Right: an unhappy taxi driver / protester kicks out at an assumed Uber car in Spain. Uber is now a multi-national and multi-billion dollar company.
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Reasons why Uber should not be made legal throughout Australia
1. Uber pays very little taxUber, the company which owns the Uber app that commuters use to book a driver and car through takes between 20 and 25 percent of the fares these drivers receive. However, Uber has been accused of aggressively minimising its tax payments to the Australian government.
Uber is a company which is able to operate profitably in Australia in part because of the infrastructure, especially roads, which Australian state and federal governments build and maintain. Their critics claim that the company has an obligation to pay tax on its earnings and its drivers should be ready to collect the GST. The suggestion has even been made that Uber should be paying GST on the operation of its app.
Rather than readily meeting its taxation obligations, Uber's critics claim that the company uses profit-transfer strategies to reduce its taxation commitment in Australia.
In November 2015 Uber informed a Senate corporate tax inquiry that it was 'not yet profitable'. Uber's director of public policy for Australia and New Zealand, Brad Kitschke, explained that a quarter of the company's Australian earnings went to its head company in the Netherlands. This entity then paid Uber Australia a fee for providing service support in this country. It has been suggested that the company has not been keen to make the amount of tax it pays open to public or government scrutiny. Mr Kitschke told the Senate inquiry he did not know how much overall tax the company had paid in Australia. This claim was met with disbelief by some members of the Senate inquiry.
The Australian Taxation Office declared in May 2015 that Uber drivers should be subject to collecting GST on the service they provide. This means that Uber fares will increase by 10% and should have no impact on either the earnings of the Uber drivers or of the Uber Company which supplies the app. However, Uber is in the process of challenging the Taxation Office, claiming that the manner in which the GST has been imposed on Uber drivers is harsher than the way it has been imposed on the providers of other comparable services. Critics of Uber argue that the company is simply trying to maintain the competitiveness of its service at the expense of the Australian federal budget.
It has further been argued that in addition to Uber drivers having to collect the GST due on the service they provide, Uber should also have to pay GST on the service it provides drivers through its app and for which Uber takes 20 to 25 percent of the value of fares paid by commuters.
In an article written for Business Australia on August 3, 2015, Paul Coglan stated, 'Just because a service is run from an app on a mobile phone at the consumer end doesn't automatically provide some kind of free pass on taxation. And just as the government plans to apply GST to content we download through the so-called "Netflix tax" on books, music, and streamed content services from overseas providers, the ATO will surely be lining up other digital platforms...'
2. Uber offers unfair competition to existing taxi and limousine companies
Taxi plate owners all round the world have complained that Uber offers unfair competition. They argue that Uber is able to offer cheaper fares because it does not have the same level of overheads, that is, additional operating expenses, as conventional taxis. This is because when Uber enters a market it typically operates outside the law, without paying the taxes and adhering to other regulatory procedures.
In Australia, state governments control the number of taxi licences available for sale each year and sell the licences to individuals who may then use themselves driving their own taxi or lease them to others.
For example, in New South Wales, the Passenger Transport Act 1990 requires Transport for NSW to determine before 31 March each year the number of annual taxi licences to be released in Sydney. The Act also allows Transport for NSW to determine the maximum taxi fare that customers may be charged for NSW taxi services.
Such regulated entry into the taxi industry has typically meant that the cost of taxi licence plates has been high. In New South Wales, a taxi licence can cost $400,000. The average cost as at December 2015 was $ $375,000, the lowest level since 2008. One of the reasons conventional taxis cannot offer the same low fares as Uber is that the owner of the taxi licence plate is seeking to recoup the cost of these plates.
Taxi plate owners argue that Uber represents unfair competition as the company has been able to enter the market without the same level of initial outlay.
Taxi driver representatives have condemned the New South Wales compensation package as inadequate. ?Canberra Taxi Industry Association chairman, John McKeough?, stated, 'The New South Wales government once sold plates over the counter for the equivalent of $400,000 and now they're saying to owners, "Here, you can have $20,000."
