Speech in the ACT Legislative Assembly
28 October 2015
(Note: the full debate can be found in Hansard)
MR COE (Ginninderra) (4.04): I move:
That this Assembly calls on the ACT Government to respond to the devaluation of perpetual taxi plates brought about by the Government’s ride share policy.
My motion today is simple but necessary. The Canberra Liberals firmly believe that the taxi industry plays a vital role in the provision of transport in the ACT. We do not say that the industry is perfect, nor do we say that the regulatory regime is perfect. However there must be some acknowledgement that there are thousands of Canberrans that depend on the industry for their livelihood and any policy changes will have serious financial and personal ramifications. In saying that, I welcome to the Assembly today a representative of the industry and also the owner of perpetual plates. I also welcome those who are watching via the web.
The opposition are not opposed to ride share services. We believe that there is a place for such services. However there has to be a level playing field. Unfortunately the ACT government has done the very opposite. It has created a situation whereby many, if not all, taxi plate owners will be in a worse position as a result of these changes.
The changes brought about are not gradual. They are sudden. With the stroke of a pen, Mr Barr’s signature on a regulation, we will see return on investment for perpetual plates plummet. Whereas presently the return on investment is $20,000 per year, the current annual lease rate, the amount will fall to $10,000 and a year later to $5,000, assuming that they are taken up. Therefore the return on investment will halve and then halve again. If the price to earnings ratio remains the same we can assume that the value of a perpetual plate will quarter; 75 per cent will be wiped out. Further to this, with the uncertainty in the sector, even at a quarter of the price plates may sell for even less if they sell at all.
As the government’s own discussion paper shows, the value of perpetual plates traded over the last 10 years has been well over $200,000. In fact, in 2014, just last year, eight plates were sold at an average cost of $244,900. That means if the value of these plates has gone down by 75 per cent, approximately $1.5 million has been stripped from families in last year’s purchases alone. Like many investments, return consists of two components: an annual return which is the equivalent to a divided and a capital gain or a capital loss in the value of the plates over time. Both have taken and will take a hit.
Taxi owners will receive less income and therefore the value of the plate will go down. Between 2004 and 2014, 146 plates were sold. They were sold as a commodity for approximately $250,000. It is easy to say this in a speech in the Assembly or in the Chief Minister’s office. It is easy to think these are just arbitrary figures. However my reference of $250,000 now being worth perhaps just $60,000 means that there are 217 owners of plates, hundreds of families, who have had their family wealth slashed. For many this is their life savings being slashed by this government’s decision. For many this is their retirement nest egg. For many it was the estate they were hoping to leave to their children. Is this fair? Is this what the Labor Party in Canberra stands for? I am amazed that in a party full of people that claim to be about justice, that claim to be about social justice, not one of them has the guts to raise this as an issue. Not one of them has the guts to say, “This is not right”.
Let me describe a comparable example. Imagine if the government sold a block of land for $250,000. Imagine a family puts all their savings into the purchase but then the next day the government declares that land is now free; that land is being given away. What would happen to the value of that block of land? Imagine trying to sell that block of land while all the other blocks are being given away. The truth is, if you could sell it at all it would be worth a fraction of the price that was paid. It would be worth a fraction of that $250,000 for the block. In effect, the savings of that family would be eradicated.
This is the situation that 217 perpetual plate owners face right now. I know this is a complex area of government policy but that is no excuse for not recognising the damage that this policy is going to have on many Canberrans. I know that there is not necessarily a simple solution as there are some plates that were awarded to people at no cost but there were others—many, many others—that paid a great deal for them. There may not be a one-size-fits-all scheme but developing a scheme which recognises the lost value in perpetual plates should not be beyond this government. There are plenty of competent people in the Treasury, in the Chief Minister’s department who could develop options.
I am the first to admit that any industry that is heavily dependent upon government regulation is at risk of changes in those regulations. However there is also an expectation—an expectation that is rapidly deteriorating—that this government will be fair. I do not think there is anyone that says there are not significant reforms that can and should be made in the taxi industry. However, like any other change in government policy it has to be done properly.
Mr Barr accuses the opposition of being a sovereign risk for the light rail contract, despite the fact that we would be exercising a termination clause in the possible contract and we are telegraphing it years in advance. Any consortia that go into the light rail contract go in with their eyes wide open about what the Liberal Party’s intentions are should we be endorsed in October next year. I do not think it is sovereign risk. However, real sovereign risk occurs when governments change their policy and devalue decisions based on former policy.
The government’s decision to throw out the regulatory system on which people trusted and made investments is sovereign risk. What the government is doing is saying that our rules and regulations in the ACT are worthless. The government is saying that you cannot and should not make investments in Canberra based on our regulatory regime. For a government that claims to be in favour of growing our economy, this escalation of risk is damaging to confidence in Canberra and damaging in confidence for people who seek to invest in Canberra.
This government seems to have an obsession with all things interstate. They seem to have a bias against Canberra and against the Canberrans who have taken risks, built up businesses, created wealth and opportunities and created employment. We owe it to Canberrans to be fair. As I have said before, I am not against ride share businesses; I simply think there has to be appropriate recognition of the devaluation brought about by this government’s change.
In fact, I understand that a policy option for the recognition of the evaluation of perpetual plates was put to the government by the department. I would appreciate it if the Chief Minister in his speech would confirm this is the case and, if so, what was the proposal or what were the options put to the Chief Minister and put to cabinet by his directorate? What options were put forward for his considerations? What were the deliberations and why did they say no?
The government’s discussion paper very clearly says in questions to consider, “How can we have a model that allows innovation but also recognises historic regulatory costs borne by current participants?” This has been a question that has been on the table for many months, since the government first mooted this idea: “How can we have a model that allows innovation but also recognises historic regulatory costs borne by current participants?” That question has been left unanswered. That question has been ignored. That was a question for which 217 owners of perpetual plates had high hopes, and this government has let them down. This is a government that claims to be about social justice. This is a government that claims to be for Canberra. In this move it is doing the very opposite.
Mr Barr may have ambitions to be perceived by Canberrans as modern. He may have a desire to differentiate himself from Ms Gallagher or Mr Stanhope. However he should not be doing this at the expense of hundreds of small businesses. Unfortunately this is a trend that is becoming more and more apparent. The truth is, the best reforms are the ones that are well implemented and take the community with you. This is not so in this circumstance.
Mr Barr and the government must recognise the impact of their policy on taxi owners, operators and drivers. He may claim that he is helping taxis by reducing the annual fee. However this decision is probably the primary contributor towards devaluation of the plate value. Mr Barr and those opposite should not be stubborn; they should not just sit back as life savings are wiped out. We call on the government to do the right thing, to support Canberra family businesses and to develop a package of support that recognises historic investments.