Minister for Innovation and Better Regulation Victor Dominello this week announced the government will be reviewing the pricing of policy premiums in the NSW CTP Scheme to address changes in the point-to-point transport market.
This review will provide clarification for taxis, hire cars and ride-share services about what price should be paid for CTP and which regulations will apply to each category of driver. The review will offer six options for reform, and you can have your say on which option the government should choose (see below).
At the time of writing, there are around 5 million Green Slip policyholders covered for injury or death to “not at fault” injured road users. But ride-sharing services are currently get included with every other passenger vehicle, while taxis and hire cars are charged CTP insurance as a separate class of vehicles at a higher rate.
The Insurance Council of Australia welcomes the proposed changes to CTP for ride-sharing.
CEO Rob Whelan explains that to keep insurance premiums fair and sustainable, drivers must be classed according to the risk they represent. Insurers have the data to understand the insurance risks presented by taxis and hire cars because they are registered in a separate CTP insurance class, unlike ride-sharing drivers.
“By calculating the risk profile of this emerging market, CTP insurers can charge appropriate premiums for ride-hail drivers to ensure there are adequate funds to meet claims arising from this category of point to point transport,” says Mr Whelan.
Previous reforms to ride-sharing
Since the NSW and ACT governments legalised ride-sharing in December, new entrants to the market have been welcomed. A study by Pocketbook found that Uber’s market share was growing quickly in an unregulated environment until the end of 2015, earning $1 to every $12 earned by taxis in Australia.
Minister for Transport and Infrastructure Andrew Constance commented, “As part of our landmark reforms announced in December, we repealed more than 50 taxi and hire car regulations, which is expected to generate more than $30 million in benefits for the industry.”
Under a package announced in December 2015, Uber prices in NSW went up by a $1 levy per fare to pay $175,000 in compensation to taxi drivers affected by competition from Uber.
In spite of these reforms, Uber drivers still do not have face many of the regulations taxi drivers do, such as taxi licence fees, commercial registration fees, and meeting mandatory safety requirements.
The NSW Independent Pricing and Regulatory Tribunal (IPART) released a report last year that showed while competition from UberX had proven to be good for consumers, the government needed to regulate ride-sharing services “to create a level playing field” for taxi drivers.
Regulations already followed by ride-sharing services
According to Uber Australia General Manager David Rohrsheim, Uber Australia already complies with many Australian traffic regulations to protect its passengers:
- Public liability insurance: Uber already has a $5 million insurance policy against every trip. This acts like CTP insurance so that if their driver damages people or property, they are insured for the legal costs.
- Background checks: Uber does a background check before accepting a new driver, and they do not take on anyone with a criminal history.
- GST: As of June 2015, Uber has to pay GST just like every other taxi service.
Regulations not currently followed by ride-sharing services
We expect the NSW government to address the following gaps in their regulation of ride-sharing services, either by requiring ride-sharing services to comply or by altering the regulations:
- CTP insurance premium as a commercial vehicle: The Sydney Morning Herald reports that taxi drivers in NSW currently pay around $7,000 per year for CTP insurance, compared with just $600-$700 for private passenger vehicles. CTP premiums for ride-sharing has already been introduced in the ACT, along with a fall in the premiums for taxis, hire cars, and also passenger cars. Ride-sharing drivers now have to pay commercial class premiums.
- Taxi licence fees: The sale value of the average taxi licence fee plate is now down to $228,500 as of November 2015, its lowest point since 2002. This would be a serious investment for a ride-sharing driver.
- No peak pricing
- Licence and age restrictions: Uber drivers only need to be over the age of 21 years old, while Australian taxi drivers must be on their open licence and of a safer driving age.
- Always-on GPS tracking
- Regular vehicle roadworthy checks and servicing
- Regular criminal and traffic history checks on drivers
- Mandatory driver training
- Zero blood alcohol level at all times for drivers
- Access for disabled passengers
- Paying the same tax as any other business in Australia: Currently this multinational company uses the same tax minimisation strategies as Google and Apple. Instead of paying the full amount of tax to benefit the Australian community, Uber funnels most of their profits back to their headquarters in the USA.
Have your say
Don’t miss out on the chance to let our government know what you think about whether ride-share drivers should have to pay commercial CTP premiums like taxi drivers.
The CTP Green Slip Insurance for Point-to-Point Transport Vehicles options discussion paper is open for public submissions until 8 April at http://www.sira.nsw.gov.au/about-us/have-your-say/point-to-point
The Government plans to announce its response in late 2016.
You can also use the CANSTAR website to make sure that your CTP Green Slip insurance is not more expensive than it needs to be.