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What Fels doesn’t want you to know about deregulation in Ireland
One of the countries Professor Allan Fels holds up as a shining example of successful deregulation of the taxi and hire car industries is Ireland, which deregulated 12 years ago in 2000. If by ‘success’ he means that the problem of catching a cab at peak times has been solved he would be right. The number of cabs in Ireland has increased tenfold. If he means that safety, drivers and networks have improved, he is delusional. The Irish industry is a hopeless mess.
by Peer Lindholdt
During my research of the Irish deregulation I came across a number of owner-drivers who turned out to be very generous with their time in answering my many questions and supplying important links to official data and media reports.
When I thanked them for all their help ready to start my article I received a number of replies. Here is one example: “I have a big favour to ask you, please please please do not under any circumstances mention me by name in your article. There are quite a few undesirable elements in our industry who, if they were to identify people like me, would have no hesitation in putting a bullet in my head. Even the taxi regulator here, Kathleen Doyle, received several death threats in 2009 including a bullet in the post and was put under 24hr armed guard.”
Nice chilling lead-in to this article.
Before the Irish taxi industry was deregulated in 2000, the country, with a population of 4 million, had around 2,700 taxis. Licences were valued at up to €100,000 (then A$150,000). The price of 3 bed family home at the same time was approx €70,000.
Taxis were largely operated by owner-drivers. Most would have what they call ‘a cosy’, a regular co-driver.
When deregulation came, most cosies became owner-drivers themselves as they could get a licence from the Government for €6,500 (then A$10,000) and as there was no age limit on taxis they could buy and fit out a vehicle for less than €5,000. Simply irresistible. Ireland was booming.
The result was a doubling in numbers over the next 2 years. However, that didn’t worry the original owner-drivers too much as they were only driving one shift a day anyway. What did make them mad was that their licences became worthless and the Government refused point blank to pay any compensation. This resulted in a series of rolling strikes which finally ended in a compromise. The Government agreed to pay ‘special hardship’ cases such as retired owners or their widows €30,000 in compensation on a case by case basis.
But, from 2002 things got progressively worse. Taxi numbers exploded and by 2008 hit a peak of more than 27,000 (source: government statistics), a tenfold increase since 2000. By then the regulator and police had lost complete control of the industry. In desperation, the Government, in 2009, introduced a moratorium on the issuing of new licences to halt the growth, which is still in force today.
Unfortunately the damage had already been done. The industry had become infiltrated by criminals; shonky fleet owners, corrupt taxi inspection stations and dodgy drivers.
At the same time as the taxi fleet reached its peak in 2008, Ireland was hit hard by the Global Financial Crisis and its economy collapsed. Today its unemployment rate is 14%.
The demand for taxis dropped dramatically and owner-drivers started to go broke in large numbers. By 2011 the fleet size had dropped to 20,000. Desperate owners are selling their €6,500 licences for less than €1,000 on the open market and allegedly 13,000 working drivers are on welfare as they can’t feed their families from driving. Between 2009 and 2010 31 Dublin taxi drivers, according to news reports, committed suicide.
As for better quality service and greater safety for passengers, things could not be worse. The Government has spent the past 10 years trying to re-regulate the industry to get it under control. That includes an attempt to reducing the number of cabs, hence the moratorium on new licences.
Ireland today has a population of 4.6 million (Melbourne 4.1 million) and 20,000 taxis (Melbourne 4,345). Dublin, Ireland’s largest city has 1.8 million people and twice as many cabs as Melbourne. Its streets are regularly grid locked by vacant cabs.
There is no age limit on taxis and just about any four door sedan in any condition will do as long as the owner has an inspection certificate. That, an investigative TV report revealed last year, is easily obtained with a €100 bribe.
The only taxi licences issued by the Government today are WAT licences. They cost just €125 and come with a €15,000 Government subsidy towards the purchase of the vehicle. In 2008, pre-GFC, there were 1600 WATs in Ireland. As of May 2012 that had dropped by 26% to 1178. Now, how can that be?
Very simple really. WATs that were bought 9, 10 years ago are now well beyond repair and their owners can’t afford to replace them, not even with the subsidy. The business is not there any more to service a new lease so they have handed back their licences to the Government.
Allan Fels has promised Victorians that fares will become cheaper after the introduction of open entry. Did they in Ireland? The answer is no!
The regulator still sets maximum metered rates, which it reviews every two years. The last increase was 8% in 2008. In 2010 most drivers didn’t want an increase, believing it would be bad for business because of the severe recession, so the regulator held off. Another review is due this year.
So after 12 years of deregulation, how much cheaper are fares in Ireland compared to Melbourne?
A 10km fare in Ireland is A$20.80, however, after 15km the tariff per kilometre increases and again after 30km. A 25km fare is more expensive in Ireland than in Melbourne where a 10km trip costs $22.00, but the tariff stays the same for longer journeys.
It is estimated that an experienced Dublin driver makes €9 gross an hour (A$11.30).
Less than 25% of Irish cabs belong to a taxi network according to my sources. None have decals or other markings. The only things destinguishing a taxi are a small round sticker on the windscreen and the back window, and the taxi roof light which is easily detached. Take the roof light off and the car looks like any other private car. See photo on previous page.
Dodgy multi-taxi owners, who have bought up licences on the open market for less than €1000 have sprung up everywhere, many renting out old clunkers for €250 p.w. for cash up front and not too fussy whether or not the driver is accredited to drive a taxi.
The Irish industry is still one that is dominated by proud individual owner-drivers, but they no longer have cosies, because that would put even more cabs on the road 24/7. Instead owner-drivers drive their cab one-out 10-12 hours a day to share the work around.
It is drivers like these, who have helped me put this article together. Their reason? To warn Australia not to go down the path the Irish Government has, which has destroyed their industry.
If you would like to view the explosive Irish news report on the Irish taxi industry, simply google Dodgy taxi drivers and nefarious NCTs. But be warned, it runs for 50 minutes, yet not to be missed as it illustrates graphically what could happen here. •
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Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin
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