill goes ahead there won’t be any more leases and the government will lose $46 million per year. Is this perhaps why they have not included a sunset clause for the $2 levy in the proposed bill? Is it that they still want to get their hands on this $46 million revenue that they are now going to lose due to the cancellation of all taxi licences? Really! The government surely doesn’t want to 6 DRIVE A2B magazine · June 2017


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incorporating TAXIOF THE TVAOXIICINEDUSTRY on the ranks MAGAZINE since 1966 have their cake and eat it too. They can’t continually bleed this industry dry, or can they? 13CABS, which is owned by Cabcharge, owns 34 taxi licences - most of which are WATs. Interesting to note that neither David Samuel or Stuart Overell strongly opposed the compensation package of $100,000 - $50,000 at the recent committee hearing. It was as if they didn’t really care about this. Perhaps because they have already written down the value of their licence ownerships, they are just keen to move on...... Lucky for some to have a big profit margin that enables them to claim such a big capital loss against it. Mark Shehata, VTHF, said at the committee hearing that, “the first licence held by an individual or company, should not be valued any more or less than the 20th licence”. It shouldn’t matter whether an individual, a trust or a company owns the licence. They should all be reimbursed equally. Denis Nelthorpe, CEO WestJustice, thinks that people who purchased licence plates many, many years ago should receive less payout than those who purchased five years ago. For example, Nelthorpe believes that if you purchased a taxi licence in 1986 for $59,000, you should receive less compensation for the cancellation of your licence than the person next door to you who in 2012 paid $460,000. He believes that the person who purchased the licence in 1986 has had a good return on the licence and doesn’t need to be compensated as much. But the taxi licence is property it is an asset - just like a house is. So what does it matter when someone purchased the property? It only matters when they sell it. Nowadays taxi licence holders can no longer sell their taxi licence anywhere to anyone, because the Andrews government is cancelling their licence. So, they need to be paid a buyback fee by the government that is both fair and equitable. It’s not rocket science, is it? Toni Peters EDITOR Views expressed in any article in DRIVE A2B magazine are those of the individual contributor and not necessarily those of the publisher. The publisher cannot accept any responsibility for any opinions, information, errors or omissions in this publication. To the extent permitted by law, the publisher will not be liable for any damages including special, exemplary, punitive or consequential damages (including but not limited to economic loss or loss of profit or revenue or loss of opportunity) or indirect loss or damage of any kind arising from the contract, tort or otherwise, even if advised of the possibility of such loss of profits or damage. Advertisements must comply with the relevant provisions of the Competition and Consumer Act 2010. Responsibility for compliance with the Act rests with the person, company or advertising agency submitting the advertisement. DRIVE A2BTM is wholly owned by Trade Promotions Pty Ltd. © Trade Promotions Pty Ltd 2017. All rights reserved. Copyright of articles and photographs in DRIVE A2BTM remains with the individual contributors and may not be reproduced without permission. DRIVE A2B magazine · June 2017 7


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PARLIAMENTARY COMMITTEE UBER IS ILLEGAL And so it has been confirmed. The operation of Uber in Victoria has always been and currently is, ILLEGAL. A t the recent inquiry into Victoria’s Commercial Passenger Vehicle Industry bill, many questions were asked of Mr Lucas Groeneveld, General Manager, Uber Victoria and Tasmania. He stated that Uber has 18,000 driver partners in Victoria and they have done some 850,000 rides since they have been in town. He believes that the $2 levy would have a severe impact on their business and Uber would increase fares to cover this. He also stated this levy would create entry barriers for new players in this point-topoint industry. Uber doesn’t have any wheelchair accessible vehicles operating in Victoria, but they are looking to introduce UberAssist, whereby the drivers assist the passengers to enter and exit the vehicle. At this stage they are not even considering providing vehicles that can transport wheelchair-bound passengers. The legality of Uber’s operations in Victoria was questioned a couple of times. It was stated by members of the committee that Uber had been operating illegally for many years and Groeneveld was asked how they had got around that. The response from Groeneveld was another version of the sales pitch on how Uber operates and how the current legislation was drafted and in place well before this technology, smart phones and apps, were available. He mentioned that Government has acknowledged that the legislation is out-ofdate and that the Commercial Passenger Vehicle Industry bill was about incorporating this technological advancement and ride-sharing apps and putting everyone on a level-playing field. A great sales pitch - but not an answer to the question asked. Mr Bernie Finn (Chairman of the Economics & Infrastructure committee) directly asked Mr Groeneveld, ”Why has Uber not been prosecuted in the years that you have been operating illegally in Victoria?” Mr Groeneveld answered, ”No comment on that, I am not in a position to comment.” He went on to say that they work hand in hand with law enforcement, Victoria Police and other government bodies regularly. Mr Finn immediately stepped in to say, ”A company operating illegally has a good working relationship with police!” Now, the question has been asked and the answer is on file.... What’s next? 8 DRIVE A2B magazine · June 2017


