Determination of prices for taxi services
DRAFT COMMMENTS
We thank the Commissioner for the invitation to comment on the above.
We have a number of areas of concern in regard to the matters raised in the issue paper. We believe that the Commission may not be aware of all or some of the following factors and suggest that any future determination regarding the pricing of taxi fares should be made taking account of these factors. We also suggest that the costing model may be improved if the model were able to embrace our suggestions. We regard the suggestion that a surplus under this model suggests that taxi fares should fall as both inappropriate and unfair on drivers.
For your information, Canberra has a large number of taxi drivers who drive either part or full time. We understand that in more lucrative times there were around 1100 active drivers. We now believe that this figure is closer to 800 active drivers (Canberra Cabs will be able to be more precise on these figures should you wish more accurate figures). These drivers are typically are over 40 years of age and, because of their age find difficulty in obtaining alternate employment. In many cases these drivers work for a lot less than the $11.43 per hour that the model indicates as average taxi driver earnings. (NB: Saturday dayshift, Sunday day and night shifts, Monday night, Tuesday night and Wednesday night shifts all attract less than $11.43 per hour particularly if the drivers are required to work the full 12 hours – Workers in other industries are rewarded at time and a half or more for working similar hours and times!). ACTION pays bus drivers around $20 per hour, Woolworth’s pay checkout staff $13.78 per hour, with both these employers paying entitlements, like superanuation sick and holiday pay.
We acknowledge that taxi drivers make a good hourly rate during some shifts. However there are occasions (such as during the month of January and school holidays) when the demand for taxis is so low that drivers can earn as little as $4 per hour. Taxi drivers are normally regarded as self-employed and as such are responsible for the collection of GST and the remittance of that tax to the ATO (1/11th of earnings). On remuneration levels as low as this, the setting aside of superannuation is obviously difficult. As a self-employed sub contractor any driver who has the misfortune to have an “at fault” accident will be held responsible for the insurance excess. Should a driver be unfortunate enough to have 2 at fault accidents over a 3-year period any accident will cost that driver $1000 in excess payments.
The pricing model has a typical taxi traveling 206000km per year returning $163,493. We are of the opinion that this is not as typical as the Commission have assumed. Because of the low returns offered drivers during some shifts, (see above), a large number of taxi operators are unable to find drivers. Many owners and leased plate operators do a large percentage of driving themselves. We suggest the number of these operators who drive their taxi as little as 55 – 60 hours per week (five full shifts) would be limited to those owners who own their plates outright. The pricing model does not account for this scenario as a vehicle traveling less than the pricing model suggests only saves on the reduced running costs, with the fixed costs of the operation remain static.
The recent Federal Election, Ansett collapse and the events of September 11 have combined to cause a larger downturn in work than is usual under the normal fluctuations that are associated with the taxi industry. This coupled with the introduction of extra WATS vehicles and the Queanbyan taxi fleet gaining access to the Canberra Airport and ranks have had a combined negative effect on the income available to drivers and Operators. We believe that the year 2002 also looks difficult. Federal Parliament will only be in session for some 19 weeks this year. Any continuation of the downward work demand makes the pricing model less accurate.
We find it difficult to agree with the inclusion of non-fare income in the pricing model (see page 3 of the issues paper). This non-fare income is generated by investment returns and trading incentives paid to operators by Canberra Cabs. The $3895 included in the pricing model has the effect of costing each driver about $40 a week. We respectfully request a re-examination of this factor in any future determinations of fare structures. We question whether the model should take into account of Canberra Cabs (a Co-operative Society) acting like an investment organization. This could well be outside the Co-operative Societies Act. Namely Section 22A and sections 37 (1) (a).
The issue of plate value being reflected in the pricing model (see page 4) is of concern given that without the inclusion of an investment return the viability of the taxi plate as a business could be threatened. This usually is reflected in an operator initially cutting corners (e.g. non-payment of workers compensation insurance {we are aware of this happening} and lengthening of service and maintenance periods) in the operation of the taxi. We respectfully request that the inclusion of a reasonable investment return be costed into the pricing model.
Therefore the Commission should be aware that in order to earn a respectable wage a taxi driver must work considerably more than the assumed 60hr week. (Even using the Commissions assumption of $11.43 per hour, full time drivers working a five day week would earn $685.80 minus $62.50 (GST) = $623.30 per week before tax for a sixty hour week without superannuation, recreation leave, sick leave, long service, shift loadings or any other deductions!)
Page 6 of the issues paper discusses the variance in day (rate 1) and night (rate 2) rates. We support the Commissioners opinion that there is little or no difference in the operating costs between day and night or weekday or weekend operations of a taxi. There should be however recognition that driver’s must be paid more for working these hours. Because work patterns change over any given 24 hour period (and on a weekly and monthly basis), compensation for after hour labor costs through flag fall changes may have the effect of lowering returns to drivers. Average hiring distances on Saturday nights could be as high as 20 km, but because the work flows mainly one direction (ie into Civic in the early part of the evening and out of Civic later at night) the distance traveled and subsequently the time taken to complete each hiring is longer. Saturday / Sunday morning work mostly involves short distance trips (suburbs to the local shops) with average distances traveled less than 6 km. Driver remuneration is low now (see above) and any attempt to compensate after hour payments solely through flag fall changes may have the effect of lessening driver returns. We believe that starting times for rate 2 should be changed to 6 PM and extended to 7 AM thereby compensating drivers more in line with traditional overtime payments.
http://www.icrc.act.gov.au/__data/asset ... ramsay.doc
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