Uber now needs to move beyond disruption and start working with regulators

liza mcdonaldWhile Uber is disrupting the private car industry, there’s a difference between disruptive and illegal, says Liza McDonald.

Just who are the winners and losers in Australia’s fast growing private hire car market is yet to be revealed following yesterday’s revelation the NSW government had suspended 40 individuals who are driving under the UberX banner.

Uber has disrupted Australia’s private hire car market. But failing to work collaboratively with regulators doesn’t make a brand only disruptive. It makes it a little short sighted.

Some Australians have fallen in love with the brand. However, regardless of how popular a brand is, if it doesn’t operate within a regulated environment, it passes potential longer term danger onto its users with a risk of reduced quality of service should it be acquired by another investor or smaller ‘franchise’ type investor in the future who do not uphold the same standards as incumbents.

Regulation accounts for market failure and governments shouldn’t pick favourites. Regulation needs to be structured to ensure best practice for the safety of all people and not protect brands or the latest fad.

The word ‘regulation’ doesn’t quite have the same ring as ‘disruptive’, does it? But in Uber’s case, the conversation must move from disruption – to how they can work collaboratively with government to protect its customers now and into the future. It is inherent on government to protect its people – however it also has a responsibility to get out of the way of innovation and changing environments.

As for taxis, the centralisation of control in the taxi industry is to some degree a result of successive governments inaction to reform – they didn’t protect the taxi industry from itself.

Decades of Governments ‘tinkering around the edges’ and overly prescriptive regulation created an environment where innovation in the taxi industry didn’t thrive. Healthy competition benefits both businesses and consumers, with different businesses adapting and catering for different markets. The taxi industry has been in state of transition since the Fels reforms were introduced in 2013 and Uber’s entry into the market has only led to speed the process up.

uber-logo-234x40If there are calls for the taxi industry to compete then it’s reasonable that prescriptive regulation on them also be removed. But that’s a whole other conversation.

Government should resist the temptation to a ‘quick fix’ because of sophisticated marketing campaigns and should not create new legislation for any one particular business model. If regulation is not amended thoughtfully and in consultation, then what happens with the next new thing that could be around the corner which hasn’t been even though of yet and is completely different to any current business model?

Consumer sentiment is mixed and many are quick to blame government for shunting new entrants in the private hire car market. However it’s worth noting the role the Government plays in supporting innovation – within guidelines that supports its constituency. While people will evangelise niche brands, there will always be a wider group of consumers who rely on regulated services such as people with a disability.

Private vehicles being used for commercial means is good for the share economy and very good for niche markets – however there will be sectors of the community that, for the foreseeable future, rely solely on taxis for their independence.

The biggest innovators in the world and the smallest businesses remain compliant with regulations – why should Uber be completely exempt?

Competition in the private car industry is a good thing. The message the government is sending Uber is, just like any competitive brand, they must be collaborative and abide by stipulations that protect the safety of its users.

  • Liza McDonald is the principal – strategy & community at Bastion S+GO

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