Recently the West Australian Minister for Transport, Rita Saffioti, announced details of the proposed new On-Demand Transport Act, one which provides a clear example of government interference in the market which will increase the burden on the public.

Photo: Department of Transport

The implementation of a “10 per cent levy on total fare revenue generated by operators” is the Labor government’s mechanism for funding a voluntary buy-back scheme for taxi plates, which have decreased in value over the past two years since Uber entered the local market. This 10 per cent levy is a direct tax on the users of on-demand transport. Saffioti is aware that this supposed “levy” is in fact a tax, however her best defence is trying to wash the government’s hands of any increase in cost to consumers, saying that she doesn’t believe there is justification for such an increase.

The problem with this line of thinking is that there absolutely is a justification for business to pass on the extra cost. Why should businesses who have made net prices cheaper for consumers have to foot the bill for their inefficient competitors? On-demand transport companies are going to pass on the levy, and any suggestion that they won’t is absurd. How is a business supposed to survive with such an increased burden? It is hard to imagine on-demand transport companies being very profitable after paying their 10% GST, now another 10% to the State Government for this proposed levy, the cost of paying drivers, insurance, fuel, rent, and other such over-heads, and then paying 25–30% of what is left over in company tax (the variation depending on their annual turnover under the current Federal Government). There is no need for all this regulation; it is unnecessary intervention by the State Government which prevents the market from becoming more efficient, and specifically in this case, prevents small and medium sized businesses from providing much needed jobs and a profitable service.

Saffioti claims that this Act will “promote competition and innovation across the industry, removing regulation and costs” — in reality nothing could be further from the truth. Regulation is increasing, the cost will increase by exactly 10%, and competition and innovation will be effected as a result of interference which significantly reduces a given company’s ability to invest and operate. The only way that a company can avoid all this is if they pass the cost directly on to consumers, which hardly seems fair.

In an effort to raise funds to compensate taxi plate owners for a decrease in value of their plates (which were artificially overvalued as a result of previous state governments constricting the number of plates allowed on the road) the McGowan Government is proposing legislation which will take directly from the hip-pocket of West Australians to fund a voluntary buy-back. While unfortunate for taxi drivers who have lost out, we can’t expect on-demand transport users to bail out private individuals for their own unfortunate investments. Taxi plates were overvalued because of poor legislation and over-regulation, this problem was created by the State Government and should be paid for by the State Government.

To achieve Saffioti’s goals of increased competition and innovation, along with removing regulation and costs, there is one simple way forward: a more liberal approach to the on-demand transport industry. The State Government has no business interfering in the market to the extent they will under this proposed legislation, which provides the paradox of supposedly decreasing regulation and cost by increasing regulation and cost. Saffioti should leave consumers to use the transport they want to without the added cost of a Government gouge which interrupts the free-flow of goods and services in our economy.