Why taxi fares are high and taxi driver wages low

I don’t often agree with The Age‘s campaigning journalism, but I thought they picked the right cause – if not quite the right argument – in their advocacy this morning on behalf of taxi drivers. The paper led this morning with the heading:

Fair evasion
12 hour shifts
Poor security
All this for $8 an hour

For the benefit of interstate readers, on Tuesday night a taxi driver, like many of them an Indian student, was stabbed by a passenger (who thanks to the cameras installed in cabs was arrested by police within 24 hours). At last report, the driver was still in a serious condition in hospital.

Drivers responded by blocking a major city intersection, eventually forcing the state government to agree to security screens and pre-paid fares late at night.

Though an analysis piece and an editorial did refer to the licence system in the industry, they did not draw the obvious conclusion that it is to blame for the miserable earnings of taxi drivers, despite the seemingly high fares paid by passengers.

The CIS has a long history – though one unfortunately without policy success – of criticising taxi regulation. One of its earliest publications, by Peter Swan in 1979, was a critique of regulation of the Canberra taxi industry. This was followed by articles by commenters on this blog, Jason Soon in 1999, and Christian Seibert in 2006.
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