INVESTIGATION INTO THE RESERVE PRICES OF OWNER

INVESTIGATION INTO THE RESERVE

PRICES OF OWNER-OPERATOR TAXI

LICENCES IN TASMANIA: 1 DECEMBER

2021 TO 31 DECEMBER 2025

FINAL REPORT AND PRICE DETERMINATION

November 2021

TASMANIAN ECONOMIC REGULATOR

CONTACT DETAILS

Office of the Tasmanian Economic Regulator

Office hours: 8.45am to 5.00pm, Monday to Friday (except public holidays)

Street address: Level 3, 21 Murray Street, Hobart, Tasmania 7000

Postal address: GPO Box 770, Hobart, Tasmania 7001

Telephone: (03) 6145 5899 or international +61 3 6145 5899

Email: office@economicregulator.tas.gov.au

Website: www.economicregulator.tas.gov.au

Printed November 2021

Office of the Tasmanian Economic Regulator

ISBN 978-1-922379-62-7

OWNER-OPERATOR TAXI LICENCE RESERVE PRICE INVESTIGATION 2021: FINAL REPORT AND DETERMINATION 
  TASMANIAN ECONOMIC REGULATOR   
TABLE OF CONTENTS 
 
EXECUTIVE SUMMARY ............................................................................................... I 
INTRODUCTION .............................................................................................. 1 
1  BACKGROUND ........................................................................................................................................... 1 
2  TERMS OF REFERENCE ............................................................................................................................ 1 
3  RESERVE PRICE INVESTIGATION PROCESS .......................................................................................... 2 
THE TAXI INDUSTRY IN TASMANIA .................................................................... 3 
1  OVERVIEW .................................................................................................................................................. 3 
2  TAXI LICENCES IN TASMANIA ................................................................................................................. 4 
3  MARKET CONDITIONS IN TASMANIA’S TAXI INDUSTRY................................................................... 6 
4  THE RELEASE OF NEW OWNER-OPERATOR TAXI LICENCES ........................................................... 8 
5  OUTCOME OF THE TENDERS FOR OWNER-OPERATOR TAXI LICENCES SINCE 2008 ................. 9 
THE REGULATOR’S APPROACH TO DETERMINING OOTL RESERVE PRICES IN 
TASMANIA’S TAXI AREAS ............................................................................... 11 
1  SUMMARY OF THE REGULATOR’S APPROACH ............................................................................... 11 
2  OBJECTIVE 1: THE DEVELOPMENT OF EFFICIENT PRICING AND COMPETITION FOR TAXI 
LICENCES ................................................................................................................................................. 12 
3  OBJECTIVE 2: THE PROMOTION OF A SAFE TAXI TRANSPORT SYSTEM THAT RESPONDS 
ADEQUATELY TO CONSUMER DEMAND FOR TAXI SERVICES...................................................... 14 
4  THE IMPACT OF RESERVE PRICES ON EXISTING HOLDERS OF TAXI LICENCES ......................... 19 
RESERVE PRICES OF OWNER-OPERATOR TAXI LICENCES: 2021-2025 ................. 20 
1  METROPOLITAN TAXI AREAS .............................................................................................................. 20 
2  URBAN/REGIONAL TAXI AREAS .......................................................................................................... 25 
3  RURAL TAXI AREAS ................................................................................................................................ 34 
APPENDIX: SUMMARY OF SUBMISSION .................................................................... 45 

OWNER-OPERATOR TAXI LICENCE RESERVE PRICE INVESTIGATION 2021: FINAL REPORT AND DETERMINATION

TASMANIAN ECONOMIC REGULATOR I

EXECUTIVE SUMMARY

The Tasmanian Economic Regulator is required to set reserve prices for owner-operator taxi

licences for Tasmania’s 24 taxi areas under recent changes to the Taxi and Hire Vehicle

Industries Act 2008. The reserve price is the minimum price a new owner-operator taxi

licence can be purchased from the Transport Commission.

The Act specifies that the first price determination must be completed before

1 December 2021 and that the prices will apply for December 2021 and the following four

calendar years, to December 2025. Under the Act, unless there are insufficient taxis in a taxi

area to meet demand, these licences will not be available for purchase in any taxi area until

2025.

The Regulator is required to conduct an investigation before issuing a price determination.

The Act sets out two objectives for the Regulator’s reserve price determination:

(a) to assist in the development of efficient pricing and competition for taxi licences;

and

(b) to promote a safe taxi transport system that responds adequately to consumer

demand for taxi services.

The Act also specifies that, for each taxi area, the reserve price in December 2021 must not

be more than 10 per cent below the former reserve price for that area. It also specifies that

in each subsequent year, these prices cannot fall by more than 10 per cent below the

previous year’s price.

Summary of Regulator’s Approach

In conducting this investigation, the Regulator has been guided by the objectives, as set out

above, and has also taken into account the broader objectives in the Taxi Act. The Regulator

has sought to promote the following in determining reserve prices for Tasmania’s 24 taxi

areas:

a) efficient pricing and competition for taxi licences;

b) lower barriers to entry for potential new operators in the taxi industry;

c) increased capacity for the taxi industry to respond to consumer demand for taxi

services;

d) increased supply of taxi services in those taxi areas where few or no taxi services are

offered;

e) increasing the capacity of the taxi industry to compete with other providers of on-

demand passenger transport;

f) maintaining safety standards in Tasmania’s taxi industry; and

g) fair outcomes for the taxi industry, including current licence holders.

In examining the level of competition for taxi licences, the focus has been on the availability

for sale of all types of taxi licence and the conditions in the taxi area that may encourage or

discourage potential taxi operators.

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The Regulator, in assessing the extent to which taxi operators can respond to consumer

demand, has taken ‘demand’ to include not just the quantity of taxi services demanded but

also the quality or attributes of the service that consumers may demand, which might

include, for example, the cleanliness of the vehicle or the politeness and helpfulness of the

driver. If there is a single taxi business in a taxi area, for example, that business may not offer

services that some consumers demand.

This investigation has collected information relating to the 24 taxi areas, including the

number and type of taxi licences issued. Current market conditions in the taxi industry have

also been examined. Data are not available, however, on some key indicators such as the

volume of taxi services provided or the number of taxis in operation over any specified

period, or passenger waiting times.

The Regulator has also made extensive use of Transport Commission data on the take up and

issue prices of new OOTLs since 2008 and the trades in PTLs and OOTLs; in both cases, the

focus has been on the purchase of taxi licences in more recent years. Much of this

information is commercial-in-confidence and is not included in this report.

Discussions were also held with stakeholders, including OOTL and PTL holders, taxi operators

and owners of network dispatch companies in the south, north and northwest of the State.

The Regulator has not sought to forecast future market conditions or future prices of taxi

licences exchanged between investors and/or taxi operators. Rather, the approach has been

to identify the key factors that are important in determining how the objectives set out

above may be achieved through the setting of OOTL reserve prices.

In determining reserve prices, the Regulator has sought to balance the competing priorities,

including protecting the interests of consumers, providing opportunities for new operators

to enter the industry and achieving fair outcomes for the taxi industry, including for current

licence holders.

The investigation commenced in July 2021 with the publishing of an Issues Paper. The

Regulator received two written submissions, one from a taxi licence holder and one from the

Transport Commission.

The Regulator’s draft report and draft price determination was issued on 1 October 2021.

The draft reserve prices for 2025, which is the first year OOTLs will be available for purchase

from the Transport Commission for all taxi areas, were published in newspapers that cover

mainland Tasmania and publications on King Island and Flinders Island. One submission was

received, which was from a taxi licence holder and driver.

Key findings

The 24 taxi areas are very different with respect to geographic size, population, the number

of taxi licences issued, the level of competition between taxi businesses and from other on-

demand passenger service providers, and even whether or not taxi services are provided.

The taxi industry faces very challenging conditions as a result of the introduction of ride-

sourcing and, more recently, the restrictions imposed by governments as a result of the

COVID-19 pandemic. This has impacted not just on the demand for taxi services but also on

the supply of drivers as a shortage has been reported in several areas. The traded prices of

PTLs and OOTLs have declined in recent years, especially in Hobart, together with lease rates

for PTLs. This may explain why, of the 43 OOTLs made available by the Transport

Commission in 2019, only one was purchased.

OWNER-OPERATOR TAXI LICENCE RESERVE PRICE INVESTIGATION 2021: FINAL REPORT AND DETERMINATION

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It is unclear to what extent the former OOTL reserve prices in each taxi area encouraged or

discouraged the purchase of OOTLs from the Transport Commission. Local market conditions

in the taxi area, including the level of demand for taxi services, are clearly very significant.

The availability of PTLs and OOTLs for purchase from other industry participants can also be

important. Whether or not there is only one taxi business in the area may also be a factor, as

well as the opportunity to be a member of the local radio room which takes bookings and

dispatches taxis.

There are marked differences in opinion between taxi operators as to the nature of the taxi

market, even between operators in the same taxi area. Some operators consider that the

market size is largely fixed such that further supply of taxis would inevitably reduce the

volume of business for each taxi operator and result in lower returns. Other operators,

however, consider that the taxi industry offers opportunities for operators and drivers to be

successful and secure high returns by offering high quality services and expanding the

market as a whole. Several operators point to large differences in fare box revenue per shift

between those drivers who actively seek to secure high incomes and those that may settle

for much lower incomes.

Based on data available to date, the safety of drivers, passengers and the general public does

not appear to be affected by the number of taxis operating in a taxi area. Data from the

Motor Accidents Insurance Board reveal that accidents involving personal injuries have not

been increasing, on a per taxi basis, in taxi areas where strong growth in taxi numbers has

occurred, such as Hobart. The Regulator has therefore assessed that the level of reserve

prices, to the extent that it affects the number of new OOTLs purchased, is not expected to

affect safety standards in Tasmania’s taxi industry.

Three classes of taxi areas have been identified: metropolitan, urban/regional and rural taxi

areas. A summary of the key findings relating to each class is provided below.

The OOTL reserve prices determined by the Regulator in this Final Report are the same as

the draft reserve prices in the Draft Report.

Metropolitan taxi areas

The two metropolitan taxi areas are Hobart and Launceston, which together account for

around 76 per cent of all taxi licences issued in Tasmania (358 licences for Hobart and 119

for Launceston) and around 59 per cent of Tasmania’s population.

Ride sourcing services are well established, as well as community transport services, and

each area has a large number of wheelchair-accessible taxis (WATs). There are many PTL

holders and there is a strong market for leasing PTL plates. There has been a large number of

trades of PTLs over the past two decades indicating that the market for PTLs is competitive.

The traded values for PTLs and OOTLs have been highest in these two taxi areas though they

have fallen in recent years, particularly in Hobart, such that the former OOTL reserve prices

now appear rather high.

Radio rooms with access to a number such as 131 008 have a very important role in taking

bookings and dispatching taxis. These radio rooms accept operators as members who may

not have any share in the ownership of the radio room itself. Membership of a radio room

appears to be a significant factor in whether a potential operator chooses to purchase an

OOTL from the Transport Commission. In Hobart, with two radio rooms and where

membership has been generally available, 89 OOTLs have been purchased from the

The Draft Report, titled Investigation into the Reserve Prices of Owner-Operator Taxi Licences: 1 December 2021 to

31 December 2025 - Draft Report, and the submission are available here.

OWNER-OPERATOR TAXI LICENCE RESERVE PRICE INVESTIGATION 2021: FINAL REPORT AND DETERMINATION

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Transport Commission since 2008. By contrast, in Launceston, three OOTLs have been

purchased and the Regulator understands that radio room has not accepted Launceston-

based taxi operators with OOTLs as members.

The overall level of competition for taxi licences, and the capacity of the industry to respond

to demand, has been assessed as stronger in Hobart than in Launceston.

Under the standard OOTL release arrangements scheduled to recommence in 2025, 16

OOTLs are made available for sale in the Hobart taxi area and five in the Launceston taxi area

each year. The level of the OOTL reserve prices could therefore have a significant impact on

the absolute number of taxis in each area and on the level of competition.

The Regulator has determined the OOTL reserve prices for Hobart and Launceston as

presented in Table E.1.

Table E.1: Price Determination - OOTL reserve prices for the Hobart and Launceston taxi areas

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Hobart

$57 000

$54 200

$51 500

$48 900

$46 500

Launceston

$31 500

$28 400

$25 600

$23 100

$20 800

Urban/regional taxi areas

The urban/regional taxis areas are those areas where the number of taxi licences issued

ranges from nine to 40. They comprise seven taxi areas: Burnie; Devonport; Ulverstone;

Perth; New Norfolk; West Coast and Huon Valley. Some of these taxi areas cover a large

geographic area but as the population density in these areas is relatively low this tends to

result in weak demand for taxi services. Together, these taxi areas account for around 18 per

cent of all taxi licences and 28 per cent of the State’s population.

Pre-booked work accounts for a larger percentage of all work in these areas, compared to

the metropolitan taxi areas, partly because there are no large central business districts and

few taxi ranks. If there is a radio room with access to a number such as 131 008, it belongs to

a taxi business operating in the area and other operators would not usually be accepted as

members.

In most of these areas, all, or almost all, PTLs for an area are owned by one business. It

appears that few PTL plates are leased. In cases where PTLs are sold, the entire business

would typically be sold rather than one or two PTLs. Potential operators in these areas would

therefore have to buy several PTLs to enter the industry, which presents a barrier to entry.

Compared to the metropolitan taxi areas, the number of PTLs and OOTLs offered for sale by

investors and operators can be very low and there are far fewer years when trades in PTLs or

OOTLs occur. As there are also very limited opportunities to lease PTLs, purchasing OOTLs

from the Transport Commission may be the only option to operate a taxi service. Of the 110

OOTLs purchased from the Transport Commission since 2008, almost all those not

purchased for the metropolitan taxi areas (predominantly Hobart) have been purchased by

operators in the urban/regional taxi areas.

