The B.C. government has announced that it will soon be breaking up the taxi-industry monopoly by allowing companies like Uber and Lyft to operate in the province. This is great news, as more competition will certainly lead to an improvement in the availability, quality and convenience of rides for clients. Drivers will also benefit, as it will be easier for them to work during the periods that suit them best, in terms of demand and their own personal preferences.
However, the government has also decided to introduce some questionable reforms and offer financial support to the taxi industry. This isn’t so good.
Quebec went through a similar transition last year, and Uber is now operating legally here in la belle province, but judging from the turmoil we went through, B.C. could probably learn a few lessons on what not to do from us Easterners.
First, it’s important to create as level a playing field as possible between taxis and their new competition. Quebec tried to do this by imposing new fees and regulations on the new operators, but this only leads to higher costs for clients and a reduction in mutually advantageous exchanges. Instead, why not re-examine current rules in order to make them leaner and less costly, which will translate into lower prices for consumers?
One example: B.C.’s proposed phasing out of Class 4 licences for taxi drivers instead of requiring ride-for-hire drivers to incur higher costs to get them, as the Quebec government has done. Opening cross-municipal rides to all is also a good idea, as it increases competition by helping supply adjust to demand, and reduces the inefficiency of taxis bringing a passenger to another jurisdiction and coming back empty.
Other proposed measures are less praiseworthy. It makes sense at first glance to require drivers to be at least 19 years of age, to pass a safe-driving record check and to have their vehicle inspected regularly. Yet Uber and Lyft already have similar rules, since they’re good for business, so why include these rules in a new law?
The government also proposes to give exclusive rights to taxi drivers to be hired by phone or from the curb, which goes against the idea of a level playing field. In Quebec, Uber was also excluded from picking up passengers at airports. Hours-long waiting times for frustrated air passengers eventually convinced the airport authorities to change course, and Uber can now be hired from the Montreal and Quebec City airports. The lesson here is simple: Don’t limit competition.
Finally, the B.C. government has proposed to spend millions financing new app technologies and crash-prevention software for taxis. But is it such a good idea to fund research to develop something that already exists in the marketplace?
Business models don’t last forever. No one, and no industry, is safe from structural changes caused by technological innovation. National postal services, newspapers, publishers, bookstores, hotels and universities are all going through turbulent times. The taxi market isn’t being spared, and must either adapt or disappear. Taxi-industry players must take notice of the profound changes affecting this sector. There is no going back.
At least B.C.’s proposed modifications of rules and laws are a first step, but it’s extremely cumbersome for governments to manage each new crisis related to digital transformations on a case-by-case basis. It’s high time to think of simplifying and streamlining laws and regulations more generally, so that we don’t need to live through a political crisis and put up with an imperfect, micromanaged solution every time a technological innovation threatens to shake things up.
Germain Belzile is a senior associate researcher at Montreal Economic Institute. The views reflected in this op-ed are his own.
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