Price Notification System
Draft design and requirements
Table of Contents
1
Background .................................................................................................................................. 2
2
Design of the Price Notification System ....................................................................................... 2
2.1 Taxis cannot charge more than the fares notified to and published by the TSC ......................... 2
2.2 Operators or NSPs on their behalf must submit notice of maximum fares to the TSC ................ 3
2.3 Subsequent notices are permitted without limitation on frequency .............................................. 3
2.4 The TSC is to publish on its Website within 5 days of receipt ..................................................... 3
2.5 The TSC must notify the operators once the notice is published ................................................ 4
2.6 The notice must include the date at which the maximum fares come into effect......................... 4
2.7 Taximeters must be calibrated with the maximum fares notified to the TSC ............................... 4
2.8 Maximum fares must be notified to passengers prior to them travelling in a taxi ........................ 5
2.9 Penalties are to apply if an operator does not submit a notice of maximum fares and other
prescribed information to the TSC. ....................................................................................................... 5
2.10 MPTP fares and subsidies ........................................................................................................... 5
2.11 ESC price monitoring requirements ............................................................................................. 6
3
Summary of specific requirements on operators and other industry participants ........................ 6
4
Education and publicity ................................................................................................................ 7
5
Comments on the draft design ..................................................................................................... 7
6
Due date for comments on the draft design ................................................................................. 7
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1 Background
The Final Report of the Taxi Industry Inquiry (TII) recommended that in regional and country zones,
where pre-booked services predominate, the Taxi Services Commission should be empowered to
replace formal maximum fare regulation with a price notification and publication system, following the
adoption of the licensing reforms proposed by the TII. This recommendation was supported by the
Government in its report in response to the TII final recommendations. In that report the Government
noted:
Price notification is a system where ATOs are required to notify the TSC and publicly display
their taxi fares. Under price notification, operators will set their own fares, but must issue public
notices when fares are set and changed. 1
The Government also supported the TII Final Report recommendation that after the first three years of
the reform program, the Taxi Services Commission (TSC) should assess the extent and effectiveness
of fare competition to determine if it is also suitable to move from maximum to notified and monitored
fares in the metropolitan and urban zones.
It is expected that further detail of the design of the price notification system will be contained in
legislative amendments and associated new regulations.
This document details the TSC’s draft design and requirements for the price notification system for
industry and other stakeholder comment.
2 Design of the Price Notification System
In line with the Government’s policy for the price notification system, it will apply initially only to
operators in taxi zones designated as Regional and Country. The proposed draft design as outlined
below has been framed with regard to Regional and Country taxi market conditions. It has therefore
been designed not to be too onerous, and does not include requirements to provide cost and profits
information as applies in some other price notification regimes.
2.1 Taxis cannot charge more than the fares notified to and published
by the TSC
This proposed provision means that once fares are notified and published by the TSC with an
effective date, these fares are the maximum fares that can be charged to passengers from the
effective date until a new notification and effective date is provided to the TSC. Operators will be able
to charge passengers lower fares than those notified.
One issue is whether a taxi operator is required to charge a passenger the lowest fare of a possible
menu of fares notified. For example if a metered fare based on a flagfall and per km fare happens to
be less than a flat rate fare between two locations. This is not expected to be a requirement of the
price notification system unless a “whichever the lowest” feature forms part of the fare structure
committed to and notified to the TSC by the operator. If no such feature is provided, the only
obligation of the operator would be make sure the passenger is made aware of the fare to apply prior
to travel (see section 2.8 below) and not to charge more than this fare.
1
Government Response, p. 33, footnote 1.
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2.2 Operators or NSPs on their behalf must submit notice of maximum
fares to the TSC
The ability of network service providers (NSPs) to notify fares on behalf of operators would allow for
the minimisation of regulatory costs where this can be done on behalf of several operators or where
operators do not have the technical or administrative proficiency to be able to do so.
In the absence of exceptions triggered by State Acts or regulations, any process of notification by the
NSPs on behalf of operators would need to be approached cautiously by the parties to avoid a
possible breach of the cartel provisions of the Australian Competition and Consumer Act 2010. A
contract, understanding or arrangement to determine fares jointly by operators or by operators and
NSPs (or other businesses) may be illegal unless authorisation has been obtained from the ACCC.
Further information about cooperation that could constitute cartel conduct, including fixing of prices, is
available on the ACCC website at the following link:
http://www.accc.gov.au/business/anti-competitive-behaviour/cartels
The TSC will be able to provide further guidance to industry on the applicability or otherwise of the
cartel provisions of the Competition and Consumer Act 2010 prior to the price notification system
taking effect.
The ability of a NSP to notify on behalf of an operator could mean that the threshold on the
administrative form of the price notification can be raised higher than otherwise. Reflecting this, one
possibility is a requirement that the notification be provided to the TSC in electronic form.
It is proposed that the obligation for notification and for related breaches would still remain with the
operator where an operator has arranged for a NSP to undertake notification on its behalf.
2.3 Subsequent notices are permitted without limitation on frequency
It is not proposed that the price notification system impose a limit on the number of times an operator
can change its notified prices. Rather, the number of changes will be driven by the market conditions
faced by the operator, including the costs of notification and the advertising of fares.
However, one practical limit is that the TSC is proposing up to five days (see below) to publish a
change in fares which suggests that it would not be possible for an operator to change fares within a
five day period without breaching the notification requirements. The need to change meters to register
the fares (which can take a couple of weeks to arrange) and the potential to aggrieve customers from
too frequent changes is expected to mean that the 5 day restriction due to TSC processes is not likely
to be the main constraint on operators’ fare changes..
2.4 The TSC is to publish on its Website within 5 days of receipt
It is proposed that the TSC publish the fares in the exact form they are received from the operators or
NSPs. That is, the information would not be transcribed or reformatted by TSC staff. A copy of the
fare information would be simply posted on the website as a PDF file. This would ensure the
operators have complete control over the structure and magnitude of the fares they are proposing to
charge, and is in keeping with a price notification system as a minimalist form of regulation.
Nevertheless some very basic requirements are likely to be necessary to ensure that the information
is readily publishable, accessible and understandable. It is suggested that these basic requirements
include that the information:

