Major reforms include giving taxi drivers a guaranteed 55 per cent of the fare box in a bid to raise driver income and introducing an independently run driver knowledge test for all drivers. Credit:Justin McManus The cost of paying for a cab by eftpos will be slashed 50 per cent, from 10 to 5 per cent of the fare. Other reforms include giving taxi drivers a guaranteed 55 per cent of the fare box in a bid to raise driver income, and introducing an independently run driver knowledge test for all new drivers. The news sent the share price of listed company Cabcharge into a tailspin, down about 20 per cent by lunchtime. Metropolitan taxi licences, currently valued at about $350,000, will be made available for $22,000 a year, indexed at 0.5 per cent below the inflation rate. Restrictions on the number of new licences will be removed to encourage drivers to start up their own small businesses.

The question of compensating some taxi licence owners who stand to see the value of their investment shrink, flagged during the inquiry, was rejected by the government. Premier Denis Napthine said customers would begin to see big improvements to the quality of taxi service within 12 months. Professor Allan Fels, who chaired the taxi industry inquiry, welcomed the government’s response, saying it would improve customer service standards, but said it had not gone far enough on reducing overinflated licence values. ‘‘The decision to offer new licences to any suitably qualified person at a slightly higher than recommended price of $22,000 is an important change and may lead to some new entrants to the industry in the short term,’’ Professor Fels said. But he warned that the government’s decision ‘‘not to fix the cost of licences in perpetuity but to legislate that they increase with CPI each year is a significant step away from the inquiry recommendations and will trigger escalating licence values’’.

‘‘This will continue to put pressure on fares and the community will continue to pay heavily to investors.’’ Former Australian Competition and Consumer Commission chairman Graeme Samuel has been appointed the chair of the new Taxi Services Commission, which will administer the reforms and monitor the industry. Off-peak fares will be introduced, with higher fares at peak times on Friday and Saturday nights to address cab shortages. Premier Napthine said the reforms were ‘‘the biggest overhaul of the taxi industry since the demise of horse drawn cabs’’. ‘‘We had a tragic history of cabs that were poorly maintained, drivers working extended shifts for poor pay, inexperienced drivers, customers complaining drivers didn’t know the basics of where the MCG was, let along Bourke Street and Collins street," Dr Napthine said.

Public Transport Minister Terry Mulder said the reform package put the interests of customers first and balanced the needs of drivers and the industry. “While we have taken account of the interests of licence holders, we make no apology for the fact these reforms put the interests of customers first,” Mr Mulder said. But Graeme dSamuel, chief executive of industry group the Victorian Taxi Association, said there was a risk some of the reforms would make customer service worse. ‘‘There are areas of concern, that won’t come as a surprise to the government, we’re concerned about the future of taxi operators and taxi licence owners,’’ Mr Samuel said. ‘‘The licence value doesn’t overly concern us, what we’re concerned about is open entry to the industry, which could see a massive oversupply, a decline in service standards for customers, an increase in price and also taxi businesses being put up against the wall.’’

He said customer satisfaction with taxi standards was now at 69 per cent, up from about 55 per cent when the inquiry was launched in March, 2011. Loading Reforms in summary Consideration of variable pricing with higher fares in peak periods

Moves to increase the flagfall and reduce the price per kilometre for the metropolitan zone to address short-fare refusal and inefficient behaviour such as airport overcrowding

Drivers will get more of the what is on the meter, and will now collect 55 per cent of the fare box takings - up from 50 per cent

Drivers will have to pass an independent knowledge exam to be accredited

Card-payment fees will drop from 10 to 5 per cent to improve affordability, and there will be a new set fee for new licenses - up to $20,000 annually, depending on the zone

New taxi licences available at any time to approved applicants at a set price

New in-vehicle information (such as windshield stickers, placards and other signage) will be compatible with smartphone technology, such as the inclusion of a barcode that can be scanned by mobile phones and other portable devices. Through this technology, passengers have direct access to a new taxi participants public register from the vehicle and, over time, be able to access information about service performance and driver quality

Increase taxi access to bus lanes along freeways and major roads

Changes could take up to three years to implement With Jason Dowling

