Bills

Passenger Transport (Point to Point Transport Services) Amendment Bill

Committee Stage

Debate resumed.

Clause 37.

The Hon. D.G. PISONI: This refers to certain fares and charges prohibited in prescribed circumstances. Uber have concerns about regulating surge pricing and queue-jumping fees directly impacting their business model, and potentially reducing driver supply during peak demand. We are informed that no other jurisdiction has these restrictions and so, comrade, I would like to ask you this question: why is South Australia the only state attempting to regulate surge pricing. This is off the back of the government's campaign for the last 21 years of being in government of rewarding people for working unsociable hours.

We saw the introduction of the New Year's Eve public holiday and the introduction of the Christmas Eve public holiday because of unsociable hours, yet for the first time in the ridesharing business in South Australia, we have a proposal to regulate surge pricing. I know that there are opportunities to pay extra when you fly to be at the pointy end. There is no restriction on airlines offering that service. You can actually pay extra to avoid the queue where you put all of your luggage through the scan. That is another service that is being offered. At Disneyland, you can pay extra to be at the front of the queue instead of waiting two hours in the line.

They are natural business practices. There are restaurants that charge 10 or 15 per cent more for the penalty rates they have to pay their staff on Sundays or public holidays, for example. Consumers always have the choice of saying, 'No, I am not paying for the pointy end. No, I am not dining out on a Sunday,' just like consumers have the choice of saying, 'No, I am not paying surge prices. I am staying home that night or I am going to walk.' So why is the government interfering in a market industry?

This legislation is about correcting, if you like, when you have seen a market mechanism for the purchasing of licences, but then there is a regulated fee that taxis can charge. It is a very strange situation. Now we are moving into a completely unregulated area, and all of a sudden there is a regulation about how much can be charged for surge charging, which is a mechanism that works for the provider to ensure that there are enough drivers to meet a demand.

It is a demand economy. It is a demand business. There are a lot more people here when events are here using taxis, using rideshare. It might bring some of those part-timers out. Instead of sitting on the couch, they might decide, 'If I can earn $50 or $60 an hour driving the car tonight, I will, but I am not going to bother if it is only $25 an hour.' That is the question, minister: why is it that in South Australia we have a regulatory process that socialises a market mechanism?

The Hon. A. KOUTSANTONIS: I have not been called 'comrade' since Young Labor, when the left used to try to insult me by calling me 'comrade'.

Mr Telfer: Every time I walk past Russell Wortley.

The Hon. A. KOUTSANTONIS: Yes; he is an old comrade. It is not true to say that South Australia is the only one that does this or proposes to do this: Western Australia and New South Wales have as well. It is for emergency situations, bushfire, flood. During the Lindt siege in Sydney, Uber did not read the room and implemented surge pricing for people trying to get out of Sydney. It was appalling behaviour by Uber.

I accept what you are saying. I am not interested in regulating surge pricing to stop a demand response: I am interested in regulating it in an emergency situation. The reason I have given myself flexibility is that it might not be something that we need to declare a state of emergency to do. We had a statewide blackout in 2016 that members opposite like reminding me of. What would happen if Uber started surge pricing then?

Mr Telfer: We didn't have phone service.

The Hon. A. KOUTSANTONIS: They did have phone service. Why? Because it was battery operated. My point is that the government needs to maintain the ability to regulate these things in a time of emergency for the good order and conduct of the state. I am not attempting to insert myself into the economic arbitrage that rideshare use to try to get drivers. I agree with you: if there is surge pricing on because some restaurant is hot right now and everyone is trying to get in or everyone is trying to leave, that is their problem. But if there is a fire or a riot or something has gone wrong and people are trying to get out and Uber are trying to profit off the back of it by surge pricing, that is unacceptable.

So I think this is a sensible application where we want some broader powers in place where I can actually not have to declare a state of emergency to take care of surge pricing if there is a riot in the middle of the city or a terrorist event or something that happens quickly and people want to get out. So that is why it is there. It is not there to try to insert myself into the day-to-day management of what Uber charge.

