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Clinging to a divine right to take us for a ride

Its not just the passengers at Sydney Airport who are bewildered.

Its not just the passengers at Sydney Airport who are bewildered. Photo: Toby Hagon

Few things are more precious than a state-granted licence to rip off the general populace. Governments have a long history of creating vested interests and then becoming beholden to them – unwilling or unable to tackle the monsters they've created.

From monopoly airports to taxi licences to solar power schemes, it's a rare and brave politician who even tries to get the rent-seeking genie back in the bottle.

The early signs are that Victoria will squib the genuine taxi reform proposed by Allan Fels – shuffling it off for more "community" debate, which will suit the taxi owners just fine.

I'll bet New South Wales also will duck the much milder taxi recommendations drafted by its Independent Pricing and Regulatory Tribunal. Ditto any other state government thinking of putting the public and drivers ahead of the plate owners who believe they are entitled to guaranteed and uncapped capital gains at everyone else's expense.

All the way with Max Moore-Wilton

The fledgling O'Farrell government did have a crack at its dysfunctional predecessor's solar power rort but backed off quickly enough – and unfortunately seems to have learned a political lesson. As for the Sydney Airport gouge, well it's all the way with Max Moore-Wilton and stuff the rest of the state – never mind the favour being lined up for James Packer's Sydney casino ambitions. Such are the sad realities of state government.

What Sydney Airport, taxi plates and over-the-top solar feed-in prices have in common is that they represent intrinsically bad policies that benefit the few at the expense of the many, but the few cling to the gossamer of a government imprimatur to claim something like the divine right of kings to rip and rort.

On a scale of failures by NSW's Labor governments, the $759 million blow out in over-the-top solar feed-in payments was small beer indeed, but it illustrates a broader point. It was a deal that was simply too good to be true – the government paying people more than it was worth to whack not-particularly-efficient solar panels on their roofs, a way to make money at the expense of other electricity consumers.

It clearly wasn't "fair" to the broader population, but that didn't worry the 110,000 or so solar panel owners who had signed up before O'Farrell moved to curtail it – they had their collective hand in the lolly jar and wanted to keep it there. They were entitled to it.

Free rein to rort the system

The artificial limiting of taxi plate numbers is much like that. Assisted by key players' assiduous courting of both sides of politics, the industry has had pretty much free rein to rort the system to achieve steady appreciation of the plates. There is no relationship now between half-million-dollar plates and someone driving a cab, picking up and delivering passengers for not much money. The artificial inflating of plate values has made the taxi industry bad for the workers and bad for the customers – but the owners' hands are in the lolly jar and they want to keep them there. They are entitled to it.

It's been an open wound for decades, but a straight politician might as well have taken on the Obeids as dared to cauterise it. The industry's skilful PR campaign trots out stories of battlers mortgaged to the hilt to buy a licence, but the reality is more about a relatively limited number of rich individuals whose ultimate expression can be seen in the dominance and arrogant demeanour of CabCharge.

Watch the Baillieu government flail about in coming months for a way to maintain the racket instead of ending it. Every year of postponing just makes the eventual solution more expensive.

At the bigger end of town, it is interesting to compare and contrast Barry O'Farrell's stand on the solar panels blowout and his refusal to countenance a second airport for Sydney.

When asked about the second airport, the NSW Premier shuts down discussion with the statement that he had gone to the electorate with the policy that there would not be one and so there won't be. It also had been his policy to maintain the solar feed-in payments.

The question not asked of the premier on his airport stance is whether that was a bad policy in the first place. For the vast majority of people, the answer is clearly "yes", especially the people of western Sydney.

Grubby reality

The grubby reality of various federal governments is no better than O'Farrell's performance, but Macquarie Street is in the front line for suspicions about being close to the one party that profits from the existing policy: Sydney Airport Corporation.

As the parent of what became SAC, Macquarie Bank realised better than anyone just how rich a government-granted monopoly could be and bid accordingly. Now SAC believes it is entitled to every penny of rent it seeks.