Hundreds of owners have retired on that and now their asset is worth nothing and the government has legalised a foreign company to come in that pays no tax and welcomed it as giving more choice for consumers.'
Taxi drivers are also complaining about the devastating effect Uber is having on driver incomes. The Australian Taxi Drivers' Association Internet site states, 'Governments around Australia are ready to legalise UBER X, and to accept minimal annual fees plus very light rules on registration and insurance to leave you with only rank and hail work, and with instant bookings our work and income will drop even more.'
The site refers to the diminishing share of the customer base taxi drivers now have and the added hours they have to work in order to make an income. 'Uber X will be legal in the ACT in November. We have already lost 25%: we will lose another 25% by Christmas. How many extra hours can you safely drive?'
Similar complaints can be made about the impact Uber has on limousine companies. Again, limousine companies have had to make substantial outlays to purchase their vehicles. Uber uses the vehicles of its drivers, for which the drivers are not compensated, and so can undercut limousine charges and undermine the value of the businesses limousine companies have established.
3. Uber exploits its drivers
There have been complaints made in many countries where Uber operates that the company mistreats its drivers.
In an opinion piece published in The Huffington Post on September 16, 2015, it was noted of Uber drivers working in the United States, 'Through an often-exploited loophole, Uber drivers are considered independent contractors instead of full-time employees. No matter how many hours a week someone works for Uber, they will never be eligible for benefits or job security. Uber drivers are also forced to pay for all their own expenses, from gas to car insurance. These costs would be expected to be fulfilled by Uber itself if drivers were direct employees.'
Michael Aird, the New South Wales secretary of the Transport Workers Union has claimed that within Australia Uber similarly denies its drivers accepted rights and conditions. Mr Aird has stated that Uber drivers were not guaranteed any level of income for their work and were not afforded entitlements or protections required under Australian law.
In a news report published in The Canberra Times on July 13, 2015, Mr Aird was quoted claiming, 'The fact a person's work is ad hoc or contingent does not mean they are not an employee. It simply means that they are part of the trend toward increasingly insecure work.'
The ACT secretary of the Transport Workers Union, Alex White, has also condemned the employment practices adopted by Uber, claiming they exploit drivers.
Mr White has stated, 'Far from being "innovative", companies like Uber are using a new technology to revive outdated and adverse employment relationships from the 19th century. Although Uber refers to drivers as "independent contractors", Uber drivers have few or none of the characteristics of a genuine independent contractor.
A more appropriate term to refer to Uber drivers' and other "on demand" workers' form of employment is "on-hire employment services" where workers are covered by their employing company and work in a host organisation or on specific tasks.'
Uber drivers have no guaranteed hours of work, no sickness benefits and no holiday pay. Unlike contract workers, they cannot negotiate the rate they charge the company that contracts for their services.
In December, 2015, drivers across Brisbane and the Gold Coast who operate as contractors for Uber complained that they were making less than $10 an hour after deducting GST, personal income tax and car and phone expenses from their fares in addition to the 20 per cent taken by Uber. Commission-only workers are entitled to receive the minimum wage, which is $17.29 an hour for adults; however, Uber drivers are currently not classified as commission-only workers.
One of the Brisbane drivers lodging the complaint stated, 'It's just a trick, a legal loophole, to say the drivers are contractors and therefore not subject to any of the standard minimum wages and conditions that any employee in Australia gets.'
Another Brisbane driver stated, 'The current business model, which is clearly uneconomical, is a pyramid scheme. They sign you in on a bonus incentive, they promise that you can earn a certain amount of hours and then they flood the market with drivers.'
4. Uber offers an expensive, unprotected service to commuters
It has been claimed that Uber's pricing policy leaves commuters open to exploitation and unexpected price hikes. It has further been claimed that there is inadequate redress against Uber should the commuter be injured or in any other way harmed.
