Canberra's taxi industry is not dead, though it's unlikely to last much longer. When the ACT government welcomed ride-share business Uber into this city two years ago, it sealed the fate of the old-fashioned "rank and hail" service. Uber's operating model is far more efficient than the taxi businesses it is rapidly replacing: its passengers pay less (most of the time, at least) and vehicles arrive to pick them up sooner (again, most of the time). Perhaps more importantly, Uber's far simpler model means drivers receive a greater share of the fare.
The failings of the older system were not the fault of taxi-licence owners. Poorly designed regulations stifled the market. Despite Canberra's uniquely steep fluctuations in demand (caused by parliamentary sittings), neither taxi fares nor the number of taxis on the road changed: they were set, and locked in, by a regulator and the government respectively. The high price of taxi licences also effectively forced owners to keep their vehicles on the road for 24 hours a day, or as close to that as possible. One consequence was that drivers' net income was well below the minimum wage; a 2014 evaluation found their average take-home pay was $9.60 an hour.
Taxi-licence owners are understandably upset that their investments have lost value. But we should not mourn the decline of this superseded market. Ride-sharing has clearly improved transport in Canberra.
Nonetheless, Uber is an imperfect business that faces growing concerns globally about its management culture and its lackadaisical approach to safety. On Friday, London transport authorities began the process of rescinding Uber's licence in that city, though the business may yet win a reprieve.
Meanwhile, the ACT government is still deciding how to regulate Uber. For example, as of November 8, all drivers must have a working-with-vulnerable-people card. This rather obvious vetting procedure probably should have been adopted two years ago, when Uber began operating in Canberra.
Indeed, it's worth asking why the ACT government appeared to rush its approval of a ride-sharing market in 2015. To its credit, its decision showed it recognised that Canberrans wanted an alternative to the troubled taxi market, and that there was little point impeding a newer, better product.
Yet there were alternatives. The ACT government never explicitly handed Uber a monopoly; it was careful to say it was welcoming ride-sharing rather than a single business. In practice, however, only Uber was ready at the time – a business that pays little tax here and employs few Australians.
Other cities around the world took a different approach: they retained far greater control. They consulted widely on how to design regulation; they sought bids for the right to operate ride-sharing services; and they now collect substantial licence fees.
Perhaps it's time to think about how to build Australia's best ride-sharing market, rather than simply the first.