In some of these taxi areas, a large number of taxi licences have lapsed and in some other

areas some taxi licences are not being used. The share of all taxi licences that are not being

used is much higher than in the two metropolitan taxi areas.

Ride-sourcing services are available in most areas, and in some, such as Perth and New

Norfolk, local taxi operators have stated that these services have had a significant impact. It

OWNER-OPERATOR TAXI LICENCE RESERVE PRICE INVESTIGATION 2021: FINAL REPORT AND DETERMINATION

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has also been reported that community transport services have also impacted on taxi

operators in some of these areas, including the Huon Valley taxi area.

In the urban/regional taxi areas, one OOTL only is made available each year under the

standard release arrangements (unless the average tender price is more than twice the

reserve price when an additional OOTL is offered at the reserve price). If the reserve price in

2025 attracts another operator, this would not have a major impact on the level of

competition in the relevant area or on the overall market for taxi licences. It would,

however, provide an opportunity for a new operator to respond to increased demand, or to

provide different services.

The Regulator has determined the OOTL reserve prices for the urban/regional taxi areas as

presented in Table E.2.

Table E.2: Price Determination - OOTL reserve prices for the Devonport; Burnie; Perth; Ulverstone; New

Norfolk; Huon Valley and West Coast taxi areas

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Devonport

$23 000

Burnie

$20 700

$18 700

$16 900

$15 300

$13 800

Perth

$12 500

Ulverstone

$16 400

$15 600

$14 800

$14 100

$13 400

New Norfolk

$9 800

$8 900

$8 100

$7 300

$6 600

Huon Valley

$6 800

$6 200

$5 600

$5 100

$4 600

West Coast

$1 000

Rural taxi areas

There are 15 rural taxis areas, where the number of taxi licences issued is five or less:

 George Town

 West Tamar

 Meander Valley

 Circular Head

 Break O’Day

 Glamorgan/Spring Bay North

 Kentish

 Penguin

 Tasman

 Dorset

 Glamorgan/Spring Bay South

 Bruny Island

 Central Highlands

 Flinders Island

 King Island

These taxi areas are generally in the more rural and remote regions of Tasmania, where

population density is very low. Between them, these taxi areas account for around 16 per

cent of Tasmania’s population but only around six per cent of all taxi licences issued in

Tasmania.

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The demand for taxi services appears to be generally very low and the returns to some taxi

operators are also likely to be low. In eight of these taxi areas, no taxi services are currently

provided.

The OOTL reserve prices in most of these taxi areas were very low, ranging between $1 000

and $3 750. The taxi licences issued in these areas are PTLs except for two OOTLs, one for

Tasman which is not currently being used and one for Flinders Island which is lapsed. It is

likely that for many taxi areas the taxi licences have a very low financial value as, for several

areas, no taxi services are provided and only two OOTLs been purchased since 2008 despite

very low OOTL reserve prices in most areas.

There are no WATs in these areas and ride-sourcing services are offered in very few. In most

areas, all licences are owned by one taxi business. It appears that no PTLs are leased and in

many taxi areas there have been no trades in PTLs in the past decade. Neither of the two

OOTLs has ever been traded.

The market for taxi licences cannot be competitive in these taxi areas, given the very small

number of taxi licences. For those areas where no taxi services are provided, the Regulator’s

objective has been on ensuring that the OOTL reserve price does not provide a disincentive

to a new operator from entering the industry and providing taxi services. In these taxi areas,

the Regulator has determined that lower OOTL reserve prices are appropriate even if the

former prices were very low, such as $1 000. The reserve prices in non-serviced areas have

been set for December 2021 at around 10 per cent below the former levels and they decline

by 10 per cent or marginally less each year to 2025.

The Regulator has determined the OOTL reserve prices for the rural taxi areas as presented

in Table E.3.

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Table E.3: Price Determination - OOTL reserve prices for the George Town; Circular Head; Break O’Day;

Dorset; West Tamar; Meander Valley; Penguin; Tasman; King Island, Glamorgan/Spring Bay

North, Glamorgan/Spring Bay South, Bruny Island, Flinders Island; Kentish and Central

Highlands taxi areas

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

George Town

$11 300

$10 200

$9 200

$8 300

$7 500

Circular Head

$10 200

$9 200

$8 300

$7 500

$6 800

Break O’Day

$9 800

$8 900

$8 100

$7 300

$6 600

Dorset

$2 250

West Tamar

$11 300

$ 10 200

$9 200

$8 300

$7 500

Meander Valley

$11 300

$10 200

$9 200

$8 300

$7 500

Penguin

$3 750

Tasman

$3 400

$3 100

$2 800

$2 600

$2 400

King Island

$900

$810

$730

$660

$600

Glamorgan/Spring Bay North

$3 400

$3 100

$2 800

$2 600

$2 400

Glamorgan/Spring Bay South

$1 700

$1 550

$1 400

$1 300

$1 200

Bruny Island

$900

$810

$730

$660

$600

Flinders Island

$900

$810

$730

$660

$600

Kentish

$3 400

$3 100

$2 800

$2 600

$2 400

Central Highlands

$900

$810

$730

$660

$600

In two taxi areas (Dorset and Penguin) where the former OOTL reserve prices were low and

taxi services are currently provided, the Regulator has assessed that the former reserve

prices remain appropriate out to 2025. This is because if new reserve prices are set below

the former prices, the benefit of encouraging a new operator into the area may be

outweighed by the risk that it could lead to the departure of the remaining firm and

potentially result in no taxi services being provided. In both areas, only two taxis are

currently operating and so one additional taxi would result in a 50 per cent increase in the

number of taxis operating in these areas, which would severely affect the incumbent

business.

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1 INTRODUCTION

1.1 Background

In December 2020, changes to the Taxi and Hire Vehicle Industries Act 2008 (the Taxi Act)

require the Tasmanian Economic Regulator to set reserve prices for owner-operator taxi

licences (OOTLs) for each of the 24 taxi areas across Tasmania, commencing in December

2021.

The reserve price of an owner-operator taxi licence is the minimum price for which new

owner-operator taxi licences can be purchased from the Transport Commission in Tasmania.

Under the standard taxi release arrangements in the Act, each year the Transport

Commission offers OOTLs for sale for each taxi area at the reserve price for that area.

However, changes to the Taxi Act suspended this annual process from 2020 to 2024. From

December 2021, the Commission can offer OOTLs for sale, at the reserve price set by the

Regulator, only if the Commission is satisfied there are insufficient taxis to adequately meet

the needs of consumers in a taxi area.

Unless the Transport Commission issues additional licences as explained immediately above,

2025 will be the first year when the reserve prices will have any effect on the release of new

owner-operator taxi licences and therefore on the number of taxi licences 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. The prices will apply for December 2021 and the next four calendar years,

that is until the end of 2025.

The Act sets out two objectives for the Regulator’s reserve price determination:

and

(d) to promote a safe taxi transport system that responds adequately to consumer

demand for taxi services.

1.2 Terms of reference

The terms of reference for the first reserve price determination are set out in the Taxi Act

and comprise two constraints on the Regulator’s reserve prices:

(a) for December 2021, the reserve prices of OOTLs in all taxi areas must not be less

than 90 per cent of the reserve price that had applied for that area. As an example, if

the reserve price in a taxi area had been $20 000, the Regulator cannot set the price

for December 2021 at under $18 000.

(b) for the four calendar years from 2022 to 2025, the reserve prices must not be less

than 90 per cent of the reserve price in the previous year. If the Regulator set the

reserve price at $19 000 for December 2021, for example, the Regulator cannot set

the price for 2022 at under $17 100.

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The Act also requires the Regulator to consider the following matters:

(a) the impact that reserve prices in the price determination would have on existing

holders of taxi licences;

(b) market trends in relation to the amounts paid for the transfer of taxi licences;

thinks fit, before the investigation commences; and

(d) any other matter that the Regulator considers relevant.

The Regulator is also required to include a statement of the reasons for the reserve price for

a taxi area in the reserve price determination.

1.3 Reserve price investigation process

A summary of the investigation process is provided below.

Milestone

Investigation timeframe

Regulator releases Issues Paper for public consultation

22 July 2021

Public consultation period on Issues Paper closes

13 August 2021

Regulator engages targeted stakeholder consultation

August/September 2021

Regulator releases a Draft Report and Price Determination for public

consultation

1 October 2021

Public consultation period on the Draft Report and Price Determination closes

22 October 2021

Regulator releases a Final Report and Price Determination

30 November 2021

The Regulator received two submissions on the Issues Paper and one submission on the

Draft Report from a taxi licence holder and driver. A summary of this submission is presented

in Appendix 1. In preparing the Final Report, the Regulator took into consideration the

submissions received.

This Final Report and Price Determination sets out the Regulator’s reserve prices for owner-

operator taxi licences from 1 December 2021 to 31 December 2025 for each taxi area and

the Regulator’s statement of reasons for setting the reserve prices for each taxi area.

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2 THE TAXI INDUSTRY IN TASMANIA

This section provides a brief overview of the taxi industry in Tasmania including the

distribution of taxi licences across the 24 taxi areas.

2.1 Overview

A taxi licence is required for a vehicle to provide taxi services in Tasmania, which comprise

rank and hail services and pre-booked services. While other operators can provide pre-

booked services, only taxis are permitted to provide rank and hail services.

The number of taxi licences is restricted and taxi fares are regulated by the Transport

Commission, which sets maximum fares. Taxi drivers must receive accredited training before

being be authorised to drive a taxi by having a taxi ancillary certificate. Taxi regulation also

covers where taxi services may be offered, how they may be offered (soliciting passenger

trade is not allowed, for example), and safety-related vehicle requirements.

The restriction on the number of taxi licences has resulted in some taxi licences being

purchased at high prices. Around a decade ago, for example, in the Hobart taxi area some

perpetual taxi licences (PTLs) were traded at prices of around $150 000, while in Launceston

some were traded for between $80 000 and $100 000 at around the same time. PTLs may be

leased and many have been purchased to provide a source of investment income rather

than as a means to operate a taxi business.

There are 24 taxi areas in Tasmania with very different industry market conditions. The

Hobart taxi area, which extends from Hobart to Brighton, Margate and Sorell, contains

around 44 per cent of Tasmania’s population.

Of the 625 taxi licences issued in Tasmania,

358 or around 57 per cent are for the Hobart taxi area.

A further 119 licences (19 per cent)

are for the Launceston taxi area. Around three quarters of all taxi licences are for operations

within, or to or from, in these two metropolitan areas, with the remaining one quarter of all

licences distributed among the other 22 taxi areas.

By contrast, the population is very small in some rural taxi areas such as Bruny Island and

Flinders Island, and can be widely dispersed, such as in Central Highlands. In two taxi areas,

namely Kentish and Central Highlands, no taxi licences have been issued. In some other taxi

areas, licences have been issued but no taxis currently operate, including the two

Glamorgan/Spring Bay taxi areas, Tasman, King Island and Flinders Island.

In metropolitan/urban areas, radio rooms provide booking and dispatch services to taxis

operators with a widely advertised and well known telephone number associated with that

radio room, such as 131 008 or 132 227 in Hobart and Launceston. As a substantial share of

taxi services are pre-booked services, access to radio room services can be important, or

even necessary, for urban-based taxi businesses. In rural areas, taxi operators tend to rely on

their mobile phone number for pre-booked work. Typically, rank and hail services form a

smaller share of all taxi services in non-urban taxi areas.

Unless they are the operators, taxi drivers are bailee drivers who are considered self-

employed by law (except for the purposes of workers compensation law). They bear their

Unless specified, all population data in this report are based on ABS Local Government Area estimates for 30 June 2020.

As at 9 September 2021.

OWNER-OPERATOR TAXI LICENCE RESERVE PRICE INVESTIGATION 2021: FINAL REPORT AND DETERMINATION

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own GST and superannuation costs and receive a share of the fare box, usually 50 per cent.

Strictly, the driver pays the owner for the use of the taxi. The driver will choose where to be

based and the extent to which fares are sought from taxi ranks, airports or other specific

locations.

The Regulator understands that bailee drivers often do not enter into long term contracts

with operators; in many cases, the operator may decide, on a day to day basis, whether or

not to make his or her taxi available to a particular bailee driver. Likewise, a driver may

decide on the day whether or not to show up and drive the taxi and for how many hours of

the allocated shift he or she will drive the taxi.

From discussions with industry participants, marked differences in opinion have emerged

between taxi businesses on the nature of the taxi market and their future prospects, even

with the same taxi area. Some operators consider that the market size is largely fixed and

that there is very substantial over supply of taxis, resulting in low utilisation rates for taxis

and poor returns for investors, operators and drivers. Their view is that if more taxis are

operating due to more OOTLs being purchased, this would inevitably further dilute the

volume of business for each taxi operator and result in lower returns.

By contrast, other participants consider that the taxi industry presents opportunities for

individual businesses, and even individual drivers, to be successful and secure high returns. A

feature of the taxi industry is that, within a taxi area, some taxi businesses can succeed while

others fail. Some participants consider that by offering high quality services, drivers and

operators can not only obtain business from rival taxi operators but also expand the market

as a whole. Several operators point to large differences in fare box revenue, per shift,

between those drivers who actively seek to secure high incomes and those that may settle

for much lower incomes. Some would like to purchase additional OOTLs to enable their

business to expand because rival taxi businesses may not offer any PTLs or OOTLs for sale.

According to the industry, the reserve price of OOTLs in any taxi area does not have a direct

influence on the traded prices of PTLs within that taxi area and is not used as a reference

price by buyers or sellers. In the case of OOTLs, however, it appears that the OOTL reserve

price sets a ceiling on the traded price of OOTLs in the taxi area.

2.2 Taxi licences in Tasmania

There are four types of taxi licence:

 Perpetual taxi licences (PTLs) - PTLs are the personal property of the owner and may

be sold or leased to accredited operators. Most taxi licences in Tasmania are PTLs,

though the issue of PTLs ceased in 2008.