is provided in a single electronic PDF file

is typed in black on white A4 pages with a minimum font size

includes the name of the operator
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
indicates the Zone and district (or other area) information to which it applies as applicable

contains the date at which it takes effect.
The TSC might issue a pro-forma to serve as a guide for operators, but it is not proposed this proforma be compulsory other than it containing the basic requirements to be provided as detailed
above.
Given that a notice would need to be submitted at least a few weeks prior to it taking effect, the TSC
website would need to accommodate the ability to include multiple notices for each operator (i.e. the
current notice and the notice to apply from a future date). Each notice should be given an ‘introductory
line’ by the TSC that includes the date which it applies from.
It is proposed that the TSC also identify the operator, and for ease of navigation by users it would be
useful to include the Zone and if applicable the district (or other area) information for which the fares
apply.
It is proposed that that any specific district(s) or other areas which the operator will operate in should
also be nominated by the operator as part of the price notification. This information may also be
helpful to assess licence applications under the Consumer Interest test that is to apply for the issue of
licences in Regional and Country zones.
2.5 The TSC must notify the operators once the notice is published
This would require that the TSC send an e-mail to the fare notifier (operator or NSP as applicable)
once the fare notice was live on the TSC’s website.
The operator would need to ensure that the fares that it charges passengers apply from the date of
effect as indicated on the price notification notice as published by the TSC.
2.6 The notice must include the date at which the maximum fares come
into effect
As indicated above, the date of effect for the maximum fares would need to be included in the
contents of the notice supplied to the TSC by an operator or NSP. Further, on publication on its
website, the TSC should include an ‘introductory line’ to the file containing the fare notification
information indicating when it applies from. This would facilitate current and future notices to be
accommodated.
2.7 Taximeters must be calibrated with the maximum fares notified to
the TSC
It is an overall requirement of taxi fare regulation that the maximum fare or any fare that is offered as
a discount to the maximum fare be recorded on the taximeter.2
To ensure the price notification system is consistent with this requirement, it is proposed that any fare
that is offered under a price notification system notice must be able to be programmed into a
taximeter, and the applicable fare charged to a passenger must be recorded on the taximeter.
Current meter types allow up to at least 9 different fare types to be entered in to the meter. This will
serve to restrict the type and number of different fares that many operators are able to notify and
charge passengers under the operation of the requirements of the price notification system until new
meter technology is adopted.
2
Government Response, p. 33, Recommendation 12.5.
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2.8 Maximum fares must be notified to passengers prior to them
travelling in a taxi
It is proposed that a passenger must be notified by the operator of the fare to apply prior to
undertaking a journey. This is in addition to the publication of the fares on the TSC website.
The TSC considers that fares should be displayed on the inside and outside of taxis, but that the form
of display be up to the discretion of taxi operators. This will serve to minimise potential for dispute with
passengers and enable the TSC to more easily monitor compliance than a system where passengers
can be informed verbally. This fare information would need to make it clear to the passenger which
fare rate will apply for the trip they are intending to undertake. Verbal notification should be required
for the visually impaired.
In keeping with this wide discretion and the fact that fares are set by operators, it is proposed that the
TSC will no longer provide fare stickers to operators for this purpose.
While it might be argued that the competitive market process will determine the suitable level of
notification, this is perhaps putting too much faith in market processes in some instances – particularly
for hail and rank work where an operator may have residual market power due to the presence of
search costs and the convention of choosing the first cab respectively. A requirement for fares to be
provided visually on the inside and outside of cabs could therefore actually help to improver market
outcomes, by enabling customers to make more informed choices.
2.9 Penalties are to apply if an operator does not submit a notice of
maximum fares and other prescribed information to the TSC.
To ensure that operators comply with the requirements to supply the fare notices and other prescribed
information to the TSC, it is proposed that operators will be liable for prosecution if they do not supply
the information as required.
It is proposed that the TSC issue a warning notice if the information is not supplied or supplied in a
form that is illegible, incomplete or does not meet the other requirements of the price notification
