Ottawa’s taxi licensing system is a disservice to customers and the industry
By Tracy Wates
When the new amalgamated City of Ottawa comes into being on Jan. 1, 2001, a whole array of old bylaws from the municipalities will be hanging around, waiting to be harmonized. And none of these laws need more attention than those dealing with the taxi cab industry.
The current system of regulation and price-fixing stifles competition, hurting consumers, and limits the number of available licenses, hurting cab drivers. There are only 586 licenses, also called plates, in circulation, and that number hasn’t changed since 1976. The apparently omniscient present City of Ottawa has deemed that this is all the cabs we need on our streets — not one more, not one less.
Those who are fortunate enough to own a plate, and thus a taxi, rarely drive the cab themselves. Instead they sell the privilege to drive their cab out to others — sometimes for as much as $40,000, plus monthly rental payments of $500.
The plates, which originally sold for a few hundred dollars 30 years ago, are now worth approximately $100,000 when traded in the marketplace. Ottawa’s two cab companies, Blueline Taxi Company and Capital Taxi, share 580 of those plates between them, leaving six independent plate holders.
Martha Boyle, the city’s manager of licensing, admits the “intrusive system we have now” is far from perfect.
She says the licences are intended to be in the hands of the people delivering the service and should act like a work permit.
Lola Sashola, chair for the Blueline drivers’ union, says Ottawa cabbies are very unhappy with the state of things. He says one plate should belong to one driver, not the current system where some individuals own over 50 plates, reaping huge profits from driver rental fees. Many of the owners bought their plates from the city 30 years ago for a song, he says, and pay just $400 a year to renew it.
So, what system should the new city adopt?
It would be wise to look to New Zealand, a country of just 3.5 million, that largely deregulated its cab system in 1989. The deregulation was part of a series of spectacular reforms that transformed it from a highly insular country into a dynamic and globally competitive nation. During that time, New Zealand went from being ranked 32nd to third on a scale of economic freedoms put together annually by over 50 international organizations.
Under New Zealand’s reformed cab system, licenses are given to qualified drivers for an annual fee of about $25. Cabbies must pass a “fit and proper” test which means they can’t have a criminal record, must understand the local geography and speak English. Cabbies can set their own prices and are free to remain independent or join a taxi company.
The number of New Zealand cab drivers has doubled in the last ten years, providing employment for more people and more flexible service for customers.
Ian Wood, information officer at the New Zealand High Commission in Ottawa, says the results have been noticeable in terms of lower fares (as much as 10 per cent less), fewer lineups and more courteous service.
The New Zealand system is still regulated, but only to ensure consumer protection such as bi-yearly safety inspection of vehicles. The rules that produced the same types of problems that Ottawa faces, are gone.
A deregulated system would eliminate many inefficiencies in Ottawa. For example, each municipality’s licenses are currenly valid only within that area, which means a cab from the Airport Ottawa Limousine Service, registered in Gloucester, can’t pick up a fare in Ottawa, even if the customer wants to go to the airport.
Cabbies and consumers would be winners in the deregulation game, but like any game, there are always losers.
In this case, it would be the plate owners, whose assets would go from being worth $100,000 to nothing overnight.
New Zealand’s response to this was to argue it wasn’t their problem. The government said they didn’t create the value of the licenses — the market did — so they are not responsible.
Ottawa couldn’t take the same approach, argues Sashola, because they inherently acknowledge the value of the plate by charging a $6,000 transfer fee whenever a plate is sold to a new owner.
In addition, some drivers have saved for 15 years to become owners, he says, and the devaluation of their investment would not be fair.
Another, more equitable way of solving this dilemma is for the city to compensate the owners on a decreasing scale according to how long they have owned the plate. For instance, a long-time owner would get nothing, while a brand-new owner would receive the market value of the plate.
Boyle says the cab regulations will be reviewed either by the transition committee before the new city is created or by the new city’s council. She says the options for change run the full spectrum and all ideas will be looked at.
For the sake of cabbies and riders, the new city council should take a long, hard look at New Zealand’s set up.