 Owner-operator taxi licences (OOTLs) - introduced in 2008. The owners of OOTLs must

be the operators of the taxi business (though not necessarily the taxi driver). OOTLs

cannot be leased but may be traded, but only to an accredited individual and with the

approval of the Transport Commission. Around 80 per cent of OOTLs in Tasmania have

been issued for taxis operating in the Hobart area.

 Wheelchair-accessible taxi (WAT) licences - introduced in 2005. WAT licence numbers

are uncapped and there is no licence price. WATs may only be operated by the

accredited operator that also holds the licence. Unlike PTLs and OOTLs, WAT licences

apply for a fixed period (10 years).

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 Temporary taxi licences (TTL) – a TTL is similar to an OOTL, but is issued for a short

term period only, at the discretion of the Transport Commission. Currently, there are

no TTLs in any taxi area.

Table 2.1 below shows the distribution of taxi licences across Tasmania’s taxi areas as at

early-September 2021.

Table 2.1: Tasmanian taxi licences for each taxi area (current and lapsed taxi licences), as at 9 September 2021.

Owner-Operator Taxi

Licences

Perpetual Taxi Licences

Wheelchair-Accessible

Taxi Licences

Current

Lapsed

Current

Lapsed

Current

Lapsed

Hobart

228

Launceston

101

Burnie

Devonport

Ulverstone

George Town

Perth

West Tamar

Meander Valley

Circular Head

Break O'Day

New Norfolk

Huon Valley

Glamorgan/Spring Bay

North

Kentish

Penguin

Tasman

Dorset

Glamorgan/Spring Bay

South

Bruny Island

Central Highlands

Flinders Island

King Island

West Coast

Total

109

428

A taxi licence had lapsed if the licence owner had not paid the annual administration fee, in which case the taxi to which

the licence applies cannot operate. No fee is now required and if the owner applies for the licence to be active, the

Transport Commission will allow the taxi to operate again as soon as possible.

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In any taxi area, PTLs are traded at higher prices than OOTLs as Figure 4. 1 in Chapter 4

shows. The reasons are that PTLs are the property of the licence holder and the Transport

Commission cannot require a licence holder to surrender a PTL. By contrast, an OOTL can be

cancelled without compensation. In addition, a PTL can be leased and so can provide a

source of investment income. Furthermore, unlike with OOTLs, there is no requirement for

the PTL holder to be a taxi operator.

Operators in the taxi industry incur costs in owning or leasing a PTL or owning an OOTL. In

the Hobart taxi area, for example, PTLs were traded at around $150 000 a decade ago and

the lease rate was reported to be around $250 per week at that time, though these prices

have subsequently fallen. This can represent a significant cost for investors and operators

and they would expect to recover these costs, directly or indirectly, through taxi fares.

The value of these taxi licences is ultimately due to their scarcity. If, for example, an

unlimited number of PTLs or OOTLs were made available in a taxi area with no minimum

price, the licence price would be zero as would the PTL lease price.

However, in providing taxi services, no resources are used relating to a taxi licence. This is

unlike other inputs such as vehicle use, fuel, fare booking facilities (such as radio rooms) and

drivers. In this sense, therefore, taxi fares do not reflect efficient costs if they include an

allowance for taxi licence costs.

As long as taxi fares include an allowance for taxi licence costs, including lease costs,

operators in the taxi industry will be at a cost disadvantage in competing with other on-

demand passenger transport providers.

Notwithstanding this, PTLs and OOTLs have a financial value to licence holders and PTLs, in

particular, can be an important source of investment income, including for superannuation.

2.3 Market conditions in Tasmania’s taxi industry

The taxi industry has experienced very significant changes over the past five years. One

source of these changes has been the development of ride-sourcing platforms that offer on-

demand passenger transport in competition with the taxi industry. Ride-sourcing services are

predominantly offered in Hobart and Launceston. Many taxi businesses report that they

have been very adversely affected by the growth of this new industry. From no registered

ride-sourcing vehicles up to November 2017, the number of vehicles reached a peak of 1 542

in February 2021 and was 1 414 as at 31 July 2021. This is around three times the number of

registered taxis in the State.

In addition to ride-sourcing, the taxi industry faces competition from community transport

organisations which offer services at prices well below the costs faced by taxi operators.

These include Community Transport Service Tasmania (CTST), Red Cross Transport and St

John’s Community Transport.

CTST is a major provider of these services and receives financial support from the Australian

and State Governments. It provides point-to-point passenger transport services to those

aged 65 or over (or over 50 for Aboriginal/Torres Strait Islanders) and those with access to

disability transport services. CTST provides services to around 8 000 consumers each year

and operates state-wide with a fleet of over 90 vehicles, which is around 17 per cent of the

number of taxis currently registered.

In addition, supermarket chains offer deliveries to the home when previously taxis may have

been used for grocery shopping. Historically, luxury hire firms also competed with taxi

businesses though this appears to be less significant in recent years. Concerns have also

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been raised over illicit, informal passenger transport services being offered, particularly in

the State’s northwest.

In any particular taxi area, the taxi businesses can be in competition with taxis from

neighbouring taxi areas. This appears to be more prevalent in non-urban taxi areas that

border on major urban taxi areas. Competition also arises as a result of overlapping taxi

areas. As an example, taxis operating in the Launceston taxi area compete with taxis

operating in the Perth taxi area in taking passengers from Launceston to and from

Launceston Airport and the Launceston Country Club Casino.

The taxi industry is also subject to a range of regulatory-related risks. Over the longer term,

one of the most significant risks relates to the arrangements for the release of new taxi

licences, and therefore the level of competition within taxi areas. The standard OOTL release

arrangements, discussed below, have resulted in a large increase in taxis in the Hobart taxi

area since 2008. Many operators have complained that this has resulted in the oversupply of

taxis and reduced returns to investors, operators and drivers.

The Transport Commission‘s maximum fares can have a major impact on the income of

investors, operators and drivers. The Commission also imposes many requirements on

operators such as the installation of safety cameras, the age and type of vehicles permitted

to be taxis and the training required for taxi drivers. Changes to these requirements can

potentially have significant impacts on taxi businesses. For example, the Commission no

longer requires an operator to buy a new vehicle to operate a WAT, resulting in the vehicle

cost falling from around $70 000 to potentially as low as $12 000. While this may encourage

the supply of WATs, it could impact heavily on existing WAT operators or taxi businesses

more generally in that taxi area.

The taxi industry has reported that the restrictions imposed by governments as a result of

the COVID-19 virus over the past 18 months have had a very significant impact on their

business. In taxi areas that contain airports, the large reduction in passenger numbers to and

from airports has had a major impact on the overall demand for taxi services, especially

when restrictions on interstate travel are imposed. When lockdowns were imposed in

Tasmania in late 2019-20, the demand for taxi services fell to very low levels.

Ride-sourcing services are generally not available in non-urban taxi areas and some of these

areas appear to have been less affected by the COVID-19 related restrictions. Some

operators in these areas report, nevertheless, that demand for taxi services is subdued,

which may be due to demographic trends, greater availability of community transport

services or changes in passenger transport preferences.

Some taxi operators are not using all their taxi licences, which they attribute to weak

demand for taxi services. A total of 625 taxi licences have been issued in Tasmania but, as at

31 July 2021, only around 524 vehicles were registered as taxis. In some cases, this is

because some PTL holders have not been able to lease their licences. In other cases, the

operators may not consider that it is sufficiently profitable to operate all their taxis. Taxi

operators in several taxi areas have advised that they have difficulty, or are unable, to hire

sufficient drivers. This is attributed to low driver earnings but also to the COVID-19

restrictions that have reduced the number of persons entering Australia who would work as

taxi drivers.

Taxi businesses and radio rooms have also reported that, for the vehicles they are operating,

they offer fewer shifts to their drivers per week than in earlier years. That is, their vehicles

are not on the road for as many hours per day or per week. This suggests these businesses

do not expect to cover their variable costs of operating some taxis for some shifts.

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In summary, the taxi industry faces challenging circumstances and the outlook is highly

uncertain. In the near term, the most important issue is likely to be the extent to which the

COVID-19 related restrictions are unwound, or alternatively whether a further round of

restrictions will be imposed. Over the medium term, the major issue is likely to be the

opportunities and threats arising from further technological advances and how competitive

the taxi industry can be with other providers of on-demand passenger transport services.

2.4 The release of new owner-operator taxi licences

Under the Taxi Act, new owner-operator taxi licences can be issued in each taxi area. Under

the standard arrangements, by 30 September each year and for each taxi area, the Transport

Commission must make available at a reserve price the number of OOTLs that is equal to five

per cent of the total number of PTLs and OOTLs in that area (rounded to the nearest whole

number), or one OOTL, whichever is greater.

Table 2.2: Reserve prices of owner-operator taxi licences (until 2020)

Taxi area

OOTL reserve price

Hobart

$60 000

Launceston

$35 000

Burnie

$23 000

Devonport

$23 000

Ulverstone

$17 250

George Town

$12 500

Perth

$12 500

West Tamar

$12 500

Meander Valley

$12 500

Circular Head

$11 250

Break O'Day

$10 800

New Norfolk

$10 800

Huon Valley

$7 500

Glamorgan/Spring Bay North

$3 750

Kentish

$3 750

Penguin

$3 750

Tasman taxi

$3 750

Dorset taxi

$2 250

Glamorgan/Spring Bay South

$1 875

Bruny Island

$1 000

Central Highlands

$1 000

Flinders Island

$1 000

King Island

$1 000

West Coast

$1 000

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For example, for a taxi area with 80 PTLs and 20 OOTLs, the Commission must make

available five OOTLs each year at the reserve price for that taxi area. If in another area, there

are only 10 PTLs and no OOTLs, the Commission must make one OOTL available each year.

A tender process is run to sell these OOTLs and the actual sale prices may be above the

reserve prices. If the average tender price in a taxi area is more than double the reserve

price, the Commission must make available a further five per cent of the total number of

PTLs and OOTLs, or an additional OOTL, whichever is greater, at the reserve price.

Any OOTLs not sold through this process are available for sale for the rest of the year at the

reserve price. These arrangements have been in place for most years since 2008 but ceased

in 2020.

Table 2.2 above presents these reserve prices, which had been unchanged since

2008.

The reserve prices of OOTLs in the 24 taxi areas were set in legislation in 2008 following

negotiations with the taxi industry. At that time, the traded price of PTLs was around

$60 000 in Launceston and $120 000 in Hobart. As a general rule, the reserve prices were set

at around one half of the recent traded prices for PTLs.

The reserve prices of OOTLs have been important as they set the minimum price for new taxi

licences in each taxi area when they are made available. However, as Table 1 above shows

and as explained below, the number of OOTLs sold has been very low, except in Hobart.

Recent amendments to the Act have paused these standard taxi licence arrangements from

2020 to 2024. No OOTLs can be released until 2025 unless the Transport Commission is

satisfied that there are insufficient taxis available in any taxi area to meet the needs of

consumers. If the Commission is satisfied there are insufficient taxis available, the OOTLs

would be made available by tender at the reserve price, as set by the Regulator.

Unless the Transport Commission issues additional licences as explained immediately above,

2025 will be the first year when the reserve prices will have any effect on the release of new

OOTLs and therefore the number of taxi licences in Tasmania.

2.5 Outcome of the tenders for owner-operator taxi licences since

2008

For most years between 2008 and 2020, owner-operator taxi licences were offered for sale

in all 24 taxi areas in Tasmania, including those areas where no taxis had been operating.

In the Hobart taxi area, 89 OOTLs were purchased. The sale prices were equal to, or

marginally higher than, the reserve price of $60 000. Eleven OOTLs were offered for sale in

2008, with this number increasing each year to 16 by 2015 as the total number of taxi

licences in Hobart increased. In most years, a large share of the OOTLs made available was

purchased. However, in the most recent two years when OOTLs were made available in

Hobart (2015 and 2019), only one was purchased.

By contrast, in Launceston, despite five OOTLs being made available every years since 2008,

only three OOTLs have been purchased over the entire period.

The standard release process for OOTLs was suspended between 2016 and 2017 (and for 2018 for the Hobart taxi area)

when ride-sourcing was first authorised in Tasmania. The OOTLs sold during 2016 were those made available by the

tender process in 2015 and those that were not sold by tender were made available for purchase until 30 September

2016. The standard release process did not occur in 2020 or 2021.

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It appears that the policy of the radio rooms with widely advertised telephone numbers,

such as 131 008, affects the number of OOTLs purchased. This may help explain why no

OOTLs have been purchased in Burnie, where until recently the radio room operated as a co-

operative owned by all PTL licence owners in the area.

In Devonport, however, even though the PTLs are owned by one business, which also

operates the Devonport radio room, a separate operator, has purchased OOTLs in recent

years as they have become available. As a result, there are more OOTLs in the Devonport taxi

area than in any other taxi area outside Hobart.

In four taxi areas, between one and three OOTLs have been sold by the Transport

Commission since 2008 while in 17 taxi areas, including most of more rural areas, no OOTLs

have been sold. As in Hobart, in the other taxi areas where OOTLs have been purchased from

the Transport Commission, the purchase price has been at, or only marginally higher than,

the reserve price.

A private firm has recently purchased almost all these licences and the cooperative that owned and operated the radio

room has been disbanded.

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3 THE REGULATOR’S APPROACH TO

DETERMINING OOTL RESERVE

PRICES IN TASMANIA’S TAXI AREAS

3.1 Summary of the Regulator’s approach

The Taxi Act sets out the objectives that the Regulator must seek to achieve in its price

determination, as set out in Chapter 1 and discussed in more detail below. The Regulator has

also taken into account the broader objectives in the Taxi Act. In addition, the Regulator has

taken into account the trends in the on-demand passenger transport industry in Tasmania,

particularly the increased competition arising from the introduction of ride-sourcing.

