The human toll of falling taxi licence values

Updated

The rise of Uber is only half the story.

In a small and cluttered mechanic's workshop at the back of his house, Ylmiz Hassan tinkers with the greasy parts of a four-wheel drive he is repairing.

The 63-year-old should be nearing retirement, but there is little chance of him downing his tools any time soon.

"I have got no choice or my family will fall apart, my marriage will fall apart," he says.

Since moving to Melbourne from Cyprus in the early 1970s, Ylmiz and his wife, Sevgi, have worked tirelessly to provide for their family.

Ylmiz got a job with Ford while Sevgi supplemented their income by folding and packing pairs of socks into boxes after their two young children had gone to bed each night. She was paid 30 cents for every dozen.

The money the couple saved was invested in five taxi licences. At their peak, the licences were worth more than $1 million combined — enough to retire on.

But the arrival of ride-sharing apps like Uber and the subsequent deregulation of the taxi industry in Victoria have wiped out their value.

"We worked so hard for it and everything just went, overnight, back to zero," Ylmiz says.

The nest egg Ylmiz and Sevgi had been expecting has failed to materialise.

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The couple had purchased their taxi licences by borrowing against the value of their house. They now have a $600,000 debt.

Ylmiz says this sudden change in fortune has taken a toll on Sevgi's mental health. A few weeks ago, she tried to kill herself. It was her third suicide attempt.

"Mentally, she's gone bad," Ylmiz says.

"We are living in the same house but it's like we're living away from each other."

The loss of lives and livelihoods is a global phenomenon.

Six drivers in New York have died by suicide since December after the value of licences fell from more than $1 million to just $130,000.

The Queensland Taxi Licence Owner's Association says four of its members have also killed themselves.

"Insolvencies and bankruptcies are on the rise," chief executive Paul Scaini says.

"Owners and workers suffer severe depression and at least four individuals have tragically self-harmed."

Mr Scaini is calling for more government assistance for those affected by the upheaval of the industry.

"Many have lost their superannuation nest eggs and once proud self-funded retirees have been forced to sell their homes and move onto welfare," he says.

The Victorian Hire Car and Taxi Families group in Melbourne, where Ylmiz and Sevgi Hassan live, has reported at least seven recent suicides.

Background Briefing has spoken to a relative of one of the deceased, but they did not want to be quoted here.

At a meeting to discuss the impact of Uber and deregulation, a dozen taxi industry workers in Melbourne are venting their frustration with the Victorian Government.

Most of the people in the room are from families that migrated to Australia. They have surnames like Diaz, Maro, and Kalatzis.

They each speak of having put their trust in the Government to protect their jobs and investments, only to be let down.

"Do you know how I think they justify it?" asks Sandy Spanos.

"It's called racism."

The people in this room are determined to fight back.

There are two class actions brewing. The first is aimed at Uber, the second at the State Government.

"You cannot remove 40, 50, 60 years of people's work and think that they're just going to go away and slide off into the sunset," Mr Spanos says.

"It's not going to happen."



In Victoria, both sides of politics have supported deregulation.

While in power in 2012, the Liberals kickstarted the process with a review into the taxi industry.

The review recommended making space for new competitors and reducing licence values to $20,000.

The main difference between the major parties' stance on the issue is how much money they are willing to spend compensating drivers and investors.

The Labor State Government has so far given out $500 million in assistance to those affected by its reforms.

Shadow transport minister David Davis has promised a more generous package than Labor, but has refused to disclose a figure.

"We're not in government at the moment. We don't have the bureaucracy and the ability to assess individual cases," he says.

"But let me just be quite clear that people who have lost their assets do deserve more substantial compensation."

Transport Minister Jacinta Allan declined to be interviewed.

In a statement, she denied the Government's reforms were responsible for the reduction in licence values.

Given the disruption caused by Uber, she said they would have continued to fall whether or not such action was taken.

Uber connected its first rider and driver in San Francisco in 2010.

Within a few years, the company was operating in hundreds of cities around the world, often in direct contravention of local laws.

Uber's net worth quickly rose to more than $50 billion.

Australian Productivity Commissioner Dr Stephen King says its expansion undermined the taxi industry's regulatory structure and forced state and territory governments to yield.

"Uber did literally come in and say, 'We pretty much don't care about the local laws'," he says.

"And they did that around the world."

Everywhere it went, Uber tailored its approach to undermine the legislation in that particular city or state.

When its drivers were slapped with fines, the company used its deep pockets to pay the penalties on their behalf, allowing them to keep driving.

Uber coughed up $1.7 million to cover infringements in Queensland in one year alone.

Furious members of the taxi industry have held demonstrations the world over but their protests have done little to slow its momentum.

Despite the connection between the rise of ride-sharing apps and the decline of traditional taxis, Dr King says this is only part of the problem.

He believes deregulation is equally to blame.

"The people who bought taxi licences did so with a government regulatory framework that restricted the number of licences and effectively pushed the price of those licences up," he says.

"They were a scarce resource because of government regulation and, as with all scarce resources, they become expensive."

In Australia, just a few years after its arrival, state governments stopped resisting Uber and began to legalise the service and others like it.

Dr King says the process of deregulation should have begun sooner but pushback from powerful forces within the industry prevented a smooth and gradual transition.

"Instead of having a proper, eased process from where we were in the 1970s and 1980s to where we should be today, it happened as a crunch," he says.

"People have lost significant sums of money in that crunch."

In a statement, Uber said it was saddened by reports of suicides among taxi licence holders.

The company said it was supportive of the work being done by state governments to provide financial support to those hardest hit by technological and regulatory change.

In the year since the Victorian government legalised Uber and similar services, the number of rideshare cars on the road has almost doubled.

For consumers, it has never been easier to find someone to take you from A to B, but trying to make a living as a driver is difficult.

George Chayeb needs to pull in $250 each shift just to cover the network fees and running costs. On the day he speaks to Background Briefing, he has made just $135.

"I spoke to my wife earlier on the phone," he says.

"She told me about how many bills we've got at the moment and we came to the conclusion that it's best to sell the house, otherwise we'll be in trouble."

George does not blame Uber for ruining his livelihood. He knows change is inevitable. He just thinks governments of both stripes should have handled things better.

"If they want to break up the industry, that's fine, pay me back my money," he says.

"To take it away from me without compensating me fairly is not fair at all."

George, who migrated to Melbourne from Lebanon, says he never expected to find himself in this situation.

"I came to Australia hoping that it's a better country where you can make a future for yourself and your family," he says.

"Then, in the end, it's just all gone in the stroke of a pen."

Credits



Journalist: Alex Mann

Photography: Alex Mann and Danielle Bonica

Digital Producer: David Lewis

Executive Producer: Alice Brennan

Topics: road-transport, government-and-politics, mental-health, suicide, business-economics-and-finance, melbourne-3000, australia

First posted