system. This would contain a deadline for the submission of the requisite information. If the
information is not received by this date in the form needed, the TSC will take enforcement action.
The failure of an operator to charge fares that are consistent with the fare notification notice provided
to the TSC or to its advertised fares could mean it is in breach of the misleading and deceptive
conduct provisions of the Australian Consumer Law and liable for prosecution under that law.
2.10 MPTP fares and subsidies
The MPTP is a subsidy payed to a driver by the TSC retrospectively that allows eligible MPTP
customers to pay a fare to the taxi driver at the time of travel that is lower than the fare they would
otherwise have to pay. The MPTP subsidy is presently paid at the rate of 50 per cent of the standard
fare up to a maximum of $60.
It is proposed that providers of MPTP services will be required to provide notification of their MPTP
fare or fares as well as any other fees they propose to charge, such as lifting fees for WATs.
If the MPTP fare is to be based on a discount to the maximum metropolitan fare as recommended to
the Government by the TII, it is proposed that operators would need to notify the metropolitan
maximum fare as one of its fares, include the metropolitan fare as a fare in the taximeter and provide
details of the discount off this fare (i.e. the amount paid by the Government).
While providing notification of the discount to the MPTP passenger and the TSC may not be strictly
necessary under the price notification system, it serves to increase transparency and could help to
minimise the potential for fraud.
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2.11 ESC price monitoring requirements
It is proposed that the fare information notified to the TSC be used for the ESC for the purpose of
price monitoring. This will require the TSC to provide all fare notifications to the ESC on a regular
basis so that the ESC can use this information in its price monitoring and reporting activities. It is
proposed that any other information that the ESC might require to undertake its price monitoring
function be collected by the ESC via separate processes.
3 Summary of specific requirements on operators and other
industry participants
The proposed specific requirements on taxi industry participants are summarised below. More detail
is contained under the description of the price notification system provided in the previous section of
this report.
Operators
Submit maximum fares and related details (effective date, Zone etc) to
the TSC in the requisite form.
Arrange to calibrate taxi meters with all notified fares.
Ensure that passengers are notified of the fare they will be paying prior to
travel via signage on and in taxi and instructions to drivers to do so
verbally for the visually impaired.
NSPs
Provide fare notification and related details to the TSC if requested to do
so by an operator on its behalf.
Drivers
Activate the taxi meter with the applicable fare from the menu of notified
fares.
Ensure that visually impaired passengers are verbally notified of the
applicable fare prior to travel.
TSC
Publish the notified fares for each operator on its website within 5 days of
receipt.
Inform the operator when its notified fares are ‘live’ on the website.
Enforce compliance with the price notification system.
Provide price notification fare data to the ESC.
ESC
Undertake price monitoring using fare notification data provided by the
TSC.
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4 Education and publicity
An education and publicity programme for operators and NSPs is proposed leading up to the
operation of the price notification system.
This is expected to include providing written guidance of the price notification requirements to all
operators, advertising of the new system to notify operators and the general public and the provision
of industry briefings.
To be considered is whether the TSC should issue guidelines on commercial factors that operators
should consider in setting fares and informing customer of fares. It is proposed this be decided based
on industry feedback, noting that operators may not appreciate the TSC advising them on commercial
matters.
5 Comments on the draft design
The TSC invites comments on any aspect of the draft price notification system as outlined in this
paper. Without limiting the scope for comments, the TSC is particularly interested in comments on the
following matters:

Form of the notice provided to the TSC, including whether it should be a standard format and
include any unit price information

The feasibility of the fare posting requirements on the inside and outside of taxis

The requirements of an education and publicity programme, including the need for guidelines
for fare setting.

Any likely implementation difficulties and expected timeframes to meet the price notification
system requirements.

How operators propose to determine fares for MPTP customers given the recommendation of
the TII that the MPTP subsidy be based on the metropolitan fare rate.
6 Due date for comments on the draft design
Comments on the draft price notification system should be provided to the TSC by Friday 14
February 2014, preferably by e-mail.
Comments should be provided to:
Taxi Services Commission
Reform Implementation Project
E-mail: [email protected]
Post: GPO Box 1716, Melbourne VIC 3001
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