The Regulator has sought to promote the following in determining reserve prices for

Tasmania’s 24 taxi areas:

a) efficient pricing and competition for taxi licences;

b) lower barriers to entry for potential new operators in the taxi industry;

c) increased capacity for the taxi industry to respond to consumer demand for taxi

services;

d) increased supply of taxi services in those taxi areas where few or no taxi services are

offered;

e) increasing the capacity of the taxi industry to compete with other providers of

on-demand passenger transport;

f) maintaining safety standards in Tasmania’s taxi industry; and

g) fair outcomes for the taxi industry, including current licence holders.

This investigation has collected information relating to the 24 taxi areas, including the

number and type of taxi licences issued. Recent market conditions in the taxi industry have

also been examined, particularly the impact of the introduction of ride-sourcing and the

restrictions imposed by Governments as a result of the COVID-19 pandemic. Data are not

available, however, on some key indicators such as the volume of taxi services provided or

the number of taxis in operation on any day or over a specified period, or passenger waiting

times.

The Regulator has also made extensive use of Transport Commission data on the take up and

issue prices of new OOTLs since 2008 and the trades in PTLs and OOTLs since 2000. The

focus has been on the purchase of taxi licences in more recent years. Much of this

information is commercial-in-confidence and while it has been used to develop OOTL

reserve prices, the information is not included in this report.

Discussions were also held with stakeholders, including OOTL and PTL holders, taxi operators

and owners of network dispatch companies in the south, north and northwest of the State.

Three classes of taxi areas have been identified, each with some important features which

affect the extent to which the objectives listed above and other outcomes sought by the

Regulator may be achieved.

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The taxi industry has been subject to very substantial disruption in recent years, especially as

a result of digital technology that has allowed substitute industries to develop, and further

major changes cannot be ruled out. The Regulator has not sought to forecast future market

conditions or future prices in taxi licences exchanged between investors and/or taxi

operators. The focus instead has been on assessing the features of the different taxi areas

and the likely capacity of the industry in each area to respond to consumer demand,

including new operators entering the industry.

As in most cases involving economic regulation, trade-offs arise in seeking to achieve the

desired outcomes. The Regulator has sought to balance the competing priorities of existing

licence holders, potential entrants and consumers in determining reserve prices out to 2025.

The Regulator’s approach is set out in more detail in the following sections in this Chapter

under the two objectives prescribed in the Taxi Act.

3.2 Objective 1: The development of efficient pricing and competition

for taxi licences

The Taxi Act defines taxi licences as all licence types, as set out in Chapter 2, and not just

OOTLs. The Regulator’s focus here was on the market for these taxi licences.

In considering how OOTL reserve prices may assist in developing efficient prices for taxi

licences, the Regulator has examined traded prices for PTLs and OOTLs and assessed

whether there are any significant trends that are likely to be long term. The objective has

been to avoid setting reserve prices in a taxi area that are so far outside the range of

possible prices that reflect the value of OOTLs that few or none would be purchased even if

demand is not being adequately met.

The Regulator has gathered information on taxi licences in the 24 taxi areas, including the

number of licences and the growth in licences since OOTLs were established in 2008. The

Regulator has also obtained information on the ownership structure of licences in taxi areas,

which ranges from a large number of different owners and operators of PTLs and OOTLs in

some taxi areas to one firm owning all the licences in other areas. In addition, the Regulator

obtained information on the recent acquisition of taxi businesses in specific taxi areas and

current market offers for sale of taxi businesses.

Transport Commission data reveal that PTL and OOTL prices have been declining in recent

years. This decline commenced before the COVID-19 pandemic and is likely to be largely due

to the impact of competition from ride-sourcing services. This structural change in the on-

demand passenger transport industry is likely to be ongoing, in which case it seems unlikely

that PTL prices will return to the high levels of earlier years. This also suggests that the

former OOTL prices in some taxi areas would now be too high to attract potential operators,

even if market conditions improve.

In setting OOTL reserve prices, the Regulator has taken into account market trends in the

traded prices of PTLs and OOTLs and the number of licences traded, as required under the

Taxi Act.

Of particular interest to the Regulator has been the level of competition for taxi licences in

Tasmania’s taxi areas, namely the availability for sale of taxi licences and the demand from

current or potential investors and operators for these licences.

Much of this information is commercial-in-confidence.

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A competitive market for taxi licences is one where there is a large number of sellers of PTLs

and OOTLs and there are no restrictions in the relevant area that prevent existing operators

and particularly potential operators from purchasing taxi licences. These restrictions might

include lack of access to a radio room or a local monopoly in taxi services. Taxi areas where

there has been a large number of trades of taxi licences, and especially a large number of

OOTLs purchased from the Transport Commission, have been assessed as competitive.

Operators with Wheelchair Accessible Taxis (WATs) compete with operators with other taxi

licences for passengers who do not require a wheelchair. Until recently, it was necessary to

purchase a new vehicle to operate a WAT, at around $70 000. While there has been no cost

for a WAT licence, the vehicle price represented a major cost to begin operations involving

WATs. Furthermore, WATs are generally more costly to run, including higher fuel costs and

maintenance costs. While they can accommodate more passengers, some passengers prefer

to ride in conventional taxis.

Since 30 December 2020, however, Transport Commission may approve a vehicle for use as

a WAT if, at the time of approval, it is not more than seven years old. Taxi operators have

reported that this may reduce the vehicle cost to around $12 000 to $15 000. Some taxi

operator have expressed an interest in operating WATs as a result of this change and two

WAT licences have been issued since 30 December 2020, despite the generally subdued

conditions in the industry.

It is unclear whether, in future years, there will be a substantial increase in the number of

WATs due to the changed requirements. If there are a significant number of additional WATs

in the metropolitan taxi areas, this would likely put downward pressure on taxi licence prices

and lease rates in those areas and potentially in neighbouring taxi areas.

In assessing the level of competition for taxi licences, the Regulator has examined the

purchase of OOTLs from the Transport Commission in the 24 taxi areas since 2008. As noted

above, in 17 taxi areas no OOTLs have been purchased. Generally, outside Hobart, very few

OOTLs have been purchased, with only three purchased in Launceston where a total of 115

perpetual taxi and WAT licences have been issued, and none in Burnie where 22 perpetual

taxi and WAT licences have been issued.

Based on the information made available to the Regulator, the Regulator found that one

factor in explaining the uptake of OOTLs in the different urban taxi areas is access to the

services of an existing radio room with a general phone number such as 131 008 or 132 227.

In the case of Hobart, where there is competition between these radio rooms, new

operators with OOTLs have been accepted as members. In other taxi areas, however, the

members of radio rooms are holders of PTLs only and owners of OOTLs may not accepted as

members or the cost of them becoming members is higher than for holders of PTLs.

In the case of the market for PTLs, in some taxi areas, licence holders may offer for sale a

single licence, or two or three licences. In other taxi areas, especially the areas with relatively

few licences, no licences may be offered for sale over a period of several years or a licence

holder with several licences will offer for sale all licences but not just one or two of those

licences. It was also reported to the Regulator that in one case a licence holder has licences

that are not being used but has specifically stated that they will not be offered for sale to a

rival taxi company in the same taxi area. These cases represent barriers to investors and

operators seeking to enter the industry or expand their operations.

In setting OOTL prices, the Regulator was required to assist in the development of efficient

pricing and competition for taxi licences. In taxi areas where restrictions on competition and

barriers to entry have been identified, the Regulator considered that lower OOTL prices may

provide opportunities for increased competition. The Regulator therefore has determined

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that lower OOTL reserve prices are appropriate in taxi areas where restrictions on

competition and barriers to entry have been identified.

3.3 Objective 2: The promotion of a safe taxi transport system that

responds adequately to consumer demand for taxi services

3.3.1 The impact of OOTL reserve prices in promoting safety in Tasmania’s taxi

industry

The Government’s principal reason for regulating the taxi industry is to ensure that driver,

passenger and public safety is appropriately protected. The regulatory framework includes

range of safety-related requirements:

 the accreditation scheme for taxi operators;

 driver authorisation through the ancillary certification regime, together with the

setting of road rules and blood alcohol restrictions; and

 safety-related vehicle requirements including specialist equipment such as in-vehicle

security cameras.

This is supported by an inspection and enforcement regime which can, in cases of breaches,

lead to taxi operators losing their accreditation, taxi drivers losing their authorisation and, in

some cases, the prosecution of taxi operators, drivers and other persons.

The Regulator has sought information on how the safety of taxi drivers, passengers or the

general public in Tasmania might be affected by changes in OOTL reserve prices (with no

other changes).

The Regulator considered that the only likely impact of changes in OOTL reserve prices on

safety in the taxi industry would be if OOTL reserve prices were lower, more OOTLs are

purchased from the Transport Commission and increased competition in the taxi industry

results in a less safe taxi industry.

Some operators and other stakeholders the taxi industry have expressed the view that

increased competition arising from a greater number of taxis would lead to a reduction in

safety standards in the industry and increased likelihood of accidents.

The Regulator has obtained data from the Motor Accidents Insurance Commission on

accidents involving taxis since 2001 when there has been a claim on the Motor Accidents

Insurance Board, which arises only if there is a personal injury. There has been an overall

downward trend in the accident rate, in terms of the annual number of claims per 100

registered taxis, over this period (Chart 3.1 below).

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Chart 3.1: MAIB claims per 100 registered taxi vehicles for Tasmania: 2000-01 to 2020-21

During part of this period (2008 to 2021), there was a large increase in taxi numbers in the

Hobart taxi area and a modest increase in taxi numbers in the other 23 taxi areas.

If there is a correlation between the number of taxis operating and the accident rate per

taxi, this would have been evident in the Hobart taxi area, over which time the number of

taxi licences increased from around 228 to 358 or almost 57 per cent, compared to growth

of 23 per cent for the rest of Tasmania. As Chart 3.2 shows, the accident rate showed no

clear trend over this period for Hobart or the rest of Tasmania.

Chart 3.2: MAIB claims per 100 taxi licences for the Hobart taxi area and the rest of Tasmania

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While the accident rate has been higher in most years in Hobart, it does not appear that the

accident rate in the Hobart taxi area has been increasing, relative to the other taxi areas,

over the past 13 years (Chart 3.3).

Chart 3.3: Differences in MAIB claims per 100 taxi licences between the Hobart taxi area and the rest of

Tasmania

Based on the evidence available to date, there has been no discernible association between

growth in the number of taxis and accident rates involving taxis that cause injuries over the

past decades. The Regulator found that there are no grounds for expecting that changes in

OOTL prices that would lead to more taxis operating on Tasmania’s roads would have any

impact on safety in Tasmania’s taxi industry.

The Regulator has therefore assessed that the level of reserve prices, to the extent that it

affects the number of new OOTLs purchased, is not expected to affect safety standards in

Tasmania’s taxi industry.

3.3.2 The impact of reserve prices in assisting the taxi industry to respond to

consumer demand for taxi services

The arrangements for making additional OOTLs available are designed to provide an

opportunity for more taxis to be operated, and for new operators to enter the industry if

there is sufficient demand for the services of these taxis to be profitable. This is intended to

enable the supply of taxi services to respond to demand, as generally occurs in industries

where there are no entry restrictions.

In setting reserve prices until 2025, the Regulator was therefore required to consider the

extent to which the level of reserve prices, across all taxi areas, affects the capacity of the

taxi industry to meet demand and particularly to enable the industry to respond to increased

demand or changes in the services some consumers demand.

OOTL reserve prices may not need to be low, or lower than they were until 2020, to attract a

buyer if the demand for taxi services is increasing. At low demand levels, an OOTL at a

certain reserve price may not be attractive but if demand increases and a person is confident

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that a taxi or an additional taxi, would generate a sufficiently high level of income, that price

may become attractive to existing or potential operators.

As noted above, the standard taxi release arrangements have been suspended until 2025.

Until that year, if the Transport Commission is satisfied that there are insufficient taxis

available to adequately meet the needs of consumers in a taxi area, the Commission may

make available the number of OOTLS it thinks are necessary. For all but the last year of this

price determination, therefore, the Commission has a direct role in seeking to ensure that

the taxi industry can respond to consumer demand. However, as the price of these new

OOTLs in any taxi area is the Regulator’s reserve price, this price may be important in

determining whether or not these additional OOTLs made available by the Commission are

purchased.

The major disruption the taxi industry is facing arising from technological change and the

impact of COVID-19 related restrictions has resulted in significant excess capacity in almost

all taxi areas. It is expected that the taxi industry can respond to a large increase in demand

without additional taxi licences being made available.

It was not possible, however, to develop any reliable forecasts for the taxi industry in

Tasmania up to 2025. As an example, the ride-sourcing model may not continue in its

current form over this period and ride-sourcing services may be offered in more, or fewer,

taxis areas. There may be further technological changes that affect the taxi industry, both

positively and negatively. This may enable a different set of providers to offer on-demand

passenger services. It is also impossible to predict the future path of the current COVID-19

pandemic, whether any further pandemics may occur and the restrictions that governments

may impose in response.

It cannot be known, therefore, whether the market conditions in 2025, when the standard

taxi licence release arrangements resume, will be similar to current conditions, or very

different. It does seem likely, however, that the taxi industry will continue to face

competition from other on-demand passenger transport providers.

Consumer demand for taxi services includes not just the volume of demand but also the

quality of services demanded and perhaps the demand for services with different features or

attributes from those currently offered in a taxi area. New operators may offer services

sought by some consumers that are not otherwise available, especially in taxi areas where

there is only one business providing taxi services.

The number of taxis that are available may not provide a guide to how well consumer

demand is met. For example, an earlier study found that there were complaints from radio

room managers that that on week nights and weekends when Hobart airport was busy,

drivers would not venture past the city to provide services in neighbouring suburbs as they

preferred to wait at the airport or remain in the city. As a result, waiting times in outer

suburbs were high even though many taxis were vacant.

In considering the role of reserve prices in enabling the taxi industry to respond to demand,

the Regulator has sought to assess, for each taxi area, the opportunities for new operators to

enter the market, or expand their operations, and to provide different or improved services

sought by consumers. This may allow taxi businesses to compete more effectively with

ride-sourcing businesses.

