Passenger Transport (Point to Point Transport Services) Amendment Bill

Committee Stage

In committee.

(Continued from 4 March 2025.)

Clause 18.

The Hon. S.E. CLOSE: I draw attention to the state of the committee.

A quorum having been formed:

The CHAIR: We are on clause 18. Member for Unley, you have capacity to ask another question if you wish.

The Hon. D.G. PISONI: I do not have any more questions until clause 27.

Clause passed.

Clauses 19 to 26 passed.

Clause 27.

The Hon. D.G. PISONI: We have had some concerns raised by Uber claiming that despite assurances of consultation no industry engagement has occurred to ensure the new safety duty is practical and achievable for operators. My question is: what consultation has the minister undertaken to ensure the safety obligations are workable and fair? I know you did go into some detail about some of the options that you were looking at the other day. Given the impact of compliance costs on business operations how much notice will businesses receive before enforcement begins? I imagine that that would have something to do with what type of enforcement and what type of mechanism you will be placing. And can you confirm whether any industry recommendations will be incorporated into the final safety framework? I think you have touched on that, but you might want to elaborate a bit more.

The Hon. A. KOUTSANTONIS: I have told Uber now three times that the implementation timeframe for security measures would be three to five years. I accept that this is something relatively new to them. I said that I am happy for them to be entrepreneurial about its implementation. I do not want there to be an overly big cost burden on them. I do not want to be too prescriptive about a timeframe. I think as long as we have a timeframe by the end of a period where we have most of the buyout of taxis finished and Uber can come up with a relatively cost-effective way of having some security and safety measures in place I am open to it. I am not interested in this being done overnight. I think if we have a path forward I will be satisfied. So I have told them now on three occasions, twice in person and once by a Teams meeting, that my plan was three to five years.

Mr TELFER: Obviously, there is a fair bit of detail in these new sections, 44L for instance. What specific equipment or technology does the minister anticipate mandating, and what is the problem that that mandating is attempting to solve?

The Hon. A. KOUTSANTONIS: Apart from cameras we do not have any other suggestions at this stage, but we are futureproofing the act. One of the things I am interested in and the department is interested in is fatigue: how long a driver should be able to operate a passenger transport vehicle for. When I was at uni and we were driving cabs there were some people who were driving cabs for extraordinarily long periods of time. It is not safe.

I think we need to provide for the ability to have some sort of management of fatigue, but my main concern here is passenger safety, and I think cameras are the best way of ensuring that protection. We are doing that with driver training; we have it in place with taxis now; police have body cams. This is now becoming a standard safety measure where there is interface between a government regulation and the public. So this is just making sure that the department has the tools that are necessary if a later stage we need to bring in some other form of management. It is not being too prescriptive. It is just giving us the ability to prepare for the future.

Mr TELFER: Looking at futureproofing, do you envisage that AI may be included in this—self-driving cars and that sort of thing? Is this the sort of open end that you might be envisioning?

The Hon. A. KOUTSANTONIS: The legislation here does not cover or regulate or allow automated vehicles—that would need future legislative reforms to be made—but I have seen some trials in the United States that looked very interesting about automated point-to-point travel. I am very supportive of it. I think it makes a lot of sense. I am just not sure that this is the framework for it—that would be another piece of legislation.

Mr TELFER: Obviously, if you are looking ahead you have to put the process in place so that it adequately reflects not just the safety of the passenger, the user, but also the fair and practical outcome for operators. It does not have much scope here as far as what the process may be when considering further regulation. Would you envision committing to a public regulatory impact assessment so there is a clear, transparent process when it comes to what further regulations may be considered before implementing any additional new obligations under this section?

The Hon. A. KOUTSANTONIS: When it comes to this industry—I am not trying to be condescending—the history lesson here is that the public was overwhelmingly ready for reforms in point-to-point travel well before the legislative framework allowed it. Uber was operating illegally in South Australia—encouraged by some members to operate—and they were being encouraged to enter the South Australian market. The reason the government acted was that they were a phenomenon universally being called on by the public.

If we had brought in restrictive regulatory measures to try to stop or inhibit them, they would have failed. Any regulatory reform we make in point-to-point travel where there is a private contractor attempting to gain public work—there is a demand for this work. If you took taxis and Uber off the road overnight, there would be a public outcry, because people have now come to rely on this form of transport.

I do not think any government—Labor, Liberal or whatever it might be—would ever bring in some regulatory change that would see an overly regulatory burden on this industry, because of the public outcry. That is my personal view. One of the reasons I am making these reforms is that we have these two systems: one that is operating from the 20^th century and one from the 21^st century. The legacy industry—the taxi industry—is stuck with a piece of legislation that was written decades ago and is not fit for purpose. They have numbers that are capped, their operating model is too expensive, they cannot compete, their platforms are not as good and their model cannot work with young people.

