Driving Ridesharing Out Of Quebec

While the city of Toronto passes rules to make it easy for ride-sharing companies to operate legally, the province of Quebec is set to make it so difficult that it chases those companies away.

Last Tuesday, Toronto city council approved regulations that will allow Uber drivers to operate with few restrictions. They will have to hold $2 million of liability insurance, provide background checks to the city, and use vehicles no older than seven model years, but that seems to be about it.

Taxi drivers for their part will be allowed to charge surge pricing under the new rules (as ride-sharing services already do) for rides that are booked with a smartphone app at times when demand is high.

Uber Canada's general manager, Ian Black, said the company was pleased, and could certainly live by Toronto's new rules. Quebec's upcoming legislation, on the other hand, could drive the company right out of the province.

On Wednesday, according to reports in the media based on government sources, Quebec Transport Minister Jacques Daoust presented legislation to cabinet that would basically treat Uber drivers the same as taxi drivers. They would have to pay substantial amounts for permits, and the number of vehicles on the road would be limited.

This would discourage occasional drivers and completely disrupt Uber's model, which has four times as many cars operating during peak times thanks to the incentive provided by surge pricing. Although controversial in the eyes of some, surge pricing is a great way to encourage part-time drivers to offer their services when there are too few drivers relative to the number of passengers looking for rides during an unexpectedly busy time of day. By balancing supply and demand, this therefore prevents the service shortages that otherwise happen at these times.

Unsurprisingly, Jean-Nicolas Guillemette, the general manager of Uber Quebec, has spoken out against heavy-handed rules, which he says would simply shut down Uber across the province.

If the government does drive Uber out, it would constitute a significant harm to the thousands of Uber drivers, and hundreds of thousands of Uber riders, in the province.

The former are often occasional drivers, earning a little extra income on the side while working another job or going to school.

The latter may find ride-sharing to be generally faster or cheaper than taking a cab, or may find Uber drivers friendlier and their cars cleaner.

Those who are concerned about safety may like the fact that the application keeps a record of who provided each ride.

And some may just find it convenient to call a ride, and pay for it, through their smartphones.

Whatever their reasons, they choose ride-sharing of their own free will, and it would be a real mark of shame for the province to banish all of these voluntary exchanges — 300,000 a month just in Montreal. It would be particularly shameful at a time when multiple jurisdictions across the country and around the world are, like Toronto, providing workable legal frameworks for the innovative service.

Furthermore, the benefits to economic growth and employment in Quebec are substantial. In November of last year, Uber said it had already contributed $21 million to the province's economy since 2014, and created the equivalent of 1,400 full-time jobs in Montreal alone.

Generally speaking, in responding to beneficial but disruptive innovations like ride-sharing apps, regulators should not unduly constrain them and stifle their development in order to continue protecting existing industries that have been sheltered from competition for too long.

What is really needed at the end of the day is regulation that is light enough to allow entrepreneurial businesses to evolve organically and flourish in our rapidly changing world. Governments need to keep up with this change instead of hindering economic growth and punishing those who want to make money by working harder and innovating.

Michel Kelly-Gagnon is President and CEO of the Montreal Economic Institute. The views reflected in this op-ed are his own.

____________________
Read more articles on the theme of "Regulations."