Review of Taxi Licence Release Arrangements: 2013. KPMG report for the Department of Infrastructure, Energy and

Resources.

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If, in a taxi area, there are obstacles to entering the market, this can reduce the opportunity

for the taxi industry to respond to demand. In any taxi area, the lower the reserve price the

more potential operators are encouraged to enter the market and therefore the greater the

capacity of the industry in that area to respond to consumer demand.

3.3.2.1 Taxi areas within which no taxi services are offered

Based on the information obtained during the investigation, there are currently eight taxi

areas within which no taxi services are offered. These comprise King Island, Flinders Island,

Glamorgan/Spring Bay North, Glamorgan/Spring Bay South, Bruny Island, Central Highlands,

Kentish and Tasman.

For Kentish and Central Highlands, no taxi licences have been issued. For four other taxi

areas listed above, between one and three taxi licences had been issued but they all lapsed.

For two other taxi areas, there are current taxi licences but it appears that no taxi businesses

are operating. In all cases, the OOTL reserve prices has been very low (less than $4 000).

In some of these areas, taxi services may be available if a passenger is to be taken to or from

another taxi area as a taxi from that other area can provide that service. Clearly this does not

apply to King Island or Flinders Island and it would likely occur in very few cases on Bruny

Island. In those taxis areas where this is possible, it is likely that it occurs very rarely and it is

reasonable to describe these areas as effectively having no available taxi services.

Taxi operators face significant fixed costs, such as vehicle-related costs including registration

and insurance. It may be that even if the OOTL reserve price were at an extremely low level,

such as $100, none would be purchased.

It is likely, however, that there is some demand for taxi services in these areas, even though

it is very limited. As no taxis are operating in these areas, the Regulator has assessed that the

objective of assisting the taxi industry to respond adequately to customer demand has not

been met under the most recent OOTL prices for those areas. The Regulator therefore has

determined that lower OOTL reserve prices are appropriate in taxi areas where no taxis are

operating.

3.3.2.2 Taxi areas where taxi services are offered

A very useful measure of the capacity of the taxi industry to respond to demand is taxi

waiting times. The Department of State Growth has advised, however, that it does not

collect data on taxi waiting times in Tasmania’s taxi areas. The Department also does not

collect data relating to the volume of taxi services provided or the number of taxis in

operation on any day or over a specified period.

The Regulator therefore was not provided with information on the outputs of Tasmania’s

taxi industry or the extent to which it has responded to demand, including at peak periods,

and how this may have changed over time. For this final report, the Regulator has relied

mostly on data relating to the number of taxi licences and registered taxi vehicles.

In at least three taxi areas, Hobart, Devonport and Perth, a significant number of OOTLs have

been purchased since 2008, relative to the number of PTLs in these areas, as Table 2.1 in

Chapter 2 above shows. There has also been a relatively high take-up of WAT licences in

Hobart and Devonport. The taxi industry has expanded in these areas and there has been

more diversity of ownership, such that the industry is well placed to respond to increases or

changes in consumer demand.

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In many other areas, the taxi industry has expanded more slowly since 2008, or not changed,

in terms of the number of licenced taxis. For several of these areas, there may be only one or

two taxi businesses. While these businesses may have the capacity to increase the supply of

taxi services, they may not offer the quality of services demanded by some consumers. The

Regulator has taken this into account in setting reserve prices in these areas.

3.4 The impact of reserve prices on existing holders of taxi licences

The Taxi Act requires the Regulator to consider the impact of the reserve price

determination on existing holders of taxi licences.

It does not appear that OOTL reserve prices have any direct impact on the value of PTLs.

From 2008 to 2020, the OOTL reserve prices were unchanged in all taxi areas yet there were

large changes in the traded prices of PTLs. In the case of OOTLs, the OOTL reserve price

appears to have set a price ceiling on traded OOTL prices but does not appear to have

constrained any reduction in OOTL traded prices.

Any impact on existing licence holders is therefore likely to arise as a result of the OOTL

reserve price affecting the number of taxis in a taxi area and potentially the returns to

investors and operators in the industry. As the first year the standard OOTL release

arrangements resume is 2025, the total supply of taxis is not expected to change before that

time. The returns to industry would therefore not be affected until then.

In 2025, the level of the reserve prices may have some impact on the number of OOTLs

purchased from the Transport Commission but this cannot be estimated with any accuracy.

In particular, it is not possible to predict whether, if reserve prices in 2025 were higher or

lower than the level set by the Regulator, the outcome would be any different.

The impact of additional OOTLs on existing taxi businesses, and therefore licence holders,

will depend, in part, on the extent to which these businesses are able to retain their level of

activity. As noted above, some in the taxi industry consider that individual operators and

drivers can be successful and secure high returns, even if other operators and drivers earn

much lower returns. The impact of additional OOTLs on existing businesses and licence

holders may therefore vary quite substantially.

For these reasons, it is not possible to estimate with any certainty how existing licence

holders might be affected under any set of OOTL reserve prices.

In areas where a very small number of licences has been issued, such as between two and

five, the proportionate impact of an additional taxi operating is likely to be much greater

than in areas with many more taxi licences. The Regulator has taken this into account in

setting reserve prices in those taxi areas where very few taxis are operating.

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4 RESERVE PRICES OF OWNER-

OPERATOR TAXI LICENCES: 2021-

2025

This section sets out the Regulator’s high level assessment of the taxi industry in the

different taxi areas across Tasmania and the matters that the Regulator has taken into

account in setting reserve prices.

Three classes of taxi areas have been identified: metropolitan, urban/regional and rural.

They each have some important features which affect the extent to which the objectives in

the Act may be achieved in the setting of reserve prices.

4.1 Metropolitan taxi areas

The Hobart and Launceston taxi areas have been classed as metropolitan as they include the

two largest cities in Tasmania. Between them, these two taxi areas account for 76 per cent

of all taxi licences issued in Tasmania and around 61 per cent of Tasmania’s population.

Population density is also very high in these two areas, which tends to be associated with

strong demand for taxi services.

There are many PTL holders and there is a strong market for leasing PTL plates. This allows

potential taxi operators to enter the market without requiring the initial outlay of purchasing

a taxi licence and contributes to a more competitive taxi industry in these areas.

There have been a large number of trades of PTLs over the past two decades in both areas

and the highest traded values for PTLs and OOTLs have been in these two taxi areas.

In these areas, radio rooms with access to a number such as 131 008 have a very important

role in taking bookings and dispatching taxis. These radio rooms accept operators as

members who may not have any share in the ownership of the radio room itself. Taxi ranks

are more prevalent and rank and hail services account for a greater proportion of all taxi

services provided than in the other taxi areas.

Ride sourcing services are well established, as well as community transport services, and

both areas have a large number of WATs. These two areas have been particularly affected by

the COVID-19 restrictions, which is partly because each area contains an airport and the

demand for airport-related taxi services has declined sharply.

Under the standard OOTL release arrangements, 16 OOTLs are made available for sale in the

Hobart taxi area and five in the Launceston taxi area. The level of the OOTL reserve prices

can therefore have a significant impact on the number of taxis in each area and the capacity

of the taxi industry to meet consumer demand.

4.1.1 Hobart

The Hobart taxi area covers several municipalities including Kingborough, Brighton and

Sorell, and contains around 44 per cent of Tasmania’s population. In addition to providing

services in the State’s capital city and to and from Tasmania’s most used airport, they can

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accept business within a very large, densely populated area. These features provide very

substantial benefits to taxi operators.

Furthermore, as taxi operators can provide services to and from their taxi area, drivers of

Hobart taxis are able to provide services to passengers coming to or from neighbouring taxi

areas such as New Norfolk and the Huon Valley.

Of the 358 taxi licences in Hobart, 228 are PTLs, 89 are OOTLs and 41 are for WATs.

Ride-sourcing platforms such as Uber have been operating in Hobart since 2016. As at

6 September 2021, there were 1 063 registered ride-sourcing vehicles in Hobart, around

three times of the number of taxis registered. Community transport services are also widely

available.

Transport Commission’s records show at least 152 PTLs have been traded since 1997, over

half of which have been traded once only. PTL prices peaked at around $150 000 in 2011 and

have then declined to around $50 000 in 2020 (Figure 4.1).

These prices had been falling

sharply once ride-sourcing services became established and well before the COVID-19

pandemic.

Figure 4.1: Average PTL and OOTL traded prices for the Hobart taxi area

The Regulator has been advised that lease rates have also declined in recent years, from

around $250 per week up to 2015 to around $60 a week. It was reported that no lease rates

were charged when the Hobart area was locked down in 2020 under the COVID-19

restrictions.

It appears that some investors are keen to sell their PTLs but not at current prices as they

would incur a major capital loss. If lease rates remain around current levels, some investors

Some caution is needed in interpreting individual prices as the reporting process is informal and some trades may include

a vehicle, or the sale of a taxi business, which may include goodwill.

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may resign themselves to accepting a capital loss and offer their PTLs for sale, which could

put further downward pressure on licence prices.

The number of taxis in Hobart has increased significantly since 2008 when OOTLs were made

available. In nine of the years between 2008 and 2020, OOTLs were made available by the

Transport Commission and in most years a large share were purchased (Table 4.1). In total,

89 OOTLs were purchased, mostly at, or very marginally above, the reserve price of $60 000.

No OOTLs were sold in 2019, the first year when OOTLs were offered after ride-sourcing

services were available.

Since 2008, there have been 36 trades in OOTLs: around 75 per cent of OOTLs have been

traded once only. The traded price of OOTLs was around the reserve price from 2012 until

2018, before declining to just under $40 000 in 2021 as Figure 4.1 below shows.

Table 4.1: OOTLs made available for purchase in Hobart and sold each year

OOTLs available for purchase

OOTLs sold

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Features of the Hobart taxi market

PTLs, OOTLs and WATs are owned by a large number of investors. Given the high number of

trades of PTLs and OOTLs in Hobart, it appears there is effective competition for taxi licences

and no barriers to the purchase of these licences.

Currently, two radio rooms are operating in Hobart, and they manage and dispatch the

majority of Hobart’s taxis on behalf of the taxi operators. According to both radio room

operators, a new taxi operator can become a member of either radio room provided the

required performance standards are met.

There are currently around 10 per cent more taxi licences than registered taxi vehicles. Radio

room operators have advised that between 10 per cent and 15 per cent of the taxis they

manage are currently not on the road due to subdued demand arising from the COVID-19

restrictions. This corresponds to between 35 to 50 taxi vehicles that could be brought into

service if demand increases. Taxi operators in Hobart have reported difficulties in securing

drivers.

Reserve prices

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The Regulator is satisfied that the market for taxi licences in Hobart is competitive. The

Regulator considered that the former OOTL reserve price of $60 000 now appears high,

given the prices in recent trades. A price at around this level out to 2025 may not encourage

purchases, even if market conditions improve and the traded prices of PTLs and OOTLs

increase.

In weighing up these factors, the Regulator has determined that the OOTL reserve prices for

the Hobart taxi area for each year to 2025 are as set out in Table 4.2 below.

Table 4.2: Price Determination - OOTL reserve prices for the Hobart taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Hobart

$57 000

$54 200

$51 500

$48 900

$46 500

4.1.2 Launceston

The Launceston taxi area includes Launceston Airport (which is also in the Perth taxi area),

and part of the West Tamar, Meander Valley and Northern Midlands municipalities.

Drivers of Launceston taxis are able to provide services to passengers coming to or from the

neighbouring taxi areas of West Tamar, Perth, Break O’Day and George Town. The

Launceston taxi area also overlaps with part of the West Tamar taxi area.

There are 119 taxi licences issued for the Launceston taxi area, comprising 101 PTLs, three

OOTLs and 15 for WATs. Together, these account for 19 per cent of all taxi licences in

Tasmania. Around 17 per cent of Tasmania’s population reside in the Launceston taxi area,

just over one third of the population in the Hobart taxi area.

Ride-sourcing platforms have been operating in Launceston since 2018. As at 31 July 2021,

there were 308 registered ride-sourcing vehicles in Launceston, almost three times of the

number of taxis registered.

Taxi licence purchases

The Transport Commission's record shows at least 82 PTLs have been traded since 1997 and

around half have been traded once only. Prices rose from 2001 until they peaked in 2018.

Although prices have declined since, the fall has been much less than in Hobart,

proportionately and in absolute terms. Unlike in Hobart, the most recent prices are above

those in 2008 before OOTLs were issued (Figure 4.2 below).

This trade may have included a vehicle.

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Figure 4.2: Average annual PTL prices for the Launceston taxi area

On 14 September 2021, two PTLs were offered for sale on the 131 008 website for $140,000

or separately for $75,000 each, which is consistent with recent trades. The Regulator has

been advised that lease rates for PTLs have remained relatively high in Launceston and, at

$120 to $150 per week, are currently around twice the level reported for the Hobart taxi

area.

Three OOTLs only have been sold for Launceston by the Transport Commission and only one

OOTL has been traded, which was in 2017.

Features of the Launceston taxi market

The number of PTLs in the Launceston taxi area is quite high relative to Hobart, given the

population in each area, the higher visitor numbers for Hobart and the fact that, as the

capital city, Hobart generally offers more events and attractions that may result in demand

for taxi services. This may explain why the traded price of PTLs was historically lower in

Launceston than in Hobart.

The PTLs are owned by a large number of investors. There is only one radio room operating

in Launceston with exclusive access to the two well-known taxi numbers of 131 008 and

132 227. This radio room has advised that around 60 per cent of passenger trips are pre-

booked and dispatched through the radio room.

The three OOTLs purchased in Launceston compares with 89 being purchased in Hobart at

almost twice the reserve price and five being purchased in the much smaller neighbouring

Perth taxi area (with a $12 500 reserve price). Importantly, over the same period the price of

PTLs in Launceston increased from around $60 000 to at least $90 000.

When PTL prices were rising and were high, it appears surprising that so few OOTLs were

purchased over this period. It has been reported that the Launceston radio room has not

allowed operators of OOTLs to be members and that this may explain the very low number

of OOTLs in this taxi area.