I get letters to my ministerial office where parents want me to have concierges on every rank because children do not know that they can just jump into a taxi; they cannot find the app they need to download to be able to get into the taxi that is sitting on a rank. I grew up in a time when everyone knew that you just jumped into a taxi if it was there and was empty. If the light is on, you jump in; if the light is off, it is busy—it is very simple.

I get letters from people saying, 'My daughter was stuck at a taxi rank and there were taxis there and no-one would take her home because she couldn't find the app she needed to get into the taxi.' My letter in response has to be, 'She can just open the door and jump in.' I do not think it is necessary, but if it assists the opposition to say that we will do a regulatory impact statement, sure, I have no problem with that.

This is the type of industry where the public overwhelmingly want there to be, for example, security cameras in rideshare. I do not think there would be any debate about that. I think it is something that the public overwhelmingly want. But I also understand that, if I just come down hard and say, 'Right, we need a regulatory instrument that makes it now,' it would be burdensome, it would be expensive and we would lose a large portion of the fleet because of the costs associated with its implementation. I think the politics here take care of the regulatory burden, but I accept there might be a different point of view to that.

From my perspective, what we are basically doing is liberalising the point-to-point system. We are protecting the meter, protecting taxi ranks and ply for hire, and just generally then we are regulating for safety. Those regulatory reforms over the top need to be sufficient to provide the public the confidence that the system is safe, but not too overburdensome that we lose the ability to move people, because I can tell you right now that if we did not have taxis and if we did not have Uber, Adelaide Oval would cease to work, and so would our concerts, so would our nightlife, so would our restaurant economy, so would LIV Golf, so would Gather Round.

We need these forms of public transport, so I do not think there is going to be a time when you have a government come in with a piece of regulatory burden on this industry that is other than regulating for safety in a sensible way, no matter who is in office.

Mr TELFER: I guess this is the balance you have to try to make. You have to make sure that there is not overregulation and a potential perverse outcome because of that overregulation. Uber have been in the market now for eight years and consumers are used to a structure and a framework existing, and if we are going to try to meld these two 21^st century and 20^th century operations—as you put it before—together you do not want to have a perverse outcome for the one, the point to point, and bring it down.

I was curious especially about this aspect where you talked of other duties or requirements, and you mentioned fatigue management. I come from small business where it is very regulated in HVR requirements as far as reporting and that sort of thing goes, but this industry potentially—and there is a point of debate that you have already articulated as to whether there is still a large component of rideshare operators who do it as a part-time operation as opposed to full-time.

There is the challenge of fatigue management. If you are bringing in an individual who has just worked an eight-hour shift at a 9 to 5, and then hops in an Uber and does a 10-hour shift on the other end, how do you envision getting that sort of fatigue management process in place when your measure point for fatigue cannot be comparable to a heavy vehicle where it is hours behind the wheel, rest hours, and the like? It is a different dynamic potentially.

The Hon. A. KOUTSANTONIS: I completely agree. That is why we are not attempting to do that now. That will come later. We are just preparing the groundwork to have the legislative tools there if necessary. You are absolutely right. Students are a great example of this. Students might be at university all day—

The Hon. D.G. Pisoni: They don't do anything.

The Hon. A. KOUTSANTONIS: Sorry?

The Hon. D.G. Pisoni: They don't do anything there.

The Hon. A. KOUTSANTONIS: At university?

Mr Telfer: They do the Red Bulls.

The Hon. A. KOUTSANTONIS: An apprentice, whatever it might be, on a Friday or Saturday night might drive a rideshare or drive a taxi. They could be up 24 hours. The question I am asking is: is that right? I think we all know the answer to that: no.

Mr Telfer: But how do you manage it?

The Hon. A. KOUTSANTONIS: Would you want your children in the back of that car? No. But we have to be sensible at the same time. I am not going to lie; I do not have the answer to that problem. I am not sure how you regulate someone who has two jobs, one that could be working as a sales assistant somewhere, and at night driving an Uber. I do not know how we regulate that; that could be very difficult. But Uber, no doubt, would be able to regulate that through the management of their apps, which is why I am saying we need to encourage the entrepreneurship of these companies, because Uber also carries some of the risk here.

Uber's model is disruption: 'To hell with whatever the regulatory standards are and whatever the law of the day is. We are going to operate our model, our global platform here, and we will make it fit. You change your laws to make it fit to us.' That is all well and good because of how popular their app is, but the public now has reached a point where they are expecting and probably anticipating or think there are already in place the same levels of checks and balances that will be in place for other passenger transport systems, and they are not.

