Grattan Report: No Reason For Taxi Compensation

The advent of ride sharing services such as Uber who use new technologies to connect providers and consumers has been a boon to our economy. The creation of new employment opportunities and better choices for consumers is undeniable.

A new report from the Grattan Institute recommends that all state governments should legalise ride sharing and set minimum safety requirements, remove restrictions on taxi licences (or cut their prices), deregulate pre-booked fares and adjust labour regulations to help realise the efficiency gains and employment growth potential of peer-to-peer platforms.

The report acknowledges that the proposed regulatory changes will cut the market value of
perpetual taxi and hire car licences and queries from a legal and ethical perspective whether governments should compensate license owners. It makes an ethical case for offering at least partial compensation to taxi and hire-car licence owners who bought licenses recently and who face financial hardship.

Whether compensation is justified on ethical grounds will turn on who it really benefits and the obvious question of why taxpayers’ money should be used at all to prop up a redundant sector of industry. The losses experienced by redundant operators are a necessary and unavoidable result of an economy undergoing technological change.

There are enough lessons from history which teach us that government “compensation”, ie. bail-outs and corporate welfare help nobody in the long run and immorally punish taxpayers.

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