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Reserve prices

Based on the information received to date, the Regulator is not satisfied that the market for

taxi licences in Launceston is competitive. The Regulator is also not satisfied that, under the

current arrangements, there is capacity for the industry to expand to meet demand, given

the low rate of uptake of OOTLs at the previous reserve price over periods when the traded

prices of PTLs were high.

The Regulator has determined that the OOTL reserve prices for the Launceston taxi area for

each year to 2025 are as set out in Table 4.3 below.

Table 4.3: Price Determination - OOTL reserve prices for the Launceston taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Launceston

$31 500

$28 400

$25 600

$23 100

$20 800

4.2 Urban/regional taxi areas

The urban/regional taxis areas are those areas where the number of taxi licences issued

ranges from nine to 40. They comprise seven taxi areas: Burnie; Devonport; Ulverstone;

Perth; New Norfolk; West Coast and Huon Valley. Some of these taxi areas cover a large

geographic area though the population density in these areas is relatively low which tends to

result in weak demand for taxi services.

Pre-booked work accounts for a larger percentage of all work in these areas, compared to

the metropolitan taxi areas, partly because there are no large central business districts and

few taxi ranks. If there is a radio room with access to a number such as 131 008, it would

belong to a taxi business operating in the area and other operators would not usually be

accepted as members.

In most of these areas, all, or almost all, PTLs for an area are owned by one business. It

appears that few PTLs are leased to another operator. In cases where PTLs are sold, the

entire business would typically be sold rather than one or two PTLs. Compared to the

metropolitan taxi areas, the number of PTLS and OOTLs offered for sale can be very low and

there are far fewer years when trades in PTLs or OOTLs occur.

Potential operators in these areas would often have to buy several PTLs to enter the

industry. As there are also very limited opportunities to lease PTLs, purchasing OOTLs from

the Transport Commission may be the only option to operate a taxi service. Of all OOTLs

purchased from the Transport Commission, almost all those not purchased for the

metropolitan taxi areas (predominantly Hobart) have been purchased by operators in the

urban/regional taxi areas. In three of these areas, the number of OOTLs purchased from the

Commission is equal to or more than the number in the Launceston taxi area.

In some of these taxi areas a large number of taxi licences have lapsed and in some others

some taxi licences are not being used. The share of all taxi licences that are not being used is

much higher than in the two metropolitan taxi areas.

Ride-sourcing services are available in most areas, and in some, such as Perth and New

Norfolk, local taxi operators have stated that they have had a significant impact. It has also

been reported that community transport services have had a significant impact on taxi

operators in some of these areas, including the Huon Valley taxi area.

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In all of these areas, only one OOTL is made available each year under the standard release

arrangements (unless the average tender price is more than twice the reserve price, in which

case an additional OOTL is offered at the reserve price). The only year under the 2021 price

determination that the release arrangements apply is 2025. If the level of the reserve price

in that year attracts another operator, this would not have a significant impact on the level

of competition in the larger taxi areas such as Devonport and Burnie or on the market for

taxi licences. It would, however, provide an opportunity for a new operator to respond to

increased demand, or to provide different services.

4.2.1 Devonport

The Devonport taxi area includes the municipal area of Devonport and Latrobe, and has the

third largest population behind Hobart and Launceston. The population density is also

relatively high; the Devonport taxi area is smaller than the Burnie taxi area, for example,

though it contains a slightly larger population.

The taxi area also includes Devonport Airport and the Spirit of Tasmania’s Devonport

terminal. Both offer direct transport services between Devonport and Melbourne.

Forty taxi licences have been issued, 23 PTLs, six OOTLs and 11 for WATs. These account for

6.4 per cent of all taxi licences in Tasmania, slightly less than the share of Tasmania’s

population in the Devonport taxi area which is seven per cent.

Ride-sourcing platform have also been operating since 2018. As at 9 September 2021, there

were 16 registered ride-sourcing vehicles with garaged addresses in the Devonport taxi area,

less than half of the number of taxi licences.

Taxi licence purchases

PTLs have not been traded since 2014. This taxi area has the second highest number of

OOTLs behind Hobart. Under the standard release process for OOTLs, each year one OOTL is

made available for this taxi area. Since 2012, all the OOTLs made available have been sold.

Devonport was the only taxi area where a newly issued OOTL was sold in 2019 (Table 4.4).

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Table 4.4: OOTLs made available for purchase in Devonport and OOTLs sold each year

OOTLs available for purchase

OOTLs sold

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

The average issuing price of OOTLs in Devonport has been slightly above its reserve price. No

Devonport OOTLs have been traded.

Features of the Devonport taxi market

Currently, all PTLs in Devonport are owned by one taxi business, which also has a radio room

which is a member of the 131 008 network. The majority of OOTLs are owned by one

operator, which also operates a taxi dispatch service from a local number. There appears to

be a high level of competition between the two taxi businesses which also own and operate

the WATs.

Although there are ride-sourcing vehicles registered in Devonport, it appears there are

limited ride-sourcing services available.

There appear to be no restrictions to new OOTLs being taken up, unlike in several other taxi

areas, since all OOTLs that have been made available in recent years have been purchased.

This also indicates that the former reserve price reflects the financial value of an OOTL. The

ownership structure of PTLs and OOTLs in Devonport, however, may impose a barrier for a

potential entrant from establishing a taxi business in this area if existing PTLs and OOTLs are

not offered for sale from time to time. However, it is not evident that lower reserve prices

would lead to any greater competition.

Reserve prices

The Regulator has determined that the OOTL reserve prices for Devonport are the same as

the reserve price until 2025, as set out in Table 4.5 below.

Table 4.5: Price Determination - OOTL reserve prices for the Devonport taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Devonport

$23 000

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4.2.2 Burnie

The Burnie taxi area includes the municipal areas of Burnie and Waratah-Wynyard, and has

the fourth highest population behind the Hobart, Launceston and Devonport taxi areas. It

includes the Burnie Airport, which has direct passenger flights to Melbourne, Hobart and

Launceston. The current population of Burnie, at around 19 500 is marginally below the level

of 20 years ago, unlike in many parts of the State that have experienced population growth,

especially in Tasmania’s south. A feature of Burnie has been the decline in manufacturing

over the past two decades.

Twenty-two taxi licences have been issued for the Burnie taxi area, all of which are PTLs.

These account for 3.5 per cent of all taxi licences in Tasmania. The Burnie taxi area includes

around six per cent of Tasmania's population. Unlike Hobart, Launceston, Devonport and

Ulverstone, there are no WATs in the Burnie taxi area.

As in the Launceston taxi area, ride-sourcing platform services have been available in Burnie

since 2018. As at 6 September 2021, there were eight registered ride-sourcing vehicles with

garaged addresses within the Burnie taxi area, less than half of the number of taxi licences.

Taxi licence purchases

Transport Commission records show at least 21 PTLs have been traded since 1997, including

a very large number traded in 2021.

No OOTLs have been purchased for the Burnie taxi area despite one being offered for sale in

most years since 2008.

Features of the Burnie taxi market

Most PTLs for Burnie are owned by a single company, which also operates the radio room

with the 131 008 number through which all, or almost all pre-booked work is dispatched.

Previously, a cooperative of individual PTL owners provide taxi services and operated the

radio room.

It is unclear why not one OOTL has been purchased for the Burnie taxi area, despite one

being made available for sale for every year since 2008. The cooperative had advised an

earlier review in 2013 that the demand for taxis was being met by the current number of

taxis and that there was no room in the market for additional taxis.

If previous potential purchasers had not been provided membership to the radio room, this

may have accounted for the lack of OOTL purchases.

Reserve prices

The modest take up of ride-sourcing in Burnie to date suggests that overall demand for on-

demand passenger services may be relatively subdued. This may also account, in part, for

the absence of OOTLs in Bernie.

However, based on the information received to date, it appears that with one company

owning almost all the licences and the radio room there is a low level competition for taxi

One WAT did operate in the Burnie taxi area until almost a decade ago but the licence was handed in.

Review of Taxi Licence Release Arrangements: 2013. KPMG report for the Department of Infrastructure, Energy and

Resources

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TASMANIAN ECONOMIC REGULATOR 29

licences in the Burnie taxi area. Based on PTL prices in recent trades, the former OOTL

reserve price of $23 000 now appears high.

To seek to address these entry barriers, the Regulator has determined that the OOTL reserve

prices for the Burnie taxi area for each year to 2025 are as set out in Table 4.6 below.

Table 4.6: Price Determination - OOTL reserve prices for the Burnie taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Burnie

$20 700

$18 700

$16 900

$15 300

$13 800

4.2.3 Perth

The Perth taxi area consists of a part of the municipal area of Meander Valley and a part of

the municipal area of Northern Midlands. It includes Launceston Airport and the Launceston

Country Club Casino (as does the Launceston taxi area).

Thirteen taxi licences have been issued for the Perth taxi area, eight PTLs and five OOTLs,

which account for 2.1 per cent of all taxi licences in Tasmania, less that the area’s share of

Tasmania’s population (around 4.7 per cent).

Ride-sourcing platform have been operating since 2018. As at 9 September 2021, there were

15 registered ride-sourcing vehicles with garaged addresses within this taxi area, two more

than the number of taxi licences.

Taxi licence purchases

Five of the eight PTLs have been traded and the trades occurred in most years between 2005

and 2021. Trading prices have decreased significantly in more recent trades.

The Perth taxi area has the third highest number of OOTLs behind Hobart and Devonport.

Five of the seven OOTLs made available for purchase between 2008 and 2014 were

purchased. Two of the five OOTLs have been traded, 2011 and 2016, at the OOTL reserve

price.

Features of the Perth taxi market

The taxi licences in Perth are owned by several investors and operators. Taxi operators

compete with taxis from Launceston for trips to and from Launceston Airport and the

Launceston Country Club Casino, partly because both sites are in both taxi areas. They also

compete with ride-sourcing services. Demand for airport-related trips has declined sharply

with the COVID-19 related restrictions and reduced flights.

However, unlike Launceston, there is no dedicated radio room in Perth. Some Perth

operators are affiliated with the Launceston radio room for pre-booked passenger services

while others obtain bookings via their mobile phone number.

Reserve prices

There has been active trading in PTLs and a relatively strong uptake of OOTLs in the Perth

taxi area at the former reserve price. There do not appear to be barriers to entry or other

factors that would discourage potential operators from purchasing an OOTL (such as a radio

room that limits membership). The Regulator is therefore satisfied that the taxi industry in

Perth has the capacity to respond to customer demand.

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The Regulator has determined that the OOTL reserve price for the Perth taxi area for each

year is at the same level as up to 2020 as shown in Table 4.7.

Table 4.7: Price Determination - OOTL reserve prices for the Perth taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Perth

$12 500

4.2.4 Ulverstone

The Ulverstone taxi area consists of part of the Central Coast municipality and is one of the

smallest taxi area by geographic size. There are 11 taxi licences in Ulverstone, seven PTLs,

two OOTLs, and two for WATs, which account for 1.8 per cent of all taxi licences in Tasmania,

less than Ulverstone’s share of Tasmania’s population (2.9 per cent).

Ride-sourcing services have also been offered since 2018 though as at 9 September 2021

there were two registered ride-sourcing vehicles only with garaged addresses within the

Ulverstone taxi area.

Taxi licence purchases

The Transport Commission records show that the only taxi licence trades occurred in 2013,

when all seven PTLs were traded for a value higher than the OOTL reserve price of $17 250.

Two OOTLs have been purchased from the Transport Commission at slightly above the

reserve price. OOTLs have not been traded in Ulverstone.

Features of the Ulverstone taxi market

The taxi licences are owned by a few businesses, though one business owns all the PTLs and

also the 131 008 radio room, which was purchased as one business from the previous

owner. This business listed all seven PTLs and one luxury hire car plate for sale for a total of

$150 000 on the 131 008 website in late August 2021.

It is typically the case that such a business would not offer one or two PTLs for sale. This

creates an entry barrier as it prevents a potential buyer from purchasing anything other than

the entire taxi business, with all Ulverstone’s PTLs. If the sale is successful, the monopoly in

PTLs in Ulverstone, and dispatch services through the radio room, would simply be

transferred from one business to another.

Reserve prices

Based on the information received to date, the Regulator has assessed the taxi licence

market in Ulverstone as moderately competitive for a small taxi area, while noting that all

PTLs are owned by one business. It was noted that the new OOTLs were purchased quite

recently (in 2015 and 2016) and also that WATs operate in this area. This suggests that even

if the radio room does not accept as a member an operator with an OOTL, this may not

prevent new OOTLs from being purchased if the demand for taxi services increases.

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The Regulator has determined reserve prices for OOTLs for the Ulverstone taxi area as set

out in Table 4.8 below.

Table 4.8: Price Determination - OOTL reserve prices for the Ulverstone taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Ulverstone

$16 400

$15 600

$14 800

$14 100

$13 400

4.2.5 New Norfolk

The New Norfolk taxi area consists of the municipal area of Derwent Valley, which includes

the town of New Norfolk and borders the Hobart taxi area.

Nine taxi licences have been issued for the New Norfolk taxi area, all PTLs, which account for

1.4 per cent of all taxi licences in Tasmania, less that the area’s share of Tasmania’s total

population (around 1.9 per cent).

Ride-sourcing services are available and as at 9 September 2021, there were nine registered

ride-sourcing vehicles with garaged addresses in the New Norfolk taxi area, the same as the

number of taxi licences.

Taxi licence purchases

Seven of the nine taxi licences in New Norfolk have been traded according to the Transport

Commission’s records, with no trades since 2009. No OOTLs have been issued for the New

Norfolk taxi area and there are no WATs operating.

Features of the New Norfolk taxi market

Unlike several other taxi areas in this category, the PTLs in New Norfolk are owned by

multiple (three) owners. It appears from the limited information the Regulator has for this

taxi area there may be only one taxi business currently operating.

