Maximum taxi fare increase proposed to help cover costs and address driver shortage

The Essential Services Commission has proposed an increase to the maximum fares payable by passengers hailing a taxi from the street or at a taxi rank to address higher running costs and taxi driver shortages.

The commission is reviewing the maximum fares that can be charged for ‘unbooked’ taxi services, and has released a draft decision that proposes to increase maximum fares by 10.4 per cent for unbooked taxi trips.

This equates to an increase of about $1 for a three-kilometre trip within the Melbourne central business district, or $5 for a trip from the city to the Melbourne Airport.

The commission’s director of pricing Marcus Crudden said this is the first fare raise proposed since 2014 and reflects recent increases in operating costs for taxi operators.

“We are proposing an increase in maximum fares this year in response to higher fuel costs and the shortage in taxi drivers,” said Mr Crudden.

“We have considered the Fair Work Commission’s annual wage review to inform our assessment of driver labour costs. We are proposing an adjustment to fares again in mid-2023 to reflect next year’s wage review by the Fair Work Commission and any further changes to fuel prices.”

Mr Crudden said while passengers may be concerned about a fare rise, this needs to be balanced against an ongoing driver shortage and rising fuel costs which could mean consumer demand for taxi services will not be met or passengers will wait longer for taxis on the street.

“The increase in the maximum fares may help to attract new drivers as consumer demand for taxi services rebounds following the lifting of pandemic travel restrictions. However, higher maximum fares alone will not fully resolve issues related to driver earnings and shortages,” said Mr Crudden.

Unbooked services are where passengers hail a vehicle from the street or take a taxi from a rank. Booked services are arranged prior to travel through an app, online or over the phone. The review covers trips starting in metropolitan Melbourne, and urban and large regional zones including Geelong, Ballarat, Bendigo, Frankston, Dandenong and the Mornington Peninsula.

Stakeholders can have their say via Engage Victoria until 1 August 2022. The commission will release its final decision in early September 2022.