Denley: Ottawa must now deregulate taxi industry to compete with Uber

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Mayor Mark Sutcliffe and Ottawa city councillors have an opportunity to fix a mistake first made by their predecessors more than 50 years ago and perpetuated by every council since. Pity it took an eight-year legal process to reach this point.

Last week, Ontario Superior Court Justice Marc Smith ruled that the city was negligent in its failure to enforce Ottawa’s taxi bylaw when Uber began operating here in 2014, an inaction that damaged the city’s taxi industry. It was an obvious and correct conclusion.

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Hanif Patni, vice-chair of the Coventry Connections taxi company, says that taxis now account for only 25 per cent of the overall passenger-pickup business. The number of taxis is down from 2,000 before Uber arrived to just 800. City-issued taxi plates, which could once be sold for $300,000, now fetch only about $10,000.

That’s why drivers and plate owners went to court in 2016 seeking $215 million in damages. Justice Smith did not immediately assess damages in the case, giving the city and the taxi industry time to work out a mutually satisfactory settlement.

Part of that deal should be the end of the micro-managed supply-management system that has governed the operation of Ottawa taxis since 1971. A person who wants to drive a cab in Ottawa has to either buy a plate from someone who already has one or rent it from that person. The city allows only a trickle of new plates, the number determined by its supposed ability to figure out just how many taxis Ottawa needs. The oft-repeated justification was that if there were too many plates, not all the drivers would be able to make an adequate income.

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The city’s taxi bylaw has rules for every aspect of taxi operation: the age of cars, the size of cars and the fares charged. All taxis must have cameras, all drivers must be neatly dressed, no personal belongings in the car. The list goes on.

The taxi industry accepted the rules in exchange for the protection it got from competition. Then Uber came to town and said that the city’s taxi bylaw didn’t apply to it, claiming it was really a tech company, not a cab company. It merely connected drivers and riders by the use of an app.

After Uber declared its intention to wipe its feet on the city taxi bylaw, council had two defensible choices. It could deregulate the taxi industry and let it compete fairly with Uber or attempt to make Uber play by the city’s rules, just like the taxi industry had for decades.

Instead, city politicians chose to knuckle under to Uber, letting it operate as it wished while continuing to over-regulate the taxi industry.

Justice Smith determined that the city should have defended its bylaws. The smarter course, then and now, is to deregulate the industry and let traditional taxis and ride-share companies compete on an even footing.

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It’s time for this council to finally do what its predecessors failed to do and treat the taxi industry like any other business. The goal should be to establish the absolute minimum of regulations. Those would include a valid driver’s licence, insurance, acceptable driving record, criminal record check, and a vehicle safety check. That’s what the city asks of Uber operators now and apparently it’s acceptable to customers, since Uber dominates the market.

Taxi plate owners will have to be compensated for the collapse of the city’s supply-management system. When they spent big money on plates, it was reasonable to think the city would enforce its own rules.

The end goal should be a settlement that leaves the taxi industry able to compete with Uber. It’s simply irrational to regulate every aspect of the taxi industry, but let Uber operate like a normal business. It’s time to fix that mistake, not by trying to regulate Uber, but by returning real competition to the market.

Randall Denley is an Ottawa journalist and author. Contact him at randalldenley1@gmail.com

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