Reserve prices

As there have been no PTL trades in the past decade and no OOTLs have been issued, the

Regulator has assessed the taxi licence market in New Norfolk as not competitive for a small

taxi area. Furthermore, the former OOTL reserve price of $10 800 is likely to be well above

its current value if several OOTLs are currently not being used.

To promote competition, the Regulator has determined that the reserve prices for OOTLs for

the New Norfolk taxi area are as set in Table 4.9 below.

Table 4.9: Price Determination - OOTL reserve prices for the New Norfolk taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

New Norfolk

$9 800

$8 900

$8 100

$7 300

$6 600

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4.2.6 Huon Valley

The Huon Valley taxi area consists of the municipal area of Huon Valley, which includes the

towns of Huonville, Cygnet and Dover. Although the Huon Valley taxi area is around the

same geographic size as the Hobart taxi area, the population density is much lower, as it has

less than 8 per cent of the population of the Hobart taxi area.

Nine taxi licences have been issued, five PTLs, three OOTLs and one for a WAT. This accounts

for 1.4 per cent of all taxi licences in Tasmania, much less than the area’s share of

Tasmania’s population (around 4.2 per cent).

Ride-sourcing services have been available in Huon Valley since 2016. As at 9 September

2021, there were seven registered ride-sourcing vehicles with garaged addresses in the

Huon Valley taxi area, around the same as the number of taxi licences.

Taxi licence purchases

There have been several trades in PTLs, including in 2020. The average trading price

increased significantly to 2008, before decreasing in 2020. One OOTLs was traded in 2014.

Features of the Huon Valley taxi market

One taxi business in Huon Valley owns and manages all nine taxi licences. The taxi business

has been listed for sale by the owner on Gumtree since January 2021.

The Regulator understands that the owner is seeking to find a purchaser for all licences and

would not offer for sale one or a small number of licences.

The Regulator has been advised that around 90 per cent of the passenger trips are pre-

booked, which may be partly because there are no taxi ranks in this area. The local taxi

business competes with taxis from the Hobart taxi area and ride-sourcing services.

Community transport services are also offered in this area. It is reported that these services

have a significant impact on the local taxi business. In the case of Community Transport

Services Tasmania, however, the number of trips in recent months has been well below the

level prior to the COVID-19 pandemic.

Reserve prices

The Regulator has assessed that the market for taxi licences is not competitive, even for a

small market, while one business owns all taxi licences. This may also prevent the taxi

industry responding to demand in future years, if some consumers demand services not

offered by the established taxi business. It appears from the sale price of the existing taxi

business that that the former OOTL reserve price of $7 500 is significantly below the current

financial value of an OOTL. To promote competition, the Regulator has determined that the

reserve prices for the Huon Valley taxi area are as set out in Table 4.10 below.

Table 4.10: Price Determination - OOTL reserve prices for the Huon Valley taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Huon Valley

$6 800

$6 200

$5 600

$5 100

$4 600

The sale includes five PTLs, three OOTLs, three business names and three vehicles.

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4.2.7 West Coast

The West Coast taxi area consists of the municipal area of West Coast and includes the

towns of Strahan and Queenstown. It is the biggest taxi area in Tasmania by geographic size

though one of the smallest by population size.

Nine taxi licences have been issued for the West Coast taxi area, all PTLs, which account for

1.4 per cent of all taxi licences in Tasmania. This is rather more than West Coast’s share of

Tasmania’s population (around 0.8 per cent).

Ride-sourcing services are not available in the West Coast taxi area though some community

transport services are offered.

Taxi licence purchases

Four of the nine PTLs have been traded since 1998, most recently in 2014. No OOTLs have

issued for the West Coast taxi area despite the very low price of $1 000.

Features of the West Coast taxi area

The PTLs are owned by a handful of owners though seven of the nine PTLs have been lapsed

for more than two years.

There is currently one taxi business only in the West Coast taxi area, which operates using a

local phone number and also has access to the 131 008 number.

The population of the West Coast has decreased by around a third over the last twenty

years, which is largely attributed to the decline in mining activity.

Reserve prices

The Regulator has noted that the former reserve price of $1 000 is very low in comparison to

the former reserve prices in all other taxi areas where taxi services are currently available.

Given the large number of lapsed taxi licences in the West Coast and the diversity of

ownership, the Regulator is satisfied that the taxi industry can adequately respond if

customer demand increases without encouraging additional OOTLs by setting the OOTL price

below the former level.

The Regulator therefore has determined that the reserve prices for the West Coast taxi area

are at the same level as up to 2020, as shown in Table 4.11 below.

Table 4.11: Price Determination - OOTL reserve prices for the West Coast taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

West Coast

$1 000

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4.3 Rural taxi areas

The rural taxis areas are where the number of taxi licences issued ranges from zero to five.

They comprise the following 15 taxi areas:

 George Town

 West Tamar

 Meander Valley

 Circular Head

 Break O’Day

 Glamorgan/Spring Bay North

 Kentish

 Penguin

 Tasman

 Dorset

 Glamorgan/Spring Bay South

 Bruny Island

 Central Highlands

 Flinders Island

 King Island

These taxi areas are generally in the more rural and remote regions of Tasmania, where

population density is low. Between them, these taxi areas account for around 16 per cent of

Tasmania’s population but only around six per cent of all taxi licences issued in Tasmania.

Similar to the urban/regional taxi areas, there are either very few or no taxi ranks in these

taxi areas and pre-booked work can account for almost all the work for taxi businesses. The

demand for taxi services appears to be generally very low and the returns to some taxi

operators are also likely to be low. In eight of these taxi areas, no taxi services are currently

provided.

With the exceptions of George Town, West Tamar, Circular Head and Break O’Day, the OOTL

former reserve prices were very low, ranging between $1 000 and $3 750.

The taxi licences issued in these areas are PTLs except for two OOTLs, one for Tasman which

is not currently being used and one for Flinders Island which is lapsed. The very small

number of OOTLs purchased indicates that taxi licences have very low financial value in ten

of these areas.

There are no WATs in these areas and ride-sourcing services are offered in very few areas. In

most areas, all taxi licences are owned by one taxi business. It appears that no PTLs are

leased and in many areas there have been no trades in PTLs in the past decade. Neither of

the two OOTLs has been traded.

As with the urban/regional taxi areas, only one OOTL will be made available each year in

each taxi area, from 2025, unless the tender price of that OOTL is more than twice the

reserve price in which case an additional OOTL will be offered for sale.

In these taxi areas, the returns to a potential new operator who purchases an OOTL from the

Transport Commission may be very low unless that operator is able to increase overall

demand or attract business from the incumbent business or businesses. Where the total

demand is relatively low, a new operator may struggle to attract sufficient demand to

recover costs, including fixed costs such as those relating to the vehicle, insurance and taxi

licence costs. A lower OOTL reserve price than before 2020 may make entry into the industry

a little more attractive but may not make operating a taxi viable.

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One additional taxi in operation in 2025 would not result in the market for taxi licences in

any taxi area becoming competitive as the number of taxi licences would still be very low. It

could also have a very significant impact on the existing operators as it would result in at

least a 20 per cent increase in the number of taxi licences. This would, however, offer more

choice to customers.

The Regulator has considered whether, in taxi areas where OOTL reserve prices had been

very low and few or none had been purchased, there is merit in setting reserve prices even

lower from December 2021. Other costs such as vehicle, registration and insurance costs

may be much greater than OOTL price and even a zero reserve price may not attract a new

operator. The Regulator has also noted the view of the Transport Commission that there are

benefits in setting the reserve price sufficiently above zero as to be meaningful, to

encourage compliance by taxi operators, a long term commitment to the industry and an

incentive to provide appropriate hours of service.

Against this, however, is the issue that if the OOTL reserve price is above its financial value, it

will act as disincentive to potential operators and may prevent an operator from

commencing a taxi business that could prove subsequently to be successful and offer

different or superior services to consumers. The Regulator also considered that if objectives

such as improved compliance are sought, it is preferable that a separate set of policy

measures are adopted and that the OOTL reserve prices are set with a focus on the

objectives set out in the Taxi Act.

In considering the Taxi Act’s objectives for the price determination, the broader objectives in

the Taxi Act and the broader economic principles that underpin price setting, in most taxi

areas the Regulator has set OOTL prices that are lower than they had been up to 2020,

especially in those areas where OOTL prices had been low and few or none were purchased.

4.3.1 George Town

The George Town taxi area consists the municipal area of George Town and borders the

Launceston taxi area. There is only one taxi rank in this taxi area.

Five taxi licences have been issued, all PTLs, which account for 0.8 per cent of all taxi licences

in Tasmania, rather less than George Town’s share of Tasmania’s population (1.3 per cent).

George Town has experienced modest population growth over the past decade and has

been affected by the decline in manufacturing at Bell Bay.

It appears that ride-sourcing services are not available, despite its proximity to areas with

ride-sourcing services such as Launceston and West Tamar.

Taxi licence purchases

The Transport Commission’s record shows the only taxi licence trades occurred in 2008,

when all five PTLs were traded. These trades pre-dated the introduction of OOTLs in

September 2008 and no OOTLs have been purchased for the George Town taxi area.

Features of the George Town taxi market

Taxi services are provided by one business which owns all the taxi licences. The taxi business

has advised that the majority of passenger trips are pre-booked and dispatched using a local

telephone number.

The Regulator has been advised that only three taxis are currently operating and on a part-

time basis, due in part to problems in securing drivers. For trips between George Town and

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Launceston, the George Town taxi business competes with taxis from Launceston. The

Regulator has also been advised that it also faces competition from community transport

services such as those provided by Community Transport Services Tasmania.

Reserve prices

As with all taxi areas in this class, the market for taxi licences cannot be competitive given

the very small number of licences. In common with many other taxi areas, there is also only

one taxi business so it is unlikely a single licence would be offered for sale. It is noted that no

trade has occurred for over a decade.

The former OOTL reserve price now appears high as none were purchased over an extended

period, including when market conditions were more favourable than currently. To reduce

barriers to enter the industry, the Regulator has determined that the reserve prices in the

George Town taxi area are as shown in Table 4.12.

Table 4.12: Price Determination - OOTL reserve prices for the George Town taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

George Town

$11 300

$10 200

$9 200

$8 300

$7 500

4.3.2 Circular Head

The Circular Head taxi area consists of the municipal area of Circular Head and includes

Smithton.

Five taxi licences have been issued, all PTLs, which account for 0.8 per cent of all taxi licences

in Tasmania around half the share of Tasmania’s population in the area (1.5 per cent). Ride-

sourcing services are not offered in the area.

Taxi licence purchases

According to the Transport Commission’s records, the only taxi licence trades occurred in

2004, when two PTLs were traded. These trades pre-date the introduction of OOTLs in

September 2008.

The OOTL reserve price had been $11 250 with no OOTLs purchased.

Features of the Circular Head taxi market

There is one taxi business in Circular Head, which owns and manages all the taxi licences

with bookings taken through a local phone number. The Regulator has been advised that

some licences were not being used even before the COVID-19 related restrictions were

imposed. Part of the reason may be the modest decline in Circular Head’s population over

the past two decades.

For trips to and from the Burnie taxi area, the local business competes with Burnie-based

taxis and it is also reported that unlawful passenger transport services are provided in the

area. In addition, Community Transport Services Tasmania provides services, many of which

are in competition with the taxi business, though currently not to the extent before the

COVID-19 outbreak.

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Reserve prices

As with George Town, the market is not competitive, with one taxi business in the Circular

Head taxi area and no trades since 2004. Here too, the former OOTL reserve price of

$11 250 now appears high. To reduce entry barriers, the Regulator has determined that the

reserve prices for the Circular Head taxi area are as shown in Table 4.13 below.

Table 4.13: Price Determination - OOTL reserve prices for the Circular Head taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Circular Head

$10 200

$9 200

$8 300

$7 500

$6 800

4.3.3 Break O’Day

The Break O’Day taxi area comprises the Break O’Day municipality on Tasmania’s east coast

and includes St Helens, St Marys and Scamander.

There are three taxi licences issued for the Break O’Day taxi area, all PTLs, which account for

0.5 per cent of all taxi licences in Tasmania with the area having around 1.3 per cent of

Tasmania’s population. Ride-sourcing services are not offered in this taxi area.

Taxi licence purchases

There have been no trades of PTLs since 2000 and no OOTLs have been purchased for the

Break O’Day taxi area at the reserve price of $10 800.

Features of the Break O’Day taxi market

There is one taxi business which owns and manages the three taxis.

Reserve prices

As with the two previous taxi areas, the market for taxi licences in Break O’ Day is assessed

as not competitive given the very small number of taxi licences, a single taxi business and no

trades in taxi licences for over 20 years. At $10 800, the former reserve price may have

discouraged a new operator entering the industry and that level now may be above its

financial value, as none were purchased over an extended period.

To address this, the Regulator has determined that the reserve prices for the Break O’Day

taxi area are as shown in Table 4.14 below.

Table 4.14: Price Determination - OOTL reserve prices for the Break O’Day taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Break O’Day

$9 800

$8 900

$8 100

$7 300

$6 600

4.3.4 Dorset

The Dorset taxi area consists of the municipal area of Dorset, and includes the towns of

Bridport and Scottsdale.

There are three taxi licences issued for the Dorset taxi area, all PTLs, which account for 0.5

per cent of all taxi licences in Tasmania, less than half the area’s share of Tasmania’s

population (around 1.2 per cent).

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Ride-sourcing services are not offered in the Dorset taxi area though some community

transport services are available.

Taxi licence purchases

The three PTLs have been traded according to the Transport Commission’s records, most

recently in 2007, before the introduction of OOTLs.

There have been no OOTLs issued for the Dorset taxi area.

Features of the Dorset taxi area

There is one taxi business in Dorset, which owns and manages two of the three taxi licences.

The remaining taxi licence is owned by a taxi business owner who operates in another taxi

area and the licence has reportedly never been in use.

The Regulator has also been advised that the local business has competed with unlawful

passenger transport service providers in the past but that these unlawful transport providers

have since ceased operating.

