Mr AH KIT - 2000-05-09
Mr Speaker, I would like to draw the minister’s attention to the numerous representatives in the gallery of the Territory’s commercial passenger industry. Over the past few years the government’s deregulation of this industry has seen taxi licenses double, the number of private hire cars halved and havoc created for the minibus sector. I ask the minister, what do you have to say to these people when, as a direct result of your actions, some of them are now earning as little as $35 a day in contrast with your ministerial salary of nearly 10 times that amount?
ANSWER
Mr Speaker, in answering this question I think we have to go back and have a look at a bit of the history here. For many years, Darwin taxis, the Northern Territory taxi industry, operated in a regulated environment where licences were made available from time to time and bid for at auction. Under that environment, a number of those plates were put on the shelf by owners who were merely looking for the capital gain on them. They were not being used, they were not on cars and they were not out for the benefit of the public. Yet, whenever the government moved to increase taxi numbers, be it in Darwin, Katherine, or Alice Springs, the owners in the industry - we have to separate who we are talking about whether it is the previous owners of the plates, the driver lessees or the drivers; there were 3 separate parts. For a number of years, as I said, we were not getting value. When we put new plates out on the market in the taxi industry what would happen is that we would have a delegation from the owners saying: ‘Don’t do that you’re going to devalue our plates; don’t put up flash cabs because we don’t want any’.
The last time I was minister for transport and works we decided to put out 3 licences in Alice Springs, 3 plates. We were told that they were worth nothing and would do nothing to enhance the industry in Alice Springs. What happened was, of course, those very same people who told us those plates were worthless - a bid over $225 000 for an ordinary taxi licence and something like a $180 000 for a flash cab or multipurpose vehicle licence.
We were also receiving complaints from lessees and drivers about the amount of money they were paying to the owners to lease plates and it was in the order of $22 000 a year. Also you may recall that there was an attempt in Darwin to set up a private base at the airport using lessees that had been drawn from the Darwin Taxi Company, whatever it was at the time - the Co-op - and the owners of those plates put undue pressure on that potential operator and that potential competition and forced him out of business in that they pressured their lessees to stop them going into business and competition with Darwin Coop Taxis which they had a pecuniary interest in. I just can’t remember the details of the case but I understand that when this went to court it was either then settled out of court to the satisfaction of the plaintiff, or found on the plaintiff’s behalf. Darwin Radio Taxis had acted illegally forcing their lessees out of that business.
It was also an environment of constant complaint, not only to members of the Northern Territory government, but also to the Department of Transport and Works and the Motor Vehicle Registry, from the general travelling public. This is an issue that you will recall I took up as early as 1984 in relation to, because that is my interest, the Darwin public or commercial passenger transport industry.
It was in that environment that we did get a consultant in to have a look at how best we could fix this situation. We recognised that at $22 000 a year, leasing a plate from a sedentary owner was a huge impost on the lessee. We recognised that they were mere almost chattels of the owner of that plate in an era of competition and Australia looking to competition policy reforms. We took the decision to take out those sedentary owners. I remember Mr Coad, who was an owner, actually congratulating us at the time for the buy-back scheme. We have spent something in the order of $25.5m in buying out those owners on just terms. There are 3 licensees covering 5 plates, none of which are in Darwin, taking this to court. We have the money held in trust to cover those compensation claims.
Since that time, 1 January 1999, we implemented the new regime where we opened up the taxi market at $16 500 a year for rental plates. We did put an impost on the minibus market of $7 500 a year. They had previously got in free. In terms of the private hire cars, there is an annual impost of $1000 and a one-off plate purchase price of $10 000. On 31 December 1998, in Darwin, there were 87 taxis. On 28 April 2000 there are 135. In the same time there has been a diminution of the minibuses from 53 to 42 and of private hire cars from 66 to 45. Many of them are also included in the increase of the taxi numbers. But the result is on 1 January 1999 we had 206 vehicles in that industry. As of 28 April, we have 222 vehicles in that industry. That is in Darwin.
In times of change things are not going to be easy. Things are not going to happen simply. Let me tell you in the year ended 31 December 1998 the Department of Transport and Works received 35 formal complaints about the commercial passenger transport industry. The year following that 3 complaints, so far this year, zero. That is from the general public, the passenger-paying public. As I said, this is not the old industry, this is a new industry, with different terms and conditions. There are 135 taxis on the road in Darwin. Perhaps over time that will reduce, that will come down to a level.
There are options in relation to the operation of those taxis that were not in place before. If you have leased a plate from an owner, you are paying $22 000 a year regardless of how long you operated that plate. Under the current arrangements you can put the plate on the shelf for 6 months and bring it back on during peak season so there is operational flexibility in terms of the government fees and charges. There is operational flexibility. This system is not perfect.
Mr Toyne: It is not working.
Mr PALMER: Well, in terms of the public complaints it is perfect. There are none. There has not been one complaint this year from fare-paying passengers.