I agree with almost everything the member for Unley has said, but I do note that while he was in office he did not deregulate taxi meters and allow them to compete with Uber and charge variable amounts. If I took your argument to its logical extension and you believe in total deregulation and a free market economy, why restrict taxis? Why did you not deregulate the meter? Why did you allow them to charge a regulated fare? Why?

My point is all I am trying to do here is what New South Wales and Western Australia have done: in certain circumstances that are in the state's or the nation's interest not to allow surge pricing. It is not because of an economic intervention for some sort of socialist outcome but an outcome for the good order and running of the state. There is a difference.

The reason I have made the bill with a bit more flexibility and provided for the situation to be prescribed by regulation is that I do not think we need to automatically declare an emergency to be able to intervene. It could be a very bad car accident—someone blocking the city and people cannot get out; it could be a whole series of scenarios. That is what we are attempting to do.

The Hon. D.G. PISONI: Just so I can understand this, when people work for the government, whether it be in the ambulance service or the fire service, if they are entitled to penalty rates because it is after hours or because it is a weekend and everyone has to come in and work, they are all paid overtime, and they deserve to be paid overtime. So how will the demand for those trips that that emergency might cause be satisfied?

These are not volunteers. Uber operators are not like the State Emergency Service; they are in business, right? If they are not allowed to charge a fee for getting out of bed to go and do this—and they are not paid a standby rate to be ready in case there is an emergency like emergency workers and first responders are—and if the government had this in place and were regulating the fee charged at that time, why would the government not compensate the drivers for the additional money they would get if they were public servants working overtime and that they would be entitled to in order to carry that service out? Is that something that the government would consider in order to make sure that those drivers would be available to go out and deliver that service and be compensated as much as any government employee who is doing that good work for the community?

The Hon. A. KOUTSANTONIS: Wages are regulated by industrial agreements, and workers do not get to say, 'By the way, despite the EB giving me double time on a Sunday, I want quadruple time.' That is not how it works.

The Hon. D.G. Pisoni: But they get paid more.

The Hon. A. KOUTSANTONIS: They get paid more, yes. What I am talking about is not that they will not get paid. If the demand is there and there is overwhelming demand, demand exceeds supply, your argument is that in an emergency they should be allowed to charge more to service that emergency.

The Hon. D.G. Pisoni: No. I am saying: how will they be paid more like everybody else is paid more when working on weekends and—

The Hon. A. KOUTSANTONIS: First and foremost, if they are working on a Friday night or a Saturday night, there is differential charging anyway. Taxis have a different metered fare and a different flag fare for those nights anyway—they are being paid more already. What has changed other than the emergency?

The Hon. D.G. Pisoni: They may have already worked 38 or 40 hours for that week.

The Hon. A. KOUTSANTONIS: Then the person is coming after them. We can go around in circles here. I am not interested in regulating Uber's fare structure, I just am not. I am happy for them to compete on the market, charge what they like and they can live and die by their decisions. I just point out this: the drivers cannot decide what they charge, Uber does. Drivers are not taking back 100 per cent of what they are charging.

The Hon. D.G. Pisoni: It's all based on analytics.

The Hon. A. KOUTSANTONIS: Sure, no doubt. Why should we allow a company to take advantage of an emergency and charge extraordinary amounts of money to move people out of danger? I do not think that is appropriate. They are already getting paid for the service, they are already on the road, they are already in the cars.

But I accept your point—you and I come from different backgrounds. I believe the government has a role in our society and our economy; you believe it does not. Fine, that is what elections are all about. I am not saying that I am attempting to try to permanently regulate rideshare's fare structure. I am saying that under certain scenarios and under certain circumstances, for good order and public safety, we want to be able to intervene and stop surge pricing. That makes complete common sense, and I bet that is what the public expect us to do.

I am happy to have this debate with the opposition on the radio any time they want, because this is an argument you will lose. The public would expect no less. What happened with the Lindt siege was disgraceful, with the way Uber behaved. It led TV news all across the country, about the way they behaved, to a point where Uber voluntarily agreed that they would submit themselves to these types of circumstances.

All I am saying is that I want a bit more flexibility so that I do not have to declare an emergency, because that means waking up the Governor or the police commissioner. Let us be sensible about this: I am not attempting to regulate fares, I simply am not. I am attempting to make sure that the good order of the state can continue in an emergency.

