Taxi regulation ‘ill-conceived’, says ESRI

The new era of taxi regulation in Ireland is ill-conceived and doomed to repeat the mistakes of the past, the Economic and Social Research Institute (ESRI) has said.

In a report, published yesterday, the think tank said the current cap on new taxi licences was not justified and would lead to the lengthening queues and longer waiting times for consumers reminiscent of the 1990s.

The ESRI was commissioned by the OECD to assess taxi regulation in Ireland as part of an evaluation of the competitive impacts of government intervention. Its report comes at a time when the dynamics of the taxi industry are undergoing fundamental change on the back of app-based taxi services such as Hailo and Uber.

Entitled Taxi Regulation in Ireland: Will it be Different this Time?, the ESRI's report questions the basis upon which the government reintroduced restrictive regulation of taxis in 2010 after abandoning the policy 10 years previously. At the time it was argued that intervention was necessary to deal with excess supply in the market, which had been aggravated by the fall in demand linked to the recession.

Price discounting

However, the ESRI said the market appeared to have been adjusting well to the excess capacity, with price discounting and a drop in the number of taxis. It also claimed the excess capacity in the market would have been eliminated by 2013-2015 at the earliest and 2015-2017 at the latest. In contrast, the recent prohibition on issuing new taxi licences was not time- limited.

In conclusion, the report's author Paul Gorecki said there was no reason to assume that intervention would be different this time.

“It is almost as if collective amnesia descended on those responsible for making policy in this area. If, as the economy picks up, incomes increase and consumer confidence returns, then the demand for taxis will rise. There is every reason to suppose that passengers, on present policies, can look forward to lengthening queues redolent of the 1990s.”