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    « Trumpism hits the law of contract | Main | The wide and deep "missing middle" »
    Tuesday
    Jun192018

    Fresh disruption

    Uber disruption ... Unfairness of the Fairness Fund ... Ombudsman reports on administration of the taxi compensation scheme ... Rank problems revealed ... Economic difficulties facing owners and drivers ... Peach Melba's blog 

    THE commercial passenger vehicle service levy will impose $1 on every taxi and hire car trip originating in Victoria. The levy starts on July 1, 2018.

    Businesses can choose to absorb the levy or pass on the cost to customers by increasing fares. The levy will be used to assist in implementing a suite of changes to bring taxis and rideshare drivers (such as Uber drivers) under the same rules.

    The Commercial Passenger Vehicle Industry Bill passed in August 2017 removed the requirement for the payment of license fees for taxis, abolished restricted hire vehicle licenses, and allowed for the regulation of rideshare providers in Victoria.

    Taxi licenses were valuable because they were limited in number, with only around 3,550 available in Victoria. Revoking existing taxi licenses caused their value to plummet. Taxi owners and drivers were deeply concerned because the amount they paid for the licenses was more than the sum the government was offering to compensate for the abolished licenses ($100,000 for the first taxi license and $50,000 for the second) under its Transition Assistance Payments program. 

    For taxi licence holders facing significant financial hardship under the proposed reforms, the government established a Fairness Fund. This fund includes a $50 million 'hardship fund' and from September 2016, taxi and hire car license holders were able to apply for assistance through the hardship fund.

    To be eligible, license holders had to own an interest in a license between 1 January 2016 and 23 August 2016, and demonstrate either a lack of current income or loss of future income stream impacting household spending capacity, significant difficulty meeting ongoing debt obligations related to the license, or a lack of available funds to meet financial commitments.

    Alternatively, there would be consideration for license holders who could show "extenuating circumstances" resulting in financial hardship. 

    On June 14, the Victorian Ombudsman published her report on the administration of the Fairness Fund.

    The Ombudsman found that the government's insufficient resourcing of the scheme, poor communication with claimants and delay in processing of applications, were unreasonable. The report notes that the Department of Economic Development, Jobs, Transport and Resources, which administered the fund, anticipated 150 applications. Instead it received 1,247. Letters sent to claimants were generic templates. The call centre was so limited that it was difficult to see why it was set up at all. 

    Only 14 percent of the applications had been fully audited by the time the application period had been closed for a month-and-a-half. The first payments were made about three months after the application period closed.

    Given that claimants were applying for assistance from a hardship fund because they were in straitened financial circumstances due to the government's taxi licence reforms, delay in providing financial relief exacerbated the economic difficulties of applicants.

    The report reveals that one license holder waited seven months after submitting an application to receive a decision that she was eligible for financial assistance. Another individual was told 10 months after he submitted his application that he was ineligible; for most of that time, he did not receive any response to his queries from the Fairness Fund Administrator. 

    The department advised the Ombudsman that it requested further information from over 800 applications (more than half of the total 1,247 applications). This further delayed the processing of applications. The department suggested that these requests for further information were made because of "inaccurate, incomplete or poor-quality applications" such as not providing sufficient evidence to substantiate claims.

    WEstjustice, the community legal centre assisting applicants, informed the Ombudsman that the majority of individuals it assisted, by providing claimants with a lawyer, financial counsellor and social worker, received letters requesting further information or clarification.

    Since the grants are discretionary and the call centre provided only limited information, it is rather understandable that applications did not always contain the information that the department sought. The department also suggested that applicants deliberately did not fill in some parts of the application form because they were opposed to government policy. 

    The department's response to the Ombudsman's draft report was to agree that "its communications were not as agile as possible" but that the Fairness Fund was not the primary relief fund for license holders, as most financial assistance was provided through Transition Assistance Payments in October 2017 (although license holders told the media that this did not necessarily compensate for the full value of a license). 

    The government does not have any legal obligation to compensate taxi owners or drivers for losses flowing from the de-valuation of taxi licenses. However the Ombudsman's report shows that confusion around eligibility criteria and delay in communicating decisions clearly added to the pain of those who saw their retirement plans go up in fumes. 

    From: Peach Melba aka Elif Sekercioglu

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