The Hon. D.G. PISONI: My question to you is: what will you do if your regulation stops people getting out of that situation because people are not prepared to work for the fare you have set? It is not Uber who gets the money, it is the driver who gets the money.

The Hon. A. KOUTSANTONIS: That is not true. Uber get the money too.

The Hon. D.G. PISONI: They get a commission.

The Hon. A. Koutsantonis: About 30 per cent, yes.

The Hon. D.G. PISONI: But the driver is the one who gets the majority of the money—that is how any business works.

The Hon. A. KOUTSANTONIS: Sure, I accept that. But it is like saying, 'How would LIV Golf work without there being drivers in Ubers?' They do. They work, they make money. Tonight is Wednesday night. My guess is there are twice as many rideshare vehicles available right now as there are taxis—twice as many. If there was an explosion somewhere in the city or a major disaster at a concert or an event or a terrorist act and people wanted to get out quickly, your argument is that Uber drivers will not respond to work that is available because they are not being paid a premium.

My argument is they will get paid because they are there to do that work anyway. The question is: can they surge price on top of the disaster and take advantage of it? I do not think it brings more people on, I just think it makes more money, and I think that is the difference and that is a difference in ideology and philosophy. I completely understand it. Part of my brain thinks the same as you, but luckily for me a larger part of my brain thinks, 'Here is my home, in the Labor Party.'

I get what you are saying. Financial signals are very good signals, but there has to be a point where for the good order of our community there needs to be some government intervention where we can step in and say, 'That is unacceptable in this scenario,' and it is based on an emergency situation. It is not based on: you are making too much money, we want to stop you.

The Hon. D.G. PISONI: I do not believe there are fairies at the bottom of the garden either. Have you got anything else?

Mr TELFER: Me? I have a couple of questions, yes, absolutely. I am just trying to get over that statement. For clarification, minister, I look at it and think, well, if there is a scenario where there is X number of drivers available who are on the road who are doing this service, I see that potentially surge pricing could be used as an incentive to mobilise a larger cohort to service the population within a circumstance of heightened demand. Is this where the difference in ideology is: if there is a cohort who are not on the road at a certain period of time but there is a scenario where there is greater demand and there could be the potential to entice them to involve themselves?

The Hon. A. KOUTSANTONIS: Uber has an internal surge pricing mechanism where they go three times the original price. Our mechanism would be to cap them at that.

Mr Telfer: So no higher?

The Hon. A. KOUTSANTONIS: No higher than that. That is what we are attempting to do. Not that they cannot surge price, but they cannot surge price above what they have advertised would be a surge price. I think we have probably—

The Hon. D.G. Pisoni: We have some clarity.

The Hon. A. KOUTSANTONIS: Well, it is pretty clear.

Mr TELFER: One more from me, Chair. Minister, obviously this talks about prescribed circumstances. You envision the prescribed circumstances would be made in the regulations. You have talked about emergency situations broadly. Can you give any other examples of what you expect are going to be put into regulations? The legislation talks about prescribed circumstances, and it is a little bit—I do not need you to be specific. You can talk reasonably generally, but a few examples of what that might be.

The Hon. A. KOUTSANTONIS: The intention is emergencies. That is the intention.

Mr Telfer: There are a range of them.

The Hon. A. KOUTSANTONIS: Yes, there are a range them, like a terrorist attack in—I do not like ventilating these things in the public—

Mr Telfer: What is the base level, perhaps?

The Hon. A. KOUTSANTONIS: A train derailment.

Mr Telfer: I want to get out of the Adelaide Oval as well, like after a footy match and so—

The Hon. A. KOUTSANTONIS: No, hang on a second. You will still be able to surge price at the end of a game if there is demand for it. Like I said, it is what their prescribed levels are that they have published. We are talking about an extraordinary event that means there is a mass shortage, and they are now just profiteering. The question is: what is that event? We have basically designed it around emergencies. I do not want to go through each one of them because someone is going to hear it and think I will go out and do it, so we have emergencies where the government needs to respond to stop profiteering.

