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Taxi plate owners facing ruin renew compensation push

Ian Bushnell 1 February 2019 54

Canberra’s private taxi plate owners feel that the Government has betrayed them.

Canberra’s private taxi plate owners have formed a new association and renewed their push for compensation, saying the ACT Government’s release of cheap plates has left their members facing financial ruin.

Chair of the new ACT Taxi Plate Owners Association, Petar Ivanovski says the unscheduled release on 25 January of 30 plates for lease at $5000 a year for up to six-year terms had further flooded the market and will mean 120 permanent plate holders who had paid up to $300,000 a plate will see their incomes and the value of their asset slashed.

He accused the Government of using the industry disruption caused by ride-sharing service Uber as an excuse to manipulate the market, and in effect go into competition against his members.

Mr Ivanovski said members, who lease their plates to taxi drivers, had seen their incomes halved as operators renegotiated their leases when the Government dropped the price of new plates.

“Overnight they’ve dropped them down to $5000. In a month, rentals for private plate owners went from $400 to $200 a week. Now they’re going to go even further,” he said.

Mr Ivanovski said his members felt betrayed by a Government that had promised to look after them.

He said many of his members had bought the plates to fund their retirement, with some investing their superannuation, and the impact had been devastating.

Melville Leslie, 60, of Bega, bought a plate for $260,000 in 2002 and has seen his modest income halved in recent years. He has been offered only a fraction of what he paid for the plate by potential buyers.

The stress has taken a toll on his mental health and his marriage, with Mr Leslie on medication and no job prospects.

Uncertain future: Taxi plate owner Melville Leslie and his wife Robyn Boness. Photo: Supplied.

Uncertain future: Taxi plate owner Melville Leslie and his wife Robyn Boness. Photo: Supplied.

“We’re fighting against the Government, we’re fighting against the operators, we’re fighting against each other because someone has just wiped out our retirement. There’s nothing underneath us now.”

He said that at the time a taxi plate seemed a safe, Government-backed investment, that was recognised by banks as an asset.

“It was as decent as buying a property and not being a landlord,” he said. “We found overnight that our property was worth only $40,000, if you can find someone to buy it.”

His once annual income of $25,000 is down to $10,000, and he is worried that this latest release will see his operator again renegotiating. “I have nowhere to go,” he said. “My monthly remittance comes in on 17th, and every 15th and 16th I go into a sweat waiting for a phone call from my operator.”

He said his wife had applied for a pension but Centrelink had said they had $260,000 in assets, despite the plates’ real value being so much less, a situation Mr Ivanovski said was a common one for members in need of income support.

“My members are suffering, I’ve got people having difficulty putting food on the table because they can’t get the pension, and they’re 70,” he said.

The Government has so far rejected claims for compensation, such as NSW’s $250 million package, but the association again met with officials on Thursday in a bid for mediation so their members can be adequately compensated.

Mr Ivanovski will await a Government response but in the meantime, the association will mount a public campaign to highlight what he says is the Government’s ‘socially and morally indefensible’ position, including a demonstration at the Legislative Assembly on 19 February supported by the Canberra Liberals.

Although taxi plate owners insist that the Government’s policy has nothing to do with Uber, the new plates at reduced rates began to be issued from 2015 – the same year Uber was launched in the ACT – going down $20,000 to $10,000 and, from 1 August 2016, $5000.

The Government released 50 plates for lease in 2017, 15 last October and, according to Mr Ivanovski, the next release had been due in March.

The Minister for Regulatory Services, Gordon Ramsay, has said the staged release of plates would allow operators to adapt to the changing market conditions, while meeting demand for new taxi licences.

But many in the industry believe this is unsustainable in such a small market, already under pressure from rideshare services.


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54 Responses to
Taxi plate owners facing ruin renew compensation push
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rossau 2:37 pm 10 Feb 19

Any and every investor rent-seeking through simple profiteering in goods or services is on notice that you, having disenfranchised the public, have not acted in the public good and deserve no compensation.
When you bought the taxi plate, what service were you providing that every customer needed to pass their income your way? That the government no longer supports your monopoly is a wonderful evolution.
When investors in housing no longer add value but similarly disenfranchise a public seeking affordable housing what ethical dilemma should I have in wishing that your investment is washed away? I have none. You’re on notice too, no compensation.
Self-interested investors lacking compassion can get out now but not at my expense.

5:44 pm 02 Feb 19

ALP ruining private enterprise.

Gilavon 4:07 pm 02 Feb 19

Simply a demonstration of socialist opposition and indifference to private enterprise: “What’s your’s is mine, what’s mine stays mine and you’ll pay taxes to maintain mine”.

2:54 pm 02 Feb 19

or maybe you could adjust your business with the times and competition like every other business that faces the same.

Weatherman 2:42 pm 02 Feb 19

Investments are always are risk with no guarantee of market value. It’s speculation based. As well as the effort put in by investors to maintain value in their assets. If rival companies, such as Uber are doing well, that’s not the governments fault. That’s a fault within the reputation of taxi services.