Uber employs Critics claim that Uber's 'surge' pricing policy can see customers having to pay extraordinarily high rates. There were a large number of complaints from those using Uber on New Year's Eve in Sydney.
Skye Shanahan of Quakers Hill complained in an interview reported in The Sydney Morning Herald on January 1, 2016, that she ordered an Uber ride from the North Sydney foreshore to Blacktown - a fare that would typically cost less than $100. She was required to pay $720, which she claimed was more than a week's rent, after a surcharge multiple of eight was applied to her fare.
Another passenger complained that taking a trip from Manly to Pyrmont came at a charge of about $370. The fare would typically cost about $50.
Some customers have complained that the surge prices charged were higher than initially advertised.
It has also been claimed that Uber has applied its surge pricing policy during natural and man-made disasters, a practice which many users see as unethical. Uber has been criticised for quadrupling its rate to a minimum of $100 during the Sydney siege hostage situation. It has also been noted that prices doubled during Hurricane Sandy in 2012 in the United States. This behaviour has been condemned as unethical because it is exploiting commuters not just in times of peak use, but in the face of life-endangering hazards. In an opinion piece published in The New York Times on April 22, 2014, Eric T Schneiderman stated, 'The ability to pay truly exorbitant prices shouldn't determine someone's ability to get critical goods and services when they're in short supply in an emergency.'
It has also been claimed that when Uber customers use the company's app they automatically accept a waiver which excuses the company from liability in the event of any harm or misadventure the customer may face.
The fine print of Uber's terms and conditions clearly says that passengers accept a risk by using the service. These terms and conditions include, 'You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable and that you use the application and the service at your own risk.'
In an article published on C/Net on October 8, 2014, it was stated, 'Several incidents have occurred during the last year that have called into question the safety of the services. The most severe incident was the death of 6-year-old Sophia Liu, who was struck and killed by an Uber driver on New Year's Eve in San Francisco. There have also been more than a dozen allegations of sexual assault and groping; kidnapping; and physical assault,.' In all these cases Uber accepted no responsibility. It argues it facilitates the transaction between driver and customer; it is not responsible for it.
5. Uber drivers are not adequately trained and monitored and their vehicles are not regularly checked
Uber critics argue that it is too easy to become an Uber driver and that those who drive for Uber may not be sufficiently trained or skilled to offer commuters a safe service. Their vehicles may not be adequate and they may not be either physically or psychologically fit for the job.
Grace Jennings Edquist, in an article published in Mamamia on December 9, 2015, noted regarding UberX, that it was 'just a series of regular people who've passed a few basic screening procedures like police and background checks, have a valid driver's license with clean driving record and updated insurance policies. But that's about it.'
A number of representatives of the taxi industry have highlighted the difference between the safeguards their industry offers and those given by Uber.
The chief executive office Australian Taxi Industry Association, Blair Davies, has stated that the main difference between taxis and UberX is that 'ride sharing is basically not licensed and the cars are private, up to nine years old. On the other hand taxis must be inspected by mechanics every four to six months.' Mr Davies added that there is 'no real roadworthy test' for UberX cars, and that UberX cars can only be tracked through the driver's phone, which can be shut off.
Mr Davies contrasted this with the greater safeguards that the taxi industry offers. Mr Davies stated, 'Taxis have two or three GPS devices hardwired into their systems as well as a security camera that cannot be disabled by the driver...
Taxi systems are known and traceable to the company and a medical test must also be performed on divers. Doctors look at the physical and mental fitness of the driver and check to see that they are fit to drive a commercial vehicle.'
The Taxi Council of Queensland chief executive, Benjamin Wash has also warned would-be Uber passengers of alleged risks associated with the service. Mr Wash stated, 'Cashed-up companies like Uber use warm and fuzzy words but in reality they are about one thing - making money by exploiting...drivers, exposing the public to risks and lying about their operations.'