Clause passed.

Clauses 38 to 44 passed.

Clause 45.

The Hon. D.G. PISONI: There are some questions about the levy, minister. At $2, I understand the levy is the most expensive in the country for point-to-point transport. You are nodding, so you are confirming that. There is no sunset clause in place. The Taxi Council have raised concerns of a permanent and continually rising levy, which could push costs beyond people's ability to pay, particularly in a cost-of-living crisis. I will start with: what is the size of the levy currently? How much money is in the levy pot and has that done its job now and compensated the $30,000 payments that were made from 2016?

The Hon. A. KOUTSANTONIS: They are the questions I cannot answer; they are better asked of the Treasurer. But, yes, the other part that I want to mention is that it is also the largest compensation scheme in the country in terms of its generosity. So, yes, the levy is larger—

The Hon. D.G. PISONI: It is not your generosity: it is the passenger's generosity.

The Hon. A. KOUTSANTONIS: That is right, yes. Would you rather the taxpayer pay for it?

The Hon. D.G. PISONI: I am just pointing that out. You were saying you were being generous.

The Hon. A. KOUTSANTONIS: No, I accept that this is being paid for by passenger transport users, which I would have thought the libertarians on my opposite, the Milton Friedman fan club over there would have loved the whole idea of the user-pays scenario rather than it being pushed onto the taxpayer, but I am open to suggestions if members opposite want to do that. We feel that this is the appropriate way to compensate people. I accept it is an impost and burden on people—I accept that—but it will go to good use.

The Hon. D.G. PISONI: Are you able to guarantee that the levy will be used exclusively for the taxi licence buyback scheme, and will there be any cap on levy increases in the future? You mentioned earlier that you were expecting $100 million to be paid out. You must know how many trips there are annually and what the $2 per trip will add up to each year. I would imagine you would be in a position where you would have some idea, without Treasury advice as to whether it would continue on indefinitely, whether there would be a need for increases in line with inflation or some other reason in the future.

The Hon. A. KOUTSANTONIS: The government has no plans to increase the levy in the future, but I can tell the member that the levy raise will go towards the access disability services as well, the lifting fee, the lifting fee being extended into regional areas. It will also go towards the buyback of access plates as well and taxis. That is the intended use of the levy.

Mr TELFER: Is it envisioned that once the purpose of the increase—the doubling $1 to $2—passes, that that will revert back to the $1? It is a bit ambiguous, really, as to what the $1 goes to at the moment as a standalone, but will it get to eight or 10 years or whenever you think the end point is going to get to and revert back to the $1 mark?

The Hon. A. KOUTSANTONIS: It is hard for us to say given the ongoing nature of the disability services that we want to offer in regional South Australia as well. Let me put it to you another way: there is a growing cohort of people in regional communities who need access to specialised transport because of disabilities. The government is finding it very difficult to have public transport services in regional communities, as many regional members would know, that are able to provide the adequate service to key people as part of that community.

The lifting fee and extending that to regional services is something that will be ongoing post the reforms being completed. That needs to be funded. This is a good measure to make sure we can provide some equity to people in regional and remote communities and our disability community. I do not know how long it will take to pay the compensation scheme out, the buyback out, to people, which is why there is no sunset clause, but we have no plans to increase the levy. We are doing what good governments do, which is leaving as many options open for people as possible, including future governments.

What we are attempting to do is to plug a lot of gaps so that those gaps are no longer under any budgetary pressures. You do not want regional services or metropolitan services for disability services to be reliant on budget considerations. This gives them a funding stream, paid for by consumers of point-to-point transport. It is a good thing to do for the good order of the state, and it will help people reconnect with the community. It will give those regional businesses and access cabs a level of cashflow that makes them profitable to offer services in areas where public transport is rare and difficult to get access to, especially if you are infirm or need the services of an access cab. That is why the levy is not sunsetted.

Mr TELFER: I thought the additional aspect of the levy was purely around the buyback scheme over the next eight to 10 years. Are you saying that a component of it is to help subsidise the lifting fee? Is that in the first eight to 10 years? Is it going to be funding both the buyback and the provision of those services, or is it the case that you are envisioning that at the end of that period of time it can be used to fund that service? If it is both concurrently, it extends the period of time where there will be enough funds to be able to pay out the taxi buyback. I am just trying to work out where this balance is and what you are saying.