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PARLIAMENTARY COMMITTEE CPVI bill At the last sitting of the Legislative Council, it was decided to ask the Economy and Infrastructure Committee to examine the Commercial Passenger Vehicle Industry Bill 2017. The Economy and Infrastructure Committee held public hearings on the CPVI Bill at Parliament House on 23 and 24 May. This committee consists of members of the Legislative Council and was chaired by Bernie Finn (Western Metropolitan). In attendance were:- Cesar Melhem (Western Victoria), Luke O’Sullivan (Northern Victoria), Shaun Leane (Eastern Metro), Jeff Bourman (Eastern Victoria), Samantha Dunn (Western Metro) & Nazih Elasnar (Northern Metro). The Committee heard from witnesses who presented arguments for and against sections of the proposed bill. Richard Bolt (Secretary, Dept of Economic Development, Jobs, Transport and Resources) stated that the figure of $100,000 for 1st licence and $50,000 for 2nd, 3rd and 4th licences was decided upon by policy analysts/specialists and that it was a judgement - not a formula. DEDJTR stated that the value of the business is not being taken away. That the licence plate was not the value of the taxi business. They also didn’t mention that taxi licence values plummeted after the Fels’ inquiry report was released and has continued to tumble ever since. Nor did they mention the arrival of Uber and other ridesourcing companies to Victoria in 2012 and the government’s inability, or unwillingness, to prosecute illegal ride-sourcing drivers and operators. And both of these have had a huge detrimental impact on the value of taxi and hire car licence plates. It seems that the personnel from DEDJTR don’t fully understand this industry. Perhaps they have been living in a mushroom field. The Hon Jeff Kennett stated later during the meeting that this bill, this legislation, is not a reform, it is a cancellation of licence plates. The payment of compensation to plate owners is for reducing the price of a licence plate to zero and the transition payment should not be taxed. Now he certainly understands this industry very well! VHCA stated that they have had communication from numerous overseas investors who are interested in launching claims under investor-state dispute resolution treaties for compensation. Their understanding is that the treaties are very clear, that compensation must be paid for assets confiscated, at the value of the asset before the government announcement was made. In the case of taxi licences, this is about $400,000. And the VHCA believe that Victorian licence holders should be compensated at the same rate as foreign licence holders. VHCA’S CONCERNS 1. The bill confiscates property without compensation; 10 DRIVE A2B magazine · June 2017


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Witnesses agreed on 2 things 98% of the industry’s taxi licences are held by single to 4-licence owners. 2% are owned by multi owners with 5 or more licences. Also, by not having a sunset clause with regards to the $2 trip levy, the government could continue to charge this levy for ever and ever and ever........ 2. The bill imposes a substantial compliance burden on small operators; 3. The bill imposes a cost burden which is too high and should be removed. 4. The bill devalues businesses without providing a pathway to an exit or industry transition 5. The bill, on advice received, violates human rights and is grossly unfair to those who have built an industry over decades. As such this bill has been referred to the Scrutiny of Acts Committee to reconsider the compliance of this bill with the Charter of Human rights. $2 LEVY The DEDJTR, when calculating the numbers of trips per year, which is needed to calculate when the pot of money for the Transition and Fairness Funds will be repaid, has only relied upon taxi booking trips. This is because the Taxi Services Commission only has data on taxi trips. They have not taken into account the rank and hail trips, hire car trips or ride sharing trips. They also stated that the duration of the levy would probably be 8-10 years before the compensation was repaid. They have based their equation on 23 million trips per year. David Samuel, 13CABS General Manager, told the committee they did around 20 million trips per year. Therefore the total trips per year, in Victoria looks like this:- 13CABS Silver Top Taxis Hire Cars Ride sourcing 20 million 20 million 5 million 5 million giving a total of 50 million trips per year. More than double the amount that the DEDJTR has used in its calculations. So, if they are wrong about this - then what about the rest of the figures that they are quoting to everyone? Much discussion was had about whether current taxi businesses could absorb the $2 levy without passing on the cost to consumers. In short, the answer is NO. Eleanor Fitz, Wodonga Taxis says, “Short fares are the norm in regional and country areas. If we have to put a $2 levy on to the fare, passengers aren’t going to pay it. They won’t be able to afford it and will seek alternative travel arrangements.” Steve Armstrong, Chairman Ballarat Taxis, stated that most of the country taxi operations are either co-ops or very small and it would make it virtually impossible to exist if they had to absorb the $2 levy. VHCA suggested that all trips booked through a booking service provider be levied $1 per trip. But that the levy only be applied to operators or companies that undertake at least 75 trips in a given quarter. By the way, the State Revenue Office advised that it is going to cost at least $1.5m to setup and start collecting the levy. Then later on there will be the extra ongoing costs for compliance, objections, challenges, litigation, etc. This meeting was the Hon Jeff Kennett’s AC (former Victorian Premier) first appearance before a committee hearing and he said “The fact that I am here should tell you how serious this is!” He told the committee how some people in the industry are losing their livelihood - losing everything they have got - not just their licence, but everything they have come to this country for - their home, livelihood and family. 11DRIVE A2B magazine · June 2017


