The Sharing Economy Business Educators Australasia National Conference 2016 Chris Lock, Director, Economic Policy Department of Treasury and Finance 29 September 2016
The Sharing Economy
Business Educators Australasia National Conference 2016
Chris Lock, Director, Economic Policy
Department of Treasury and Finance
29 September 2016
• Sufficient potential sellers for buyers • Sufficient potential buyers for sellers • Access to the market or exchange is low cost • Confidence:
• Buyers have sufficient confidence in the quality of the good or service for sale.
• Buyers are confident they will receive the goods or services
• Sellers are confident they will receive the money and face no unexpected supply costs or risks
Key features of markets
4
In many markets there are risks to buyers…
..
5
Yet there are risks to sellers too…..
Landlords….. Taxi drivers….
6
Small markets are generally inferior…
7
Small markets are generally inferior… … to larger markets
What is the “Sharing Economy”?
Not strictly defined, but…
• it’s a particular type of market involving giving customers access to expensive items that may be used, at times, by the seller, in return for a fee: • through an internet business platform • often not a primary income source for the seller
Airbnb, Stayz
• Host not necessarily present
• Expensive underutilised asset
• Possibly servicing unmet demand
Uber
• Significant asset being put to greater use
• Includes dedicated labour
• User avoids ownership and maintenance costs
Ebay, AirTasker, Luxe & other
“peer to peer” businesses
• Internet versions of normal “buy & sell” markets for goods and services
Eatwith
• Requires premises to be provided by the host
• Provision of time, labour, food and drink
• Usually requires a ‘critical mass’ for any event to be viable
Airbnb
Public passenger transport market
• Buses, coaches, trains and trams
• Taxis
• Luxury hire cars
• Other hire car services
• Taxis in Tasmania Hobart • 24 taxi areas (a taxi can only operate in its own area),
• 429 perpetual licences 228
• 107 owner operator licences 89
• 83 wheelchair accessible taxis 50
Serious in-roads…
Uber • Uber provides point-to-point transport that is
cashless
• Passengers get an estimate of the fare in advance, and are charged via credit card
• In Melbourne (as of 30 March 2016), standard price is:
• a minimum $6 fare
• base fare is $2
• plus $0.32/min AND $1/km
• Uber may use “surge pricing” in times of high demand
• Uber has operated in Australia, unlawfully in some cases - but not Tasmania
…and the role of Governments?
• Is competition ‘fair’?
• ..or should some traditional businesses end up like the dinosaurs?
• Is compensation the answer?
• Do governments even have to regulate ?
Can Governments take this approach?
Short stay accommodation: Policy responses
• Tasmania (proposed): regulation for more than 42 days’ use per year
• Victoria: permitted – planned legislation to eliminate bad behaviour in short stays
• NSW: currently inconsistent regulation across councils – Parliamentary inquiry underway
• SA: permitted if own home is leased
• Q: permitted – new council powers to tackle behavioural issues
• WA: inconsistent regulation -fines up to $200 000 in some municipalities
• ACT: could be breaching Crown lease conditions or building laws
• NT: appears to be permitted
Ride sourcing: Policy responses • Tasmania:
• Ride sourcing will be regulated the same as luxury hire cars • No compensation to taxi owners but no new taxi licences for 3 years • Passenger transport framework under review
• Victoria (proposed): • Complete revamp of commercial passenger industry with driver accreditation (to
include ride sourcing businesses) but all taxi and hire car licences to be abolished • Compensation to existing taxi and hire car licence holders ($ 378 million) • Also a $50 million “Fairness Fund’ for those facing hardship • Funded by a $2 per trip levy for all commercial passenger vehicles
• NSW: • Ride sourcing allowed to operate, alongside licensed taxis with more flexibility in
taxi fares • No new taxi licences in Sydney for 4 years • Compensation to taxi licence holders ($250 million) • Funded by a $1 per trip levy for all commercial passenger vehicles
Ride sourcing: Policy responses (cont…) • Queensland:
• Ride sourcing operating lawfully from early September 2016 • Compensation to taxi owners and some fees and charges waived. • Also a $26.7 million “Hardship Fund’ • No new taxi licences likely before 2018
• South Australia • Ride sourcing operating lawfully from July 2016 • Compensation to taxi owners funded by a $1 levy per ride • General taxi fare increase, and increased taxi fares for Friday and Saturday night
(up 20%)
• Western Australia • Legislation in Parliament to make ride sourcing lawful • Compensation to taxi owners and $6 million hardship fund • the cap on owned taxi plates (5) will be lifted • $800 per year costs for ride sourcing drivers
Ride sourcing: Policy responses (cont…)
• ACT • The first jurisdiction to allow ride sourcing to operating lawfully (October 2015)
• No compensation to taxi owners: taxi licence fees down from $20 000 to $5 000
• Lower fees for hire cars - from $4,600 to $100 a year
• Some regulatory requirements on taxis removed
• Northern Territory • Ride sourcing is not lawful now but may be permitted under the new government
Concluding thoughts…
• Technology can bring about major changes in markets – and very quickly
• The benefits encouraged operators to act unlawfully...
• …which accelerated a response from governments including some major changes in the regulation of the industry
• The more heavily regulated an industry, the greater the prospects for compensation..
• …funded in large part (for a time) by consumers
Department of Treasury and Finance
Any questions?