UBER, a much-needed reform of taxis

In essence, there is no comparison, UBER is superior to any taxi company in New Zealand. Reasons include the convenience of the app-based service which provides information on price, timing, route and the driver; time saved thanks to the online payment process; the ability for driver and passenger to rate each other; and finally price.

It is no contest. UBER is so far ahead of the over-priced, clunky, yesterday’s model of taxis that it, or similar will inevitably be embraced right across New Zealand. The benefit to consumers from its technology are substantial. Frankly I’m amazed more cab drivers haven’t converted, the old taxi model is dead, long live the new. In short the world market doesn’t lie, where UBER has been allowed to flourish, it cleans up traditional taxi companies without fail – consumers speak with their wallets.

One hassle that remains is the resistance to the change from monopolistic airports, who are doing all they can to muscle UBER away from airport pickups and deliveries. If the government wanted to help consumers it would have the Commerce Commission or someone move immediately to put these monoliths in their place. Fair enough airports should require a charge for taxis to use up airport capacity parking in wait for their turn at the turnstile, but for vehicles simply arriving for pick-ups or drop-offs there is no difference between an UBER and a private car doing the same. Airports are terminals between traffic modes, there is no case for airports exploiting that reality by either banning UBER or trying to charge it - unless of course these monopolies wish to do the same to private citizens. That would stir the champions of civil liberties.

The case for trust-busting the behaviour of airports in New Zealand is very strong as evidenced by a comparison of the costs of taxis from New Zealand airports which showed they’re amongst the highest in the world. In New Zealand the Commerce Commission regulates airports, albeit in a typically light-handed way. They require airports to report their returns compared to the capital invested in an attempt to keep overall charges “reasonable”. That approach needs an overhaul to ensure international benchmarking is given due weight. In this globalised world there is little room for New Zealand to lose competitiveness as a result of price gouging delivering excess profits to local monopolies.

An economy’s health depends on using the most efficient methods available to deliver goods and services. The advent of the UBER app has demolished the rationale for the old style taxi business – end of story. Just as on-line streaming has destroyed CDs, online is condemning newspapers to be artefacts of history, EBay & Trade Me destroyed second hand shops and so on, the new technologies offer massive gains in consumer benefit. This is to be celebrated, not shunned.

Taxi companies need to adapt or perish. There is nothing to stop any competitor setting up an UBER-style app and having drivers and passengers use it as an alternative or in addition to the original UBER one. Like Trade Me it could well be a winner-take-all model of course although the size of the commission charged between driver and passenger will likely restrict the ability of any one app to monopoly price. Already in the United States we have seen the advent of competitors such as Lyft.

The moaning from the incumbents about safety, compliance and foreign competition are all predictable but without substance. The other concern is the weakening of workers rights as they become “contractors”, but this is just a re-run of what we have seen in other, more competitive industries – you can’t stop it. The old model is dead, all that’s in question is the date of the funeral. It’s fascinating when you talk to UBER drivers, I haven’t struck one yet that says they’re worse off – all say the opposite.

The only criticism we’ve found that holds weight is that UBER needs to pay its fair share of tax. Like other tech companies UBER has proven very adroit at avoiding paying tax. The Government has a plan for tightening this loophole, and if that doesn’t work, The Opportunities Party has another plan.

The UBER model provides the template for so many other applications that New Zealand’s most innovative can replicate across so many consumer services. Our regulatory model needs to catch up and ensure rapid adoption of these technological changes.