Ms Martin: So who is going to care about the taxi drivers then? Not you, obviously
Mr PALMER: Hang on. As I said, at this point in time there may be more cars on the road than is warranted; that is a business decision. We are not now artificially setting a limit on the taxi industry or indeed the commercial passenger industry in the Northern Territory. It is a matter of competition. We have gone from a strictly regulated environment to a largely deregulated environment. It is not amiss. People can get taxis. People ring up and get a car. There are those operators in Darwin providing a very, very good service. As I said, it is an open market. Just as we do not regulate supermarkets, fish and chip shops and takeaway cafs, we do not regulate the number of them in the industry. Nor should we. We do not regulate RPT airline routes in the Northern Territory. They have, for a number of years, been open to competition. We have moved away from a closely regulated commercial passenger industry, to a deregulated one.
Mr Toyne: Are you going to police the number of licences?
Mr PALMER: No.
Ms Martin: You won’t freeze?
Mr PALMER: No.
Ms Martin: A temporary freeze?
Mr PALMER: No. But that wasn’t the question.
Ms Martin: It was the next one.
Mr PALMER: It was the next one. Well, you can avoid asking the question now, you have the answer. We are not going to freeze. As I said, in terms of the total industry, it has gone from 206 to 222 vehicles. That is the size of the industry. In the Northern Territory overall it has gone from 289 to 312 vehicles and that’s including the PH cars at Yulara.
The total size of the industry has not varied all that much. It is the nature of the industry that has changed. I recognise some businesses are hurting but in time this industry like all other deregulated industries will reach a level of sustainability.
In the western world, the average of something like 70% of start-up small businesses are out of business in 5 years. They are the cruel hard facts of a capital economy. That is the cruel hard fact of a business economy. We are not communist China, we are not Cuba, nor are we North Korea. The last bastion of your ideology, we are not. The OECD average of small businesses being out of that business after 5 years is something like 70%.
Each and every person who went to the Motor Vehicle Registry, went to Territory Ford, Darwin Mitsubishi, Agserv or Bridge Autos and got themselves a car and put it on the road as a taxi, paid the $16 500 or the half yearly $8000, each and every one of them made a business decision. We did not go and press gang them. We did not tie them up, put them on the back of a truck and leave them out there. In case they think I do not have a personal interest in it, I should declare my brother owns a taxi and if anybody is going to get up me about the commercial passenger industry, it is Star Wars as Maurice would know. Star Wars is not backwards in coming forwards, he will tell me.
I have arguments with my brother but, as I said, in time the industry will find its own level, it is not up to government. The primary test of it all is from end of the year 1998, 35 formal complaints from the public; end of last year, 3; so far this year, 0.
ANSWER
Mr Speaker, in answering this question I think we have to go back and have a look at a bit of the history here. For many years, Darwin taxis, the Northern Territory taxi industry, operated in a regulated environment where licences were made available from time to time and bid for at auction. Under that environment, a number of those plates were put on the shelf by owners who were merely looking for the capital gain on them. They were not being used, they were not on cars and they were not out for the benefit of the public. Yet, whenever the government moved to increase taxi numbers, be it in Darwin, Katherine, or Alice Springs, the owners in the industry - we have to separate who we are talking about whether it is the previous owners of the plates, the driver lessees or the drivers; there were 3 separate parts. For a number of years, as I said, we were not getting value. When we put new plates out on the market in the taxi industry what would happen is that we would have a delegation from the owners saying: ‘Don’t do that you’re going to devalue our plates; don’t put up flash cabs because we don’t want any’.
The last time I was minister for transport and works we decided to put out 3 licences in Alice Springs, 3 plates. We were told that they were worth nothing and would do nothing to enhance the industry in Alice Springs. What happened was, of course, those very same people who told us those plates were worthless - a bid over $225 000 for an ordinary taxi licence and something like a $180 000 for a flash cab or multipurpose vehicle licence.
We were also receiving complaints from lessees and drivers about the amount of money they were paying to the owners to lease plates and it was in the order of $22 000 a year. Also you may recall that there was an attempt in Darwin to set up a private base at the airport using lessees that had been drawn from the Darwin Taxi Company, whatever it was at the time - the Co-op - and the owners of those plates put undue pressure on that potential operator and that potential competition and forced him out of business in that they pressured their lessees to stop them going into business and competition with Darwin Coop Taxis which they had a pecuniary interest in. I just can’t remember the details of the case but I understand that when this went to court it was either then settled out of court to the satisfaction of the plaintiff, or found on the plaintiff’s behalf. Darwin Radio Taxis had acted illegally forcing their lessees out of that business.
It was also an environment of constant complaint, not only to members of the Northern Territory government, but also to the Department of Transport and Works and the Motor Vehicle Registry, from the general travelling public. This is an issue that you will recall I took up as early as 1984 in relation to, because that is my interest, the Darwin public or commercial passenger transport industry.