The lesson politicians of all stripes refuse to acknowledge is that bad policy leads to worse policy and bad government. Most new governments start with good intent, but it doesn't take long for the decay to set in, for the political compromises to start adding up, for the limited abilities of party hacks to take their toll.

While there are many aspects of the American political system we wouldn't want to copy, there could be something healthy in an administration being limited to two terms – it provides less time for corruption to fester and the guaranteed limit just might empower a leader to have a go, knowing that he or she had nothing much to lose in the second term.

Well, that would be the hope.

Michael Pascoe is a BusinessDay contributing editor.


  • Michael, please, don't tar all taxi plate owners with the same brush.
    My 87-year old mother owns a taxi plate. It came to her from my late father who inherited it from his mother who had bought it in the '20's as 'unemployment proofing' for the blokes of the family.
    The moderate amount of money this plate makes for her weekly (she has it fully managed by someone) allows her to be a self-funded retiree. If she is ever in need of any extensive medical care and support it will be there to sell to fund her needs.

    Date and time
    December 12, 2012, 8:02AM
    • Tell her to sell it now while its still worth half a mill. She can live on that income really well for the rest of her life.
      In the meantime perhaps we can get a decent taxi service, maybe even one where working drivers can get a decent wage.

      Date and time
      December 12, 2012, 8:47AM
    • Rex, with all respect to your elderly mother, this is exactly Michael Pascoe's point. I imagine that when it was bought in the 20's your relatives did not have to pay the equivalent of $500,000 for the license. There is almost no chance now of extra licenses being issued that would result in the devaluation of hers, so good luck to her, but it was never intended that licenses should provide old-age health insurance or make others rich, in particular if this involves disadvantage to broader society.

      Date and time
      December 12, 2012, 8:48AM
    • Lets not forget the state granted rort i mean monopoly that is Melbourne airport.

      Classic Boy
      Life boat earth
      Date and time
      December 12, 2012, 8:57AM
    • We can all justify to ourselves our position in anything, but that doesn't make it right for the rest of us. The point is half a million dollar plates have to get a return, put that together with the cost of a vehicle fitted out and there is nothing left for the poor bas===d doing the actual work. Surely something could be worked out even if it's in the long run to get rid of those plates that are an albatross around the neck of a reasonable priced taxi service.

      Mike Judd
      Church Point
      Date and time
      December 12, 2012, 9:09AM
    • Watch Fallyou. squirm on this and nobble the key recommendations of Fels' report. Failyou makes a big deal about his ability to swim but lacks the intestinal fortitude to do anything about this massive rort that gives us one of the most expensive but also one of the most unreliable, pathetic, dangerous taxi services you could imagine in the developed world. Taxis are essential for the sick and elderly, tourists and business people and yet these plate owners who have reigned over the visible collapse of service standards and worker conditions spout nonsense about their "rights"! If you plate owners want to earn something from the taxi industry, then it's simple - buy a car, attach your plates to it and hire the drivers, or (god forbid!) work yourself.

      Angry consumer, businessman and CITIZEN
      Date and time
      December 12, 2012, 9:16AM
    • Sorry Rex, but your mother does not own an asset. She holds a licence with no intrinsic value whatsoever - just like a driver licence. It only has an artificial value propped up by artificial barriers to entry. I agree with Spender - tell her to sell it now.

      Date and time
      December 12, 2012, 9:34AM
    • 87 year olds shouldn't have their financial well-being solely in the hands of a risky investment such as a taxi plate.

      Date and time
      December 12, 2012, 9:51AM
    • Sell the plate while the 'going is good' (pun intended) as it looks like a pre capital gains tax investment. Also if concerns as to the asset retaining its value - which looks uncertain in the medium term, and at 87, you've got to look at the rate of return on a plate worth half a million dollars v other investments.

      Date and time
      December 12, 2012, 10:27AM
    • @Simon - It is a right to operate a taxi. In Victoria they were even tradeable on the BSX a few years ago. - I think this makes it qualifiy as an asset

      Date and time
      December 12, 2012, 10:47AM

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