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Taxi Licensing Changes for New South Wales

On 7 October 2009, the Government announced changes to the administration of taxi licensing that will make it easier to gradually get more taxis out on the road and more closely match fleet growth with changes in passenger demand.

This reform will benefit taxi passengers, taxi drivers, licence holders and the wider taxi industry:

  • Taxi passengers - with more taxis on the road, taxi passengers will have shorter waiting times, better reliability and, in the longer term, smaller fare increases.
  • Taxi drivers - the new more affordable annual fee will give drivers a better opportunity to become their own boss. This will help attract and retain industry professionals, with flow on improvements to service quality.
  • Licence holders - this reform is expected to encourage gradual and sustainable take-up of further new licences as passenger demand grows, while managing impacts on existing licence owners.
  • Industry overall - the reform aims to ensure long term viability and sustainability of the taxi industry, attract and retain industry professionals and position it to compete more effectively for passengers, improving its ongoing viability.

This reform builds on significant progress the Government has already made since 2004 in the implementation of taxi reform initiatives, including reviews of the taxi industry generally, improvements to arrangements for wheelchair accessible taxi (WAT) services, new performance standards for taxi networks, and taxi driver safety and security improvements.

What is driving taxi licensing reform?

For many years, the growth in the taxi fleet has generally not kept pace with demand for services, despite there being no cap on new licences since 1990. A contributing factor to this slow take up is that the cost of obtaining a new licence has been higher than lease rates on the open market.

Licence values and lease returns have varied significantly over the years due to many factors including market demand, economic conditions (particularly unemployment) and changes in regulatory activity as can be seen here.

Sydney Metropolitan Unrestricted Ordinary Taxi Licence - Actual Average Monthly Transfer Value

However, in recent years transfer values have climbed significantly.

Operators face difficulty in servicing increasing licensing costs, when licence values and lease rates continue to increase. In June 2009, the Independent Pricing and Regulatory Tribunal estimated that licensing costs had increased by over 8% in the previous year and represented the second largest cost of operating a metropolitan taxi.

This has led industry groups to call for sustainable fleet growth to better match passenger demand and for stabilisation of the past growth in licensing costs to more certain and affordable levels.

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Outline of the new taxi licensing administration

The new measures will make new annually renewable, non-transferable licences available from NSW Transport and Infrastructure.

Key features of the new taxi licensing administration are:

  • Only new annually renewable non-transferable licences will be issued by NSW Transport and Infrastructure.
  • The new annual licence will cost $28,600 per annum in Sydney (monthly payment option available at $2,383.33 per month). This does not cover other start up costs such as the vehicle, network fees, operator training and accreditation.
  • 'Ordinary' and short term licences will no longer be issued as the reforms are rolled out across the State
  • The new annual licence:
    • will be easily renewable each year subject to compliance with normal operating standards
    • can be leased to accredited operators
    • will initially be available in Sydney, before roll out to Newcastle, Central Coast and Wollongong. Further consideration will be given to the reforms before applying them across the rest of the State
  • The annual licence fee to apply to regions outside of Sydney will be established ahead of the reform being rolled out in each area.
  • Wheelchair Accessible Taxi licences will be non-transferable and annually renewable, subject to meeting performance requirements, at the current fee of $1,000 per annum in metropolitan areas and at no charge in country areas.
  • Peak availability and fringe area licence holders can apply for another licence with the same conditions as existing licences expire. New peak availability and fringe areas licences will not generally be available except at the Director General's discretion, based on the need for such licences.

The new licence will be made available from NSW Transport and Infrastructure as soon as legislative and regulatory amendments have been made. Until that time, existing licences will continue to be available by application to NSW Transport and Infrastructure.

Pricewaterhouse Coopers conducted a review and provided advice to Government on setting an appropriate annual licence fee for Sydney. Download a copy of the PwC report: Development of proposed annual taxi licence fee (PDF).

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What the reform means for existing licence holders

The Government intends to achieve gradual and sustainable fleet growth that improves services while managing transition impacts on existing licence owners.

  • Existing 'Ordinary' and pre-1990 'Perpetual' transferable licences - no change, licences will continue to operate under current conditions including transferability and ability to lease on the open market.
  • Short term licences - will continue under current conditions until expiry. Operators will then be able to obtain a new, annually renewable licence.
  • Peak availability and fringe licences - will continue to operate under current conditions. On expiry, operators will be able to apply for a new licence with the same conditions. The fee for these licences will be set relative to the new annual licence fee and will be advised shortly.
  • Wheelchair accessible taxis (WATs) - will continue to be available at current rates of $1,000 per annum in metropolitan areas and at no cost in country areas, subject to usual operating requirements being met.

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Resolution of the so-called "Nexus Scheme"

The so-called "Nexus Scheme" evolved over a long period of time and refers to a number of different arrangements under which taxi licences were issued to taxi networks between 1982 and 1990. These 'nexus' licences played a role in supporting the operation of wheelchair accessible taxi (WAT) licences during this time.

In response to concerns raised during the 2004 Ministerial Review of Taxi Services in NSW, independent probity advisor, Deloitte Touche Tohmatsu, was engaged to review administration of the 'Nexus Scheme'.

The report made the following key findings that clear up any probity concerns regarding administration of 'nexus' licences:

  • Permission to transfer these licences was legitimate - in fact provisions of the Passenger Transport Act 1990 did not permit refusal of a transfer application to an accredited operator for these licences and overrode any pre-existing licence conditions. Any 'windfall gain' from sales resulted from the above statutory requirements.
  • There is no basis for payment of back fees or compensation by licence holders.
  • While past poor administration and record keeping was noted, no evidence of corrupt conduct relating to the "Nexus Scheme" was found.

In order to meet the objective of encouraging gradual growth in the taxi fleet to meet passenger demand, it is important to keep all nexus licences and paired WATs on the road providing services.

As with other existing licence categories, the 'nexus' licences will be able to continue in operation under a set of standardised terms and conditions resembling their current arrangement:

  • Both the 'nexus' and WAT licence pair must be kept in operation; and
  • The 'nexus' licences can be transferred so long as it is to an authorised network which is an accredited operator and remains with its paired WAT licence.

These arrangements will be actively enforced and no further 'nexus' licences will be issued.

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Process for implementation

To prepare for the new taxi licensing administration, a number of matters are being progressed:

  • Industry and community engagement - NSW Transport and Infrastructure has held briefings with the taxi industry and other stakeholders. Letters outlining the changes have been sent to all taxi drivers, operators and licence holders. Progress of the taxi licensing reform will be updated on the NSWTI website.
  • Establish the initial annual licence fee - the initial new annual licence fee is $28,600 per annum in Sydney (monthly payment option available at $2,383.33 per month). This does not cover other start up costs such as the vehicle, network fees, operator training and accreditation. The fee that will apply in other areas will be established once the reforms are rolled in these regions
  • Legislative amendments - amendments are being made to the Passenger Transport Act 1990 to put in place the framework to support the new arrangements. Once passed by Parliament, no new 'ordinary' or short term licences will be issued in the areas where the reform has been rolled out.
  • Staging - the new taxi licensing administration will commence initially in the Sydney Metropolitan Transport District before being rolled out to Newcastle, Wollongong and the Central Coast. It will be further considered before applying the new arrangements to country areas. Until then, NSW Transport and Infrastructure will still be able to issue new 'ordinary' and short-term licences for taxis to operate in the areas where the reform has not been rolled out.
  • Availability of the new licence - the new annual licences will be available initially in Sydney and then progressively in other areas once legislative amendments are in place. Anyone interested in obtaining the new licence can contact the Transport Operations Division for the latest information.

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