Last October the Victorian Taxi Industry Inquiry (VTII) and the NSW Independent Pricing and Regulatory Tribunal (IPART) both launched surveys of taxi drivers and operators hoping to get a current picture of their incomes and expenditure. The VTII posted its questionnaires on its website promoting them mainly through Twitter and Facebook, IPART mailed theirs to every driver and operator in NSW enclosing a reply paid envelope. By the end of December the VTII had, I’m told, received 70 responses, IPART over 3,000.

by Peer Lindholdt

The Victorian Taxi Industry Inquiry, headed by Prof. Allan Fels, has been running since March 2011 and its interim report is due mid year. It is expected it will turn the industry on its head and is therefore awaited with considerable trepidation by industry stakeholders. If the incompetent way it promoted its surveys and forums is an indicator, there is cause for concern. If you are a Victorian cabbie and have a sudden urge to participate in the survey hurry to taxiindustryinquiry.vic. gov.au, click on ‘news and updates’ and look for the survey link. Deadline for responses is 17 February.

In NSW the Independent Pricing and Regulatory Tribunal (IPART) is preparing its annual recommendation for taxi fare adjustments to the Director General for Transport as it has for the past 12 years. However, following persistent and well-justified criticism from the NSW TDA and ATDA that its methodology is deeply flawed it decided this year to review the Taxi Cost Index on which it bases its recommendations. Towards this end it hired high profile consultancy firm The Centre for International Economics (CIE).

As part of its review the CIE mailed out a questionnaire to all drivers and operators. It received responses from 556 operators and 2,471 drivers (10.4%), which is an excellent result, large enough from which to draw reasonably accurate conclusions.

Unfortunately the outcome of surveys is only as good as the truthfulness of the respondents. Given that these are ultimately for the purpose of establishing the size of the next fare increase and that figures used for the new Taxi Cost Index will influence the decision of the Industrial Relations Commission on maximum set pay-ins for Sydney drivers, there would have been a strong temptation for some operators to inflate their costs and drivers to understate their income.

To minimise the impact of this possibility CIE very sensibly eliminated the highest and lowest 5% of answers provided to each cost and income related question.

On 19 December it released an 88-page draft report, which had been compiled with input from the NSW Taxi Council, CCN, NSW TDA and the ATDA. However, despite having consulted widely, conducted surveys and done its own research, the report is a dog’s breakfast.

First of all it is confusing. One minute it uses figures, which include GST, the next, figures that do not.

For example in the section on Network Fees it states: “Urban network fees are fairly similar across most networks averaging $612 per four-week period (including GST). For a year, network costs are $7,231 (excluding GST)”.

On insurance (Page 38): “The estimated costs of insurance per vehicle is $12,635 for a standard urban taxi”.

Adding up the figures used by the firm to reach the above total (Comprehensive, CTP, Workers Comp and Public Liability) comes to $14,089. Oh yah, CIE explained, they are inclusive of GST but the total is not. So we deducted the GST and got $12,808, still not $12,635. With a grand name like The Centre for International Economics we would have expected better.

When I asked CIE Associate Director Phil Manners why some figures were GST inclusive and others not, he told me it was because the figures they got from drivers, operators and suppliers included GST, whereas the figures IPART uses for its Taxi Cost Index do not. Well, that explains everything!

Sorry CIE, mixing up the two in your report is absurd and makes it a virtual nonsense. To force the reader to stop and think at every turn whether or not a quoted figure is GST inclusive is an affront. Cabbies are not economists!

The report, like every report before it on this industry, relies largely on annecdotal evidence and heresay. There is little or no hard evidence to back claims up. For example, according to the CIE (page 45) the average cost of operating a Sydney taxi is $62,709, the pay-in from drivers $66,420. That leaves the operator with a paltry profit of $3,711. A wonder we have any operators.

The report is a draft only and stakeholders will have further input. Whilst that may improve the structure, it is unlikely to change the overall estimates or improve the methodology behind the deeply flawed Taxi Cost Index.