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PARLIAMENTARY COMMITTEE Mr Kennett said, “These people deserve to be treated as you would want to be treated yourself if you were in these circumstances.” He said, “You have a responsibility as parliament to treat these people with respect. The responsibility of government is always virtually to be the safety of their community at any cost.” He asked them to put politics aside and take a bipartisan approach and treat this matter decently, fairly and quickly. Mr Kennett pointed out that we didn’t need to change legislation to incorporate ridesharing - as change requires good management and not necessarily legislation. But what’s done is done and we certainly need to move forward. It was stated that many claims to the Fairness Fund will be rejected due to the fact that the owners are simple working people, who have not kept the records required to have a successful claim. He indicated that we have not seen any payment from the Fairness Fund as Jacinta Allan, Minister for Transport, is waiting to get the $2 levy passed before any payments are made. Mr Kennett argued that this is totally unfair and unjust. In summary, Mr Kennett’s suggestions to the committee were:- • Compensation for the cancellation of all licence plates should be fair and equitable. • All compensation payments to be made within 30 days of Royal Assent being granted. • Introduce KPIs to monitor the collection of the $2 levy vs compensation packages and Fairness Fund. • Either pass the bill with amendments accepted - or totally reject the bill. Do not accept a piece of legislation that is going to worsen the situation. INDUSTRY LOSSES We heard from many about the plight of individuals and families since the falling value of the taxi licence plates. We heard about people who have lost their property to the banks as they found it increasingly difficult to meet loan repayments; people suffering from depression and mental anguish; the significant decrease in business - a business that is no longer sellable; the human and commercial toll taken on all within the Victorian taxi and hire car industry; those who have committed suicide or attempted suicide. MOVING ON Andrew Baruch, Vice President VHCA, stated that VHCA would like three criteria to be met with this legislation: • The viability of the industry into the long term, with sustainable returns to allow for investment, capital expenditure and long term future; • Minimum conditions for drivers to prevent a new generation of working poor, wholesale exploitation and drivers working dangerously long shifts; • Proper protection for the travelling public, including insurance, a requirement that all ride-share vehicles have a fivestar ANCAP safety standard, verifiable identification for all rideshare drivers and vehicles, and a maximum online-time to prevent tired drivers being on the road. Mr Kennett said the result must be fair and equitable to all in the taxi and hire car industry. Georgia Nicholls, CEO Victorian Taxi Association, advised the inquiry to “thrash out the bill, don’t throw it out - do your job and make a decision”. “Industry personnel’s assets have been substantially reduced, lives have been destroyed and the mental anguish is incomprehensible,” said Ms Nicholls. Mr Samuel voiced that he would like the government to stop talking - do their job - and take care of the people who have invested in this industry. Then appropriately deal with companies who have come in and broken the law. So, now the committee has had its public hearing for the inquiry into the Commercial Passenger Vehicle Industry bill 2017. What we have to do now is wait. Just a bit more. The committee must report back to the Upper House on 8 June. 12 DRIVE A2B magazine · June 2017


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What does the future of transport look like? SYDNEY MELBOURNE Peter Harris AOChairman, Productivity Commission Professor John Quiggin Australian Laureate Fellow in Economics University of Queensland Dr Jennifer Kent Research Fellow University of Sydney Nicole Spencer Commonwealth Department of Infrastructure and Regional Development Professor Bert van Wee Professor of Transport Policy Delft University of Technology, The Netherlands Dr Tim Williams CEO, Committee for Sydney Professor Michiel Bliemer Professor of Transport Planning and Modelling University of Sydney Business School Dr Elliot Fishman Director, Institute for Sensible Transport The Hon John Brumby AO Professorial Fellow, University of Melbourne and Monash University Professor Michiel Bliemer Professor of Transport Planning and Modelling University of Sydney Professor Ian Harper Reserve Bank Board Member and Senior Advisor to Deloitte Touche Tohmatsu Professor Bert van Wee Professor of Transport Policy Delft University of Technology, The Netherlands Alyssa Serafim Principal Infrastructure Advisor Infrastructure Victoria Marion Terrill Transport Program Director Grattan Institute Professor Graham Currie Professor of Public Transport, Monash University Dr Elizabeth Taylor Research Fellow, RMIT University Dr Elliot Fishman Director, Institute for Sensible Transport SEMINAR TOPICS Mechanisms for enhancing the productivity of our cities through transport innovation and policy reform Disruptive transport technology, driverless cars and the implications for government Local government’s role and the opportunity presented by disruptive transport technology and road user pricing Congestion charging: practice and impacts Electric vehicles: the consequences on fuel excise revenue Road user pricing in the digital age: Using technology to provide the right pricing signals to manage road use The human response: How road user pricing is likely to impact on transport behaviour The politics of road user pricing Emerging transport challenges in a growing Melbourne and Sydney SYDNEY Tuesday 8th August 2017 MELBOURNE Thursday 10th August 2017 Register at Registrations close 1st August 2017 Produced by PLACES STRICTLY LIMITED