It was in that environment that we did get a consultant in to have a look at how best we could fix this situation. We recognised that at $22 000 a year, leasing a plate from a sedentary owner was a huge impost on the lessee. We recognised that they were mere almost chattels of the owner of that plate in an era of competition and Australia looking to competition policy reforms. We took the decision to take out those sedentary owners. I remember Mr Coad, who was an owner, actually congratulating us at the time for the buy-back scheme. We have spent something in the order of $25.5m in buying out those owners on just terms. There are 3 licensees covering 5 plates, none of which are in Darwin, taking this to court. We have the money held in trust to cover those compensation claims.
Since that time, 1 January 1999, we implemented the new regime where we opened up the taxi market at $16 500 a year for rental plates. We did put an impost on the minibus market of $7 500 a year. They had previously got in free. In terms of the private hire cars, there is an annual impost of $1000 and a one-off plate purchase price of $10 000. On 31 December 1998, in Darwin, there were 87 taxis. On 28 April 2000 there are 135. In the same time there has been a diminution of the minibuses from 53 to 42 and of private hire cars from 66 to 45. Many of them are also included in the increase of the taxi numbers. But the result is on 1 January 1999 we had 206 vehicles in that industry. As of 28 April, we have 222 vehicles in that industry. That is in Darwin.
In times of change things are not going to be easy. Things are not going to happen simply. Let me tell you in the year ended 31 December 1998 the Department of Transport and Works received 35 formal complaints about the commercial passenger transport industry. The year following that 3 complaints, so far this year, zero. That is from the general public, the passenger-paying public. As I said, this is not the old industry, this is a new industry, with different terms and conditions. There are 135 taxis on the road in Darwin. Perhaps over time that will reduce, that will come down to a level.
There are options in relation to the operation of those taxis that were not in place before. If you have leased a plate from an owner, you are paying $22 000 a year regardless of how long you operated that plate. Under the current arrangements you can put the plate on the shelf for 6 months and bring it back on during peak season so there is operational flexibility in terms of the government fees and charges. There is operational flexibility. This system is not perfect.
Mr Toyne: It is not working.
Mr PALMER: Well, in terms of the public complaints it is perfect. There are none. There has not been one complaint this year from fare-paying passengers.
Ms Martin: So who is going to care about the taxi drivers then? Not you, obviously
Mr PALMER: Hang on. As I said, at this point in time there may be more cars on the road than is warranted; that is a business decision. We are not now artificially setting a limit on the taxi industry or indeed the commercial passenger industry in the Northern Territory. It is a matter of competition. We have gone from a strictly regulated environment to a largely deregulated environment. It is not amiss. People can get taxis. People ring up and get a car. There are those operators in Darwin providing a very, very good service. As I said, it is an open market. Just as we do not regulate supermarkets, fish and chip shops and takeaway cafs, we do not regulate the number of them in the industry. Nor should we. We do not regulate RPT airline routes in the Northern Territory. They have, for a number of years, been open to competition. We have moved away from a closely regulated commercial passenger industry, to a deregulated one.
Mr Toyne: Are you going to police the number of licences?
Mr PALMER: No.
Ms Martin: You won’t freeze?
Mr PALMER: No.
Ms Martin: A temporary freeze?
Mr PALMER: No. But that wasn’t the question.
Ms Martin: It was the next one.
Mr PALMER: It was the next one. Well, you can avoid asking the question now, you have the answer. We are not going to freeze. As I said, in terms of the total industry, it has gone from 206 to 222 vehicles. That is the size of the industry. In the Northern Territory overall it has gone from 289 to 312 vehicles and that’s including the PH cars at Yulara.
The total size of the industry has not varied all that much. It is the nature of the industry that has changed. I recognise some businesses are hurting but in time this industry like all other deregulated industries will reach a level of sustainability.
In the western world, the average of something like 70% of start-up small businesses are out of business in 5 years. They are the cruel hard facts of a capital economy. That is the cruel hard fact of a business economy. We are not communist China, we are not Cuba, nor are we North Korea. The last bastion of your ideology, we are not. The OECD average of small businesses being out of that business after 5 years is something like 70%.
Each and every person who went to the Motor Vehicle Registry, went to Territory Ford, Darwin Mitsubishi, Agserv or Bridge Autos and got themselves a car and put it on the road as a taxi, paid the $16 500 or the half yearly $8000, each and every one of them made a business decision. We did not go and press gang them. We did not tie them up, put them on the back of a truck and leave them out there. In case they think I do not have a personal interest in it, I should declare my brother owns a taxi and if anybody is going to get up me about the commercial passenger industry, it is Star Wars as Maurice would know. Star Wars is not backwards in coming forwards, he will tell me.
I have arguments with my brother but, as I said, in time the industry will find its own level, it is not up to government. The primary test of it all is from end of the year 1998, 35 formal complaints from the public; end of last year, 3; so far this year, 0.
Last updated: 09 Aug 2016