So while at the same time we are bringing taxis into the 21^st century, we are also getting Uber to catch up to modern standards, and those modern standards are the appropriate vehicle checks, roadworthiness, livery to identify drivers, a consistent accreditation, the appropriate standards for that accreditation, zero tolerance on alcohol in blood levels—the foundational checks that should be in place. There are a lot of things we are bringing into place. The next stage will be fatigue. The framework is here but we are not ready to implement any changes to that because it is such a difficult thing to overcome.

Clause passed.

Clauses 28 to 32 passed.

Clause 33.

The Hon. D.G. PISONI: I think this is probably one of the most important parts of the bill, minister. It refers to the purchase price for the first taxi plate. Taxi plates have been purchased for significant sums of money—more than $200,000. Many have been funded through the purchase of business loans. A number of taxi operators have multiple plates purchased prior to any knowledge of rideshare entering the market, a bit like someone who may have purchased property in the vicinity of South Road before knowing that it was going to be the north-south corridor, and of course, have purchased second and third taxi licences well above the $10,000 figure that has been offered.

We know of people who have retired. They have an asset, their accountant tells them. The department that manages the people's eligibility for whether they qualify for the pension tell them that that asset is worth a figure much higher than the $200,000 and the $10,000. Of course, their entire retirement is based on the income from leasing those plates. That leasing money will go. Anyone can get a taxi licence after this. Why would you lease one when you can go and buy one?

The difference is that those who are losing their property through compulsory acquirement on the north-south corridor are getting a true and fair market value, and yet these taxi licence owners are not. Minister, can you advise the house how the $200,000 figure for the first plate was established, and then why there is only $10,000 for each subsequent plate and after six plates there is nothing?

I will give you a scenario. You and I are both of southern European heritage. We know the value of property, and this is property. It is not something you can live in but it is an asset, it is property. But imagine if you had an apartment building, a block of flats—a big favourite of southern Europeans for their investment—and your department wants to buy it to do the work on the north-south corridor.

I do not think anyone would accept that they got less than market value for the first flat that they bought in that block, and then they got a fraction of market value for the next six, and then, by the way, you are going to have to give us the last five—because that is the comparison we are seeing here. When these people bought these taxi plates they bought them in an environment that was as rock solid as buying real estate—in their minds. Could I have an explanation of the figures: the $200,000 figure, the $10,000 figure and then the nothing figure after six plates?

The Hon. A. KOUTSANTONIS: Those are very good questions. I have done a bit of a roadshow, where I have gone out and met with taxi drivers and explained this to them. It is a very difficult conversation to have with people, but this is the truth: it is not real property. They are not buying a property right. They have bought a licence to operate under a regulated scheme; it is not a property right at all. A property right is very different, and those of us with the southern European backgrounds know that the one thing that God is not making anymore is land, but there are plenty of licences that can be released at any time.

The speculation that was occurring on taxi licences through government auctions was a self-inflicted wound by the industry. I have a great deal of sympathy for taxi drivers. This is not a reflection on the member for Unley, who I know also has a great deal of affection for taxi drivers, but I do remember the then Marshall opposition being quite in favour of the introduction of Uber and the very close friends of the former Premier, Mr Marshall: the Rohrsheims who did a lot to bring Uber in, especially young David who worked so hard to bring Uber into South Australia. I do not remember any tears or concerns about the poor old taxi drivers back then, but that is the past.

Our job now is to make right what was done so unfairly to these people. What people do not see is that an overwhelming majority of taxi drivers own one taxi, a smaller majority have two, and then it cascades dramatically down to third, fourth, fifth and sixth, with only a few people having more than six. So, in effect, if you have six taxis you are getting $250,000 from the South Australian government, which is a quarter of $1 million.

What is the value of a licence to operate? Some of the people we are compensating paid very little for their taxis and made a considerable amount of money from them. Others have paid a lot of money for their taxis, over $200,000 for them, and have mortgages on this regulated licence that is not an asset and not a property right. This is the hard conversation you have with taxi drivers when you are trying to explain to them that it is not a piece of property. It is just not; it is a licence to operate. People who speculate on licences to operate are at high risk because, as you saw with Uber, the government, with the stroke of a pen, can allow a competitor in to smash that regulated licensed-to-operate business model overnight, and that is what happened.

It was done by the former Labor government with the full-blooded support of the then Marshall opposition. The Marshall opposition was then in government and these reforms were not made and no compensation payouts were offered. That is not the fault of the member for Unley in any way.