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TAXI NEWS The Europeans are a fairly conservative lot and are reluctant to use credit cards in the same manner as Americans and Australians do. UBER FAILED IN EUROPE BY HANS ALTHOFF, Taxi Owner/Operator I am sitting here in the small country town of Prerow in Northern Germany and want to give the readers of DRIVE A2B an impression of why and how Uber failed to be successful in Germany. Wherever and whenever I asked people in the smaller townships about Uber they either did not know much about it or simply said that Uber was banned in all major cities in Germany. I asked a Taxi Driver in Frankfurt about Uber and was told that Uber operated illegally in several cities in Germany and that they discontinued their operations after being told by German authorities they could only continue to offer their services if they obeyed the German Law and all German Regulations. So, it is very simple. Uber can only exist where they are allowed to break the law or when Governments change laws and regulation to accommodate Uber. Digging a bit deeper I did find several other reasons why Uber found resistance in Germany. The Europeans are a fairly conservative lot and are reluctant to use credit cards in the same manner as Americans and Australians do. Also, Germans and most Europeans are struggling with the fact that they have to give up some of their nationalistic thinking in favour of being Europeans, first. Therefore they have a very critical view of America and big American companies. They also reject American business practices where a “dog eat dog” mentality exists and where declaring bankruptcy is worn as a medal of honour rather than something to be ashamed of. They also have not forgotten that many European Banks and other institution lost billions of dollars, when they were sold worthless pieces of paper as triple A securities by the Americans. This in turn affected the pensions of many European citizens and led to the Global Financial Crisis. So, all in all, it seems that in Europe the overwhelming population wants a socialistic democracy rather than American capitalism. It is also interesting to note that in all discussions, Taxi Licence Values did not even get a mention. This is the case because each jurisdiction in Germany charges a Licence Fee that varies from jurisdiction to jurisdiction and is rather modest. However, these Licence conditions are strictly enforced. Therefore there was virtually no impediment against Uber to operate and compete against the German Taxi Industry. Put in a different manner, it means that the business model of Uber is so flawed that Uber finds it impossible to compete when they are forced to abide by Consumer Protection and 14 DRIVE A2B magazine · June 2017 Uber only exists where they are allowed to break the law or when governments change laws to accommodate them.


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Work-laws of other countries. By simply enforcing the laws of the country and by refusing to give in to the demands of an American company that seems to have unlimited funds available, Uber stopped their destructive behaviour. I wish that our Victorian Government would also enforce our laws and not change them in favour of an American Bully that wants world domination in an industry of their choosing, by using money as a tool. I also wish that our Government would start treating its citizens fairly and stop using the Taxi Industry as a political football. I can still dream and maybe some things will have changed for the better when I return home to Australia in June. Germany sends Uber case to Europe’s highest court - the European Court of Justice. BY REUTERS Last month, Germany’s highest court ruled that Uber’s Black service had violated the country’s competition laws, but referred the case to the European Court of Justice to decide whether its view was in line with broader European Union laws. It wants clarification from the higher European court before issuing a final ruling. The Uber Black service provides professional drivers in luxury sedans. The usual Uber service offering standard cars driven by freelance drivers was already suspended in Germany in 2015 after court challenges. In May, Uber was confronted with the biggest challenge yet in Europe, after the European Court of Justice was advised to rule that the ridehailing firm is actually a transport service, not an app. The German court ruled that Uber Black had infringed German competition law because it assigned rides to drivers and rental car companies from its European headquarters in Amsterdam. Under German law, ride requests have to be made through sedan companies rather than to drivers directly. Judge Wolfgang Buescher argued that Uber is not just an intermediary in this business but involved in financial management, organization and marketing. A ruling by the European Court of Justice is expected to take at least a year before the German court takes a final decision. The business model of Uber is so flawed that Uber finds it impossible to compete when they are forced to abide by Consumer Protection and Work-laws. DRIVE A2B magazine · June 2017 15



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