It’s pretty crazy to think that the fastest growing ride-sharing company company in Australia, with over 20,000 drivers on its platform currently operates in a legal and regulatory grey area. While Uber has become a legal target in recent months and forced to pay millions of dollars in fines, this has had little impact on Uber’s success.
Now it seems the ride-sharing giant is likely to overcome a significant hurdle and officially become legal and regulated in NSW. This follows similar regulatory changes in the ACT.
This brings a few issues of the law to light: how did Uber manage to survive all these years operating in a legal grey area? And what kind of legal implications does this have on the NSW taxi industry and Uber itself?
How Uber has managed to operate in Australia
The law prohibits private, unlicensed taxi-drivers from accepting passengers for money, however Uber has managed to bypass these laws, and remain virtually unscathed. Since its launch in Australia in 2012, copious UberX drivers have been issued on the spot fines of up to $1,700, and Uber has been able to pay the fines on behalf of their drivers. These penalties are a small price to pay for the huge revenue generated by their average of 5 million rides per year.
The way that the law is structured also makes it difficult for the law to react to changes in today’s climate at a fast rate. While disruptive technologies and startups find it relatively easy to adapt to changes due to their fluid and flexible nature, the law stands inis a stark contrast to this, with its rigid structure and hierarchy. There are several checkpoints which must be passed before a new law is enacted or updated. The law is also reactive to legal issues. Errors or loopholes in the law often go undiscovered or discussed until there has been a contentious issue that has been brought to light through a case. This is why legal regulations of Uber have been so slow to be updated.
What kind of legal implications does the proposed law have on the NSW taxi industry?
Since Uber entered the market, it has already made a huge impact on competition in the taxi industry, offering consumers more competitive travel options and disrupting the monopoly of the taxi industry. The new laws which will be introduced next month will make traditional taxis more competitive and cheaper to obtain.
The government is predicted to significantly reduce the cost of obtaining a taxi licence from $20,000 to $10,000 and the prices are expected to drop even further within the coming months. Taxi owners will also be compensated for the loss of exclusive control of the market and the price of taxi plates which can cost upto $320,000.
With the new regulations, taxi drivers will retain exclusive access to waiting areas and the right to accept kerbside hails, while Uber drivers will only be able to acquire rides through the app.
What effect will this have on Uber?
Uber drivers will be forced to pay for a taxi-like licence and other servicing fees, such as a $600 application fee, and $50 accreditation fee. They will also be required to undergo extensive background checks, including a criminal record check, driving record checks and vehicle safety checks on a regular basis. There will also be services which allow customers to issue complaints about their Uber drivers.
Although it’s too early to say, the predicted regulations appear to be a win-win situation, for Uber, taxi drivers and consumers in general. However, I suppose we’ll have to wait and see how they work in practise.
Let us know your thoughts on the new NSW laws by tagging us #lawpath or @lawpath.