The population in Dorset decreased by around 10 per cent in the past twenty years. It is

reported that the demand for taxi services has also been adversely affected by the COVID-19

restrictions. The majority of the passenger trips are pre-booked and there are no taxi ranks

in Dorset.

Reserve prices

With few licences and no taxi licences traded for over 10 years, the market for taxi licences is

not competitive. However, unlike the previous three taxi areas, the former OOTL reserve

price was relatively low at $2 250 and is not likely to have been a significant barrier to entry

if an operator had expected that sufficient demand can be acquired to provide taxi services.

A price around this level may also not deter an entrant in 2025.

A reserve price lower than $2 250 may encourage a new operator in 2025. The fact that no

OOTLs were purchased for this area suggests that the returns are low to taxi businesses,

especially if the number of taxis operating increases from two to three. While an additional

operator could provide increased choice to consumers, there is a risk that it could lead to the

exit of the remaining firm and potentially result in no taxi services being provided.

Balancing these issues, the Regulator has determined that the reserve price for all five

periods for the Dorset taxi area is the former reserve price of $2 250 as shown in Table 4.15

below.

Table 4.15: Price Determination - OOTL reserve prices for the Dorset taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Dorset

$2 250

4.3.5 West Tamar

The West Tamar taxi area consist of the municipal area of West Tamar and overlaps with the

Launceston taxi area. There are no taxi ranks in West Tamar.

Two taxi licences only have been issued, both PTLs, which account for 0.3 per cent of all taxi

licences in Tasmania, despite around 4.5 per cent of Tasmania’s population residing in this

area.

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Ride-sourcing platforms have been operating since 2018. As at 9 September 2021, 22

registered ride-sourcing vehicles had garaged addresses in this area, more than ten times

the number of taxi licences.

Taxi licence prices

The two PTLs for West Tamar have each been traded three times each since 2015. No OOTLs

have been purchased.

Features of the West Tamar taxi market

The two operators of the PTLs operate together, one usually providing taxi services from

Riverside to Rosevears and other from Rosevears to Greensbeach. There are two mobile

phone numbers, depending on the trip required and almost all passenger trips are pre-

booked.

West Tamar has been significantly affected by the COVID-19 related restrictions and decline

in tourism to the area. It has been reported that before the COVID-19 related restrictions

were imposed there were reasonable level of customer demand for taxi services.

The West Tamar taxi businesses compete with taxis from Launceston, partly due to the

overlap of taxi areas. Just under 60 per cent of the West Tamar municipal population resides

in the area within both the West Tamar and Launceston taxi areas.

It is reported that although ride-sourcing services are available, their impact on the taxi

businesses has not been large.

Reserve prices

With only two PTLs operating together and no OOTLs, the market for taxi licences is very

small, with effectively no competition between the two taxis businesses based in West

Tamar. It is likely that the reason why so few taxi licences operate in this area is that much of

the customer demand can be met by Launceston-based taxis, as the two taxi areas overlap

and many trips may be to and from Launceston.

The former reserve at $12 500 is very high for a taxi area with two PTLs only. Based on

recent PTL traded values, the former OOTL price of $12 500 appears high and may

discourage an operator from responding to increased demand. In balancing these factors,

the Regulator has determined that the reserve prices for the West Tamar taxi area are as set

out in Table 4.16.

Table 4.16: Price Determination - OOTL reserve prices for the West Tamar taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

West Tamar

$11 300

$10 200

$9 200

$8 300

$7 500

4.3.6 Meander Valley

The Meander Valley taxi area consists of most of the Meander Valley municipality, including

Deloraine.

Two licences have been issued, both PTLs, which account for 0.3 per cent of all taxi licences

in Tasmania, and 0.7 per cent of Tasmania’s population resides in this taxi area.

Ride-sourcing services are not currently offered.

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Taxi licence purchases

According to the Transport Commission, the only taxi licence trades occurred in 2021. No

OOTLs have been issued for the Meander Valley taxi area.

Features of the Meander Valley taxi market

One taxi business owns and manages both taxis and manages pre-booked work through a

mobile phone number.

Reserve prices

With the two PTLs owned by one business and no OOTLs, competition for taxi licences is

weak and the relatively high former reserve price of $12 500, based on recent PTL trades,

may have deterred potential operators.

As for other taxis areas with similar characteristics, the Regulator has determined that the

reserve prices for the Meander Valley taxi are as shown in Table 4.17 below.

Table 4.17: Price Determination - OOTL reserve prices for the Meander Valley taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Meander Valley

$11 300

$10 200

$9 200

$8 300

$7 500

4.3.7 Penguin

The Penguin taxi area consists of parts of the municipal area of Central Coast and includes

the town of Penguin.

There are two taxi licences issued for the Penguin taxi area, both all PTLs, which account for

0.3 per cent of all taxi licences in Tasmania, though the area contains 1.1 per cent of

Tasmania’s population.

Ride-sourcing services may be available as, at 9 September 2021, there was one registered

ride-sourcing vehicle with its garaged address in the Penguin taxi area.

Taxi licence purchases

The two PTLs for Penguin have each been traded three times between 2000 and 2012. No

OOTLs have been issued for the Penguin taxi area.

Features of the Penguin taxi market

One taxi business in Penguin owns and manages both PTLs. The taxi business operates using

a mobile number and is also a member of the 131 008 network.

The Regulator has been advised that the COVID-19 related restrictions have not had much

impact in the Penguin taxi area, as customer demand was already low before the restrictions

were introduced.

The Regulator has also been advised that the local business competes with unlawful

passenger transport service providers.

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Reserve prices

With only two PTLs owned by one business and no OOTLs, competition for taxi licences is

weak. The former OOTL reserve price of $3 750 is not likely to have been a significant barrier

to entry, noting that taxi services are provided in this area. As with several other taxi areas in

this class, the lack of OOTLs suggests returns are low. A reserve price at this level is also not

expected to discourage a new operator in 2025 if that operator considers that sufficient

demand can be acquired to provide taxi services.

As with the Dorset taxi area, there is a risk that a lower reserve price could encourage entry

and lead to the exit of the remaining firm and potentially result in no taxi services being

provided.

The Regulator has determined that the reserve prices for the Penguin taxi area are as shown

in Table 4.18 below.

Table 4.18: Price Determination - OOTL reserve prices for the Penguin taxi area

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Penguin

$3 750

4.3.8 Tasman and King Island

These two taxi areas have been grouped together because no taxi services are offered

currently even though there are active taxi licences in both areas.

The Tasman taxi area consists of the municipal area of Tasman that includes the Port Arthur

Historic Site, which is one of Australia’s most significant heritage areas. In 2019-20, the Port

Arthur Historic Site received over 270 000 day visitors and over 24 000 ghost tour visitors

which is over 100 times of the local population living in the Tasman taxi area of around 2

480.

The King Island taxi area consists of the municipal area of King Island with a population of

around 1 610.

The two taxi areas together account for 0.8 per cent of Tasmania’s population and about 0.6

per cent of all taxi licences.

Four taxi licences have been issued for the Tasman taxi area, three PTLs (one lapsed) and

one OOTL. There is one taxi licence for the Kind Island taxi area, which is a PTL.

Ride-sourcing services are not offered in these areas. Community transport services are

available in Tasman but it appears no services are available on King Island.

Taxi licence purchases

For the Tasman taxi areas, the most recent trade for a PTL was in 2009. One OOTL was

purchased in 2010 and has never been traded.

For the King Island taxi area, no OOTLs have been purchased and the PTL has not been

traded over the past twenty years.

Port Arthur Historic Site Management Authority Annual Report 2019-20. The historic site was closed to visitors from 21

March to 30 June 2020.

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42 TASMANIAN ECONOMIC REGULATOR

Features of these taxi markets

According to the local information centres, no taxi services are offered in either taxi area. It

is not known for how long taxi services have not been available.

Reserve prices

In areas where taxi services are not offered, there is no reason why OOTL reserve prices

should not be at a minimum level to encourage the provision of taxi services. It is likely that

the financial value of a taxi licence is very low in these two areas, given that no taxi services

are offered even though the PTLs could be leased.

The Regulator has determined the OOTL reserve prices for the Tasman and King Island taxi

areas as shown in Table 4.19.

Table 4.19: Price Determination - OOTL reserve prices for the Tasman and the King Island taxi areas

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Tasman

$3 400

$3 100

$2 800

$2 600

$2 400

King Island

$900

$810

$730

$660

$600

4.3.9 Glamorgan/Spring Bay North, Glamorgan/Spring Bay South, Bruny Island and

Flinders Island

In these taxi areas, all the taxi licences have lapsed.

The Glamorgan/Spring Bay North and the Glamorgan/Spring Bay South taxi areas each

consist of around half of the municipal area of Glamorgan/Spring Bay, which has a

population of around 4 750.

The Bruny Island taxi area comprises Bruny Island, which is a part of the municipal area of

Kingborough. While the local population size is very small (below 800 according to the 2016

Census), Bruny Island receives over 150 000 interstate and overseas visitors, nearly 200

times of the local population.

The Flinders Island taxi area consist the municipal area of Flinders Island with a population of

just over 1 000.

The taxi licences issued in these taxi areas are set out below:

 Glamorgan/Spring Bay North: two PTLs;

 Glamorgan/Spring Bay South: three PTLs;

 Bruny Island: two PTLs; and

 Flinders Island: one PTL and one OOTL.

These four taxi areas together account for 1.4 per cent of all taxi licences and 1.2 per cent of

Tasmania’s population. Ride-sourcing services are not offered in any of these four taxi areas.

Community transport services are offered, including on Finders Island.

Taxi licence purchases

Amongst these taxi areas, there has been one OOTL purchased for the Flinders Island taxi

area in 2011 at the reserve price of $1 000. Two PTLs in the Glamorgan/Spring Bay South taxi

area were traded in 2011.

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Features of these taxi markets

As all the licences in these four areas became lapsed more than two years ago, no taxi

services have been available for at least two years. This has been confirmed by the local

councils and the local information centres.

Reserve prices

The Regulator has been advised that there are no costs for the licence holders to apply to

have their licences classified as active.

As with Tasman and King Island, in areas where taxi services are not offered, OOTL reserve

prices should be at a minimum level to encourage the provision of taxi services as this has

the potential to benefit consumers and operators. It is likely that the financial value of a taxi

licence is very low in these areas, as there is no cost to reactivating a PTL.

The Regulator has determined that the reserve prices for the Glamorgan/Spring Bay North,

Glamorgan/Spring Bay South, Bruny Island and Flinders Island taxi areas are as shown in

Table 4.20 below.

Table 4.20: Price Determination - OOTL reserve prices for the Glamorgan/Spring Bay North,

Glamorgan/Spring Bay South, Bruny Island and Flinders Island taxi areas

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Glamorgan/Spring Bay North

$3 400

$3 100

$2 800

$2 600

$2 400

Glamorgan/Spring Bay South

$1 700

$1 550

$1 400

$1 300

$1 200

Bruny Island

$900

$810

$730

$660

$600

Flinders Island

$900

$810

$730

$660

$600

4.3.10 Kentish and Central Highlands

The Central Highlands taxi area consists of the municipal area of Central Highlands and is one

of the biggest taxi areas in Tasmania by geographic size but one of the smallest by

population size at around 2 170. The Central Highlands taxi area borders the Hobart taxi

area.

The Kentish taxi area consists of the municipal area of Kentish which includes Sheffield,

Railton and Wilmot, with a population size of 6 390, similar to the Break O’Day and Dorset

taxi areas.

No taxi licences have ever been issued for the Kentish and Central Highlands taxi areas and

ride-sourcing services are not offered in these areas. For most years since 2008 an OOTL has

been offered in each area, at a reserve price of $ 1 000 for Central Highlands and $3 750 for

Kentish.

Eligible persons the Central Highlands taxi area have access to community transport

including services offered by Community Transport Service Tasmania.

Reserve prices

It may be that even if the OOTL reserve price were zero in each taxi area, this would not

attract an operator, at the current level of maximum fares, given the level of demand and

the fixed and other costs a taxi operator must incur. However, there is no reason why OOTL

reserve prices should not be at a minimum level to seek to attract an operator as this has the

potential to benefit consumers and operators.

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44 TASMANIAN ECONOMIC REGULATOR

The Regulator has determined the reserve prices for the Kentish and the Central Highlands

taxi areas as set out in Table 4.21 below.

Table 4.21: Price Determination - OOTL reserve prices for the Kentish and Central Highlands taxi areas

1-Dec-21

1-Jan-22

1-Jan-23

1-Jan-24

1-Jan-25

Kentish

$3 400

$3 100

$2 800

$2 600

$2 400

Central Highlands

$900

$810

$730

$660

$600

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APPENDIX: SUMMARY OF SUBMISS ION

Submission received from

Key Issues

Peter Cooper

 The draft reserve price for 2025 of $46 500 will

negatively affect the struggling taxi industry.

 PTL owners purchased the licence as an asset expecting

growth in value and income for their retirement.

 The introduction of OOTLs has negatively impacted on

PTLs as an asset.

 The fair solution is for the Government to buy back taxi

licences from PTL owners and to sell OOTLs in Hobart at

$65 000.

 The value of a taxi licence should increase rather than

decrease as shown by the reserve price.

 The introduction of OOTLs has also led to a severe

deterioration in the quality of service in the taxi industry.

 Uber and the Government-funded community transport

service have eroded demand for taxi services.

 Many drivers struggle to make half of the hourly

minimum wage rate while working 100 hours per week.

 The taxi industry exploits newcomers to Australia.

 Tasmania had the best taxi services in Australia seven

years ago but this is no longer the case.

 There are too many taxis in Tasmania per capita.

 The quality of taxi drivers has deteriorated in many

aspects.

 There is no governing body to assist the taxi industry in

Tasmania.

 The Government has not provided much assistance to

improve the taxi industry.

 Licence owners should be reimbursed for the reduction

in OOTL values.