I had to come up with a scheme. What was the most generous scheme in the country? I think it was $150,000 in New South Wales, and ours is $50,000 more than that. The overwhelming majority of taxi owners, I think it is over 80 per cent of the people being compensated, have one taxi. They are getting the highest amount of compensation compared to anyone else in the country—I think the equivalent of having two taxis in Victoria, which are valued at a lot more. If you own two taxis here you are getting $210,000 as opposed to Victoria, where you got $200,000.

If we attempted to pay everyone who had a taxi that $200,000 figure without it scaled down, we would be compensating people for a lot of money and I do not think the scheme would have worked. Is it fair or unfair? I do not know. I came up with a scheme that I thought we could pass through the parliament. I came up with a scheme that I thought would do justice by most of the people who were impacted. We have the ability, under certain circumstances, to look after some of those people who bought taxis at auction. We have special provisions in place for unique scenarios, and if people can show us that there are extenuating circumstances we will be sympathetic to those people.

People have asked me, 'Why are you compensating companies that are proprietary limited?' Why would we not? A lot of people who bought taxis have also written those losses off and received tax benefits from it in terms of capital gains losses through the sale of other assets. They will have a conversation with their tax agent and the ATO post this buyback.

We have tried to be as generous as we possibly can, but I accept what the member for Unley is saying—it is not perfect. There are a lot of people who bought taxis thinking that (1) there would be no way that a conservative government would ever attack business, and (2) the Labor Party, being the party of migrants and that sort of thing, would never do this to us. Well, we both did.

The question now becomes: how do we compensate? This is the best scheme I could come up with, and I agree it is not perfect—I agree. I have had to have some very difficult conversations with people and it is heartbreaking. Member for Unley, I have a lot of sympathy for what you say but in the end it is not a property right, it is a licence to operate, and people speculated on it because the industry came to the government and demanded that the government cap the number of licences and not release more than was necessary, to try to maintain an artificial value and do a terrible trade on the basis of it. That artificial arbitrage that they insisted the government create, created the ideal scenario and situation and environment for a competitor to come in, like rideshare, and completely smash the model into a thousand pieces.

We had scenarios where there were some people, owners, who were receiving very lucrative lease payments and there were taxis being driven by people working 12 and 14-hour shifts, cars never stopping, they were dirty and never getting cleaned. The breakdown of the connection between the taxi operator, their car and their customer completely vanished, and we saw a drop in service. That drop in service let Uber walk right in and take a massive market share.

What I am attempting to do is to, in one respect, compensate those people but, at the same time, it is going to be a lot harder now for anyone to be able to monopolise taxis because it will be so relatively easy now to start your own taxi. I suspect we will see a bit of a return back to those halcyon days where people operated exclusively in Unley and only very rarely went out of it, and everyone knew the local taxi driver. It might not be that local anymore but I suspect it will be better.

I feel a lot of sympathy for people about the amount, so we have tried to be generous. We capped it at six because the scheme could not afford to do more, remembering that it is going to take a while to compensate everyone, to buy these things back, to pay them the amounts, so it will take time. I do not have a perfect answer for the member because it is a good question and the question is: in any scheme how do you accurately compensate people? How do I compensate someone who bought something in 1974 and was never planning on selling it? Why should I use the internal arbitrage of a government auction as to value? If I use current market value I would be paying a lot less than $200,000. What we have tried to do is choose a date and time pre Uber's entry into the system to try to maximise the value, but it is not perfect—I agree.

The Hon. D.G. PISONI: I am just wondering whether it required any advice from the ATO about tax implications? I know that those who are retired and are getting an income from leasing the plates have an asset of a certain value that might disqualify them from receiving the pension. We know that when you release assets at lower-than-market value there is up to a five-year penalty before you can qualify for the pension. I also know that when the teachers' burnout payment was introduced by the state government, I think when Weatherill was minister, there was an ATO exemption for that being taxed; it was a tax-free payment.

So I am wondering whether you have spoken to the ATO or made any inquiries to the ATO about the impact that this would have on people who did not qualify for the pension because of their asset value and, because their asset has been wiped out, whether they will automatically now qualify for the pension or whether there is a process they have to go through to prove that they did not give an asset away, that it was a mechanism of government that removed it, so they are not penalised or having to wait up to five years before they can be reassessed at that lower asset level?

The Hon. A. KOUTSANTONIS: We have sought advice from the ATO and our private commercial lawyers. The ATO advised us this is to be treated as a capital gain or potential capital loss, depending on the capital gains tax applicable to this. I am not sure anyone is not getting a pension because the current market value of these plates is very low—it is about $10,000, maybe $15,000 if you are lucky—so I am not sure that the current market value would be excluding anyone from getting a pension. I do not think the lease payments are anywhere sufficient, given their low value, to have an impact, but my advice is that there will be a capital gains tax requirement here.

