Article
Issues Paper – Owner-Operator Taxi Licence Reserve Price Investigation
Media release – Office of the Tasmanian Economic Regulator, 22 July 2021
Owner-Operator Taxi Licence Reserve Price Investigation: Issues Paper
The Taxi and Hire Vehicle Industries Act 2008 was recently amended to require the Tasmanian Economic
Regulator to set reserve prices for new Owner-Operator Taxi Licences from December 2021 to December 2025.
The Tasmanian Economic Regulator will conduct a public investigation to determine these prices.
The Regulator today published an Issues Paper which sets out the issues he intends to consider and how he will conduct the investigation. The Regulator invites comments and submissions on the Issues Paper, including any additional matters that the Regulator should consider, to be provided by Friday 13 August 2021.
The Issues Paper is available at: https://www.economicregulator.tas.gov.au/taxis/2021-owner-operator-taxi-licence-reserve-price-investigation
1 INTRODUCTION
In December 2020, changes were made to the Taxi and Hire Vehicle Industries Act 2008 to require the Tasmanian Economic Regulator to set reserve prices for owner-operator taxi licences for each of the 24 taxi areas across Tasmania, commencing in December 2021.
The reserve prices of owner-operator taxi licences are the minimum price that new owner-operator taxi licences can be purchased from the Transport Commission in Tasmania.
Before setting these prices, the Regulator must conduct an investigation. The first report that sets these prices, called a price determination, must be completed before 1 December 2021 and will apply for December 2021 and the next four calendar years, that is until the end of 2025.
On 23 June 2021, the Regulator issued a notice of the investigation to all taxi licence holders which set out the purpose of the investigation, the period over which the investigation will be held and when comments and submissions will be sought.
This Issues Paper sets out some background information and the issues the Regulator considers to be relevant for the investigation. This includes the matters that the Regulator intends to take into account in his investigation and subsequent price determination.
The Regulator invites comments and submissions on the issues covered in this paper and on any other matters relevant to the investigation. These will assist the Regulator to decide how to conduct the investigation and identify the issues he will take into account in setting reserve prices for owner-operator taxi licences in Tasmania.
The Regulator’s draft report and draft price determination will set out the Regulator’s intended reserve prices and is scheduled to be issued by 17 September 2021.
The Regulator will also seek comments on the draft report and draft price determination before making the final determination by 30 November 2021.
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Summary of Issues for Comments and Submissions
1. Did the reserve prices for OOTLs reflect their value in Hobart, in those other areas where some OOTLs have been sold and in those areas where no OOTLs have been sold?
2. Why have so few OOTLs been sold outside Hobart?
3. What are the key factors that operators, especially new operators, consider in assessing whether to purchase OOTLs and how significant is the OOTL reserve price?
4. Would changes in OOTL reserve prices, with no other changes, encourage more purchases of OOTLS by new operators?
5. Can changes in OOTL reserve prices encourage more competition for the purchase of PTLs?
6. If the reserve price of OOTLs in a taxi area is increased or decreased, how might this lead to changes in the market value of PTLs and OOTLs in that area?
7. How do banks and other financial institutions value PTLs and OOTLs and what impact can changes in these valuations have on holders of PTLs and OOTLs?
8. How have the recent decreases in taxi licence values in Hobart and Launceston affected taxi licence holders?
9. How should the Regulator take into account safety-related factors in determining
OOTL reserve prices?
10. If the reserve prices of OOTLs are increased or decreased, how might this affect safety standards in Tasmania’s taxi industry?
11. How might increased levels of competition affect safety in Tasmania’s taxi industry?