The Hon. A. KOUTSANTONIS: You might have noticed that we have increased the amount we pay for a lifting fee and that we have extended it to regional communities as well. So there is an amount that is budgeted that we already have that will help to pay for that. Increases will be funded out of the point-to-point levy increase. We want to sustain those. We want these services to grow.

I want there to be more of these services throughout South Australia, because the truth is that we are running bus contracts and I think it is fair to say that both governments—in fact, the last four governments—have not got regional bus contracts anywhere near the service delivery aspect that we need to have to deliver any type of service that is worthwhile. Why is that? It is because they are linked budget processes, and budget processes mean that it is very difficult to get the adequate funding you need to sustain these things.

The contractor model is a good one, and the lifting fee is a good incentive to allow people to get out and do the work, so it needs to be funded. So, yes, all of this has to be bundled together. We have to make decisions as a government about how we budget for all of this. So, yes, the increases to try to make this service work are being funded out of the levy—not all of it but a portion of it. The overwhelming majority of the levy goes towards funding the buyback.

I would just say that if you are going to be a future treasurer, or you are going to be a future infrastructure minister, levies like this are of great value to be able to do some of the things that you want to do in communities where it is not cost-effective for the private sector to do them without a subsidy. So I would ask for some long-term thinking on this.

Mr TELFER: What is the $1 levy currently used for?

The Hon. A. KOUTSANTONIS: It funds public transport services, as it should. We have debts to fund for the $30,000 payout, we have rank concierges and we have security services. It goes towards point-to-point and public transport, as it should.

Mr TELFER: I have a supplementary on this $1 amount because it seems like it is funding a lot of different aspects. The levy is going up to $2. The $1 increase is going to be funding this but also funding the extension of regional disability services, and that is going to be from the new $1 not from the existing $1. The breakup of that component raises whatever the number is, however much you might tell me what it might be a year—in the tens of millions of dollars. What proportion do you envisage will be used to fund the buyback process that you are saying will take eight to 10 years? How much of it as a proportion, as a percentage, do you envisage will be used to fund these other services?

This is the competing interest which you would be very aware of, because there will be taxi licence holders who are waiting for their payout with the increase from this, and they are saying, 'If money from this is used for something else then it is going to be a longer lag time for me to get my payout for the licence that I am waiting for, six, eight, 10 years.'

The Hon. A. KOUTSANTONIS: No, and yes. Special days we have lifting fares that go up to $50. It has gone from $15 to $25, and it has been extended to regional communities. That needs to be funded, so the way you would look at this is that the overwhelming majority of the money, nearly 90 per cent of the money, is being used to try and fund the buyback. How long it will take depends on how much we raise, depending on the various cycles, according to the economy—

The Hon. D.G. Pisoni interjecting:

The Hon. A. KOUTSANTONIS: No, this is designed for those things that I have talked about, the buyback, access cab and lifting fee. They are what we want to fund out of this dollar increase, but not all the lifting fee because some of the lifting fees are already funded. There are increases, so this is a measure to try to maintain these long-term services without them being a burden on the budget.

Mr TELFER: One further additional supplementary. This is new information for me. When was that decision made to isolate the 10 per cent, or whatever that component is, to fund this aspect as opposed to the entirety with the buyback of the taxi licence fee? It is genuinely the first time that I have heard that levy increase component funding that aspect in particular.

The Hon. A. KOUTSANTONIS: I made it public when we announced it in December of last year.

Clause passed.

Schedules 1 and 2 and title passed.

Bill reported without amendment.

Third Reading

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (21:53): I move:

That this bill be now read a third time.

The Hon. D.G. PISONI (Unley) (21:53): I thank the minister for being thorough with his answers, and we have discovered some new areas where the levy, for example, is being spent. I was the shadow transport minister at the time when the levy was first introduced and the purpose of that was to pay for the $30,000 grants that were being given to taxi drivers when rideshare came in. That is why taxi drivers agreed to collecting that levy, because they knew it was an impost on their clients, but we are seeing that it is being used beyond what the original intention was.

