The Politics    Wednesday, May 20, 2015

After the disruption

By Michael Lucy

After the disruption
What will happen to the likes of Uber when governments catch up?

The Tax Office has decided that UberX drivers must register to collect GST, on the grounds that they are providing “taxi travel”. UberX is a “ride-sharing” service, in which private individuals use their own cars to drive passengers around, for a fee. Until now drivers have not had to register for GST if their annual turnover is less than $75,000.

Travel prices are expected to rise. The Australian manager of Uber, the company that runs UberX, has complained that the change will “impact the over 9,000 ordinary Australians who drive on the UberX platform”. Note the language there: Uber drivers are not employees, simply ordinary Australians who choose to use the platform to share their cars with other ordinary Australians.

It’s a case worth watching. This is perhaps the first realistic Australian attempt to regulate “sharing economy” companies like Uber and AirBnB, which set out to “disrupt” an existing industry. One key advantage of such businesses is that they don’t own assets (cars or accommodation) themselves – why buy the cow when you can simply put farmers in touch with milk-drinkers, and skim off a little cream for yourself along the way?

Uber is illegal in most Australian states, which require taxi-like services to be licensed, but that doesn’t seem to be stopping anyone. Enforcement is sporadic, and the company has in many cases paid fines received by drivers. The company, valued at around $50 billion, can well afford to write such fines off as the cost of setting up business. The company has also been criticised over poor screening of drivers, after sexual assaults of passengers by drivers.

For a passenger, Uber has two advantages over traditional taxis – a slick app that simplifies booking and payment, and lower prices. These have led it to massive popularity since its founding in America in 2009. It also claims to pay drivers more than traditional taxi companies (though this is uncertain) – with the catch the drivers themselves must in turn cover costs like insurance, fuel, car registration and so on.

Uber’s stratospheric success has largely been achieved by skirting or ignoring existing regulations – by the time governments had caught up, the company was big enough to cut deals, rather than simply accept existing laws. The Victorian government, for example, is close to an accreditation arrangement for UberX drivers (in a deal brokered by former Obama campaign manager David Plouffe).

The ATO’s move is a step closer to re-establishing “business as usual” in the wake of technological disruption – it remains to be seen how many of Uber’s advantages remain once it has been brought within the same regulatory fold as existing taxi services.


The government of the Philippines has offered to accept the Rohingya refugees now adrift in the Andaman Sea. Now they just need to get to the Philippines.

Shadow treasurer Chris Bowen has announced that Labor will support several major budget proposals in the Senate.

Deputy PM and infrastructure minister Warren Truss is attempting to undo requirements that foreign ships in Australian waters give staff Australian wages and conditions. The MUA is not pleased.

The idea of same-sex marriage may be close to having a parliamentary majority.

Victoria’s IBAC has heard a wide range of evidence detailing corruption and unethical practices in the state’s education department.

A victim of paedophile priest Gerald Risdale has told the royal commission into institutional responses to child sexual abuse Cardinal George Pell attempted to bribe him to keep quiet.

A good bit on the history of the political interview, after Malcolm Turnbull’s helpful suggestion that Leigh Sales and Emma Alberici could be “less aggressive”.

Listen to The Politics Podcast, with Rachel Withers

Michael Lucy

Michael Lucy is a writer based in Melbourne.

@MmichaelLlucy

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