Professor Allan Fels’ long-awaited report into Victoria’s taxi industry was tabled in the Victorian Parliament this week, but the Baillieu government will give the public more time to debate its recommendations before taking action.

Eighteen months in the making, with much of that time taken up in a public and industry consultation process, the 139 proposed reforms aimed at giving drivers and customers a better deal will have to wait.

Under the sweeping reforms proposed, taxi drivers would get a 55 per cent cut of the fare box and taxi licences would be rented for $20,000 a year. Professor Fels said the Victorian taxi industry suffered from a lack of competition, exploited drivers and that customers too often received a bad service. “It’s time we had an industry that puts the public first and not last, that ceases to be a closed, anti-competitive shop that is regulated with the interest of the likes of taxi networks, Cabcharge and licence holders – 80 per cent of whom have never driven a cab,” Professor Fels said.

Drivers with less than five years driving experience would be required to pass a new Melbourne knowledge test before being allowed to drive a cab. Drivers would receive a mandatory 55 per cent split of the fare box, a reduction from the proposed 60 per cent in the draft report. Professor Fels said this was a concession to taxi operators who said a 60/40 split would be financially damaging. Anyone who had recently acquired a taxi licence at a high price – in the order of $500,000 – could potentially be eligible for compensation by the government.

“Under a deregulated system, any person could obtain a licence from the government for free and the value of existing licences would fall to zero,” said Professor Fels.

“Our reform goes mid-way, so that any quality person would be able to rent a licence for $20,000. This will not lead to a flood of new entry on the market, as is being feared. Taxi occupancy rates in Melbourne are in the region of 30 per cent with many drivers complaining that there is not enough work during the day, while peak periods – Friday and Saturday nights – have become infamous for revealing the shortages in the system.

The Fels report proposes reducing fares on weekdays and increasing them on weekends. George Karas, MD of Taxicare Australia and a long-time campaigner for reforms in insuring Victorian taxis, told Neos Kosmos that the report’s recommendations were encouraging. “It could solve a lot of problems regarding taxis and insurance. Allan Fels is trying to improve an industry in desperate need of change. “Having the general public have their say for a further period is a good idea,” said Mr Karas.

On the specifics of taxi insurance, widely recognised as a problem across the Victorian industry, Mr Karas believes the report’s proposals have the potential to improve the situation. “If the Department of Consumer Affairs Victoria [CAV] do their job – as mentioned on page 135 of the Report, where it states ‘taxi clubs would be better regulated under the Commonwealth Corporations Act 2001 (ASIC) and the Victorian Government through CAV, should take steps to bring this about,’ this could be a major step forward.

“The fact that a third party property damage insurance cover will be made compulsory, is a good start.” Former taxi driver Harry Katsiabanis, now Managing Director of TaxiLink, one of Melbourne’s largest taxi agencies, said that the report was disappointing.

“I’m extremely disappointed its authors didn’t listen to people’s views, and didn’t listen to economic reason,” said Mr Katsiabanis. Asked for his view on why the government had chosen to open the report’s recommendations to further public scrutiny, Taxilink’s MD said: “I think they have realised the complexities of the issues, and the potential financial devastation to small business owners, and they need to deal with that challenge.”

On the most controversial issue of licence values, with the report’s recommendation that all new licences would be rented from the government at $20,000 per annum, Katsiabanis believes the issue is a red herring. “On one side he talks about licences being too expensive and that customers are paying for it, and on the other side he’s adopting the same principal and just putting money in the government’s coffers.

It’ll bring the cost of licences down, but is that a good thing? “Why are we so fixated on the price of the licence?” he told Neos Kosmos. “I’m still to be convinced there is a relationship between fares and the licence value. In New York fares are cheaper and the licence is one million dollars.” Meanwhile, in a statement provided to media after the report was tabled in parliament, Allan Fels urged the Government to act quickly on the final report’s recommendations.

“I understand the Premier is giving further consideration and undertaking further public consultation,” he said. “I urge the Government to adopt my proposal as soon as possible, as it will lead to knowledgeable, customer focused and skilled drivers, better and safer cars, a better deal for people with a disability, more trips, more availability – especially late at night – and a more competitive and thriving industry.”

Written submissions about the recommendations in the final report can be lodged until Wednesday 30 January 2013 by email: yoursay@transport.vic.gov.au Post: Taxi Inquiry Response Unit, Department of Transport, PO Box 2797, Melbourne Vic 3001