Professor Fels responds to taxi article

The article written in the Neos Kosmos , the "Human toll of propose taxi policy" (9/7/12) has created heated debate between Professor Alan Fels and Taxi Industry advocates.
Professor Fels has sent a letter to Neos Kosmos in reply to the article and detailed his views on the matter.
In his letter, Professor Fels felt the need to clarify the issue of licencing and believes the change won't hurt current operators.
"The fact of the matter is that an existing licence owner, unlike someone who enters the market under the proposed new regime, will be able to continue assigning the licence to a third party and earn a reasonable annual income of $20,000 from doing so," he said.
"Because of this income potential the value of an existing conventional taxi licence will still be worth a considerable amount. And given 70 per cent of these licences are currently assigned to a third party, will have little impact on current operators."
Harry Katsiabanis of Taxi Industry Stakeholders Victoria strongly disagrees and points out the other issue of the $20,000 rental fee.
"Licences are currently available from government for $30,000 and are limited. What he's proposing is unlimited licences from the government at $20,000 a year with no increase ever," he told Neos Kosmos.
"What he's saying is never ever will this $20,000 increase. So in years to come $20,000 will be worth a lot less. So these assets people have invested in, the value will start dropping."
Professor Fels goes on to say that "equating a taxi licence investment to a super fund or property is not comparing apples with apples".
Former Premier Jeff Kennett has been very vocal on the issue and has slammed many of Professor Fels' recommendations, calling them "inequitable, unfair and biased".
Kennett himself has argued "for many individuals, these licence investments were to be their superannuation nest egg".
He told the Herald Sun that "if the Government adopts these recommendations as written, it is akin to government introducing a regulation that reduces the value of your home".
The industry has always acknowledged that reform is needed but has disputed some of Professor Fel's suggestions.
Similar changes in other countries have decimated the industry.
Mr Katsiabanis points out the failure of the New Zealand recommendations.
"They got it wrong in New Zealand. It took them 12 years to fix the problem. New Zealand now has a deregulated market where anybody can own a taxi and a taxi fare in New Zealand is $3.20 a kilometre, where in Melbourne it's $1.70. Obviously more taxis released means greater waiting times for drivers and as a result the fare has doubled so they can make the same income," he told Neos Kosmos.
Professor Fels ended his letter accusing those against him as pushing agendas and not accepting reform was needed.
"Those with vested interests need to face facts now - major reform is necessary to reverse the decline facing the Victorian taxi industry and to bring back the all important people on which the industry relies - the customer," he wrote.
Professor Fels' review is focused on putting the "customer first" to give them a "safer, more reliable and more efficient taxi system".
Customer dissatisfaction is high, but increasing fares for customers seems outside of Professor Fels' review indicating a lack of resources to provide these changes.
Kennett believes this misjudgement will hurt the industry badly.
"The report is silent on any fare increase, believing all changes and desired outcomes can be secured by increasing demand. Rubbish".
Mr Katsiabanis agrees with Kennett and sees better service conditions will never happen with too many taxis on the road.
"How are they expected to maintain or even increase quality of service when these small business owners are forced to compete in a market where supply all of a sudden increases drastically due to open entry, while demand for services from the customer remains static, or even decreases? These recommendations will not put customers first," he told Neos Kosmos.
Actions can be taken to improve services that will directly affect customers and hopefully increase satisfaction.
The Fels review has signalled driver education as one of those aspects.
Mr Katsibanis suggests reform should focus on helping drivers and increasing fares to better provide for a healthy running industry.
"Let's create a safe working environment, lets redistribute the income form the licence holder to the driver, lets give the driver a fare increase to bring us in line with the rest of Australia (we're 30 per cent behind Sydney at the moment), lets re-educate and re-train the public and the drivers and we'll have a world class service," he says.
35 million trips are provided by the industry which equates to six or seven trips per citizen.