Uber gets green light in ACT

From 30 October 2015, the ACT will be Australia’s first jurisdiction — and the first capital in the world — to allow ridesharing business such as Uber to legally operate. The move could soon be followed by Victoria and other states.

This is good for competition and consumers. This process will drive more choice, better services and cheaper prices.

Although there are good arguments against the need for government regulation on the sharing economy in the first place, the ACT proposal does not impose disproportional compliance costs and adequately levels the playing field among varying competitors.

According to the proposed legislation, apart from third-party and property insurance, rideshare drivers will have to pay a $150 annual license fee and accreditation, plus a $65.40 annual vehicle inspection fee, a $45 national police check and a $23.80 driver history check. Further, a driver medical assessment (generally every five years) and an introductory minimum training will be required.

In response, Uber has already thrown its support behind the new regulatory framework. For the company – and rideshare drivers – despite the new regulatory costs, formal legal recognition and a transparent set of rules are better than undue prosecution and business uncertainty.

On the other side, the taxi industry has expressed anger. Anticipating the reaction, the ACT government tried to court them by reducing the taxi license fee from $20,000 to $5,000 and by giving exclusivity over picking up people off the street and at taxi ranks. Yet all in vain: apparently the taxi industry is more interested in clamping down external competitors rather than fighting for smart deregulation of its own industry.

For Australia, the ACT lead has the potential to kick-start a healthy round of competitive federalism with respect to disruptive technology regulation. If so, let the best win.