You might remember that when we gave $30,000 compensation after the initial change it was treated as income by the ATO. I spoke with then Treasurer Frydenberg when I was Treasurer, asking him to give an exemption. He refused. We basically paid the commonwealth government this $15,000 and people had to work it out with the ATO, which I think was very, very unfair. This time, Treasurer Chalmers is a bit more sympathetic. I do not know the implications on pensions in terms of the assets—people will have to negotiate their individual situations with the ATO—but this will be seen as a capital return. The ATO will put out a ruling, we have asked them to and sought advice on this, and of course we have informed the ATO that these profits are being realised as part of a government scheme; so we are buying them back.

There is a cohort of people who paid more than $200,000, so they will have a capital loss that they can then apply. Others will have a capital gains tax detriment, so they will have to pay capital gains tax. That would be no different if we had not introduced Uber and these things were still worth what they are worth. So whatever the situation is now is what it would have been had they sold them anyway or realised their value. This is going to be a very personal outcome between individuals and the ATO, but we have done everything we can to try to minimise it and make sure that this is seen as a capital purchase, which will have capital gains tax implications and not income tax implications.

The Hon. D.G. PISONI: If it is in a self-funded super fund that is in pension phase, a capital gains tax credit will not be of any use because they do not pay tax.

The Hon. A. Koutsantonis: What is the asset worth?

The Hon. D.G. PISONI: That is the question: what is the asset worth? It has come down in value because of changes in government regulation.

The Hon. A. Koutsantonis: That's right.

The Hon. D.G. PISONI: We know how slow governments can be to respond over time. We also know how strict they are on the deeming rules of value. If you have assets, it is deemed a minimum value of a return. So my question is basically asking if work has been done on that so that people have some form of information.

I know that our own experiences are that particularly some of the older owners of these taxi plates do not have university degrees. They work hard all their lives and they are focused on what is important to them and may not be aware of implications or opportunities that may come out of this, so I am hoping that there is something you are putting in place to at least point people in the right direction.

The Hon. A. KOUTSANTONIS: I am loath to give tax advice to people in the parliament, unless it is about parliamentary super, then I am your man. The important thing here is that the wording is correct in the legislation, and the wording has been crafted by both Crown law advice and private legal opinion to make sure that we maximise the tax efficiency for people who will be part of the scheme. I am confident that once the legislation passes the ATO will put out a ruling that will verify what I have been telling you.

We have been liaising with the ATO. There will be information in language for drivers and owners. I can tell you that there are a number of people who are very interested in this, in understanding its implications, and my office is deeply engaged with people, offering them help and assistance and pushing them in the right direction.

We will also have, probably, some sessions for the appropriate industry bodies and tax accountants as well, who deal with a large portion of this work. I accept what you are saying. There are a lot of people for whom English is not their first language who are involved in this scheme. I am very cognisant of it. I am very keen to make sure that they get the appropriate advice, but it is not for government to give people tax advice. That is something they will do themselves, but we are doing everything we can to make sure that this is treated as a capital purchase rather than an income compensation grant.

The Hon. D.G. PISONI: In your second reading speech, you said in addition anyone who is not eligible and has their perpetual licence cancelled will receive $10,000 compensation. Can you explain what that means? For example, those who purchased a licence after April 2016 are included, while those who have not and have been forced to sell due to death, incapacity or bankruptcy are not included.

The Hon. A. KOUTSANTONIS: If you are compensating only people up to a point in time in April 2016, whenever the legislation or the regulations were changed to allow rideshare to operate, the question is what do you do with people who came into the industry after that? The initial thinking was nothing. Buyer beware: they know what the system is, why give anything? But they have purchased these taxis for a value, so the question is how do we allow a perpetual licence in place? We say, 'Alright, you are not getting any compensation, but you can keep your taxi licence operational for ever afterwards and not have to pay any annual fee,' as a gift for those people.

The department quite rightly said, 'That means we'll be operating two schemes and there will be two classes of taxi licence. It is better just to extinguish them all overnight and purchase them all back.' At 11.59 on one night they are all extinguished and then at 12.01 they are reinstated immediately on this annual system. That is why we have the $10,000 purchase for all the licences for every category.

Mr TELFER: Thank you, minister. I do think this aspect in particular is important. I am a regular taxi user—not just twice a week in a parliamentary sitting week but other times as well. It is probably fair to say that when they find out my job the number one point of conversation is usually you, minister, and what you are doing to the industry and the ramifications for their individual finances and status as well. This is why, for this aspect in particular, it is really important that there is clarity around the decisions and the reasons behind the decisions.