12:48 pm 02 Feb 19

Doesn’t need to provide them, if you invest in the stock market with say Apple, then five years later The banana company starts up, with a better product causing Apple to lose market share and start losing revenue, would you then sue for compensation? No, it’s just tough luck, that’s how investments work, it’s a gamble, you never know what new technology is around the corner.

10:50 am 02 Feb 19

They made an investment hoping to make money. Just like the people who bought Telstra tranch 3 shares, not all investments rise in value. Sad for them but it was their decision and the taxpayer should not bale out their misjudgement.

    12:06 pm 02 Feb 19

    Most investments are exposed to a certain degree of economic and even regulatory risk. However the market for taxi plates was entirely created by government with costs being kept artificially high through the strict limitation on the number of plates. Then government threw it all out the window allowing an unlimited number of people to provide taxi like services at no cost, destroying the value of the assets it created.

    12:07 pm 02 Feb 19

    James Daniels That is the risk you accept. Governments change. I can see no cogent argument for bailing out bad investments.

    12:11 pm 02 Feb 19

    David Brown if the govt ...aka the tax payer...went around nuking everyone's investment you can be sure you'd be asking for compensation

    12:12 pm 02 Feb 19

    Cathy Dearnley That is a very big, and self serving IF

    12:14 pm 02 Feb 19

    David Brown self serving?

    12:15 pm 02 Feb 19

    Cathy Dearnley I am betting you own or know someone ho has a taxi plate

    12:15 pm 02 Feb 19

    The govt doesn't go around nuking everyone. ..because people would all feel the pain and protect each other. Because this isn't your pain. ..you don't care

    12:16 pm 02 Feb 19

    David Brown sorry. ..I've caught 7 taxis in my life. I don't know the first name of a single driver...self serving?

    12:17 pm 02 Feb 19

    Cathy Dearnley What about Telstra tranch 3? The government set the price and the shares dropped like stones shortly after. I did not see too many people demanding or expecting compo for that government decision.

    12:18 pm 02 Feb 19

    Cathy Dearnley Try Uber or Ole. You will get a better service no save money.

    12:21 pm 02 Feb 19

    David Brown let me help explain the difference.

    The difference is that there was no govt interference with the market AFTER the share sale. If there had been then there would have been a royal commission.

    In the taxi industry, the govt interfered with the market price.

    7:16 pm 02 Feb 19

    Oh please, the single biggest 'investment' in Australia is the property market and if there's even a suggestion of the government changing negative gearing the boomers go bananas...

9:29 am 02 Feb 19

Maybe if they had invested in the customer service side of their product (taxis turning up on time, drivers who were not rude, cars not falling apart) they would not have been in a situation for a competitor to take advantage of these issues.

8:12 am 02 Feb 19

This has been unraveling for a decade...got to know when to depreciate a loss...your accountants should have helped you do this via your business strategy...! Write off etc.

    11:59 am 02 Feb 19

    Losses on the value of taxi plates are capital in nature, are only claimable once sold and can only be claimed against capital gains. This means many of the owners will just end up with a loss they can never claim as the loss on the asset will mean they don't have funds to invest in something else and make a capital gain further down the track.

    2:00 pm 02 Feb 19

    James Daniels thanks buddy...so no taxable offsets for devalued asset...

8:09 am 02 Feb 19

The limited and expensive plates had made catching a taxi in Canberra an expensive and problematic.

But people invested in the system. Built their livelihoods and family futures around it. The investment fails not because it was a bad decision or didn't work hard. But because the rules changed without compensation.

If govt decides to build a road through your home, you get compensated. People don't say 'suck it up, you've made a poor investment'

    8:14 am 02 Feb 19

    Cathy Dearnley wasnt there discussions by govt with cab owners on how to move on this?

    8:23 am 02 Feb 19

    Jack Hearps what was the outcome of the discussion

    10:41 am 02 Feb 19

    Cathy Dearnley Whilst Taxi Owners may have worked hard they did make bad decisions, as previous post alluded to, they were not offering a good product that kept up with customers expectations. It is not enough to just buy a licence and just drive 12 hours a day. As any small business owner will tell you, you have to keep up with changing customer expectations, latest technology, increase customer satisfaction levels and be competitive price wise. The Taxi industry as a whole failed to do any of this and a competitor got the jump on them. It is called capitalism where competition is the norm and monopolies soon get found out if they don't keep up. It is a failed business, they invested heavily but did nothing to protect that investment.

    10:52 am 02 Feb 19

    Cathy Dearnley What rules changed? There were just more plates available. Competition increased. Looks like market forces to me.

    10:54 am 02 Feb 19

    Tim Daly Spot on. Zero sympathy here.

    12:08 pm 02 Feb 19

    David Brown the rule was a limited. .by the government.. supply of plates. The government used monopoly and restriction to lead to over priced entry point. It's a wonder we have any taxis at all. Then having had to over invest in the plate, they're expected to invest heavily again in vehicles and technology. Then suddenly the act govt realises they've created a crisis in the industry. And to cure it, starts giving away plates at the same time Uber arrives.

    I don't see taxis parked outside of rockafella mansions. I see them outside modest homes. These people placed trust and livelihood in a govt system. Aka law. Aka rule.

