In the early 1960s Frankie Jarvis, then in his early 60s, owned and drove a taxi in Beechworth, a town of 3700 (then and now) in Victoria.
The taxi was a black FE Holden sedan with a yellow roof. It did not have a sign. Everyone knew Frankie’s taxi.
Frankie was honest and reliable. He had to be. The taxi had no meter and his was one of only two taxis in town. Passengers would tell him where to take them and he would charge two shillings, or three for the outskirts of town.
To me it seemed an inordinate amount of money to go somewhere where you could walk or cycle. The town was not very big.
But car ownership then was low, so Frankie made a living of sorts. He supplemented it by selling petrol from a single bowser, but he was up against three other garages that also did mechanical repairs and servicing to cars which needed a lot of servicing and repairs, unlike today’s models.
Frankie also did bicycle repairs – to my Malvern Star among others. Again, he was up against a shop that sold new bikes and also did repairs.
He had some difficulties. Beechworth had a manual telephone exchange. You turned a handle to ring, and asked the operator for the number. The operator might be busy, asleep or plug in the wrong number so Frankie might lose his fare.
The roads weren’t the best, either, especially to farms on the outskirts.
Nonetheless, Frankie had carved himself out a business in what would now be called the transport sector, where other providers in the market did not want a place.
Frankie would be utterly bemused by the ecobabble of the Productivity Commission and the economic rationalists. For him a market was a place where people in stalls sold fruit and vegies. “Infrastructure deficiencies” to him were just bad roads and a sometimes-useless telephone operator.
Though Frankie’s was only one of two taxis in town, it still had other competition. An ancient red bus crawled up to Stanley – an apple-growing village seven kilometres away. A larger bus loomed usually empty to Wangaratta to meet the night mail train from Melbourne and to pick up the odd passenger. But his biggest competitors were the townsfolk themselves. They would give each other lifts to work and to the myriad of evening meetings that occupied the townsfolk till television arrived and killed them in 1966. Some would share petrol costs or even pay a notional . Teenagers could hitch-hike and get a lift.
I have no idea of the legislative or regulatory framework in which Frankie worked; perhaps he did not know himself. But I bet he did not have to buy his right to run a taxi for the equivalent of four or five times average annual earnings, as happens today in the ACT. I bet if someone had wanted to run another taxi in Beechworth they could have set up shop for a modest licence based on safety of the car and knowledge of the driver. There was no artificial government interference. The show ran well under the laws of supply and demand.
Now what happens? In the past week we have had another bout of taxi fever in Canberra — passengers waiting on the end of a phone for an hour, Passengers stranded by no-shows. We have seen huge delays along the airport run and taxis refusing to go there in peak times.
The core trouble is government-protected monopolies and advantages. In this case two, of them. And they are compounded by irregular parliamentary sittings.
The ACT has 230 taxis, about the same as 10 years ago. If you have long waiting times, a student in the first week of Economics 101 will tell you that you have too few taxis. But getting more in the current environment is difficult. Taxi plates have been bought for more than $300,000. Their scarcity and artificially high price is created by a legislative prohibition on more taxis.
The prohibition should be ended. The only business the regulator has is ensuring the taxis are safe, the drivers competent and that each taxi displays its (unregulated) fare rate and meters it accurately – much the same thing as for any other industry. We do not restrict the number of restaurants or hairdressers; we just licence them for safety. The taxi industry remains one of the last bastions of regulated protection in Australia.
The ACT Government has messed about for too long. Several band-aid schemes have been promulgated half-heartedly in the past decade. The Government should go the whole way and set out a plan to deregulate over, say, 10 years. It should include private bus operators, too.
I have every sympathy for existing plateholders who should be properly compensated, but half measures satisfy no-one.
Canberra Cabs has argued vigorously to continue its monopoly in the face of all the evidence that there are too few taxis in Canberra. Frustrated passengers should put the blame where it belongs – at the door of the ACT Government which props up the monopoly.
You cannot blame Canberra Cabs. Having been handed a monopoly where the customer waits for you (instead of the other way round) why wouldn’t it defend the goose that lays the golden eggs.
But markets can deal with fluctuating demand much better than regulation. If the set-up costs were cut, plenty of people would happily run a taxi during parliamentary sitting times only, or whenever demand was high. Consumers would be better served by the competition – ask any Telstra fixed-line customer or someone seeking after-sales service from Microsoft.
As for the delays at the airport at peak times, the cause, again, is government-given advantage. The airport has built a small town centre under the protection of the Federal Government which has exempted it (and other airports around the nation) from state and territory planning rules. The developments are first-class but they have created more traffic at peak times. Don’t blame the airport. Like most major airports it has been handed an advantage by government and it would be a fool not to exploit it.
The blames lies with the Federal Government which did not insist on a level playing field for all development.
But a favour once given is hard to take away. If you are waiting for reform of the taxi industry – or if you are just waiting for a taxi – don’t hold you breath.