You spoke a little bit already after the questions from the member for Unley around the dollar figures—the $200,000 and the $10,000—going on. I am curious as to what data was utilised in getting to that point. You sort of said, 'I decided the amount would be X amount,' but I am sure that it was not just off the top of your mind. I would be interested in what data was utilised. Does the department have sale price figures for taxi plates, for instance, and was consideration perhaps given to using that data? Was that the basis, or is that something that could have or should have been used to try to make sure there was a fair level of compensation for this process?

The Hon. A. KOUTSANTONIS: That is an excellent question. After we made the election commitment in 2020, I think, or 2021, we were elected in 2022. I asked the agencies that were compiling all this information. The previous government stopped keeping records of all taxi sales—I am not sure why; it was a direction—so it was very hard for us to get accurate numbers on the value and the types of transactions. It used to be quite regular up until 2018. I do not want to speculate on why it was not done anymore, but it was not done anymore, so it was very hard for us to understand exactly what the actual values of taxis were, how many been traded and what they were valued at, so what we were going on was what was going on everywhere else.

If you look at the Victorian scheme, it was $100,000. Victorian taxis were more expensive than South Australian taxis. Our compensation is double what theirs is, so I tried to be generous for the first one. The first taxi, as I said earlier, was an overwhelming majority. The question is: for the second, third, fourth, fifth, sixth, seventh, eighth, ninth and tenth, what value do you put on them? We came down at $10,000. It was a cabinet decision and a cabinet process. That is as far as I can go into it.

We tried to benchmark this across the country and tried to be as generous as possible for the overwhelming majority of the industry. There was one discussion about whether we would compensate them at exactly what they were bought for. What was the value of a taxi in April 2016? Was it the auction amounts? Did we go by what Cabcharge were paying for these taxis? How many private transactions occurred? When private transactions occurred, could we rely on those numbers? Do we rely on those numbers? It was very hard for us to come at a value.

The truth is, post Uber, taxi licences are not worth very much. They are not worth very much because the overwhelming majority of point-to-point transport done in this state every day of the week is through rideshare, not taxis. I think that can change with this legislative reform. I think you will see taxis come back into vogue because I think they have a better offering than rideshare. So I do not have any more I can give you on that value. I know it is not a perfect answer because it is not a perfect solution.

Mr TELFER: Supplementary: you mentioned the 2018 date. Did you use—

The Hon. A. KOUTSANTONIS: The 2016 date.

Mr TELFER: The 2018 date for the data, the data year. Did you use that pre-2018 data to help guide these figures? You talked about consideration of other structures, including reimbursement of purchase price, etc. I am just trying to get an insight for the people who ask me, when I catch a taxi, how we got to that point, that pre-2018 data, and perhaps was any other consideration given to a tiered system of compensation based on any other factors as part of that consideration?

The Hon. A. KOUTSANTONIS: It was considered on how long the scheme would last and the compensation schemes in other jurisdictions, and it was very hard to understand the value of individual plates at a certain point in time.

Mr Telfer: That pre-2018 data: you had that, though.

The Hon. A. KOUTSANTONIS: It is impossible to get an accurate number on the value of a taxi licence. Again, this is not a property right, it is a licence to operate. When it is a licence to operate, the truth is that at any stage of the pre-entry of rideshare the government could have released a thousand taxi plates. What would that mean for the value of a taxi? So, then, your value is going on individual arbitrage between two individuals or a government auction for the release of licences, people speculating on them: is that the real value of them? Do you value it on the motor vehicle plus the revenue, which is what you would do traditionally?

I can tell you right now that if you are a stock trader and you are doing stock analysis on what a taxi is worth, you would read the governing legislation and you would say, 'Right, so it's not a property right, it's a licence. Government can issue more licences anytime it likes. Government can allow competition. Government can change these rules at any time and there's no protection in the Australian constitution.'

I am not sure I can give you the answer you want on value. What we did was look at compensation schemes around the country and try to be the most generous. I do not think you can value a government licence and I do not think you can trust the self-regulation of the industry to value a licence to operate that can be changed at a moment's notice. You might argue that that is what the market was prepared to pay for it; that does not mean it is what its value is.

I accept this is not a perfect solution to a very complex problem. I accept that and that is a fair criticism of the government and of me personally. I have just come up with a scheme that is going to compensate an overwhelming majority, well over 80 per cent, of owners. That is the highest level of compensation in the country. That means that 20 per cent might be a bit worse off, but let me put it another way: let's say we had gone through a different tiered system. Let's say we had set $150,000 for the first, $50,000 for the second and $10,000 subsequently. That changes the dynamic a fair bit.