    The same thing will apply with water supplied to Murray basin. Farmers bought land with water rights. The govt takes away the rights. The farm is significantly devalued. Not the farmers fault.

    But times do change. Needs change; and rules and entitlements change. Doesn't mean the people who pay the price shouldn't be compensated for it.

    7:11 pm 02 Feb 19

    Cathy Dearnley I agree Cathy, I'm not fan of Taxi's but I think a lot of people are letting their general dislike of taxi's cloud the logic. When I opened my business I needed to jump through a million government hoops at a very high cost. If I failed once I opened because I sucked at it then that's fine, that's my problem. But if the government turned around and said to my competitor, hey you don't need any of those licences, registrations, inspections... you can bet I would be raising hell.

    8:08 pm 02 Feb 19

    Taxi drivers and company owners were always free to adjust their price systems and make use of technology for bookings. But they didn't, and so they got left behind. It's grim and I wouldn't want to rule out compensation over the plate prices, but also when you invest, it's your responsibility to keep track of market changes and proposed legislation. There's no such thing as a sure investment, but taxi drivers thought they were exempt from that rule.

7:32 am 02 Feb 19

They had it too good for too long. This is inevitable change and the best thing for consumers. Nobody reimburses my failed investments.

    8:13 am 02 Feb 19

    Aaron Clausen have you any examples of your failed investments that weren't compensated for that are comparable

10:17 pm 01 Feb 19

Yeah, I should get my stock investments reimbursed too. All governments fault.

    11:54 am 02 Feb 19

    Except the government created an artificial market, kept costs very high for decades through severely limiting the number of entrants, and then one day turned around and let an unlimited number of competitors in at minimal cost. The capital losses hitting plate owners are not from normal investment risk.

    12:58 pm 02 Feb 19

    james Daniels they did but only because the value has dropped no one in their right mind would pay $300,000 for plates now they could just become Uber drivers. If Uber wasn’t around they would still be the same price.

    3:24 pm 02 Feb 19

    Most markets are artificial due to regulation or lack of oversight, and this one, to be sure, was one of the stupidest. The government, as the creator, should have transitioned gradually to a lease-based system. There is still fault on the plate owners however - the high cost of the plates should have been a red flag to begin with. And anyone paying attention to hire car markets around the world should have figured out that the status quo was not going to remain forever.

    8:05 pm 02 Feb 19

    The market was disrupted by uber and other ride sharing companies, and this change in the market meant their investment was no longer worth it. It's tough for those involved, but no different than the collapse of video ezy and blockbuster - the market changes, and if you aren't keeping an eye on your investment and the conditions of the market, you get stung when something new happens.

    8:09 pm 02 Feb 19

    Pippa Campbell Of course you are right, but since it was a government created fiasco (as far as the limited plate market) it would have been nice if they’d managed it better. I do have some sympathy for what James is saying above.

7:48 pm 01 Feb 19

The old system was a huge cost to consumers and putting an end to it is most plainly in the public interest. Compensation? Really?

7:25 pm 01 Feb 19

More unconscionable behaviour by our awful local government.

    10:13 pm 01 Feb 19

    Emmac Ph How? What did the Government do?

    11:56 am 02 Feb 19

    Helen Goddard government created an artificial market, kept prices high through imiting competition and then one day turned around and let in an unlimited number of competitors with minimal entry costs and destroyed the value of the assets (taxi plates) it created.

Richard Handley 6:58 pm 01 Feb 19

Ok I would be upset as well but you made an investment. It was good for 20-30 years with no competition. Be happy about how long and good your run was. No investment is guaranteed. I bought a DVD player back in 2002 for $550 and now it’s worth nothing at all. You don’t see me trying to sue online movie providers for making it easier, more convenient and cheaper to watch a movie. Again if you bought a 1 bedroom apartment in Canberra you don’t see people trying to get their money back because the government released more land for unit development. It was their choice to purchase in the hope of making money or building equity and investments don’t always work out.

    Capital Retro 7:37 am 05 Feb 19

    So, when your current job is disrupted by globalisation or imported cheap labour you will apply the same philosophy?

6:50 pm 01 Feb 19

They should never have been a saleable asset in the first place.

6:30 pm 01 Feb 19

Time to take legal action

    10:12 pm 01 Feb 19

    Stephen Page-Murray by whom? Against whom?

    10:14 pm 01 Feb 19

    Helen Goddard

    I’m sure you can work it out

    10:53 am 02 Feb 19

    Stephen Page-Murray I think that is a great idea. Then it will be finally put to bed and they will learn about the risks involved in investmenting.

    10:57 am 02 Feb 19

    Stephen Page-Murray No actually... I can’t; because I’m not sure that anyone could think that you take legal action against anyone for personal investment decisions.

    10:58 am 02 Feb 19

    Stephen Page-Murray No actually... I can’t; because I’m not sure that anyone could think that you take legal action against anyone for personal investment decisions.

6:21 pm 01 Feb 19

Neo Liberal economic theory in action. Did you really think the ACT government would leave that cash cow alone. Just ask yourself who gets the new license plates individuals or groups.

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