Bumpy ride Down Under for Uber drivers

The Uber app is seen on a mobile phone in Queensland, Australia, on Oct 15, 2015.
The Uber app is seen on a mobile phone in Queensland, Australia, on Oct 15, 2015. PHOTO: EPA

Authorities issuing fines, suspending licences in crackdown on popular but illegal service

The growing Uber empire is locked in a fierce dispute with the authorities across Australia, where the ride-sharing firm's private car offering has proven increasingly popular, even though it is illegal.

Several states have cracked down hard on drivers from the UberX service - a low-cost option using private cars rather than taxis - issuing thousands of fines and even suspending drivers' licences.

In the state of Victoria, a court has been hearing a case against UberX driver Nathan Brenner, who picked up two passengers in Melbourne, who then turned out to be part of an undercover operation by the Taxi Services Commission. Brenner was charged with driving and owning a commercial passenger vehicle without a licence.

Despite involving just a A$9 (S$9) taxi fare to a hotel, the prosecution could prove fateful for the ride-sharing firm.

The case is part of a war being fought on several fronts in Australia by Uber, which has come up against state and federal governments, as well as the nation's powerful taxi industry.

The United States-based giant is only six years old but already operates in 63 countries, including Singapore, and has shaken up taxi industries around the world with its app services. UberX is the most popular of the firm's offerings in Australia, and typically offers rides at rates cheaper than standard taxis. Other Uber services include a regular taxi hire, and hires of luxury cars and sport utility vehicles.

UberX has about 3,000 drivers in Sydney alone, and in May declared that it had completed a million trips during its first year of operations.

But the service has angered traditional taxi drivers, who face strict regulations and pay hefty licence fees to the state authorities.

In the latest skirmish, the chief commissioner of the Australian Tax Office, Mr Chris Jordan, on Wednesday took the unusual step of publicly accusing Uber of lying.

The tax office, a federal agency, ruled earlier this year that ride-sharing services operate just like taxis, and that drivers need to pay the standard 10 per cent goods and services tax.

Uber is challenging the decision, and has accused the tax office of bowing to pressure from the taxi industry lobby.

Mr Jordan told a parliamentary committee that Uber's accusation was "absolutely wrong".

"That is false and entirely misleading... I am puzzled as to why they would want to publicly portray something that we know from our information is simply incorrect," he told a Senate estimates hearing.

Uber rejected the claim, saying it stood by its complaints against the tax office. But the disputes between Uber and the Australian authorities do not end there.

In  New South Wales, the Roads and Maritime Services agency last month said it suspended the licences of 40 drivers for three months each and issued thousands of dollars in fines for "offering illegal ride-sharing activities". Uber has reportedly been paying the fines of drivers who were caught.

In the meantime, an independent task force has been set up by the government to review the taxi industry. The task force, in a discussion paper in August, said: "Shifts in demographics, technology and social attitudes are changing people's expectations of point-to-point transport. However, the regulatory framework does not adequately accommodate these changes."

The task force is due to report back within days.

The taxi industry is saying private drivers are not subject to health and safety checks, and pose a risk to the public. But analysts say the growing popularity of the app-based service suggests that regulators need to find a new way to deal with the taxi industry.

In Queensland, the transport authorities issued more than A$1.7 million of fines against drivers in the past year, up to June. Two weeks ago, the state government said it would conduct a review of the service, including the issue of passenger safety, but it is not scheduled to report back until August next year.

Perhaps the only place where the firm is getting a reprieve is the Australian Capital Territory, where Uber has not yet begun operating.

The territory, which covers the national capital city of Canberra, is legalising the service from Friday next week. Ride-sharing drivers will have to undergo criminal record checks and health assessments, and will need to pay A$100 in annual fees, but will not be allowed to pick up passengers hailing cabs on the street.

For taxi drivers, regulations will be eased - licence fees will be reduced from A$20,000 to A$5,000 by next year, and the requirement that they must wear uniforms will be removed.

Analysts believe the compromise in the territory could prove to be the way forward in Australia, and that other states are likely to follow suit. "For consumers, placing taxis and Uber on a more level playing field should promote competition, reduce costs and buttress safety," a consumer law expert at Melbourne University, Associate Professor Jeannie Marie Paterson, wrote on The Conversation website.

"It appears consumers see UberX as offering a fresh alternative to the unresponsive and outmoded customer service of the taxi industry. So, consumer demand may well prompt reform… in other jurisdictions before too long," she added.

A version of this article appeared in the print edition of The Straits Times on October 24, 2015, with the headline 'Bumpy ride Down Under for Uber drivers'. Print Edition | Subscribe