We are all politicians; we all love numbers. What does that do to the overwhelmingly large cohort of people? They get less because they only have one, and people who speculated get more. Is that fair? Why would we reward someone who speculated on a licence? You might argue that they worked hard and they bought another one to grow their income. I accept these arguments. We tried to put as much as we could into that first owner because that covered everyone and it made it the most generous scheme in the country, but it is not perfect.

Mr TELFER: I absolutely recognise that. It is probably not dissimilar, though, to some of the other investments that businesspeople and individuals make when it comes to government licences. I compare it to a fisherman who gets a commercial licence to operate and a quota, which is something which is regulated by the government, and so that is what they use to leverage their business and their borrowing and they invest back into the capacity to be able to deliver, to run their business under those structures. This is why when a government changes those sorts of structures parliament as a whole needs to ascertain whether this is a fair level. Like you say, it is not a perfect scheme.

I am very interested, and another question that I will get from my taxi drivers as we are going through this process is: do you have a definitive start and end date for buyback payments to give some clarity for vulnerable licence holders? There has been speculation or direction given around timeframes in the years. This is where I think people probably get a bit nervous as to when they are actually going to get money in their pocket for what they would have considered to be an asset for themselves, so they can reuse that equity for something else. Do you have a start point and then an end point for when all compensation will have been paid?

The Hon. A. KOUTSANTONIS: No, that is the honest truth, I do not because it is reliant on collecting the levy and I do not know how much the levy will collect so I cannot give you a start and finish date. I would like to, in a perfect world, have had the levy operational by now where I can collect money and make two payments in two different financial years relatively close—30 June and 1 July—make two payments and do that again next year and the year after. I would like to be finished in eight, 10 years, but I cannot put a start and finish date on it because I do not know how much the levy will collect each and every year.

Mr TELFER: Is that because you do not know how many will take it up?

The Hon. A. KOUTSANTONIS: No. What I do not know is how many people get into these vehicles. These numbers fluctuate every year.

Mr TELFER: Have you done modelling?

The Hon. A. KOUTSANTONIS: We have done modelling. We think it could be eight to 10 years, maybe longer, maybe less. This is the hard part. The total cost of the compensation is close to $100 million. It is an operating expense. As the shadow treasurer would know, that would be a dramatic impact on the budget. Because it is an operating expense, we need to manage this to make sure we protect the integrity of the budget and that we have a revenue stream alongside it to be able to make sure that it has no impact on the budget. That is why we are doing it this way.

It is an imperfect answer to a good and reasonable question. I get this question everywhere I go. I know exactly what you are talking about. The Greek and Italian communities of South Australia are ground zero in this industry, so you can imagine what my weekends are like wherever I go and talk about this. I would like to be able to say, 'We are paying you all on one day.' I do not have the $100 million. I have to generate that through the revenue, through the levy, and I cannot give definitive dates because I have to start the implementation of the levy, have to collect it, reconcile it, know how much we have collected for that year and then pay accordingly.

Then, of course, there are the people who have special circumstances. I have received lots of letters from people who have cancer, who are at the end of their life, people who have mortgages, they have mortgaged their house. The one part that the member might not be aware of is that the nature of the licence meant that banks were not lending 80 per cent or 90 per cent of the value. They were lending 50 per cent or 60 per cent at best, if you were lucky. People had to put their houses up as security, or other forms of assets as security, to be able to borrow to buy these things.

I want to look after those people if they can prove that to the government on an ad hoc basis. I do not want to be too prescriptive about this. I want to be generous and make sure we look after everyone as much as we possibly can. That is going to be difficult. I cannot give you a start and finish date. I apologise for that. It is just the nature of the approvals I have in place.

Mr TELFER: Further from that, there are different ways to be able to structure something like this. Was consideration given to a front-end lump sum using funds out of general revenue, because you know that there are going to be funds coming in throughout the next eight to 10 or however many years? Was consideration given to a front-end payment, so there was at least a lump sum at the beginning for these people who are trying to make financial decisions, utilising general revenue and balance the budget, as you well put, then using the levy over time to pay that amount back as well as the remainder?

It is a bit like a creditor situation, where we have been discussing the nuances of this sort of thing. A small business in Whyalla that has to keep on operating is similar to a taxi driver who wants to try to utilise future equity that will be drip-fed to them over eight to 10 years. Was consideration given for a lump sum up-front percentage?

The Hon. A. KOUTSANTONIS: Yes, it was. The problem I have is that the opposition and the Independents in the upper house are considering time limiting the levy. If we did an up-front payment, I have no assurance the levy will pass. If the opposition want to give me an assurance now that they will let the levy pass and not time limit it, that is a different conversation, but I have to work with what I have.