We also learnt a little bit more about the minister's intentions when it comes to regulating surge pricing, and I think there is a very similar view about wanting to stop gouging in emergency situations. I am very pleased to hear that it will not be used for market conditions but for emergency situations. I am not sure that the minister has done enough work on how a regulated fee for an emergency situation will in fact have the effect of bringing enough people out who are needed for that emergency situation, so I would be interested to see how that develops. It may very well be that there may need to be a statewide solution, as there is with any emergency.

That is the thing about Australia: when there is an emergency, we have this culture of everyone getting together. Expecting one particular industry or one group of workers within a particular industry to take on an unfair cost of a restriction during an emergency needs to be dealt with very carefully and fairly, and I would be interested to see what the minister can come up with in that situation and of course support the minister in getting an outcome that works and is fair.

This is a significant reform. In hindsight, I do not think you ever would have released perpetual taxi plates in the first place if you had a crystal ball and knew where technology was going. It is a lot like the tariff situation. In Australia, our industries were built behind a wall of tariffs, and it worked at that time, but as those tariff walls came down under the Keating years some industries were compensated and others were not. My industry, the furniture industry, was not. I think in South Australia alone, about 25,000 people lost their jobs over that period.

When I entered the furniture industry, there was a tariff of about 60 per cent on imported furniture and about 80 per cent of furniture that was sold in Australia was made in Australia. The tariff is now 5 per cent. There was no compensation for that change and lots of businesses closed. People who had their businesses supported by mortgages over their homes had to take some pretty drastic steps in order to stay in business or to hold onto their homes at that time. But as the minister said, that tariff acted as a licence, if you like, to be able to manufacture at a certain cost base, and that was changed over a very quick period.

In hindsight, there is no doubt that we are a broader and stronger economy because of that decision on those tariff changes. I am watching with interest the impact it is having in the United States at the moment—the Trump introduction of tariffs on the share market—particularly this week, with all the gains lost that were made this year so far: lost because of the uncertainty that that tariff regime and the motivation for that tariff regime is bringing into the marketplace. It is having a significant effect on the general wealth of those who are investing in their 401 scheme in America, which is like our superannuation scheme here. And, of course, Australian superannuation schemes are being affected by the imposition by Trump of tariffs in Canada, Mexico and China, so we will see where that goes.

Again, these reforms are always difficult. We are very concerned about those 1,000 people who will take a financial hit. The minister is right that not everyone will take a hit, but there will be a number of them that will take a hit. I know, just from my own experience of coming from a migrant family, that it would be a family nightmare, because something that was very simple to do at the time, with the knowledge you had at the time, that you believed would be part of your future and your retirement and something that you could perhaps even hand on to your children, has disappeared through no fault of your own.

You are really a victim of advancement in technology, a victim of circumstance, and it is always difficult for governments to handle. We do wish the industry luck with the changes and we certainly hope that those special conditions that the minister has raised for people who are in difficult situations will be dealt with in a speedy manner.

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (22:00): I want to thank my agency for the hard work they have done, my office for the hard work they have done, my staff for the hard work they have done, especially Nick Antonopoulos, who has done an exceptional job of helping frame these reforms.

It is fair to say that these reforms are something that I have been hoping to do for a long time. Unfortunately, I was not given the mandate to do them in the previous Weatherill government, but the Malinauskas Labor government has allowed me to do these reforms. These reforms are not perfect, but they do go a long way to righting a terrible wrong on a group of people who did very little wrong. I thank the opposition for their support in the House of Assembly, and I hope that continues in the upper house.

I also want to thank Emma from my agency and my chief executive, Jon Whelan, for the exceptional work that they have done. I thank the South Australian Taxi Council for the exceptional work that they have done. It is fair to say that they are not 100 per cent pleased with the reforms. There is an old saying that if you have not pleased everyone you have probably got it right. I do not know. This is going to be a very difficult piece of reform. We have landed a version of it. I think it is a good compromise, a good work-through, and I hope it has a speedy passage through the upper house.

Bill read a third time and passed.