This is not draughts; this is chess. We have to think long-term here. I have people who are elderly and I have to work out a way to pay them so they get the enjoyment of their asset, not just their estates, which would be unfair. It is heartbreaking, some of the people who have written me letters. Some are near the end, who want to get some enjoyment of this. So I want to rush it, but we agree to up-front payments and then the levy does not pass in the upper house and then it does tremendous damage to the budget. We have to think of the state's broader interests as well.

Mr TELFER: Chair, these are sort of supplementary to answers that have been given. I would appreciate a bit of flexibility if possible on this important clause in particular.

The CHAIR: This is question No. 5.

Mr TELFER: Thank you, sir. I have two more that have stemmed from answers. I want to especially ask about exceptional circumstances. You have given a broad perspective of what you might be considering. Have you done any work on what sort of percentage of licence holders you think may be in consideration for such special circumstances? Also, what do you envision the process would be for application for those special circumstances? You talk about coming to you, but for some clarity for those who will be paying close attention to this, what do you think the process is going to be for individuals who want to perhaps have consideration of those circumstances?

The Hon. A. KOUTSANTONIS: There are a couple of things. If I am too prescriptive, people start falling away and cannot get into it. I will give you four scenarios that are on my desk: marriage break-up; death; auction, where they have paid considerably more and there are remaining gaps and debts that need to be looked after; and then there are other special circumstances that you might place into the bucket of thousands of miscellaneous different scenarios—multiple ownerships on one plate and how do we deal with all this?

I want to be not as prescriptive so that we can try to maximise the intent of the legislation, which is to compensate eligible people for their first taxi with $200,000. I will give you a scenario without naming anyone. Someone paid $330,000 for their taxi, and then a couple of months later rideshare comes in and the value of the plate plummets a considerable level, and they can show us debts that are owing, and there has been no write-off or tax benefit, we will consider then a payment that is larger than $200,000. We will consider it.

If there are people who are about to pass or have a terminal disease and they want a 200,000 up-front payment in advance rather than it being staged so they get the full benefit and enjoyment of that, I will consider that too, and so we should. If I am too prescriptive and say, 'Fill out form A and these are the criteria that make you eligible for circumstances,' there are so many different circumstances and it is going to take time for the agency to go through this with a level of consideration and compassion to come up with good answers.

I want to limit it to probably the last four or five auctions. I think it is 12 or 15 taxis per auction. Some of those exceeded $200,000, some of them did not. I want to look at those, but I am not interested in compensating people who do not live in South Australia and I am not interested in compensating publicly listed companies that purchase taxis as investments or as an operational. I am not that interested in compensating international investors, so it will exclude them, which gives me the ability to pay out people who are here faster. That is the type of thing we are looking at.

Mr TELFER: It is a process for that.

The Hon. A. KOUTSANTONIS: The process for that will be once the legislation is passed and we have the regulatory framework in place, there will be obviously email addresses and people will write in and let us know. That is already happening now. I have done a big series where I have gone out and spoken to large assemblies of taxi owners about this and they are already writing to me in anticipation of the legislation passing. But I have made it very clear to the industry that if the levy does not pass the scheme is off, because I don't have the $100 million otherwise.

Mr TELFER: Thank you for your flexibility. I am curious: why were regional taxis not included in the buyback?

The Hon. A. KOUTSANTONIS: Because they did not buy their licences and there is no cap on regional taxis.

Mr TELFER: One last one. Minister, you talked about the education sessions and the challenges with English not being a first language for a lot of these operators. Do you envision the education sessions will be paid for out of the levy, or will that be a separate budget allocation from the department?

The Hon. A. KOUTSANTONIS: It is me and Emma turning up to meetings answering questions of people, so I am turning up myself—I am already paid for, thanks to the generous taxpayer—and the staff come along and we go along and we answer questions. We are talking about 1,000 people, 1,000 licences; it is not going to be that difficult for us to administer this scheme. I probably know about 700 of them personally.

The Hon. D.G. PISONI: One more question, if I may. You have mentioned the ownership structure. Let's say, for example, there is a couple and one owns a licence, the spouse owns a licence; is the spouse's licence a second licence or is the spouse's licence their own licence?

The Hon. A. KOUTSANTONIS: One taxi, one taxi licence.

The Hon. D.G. PISONI: They each own one taxi licence.

The Hon. A. Koutsantonis interjecting:

The Hon. D.G. PISONI: It is two payments of $200,000. Okay.

Clause passed.

Clauses 34 to 36 passed.