If you think Melbourne's taxis are providing a poor service, you are not alone.
The latest patronage and satisfaction figures show general dissatisfaction and make it clear that the only real solution to the taxi industry's malaise is deregulation.
Between 2001 and 2006, the proportion of people using taxis to get to work in Melbourne fell from 0.31% to 0.27%.
This compares very badly with the strong patronage growth on the privatised public transport system, which increased from 9.3% to 10.2%.
Taxi user satisfaction fell from 64.5% to 62% last year, placing it below the average for public transport.
Long-suffering taxi users in Melbourne will therefore be pleased to learn that the State Government's Essential Services Commission is reviewing the taxi industry.
While the explicit focus is the setting of regulated fares, its comprehensive discussion paper raises more fundamental questions about how the taxi industry is run.
The basic problem with Melbourne's taxis is that the number of licences has hardly increased since the mid-1970s.
The number of conventional taxi licences almost doubled in the 20 years to 1975, but has increased by less than 10% in more than 30 years since.
The time-honoured policy of restricting access to licences has meant that the number of taxis has become less and less appropriate for a city of Melbourne's growing stature.
Population growth, increasing disposable incomes, more travel needs, changed attitudes to drink-driving and increased tourism should all point to more cab users, not fewer.
Not surprisingly, the limitation of licences has resulted in a dramatic increase in licence values.
In 1989, the average licence value was $123,267. By last year it had reached $449,241 -- an average increase of 7.4% a year, well above the inflation rate for that period.
Successive state governments, through restricting licences, have effectively increased the wealth of a small section of the community at the expense of everyone else.
To make matters worse, taxi fares have also increased at a higher rate than the consumer price index.
Those who rely on taxis, such as the elderly and disabled, carry a particularly heavy burden. Several studies have underlined the costs of regulation. A KPMG study in 1999 estimated that restrictive licensing cost Melbourne taxi customers $72 million a year in the form of higher fares. Almost a decade later, that cost is much higher.
While there have been some welcome measures such as the introduction of peak-period cabs and leasing some extra licences, what is actually required is deregulation.
The Government should issue licences to anyone who wants one, subject to suitability checks and a modest administrative fee.
This would not only benefit consumers, but would be of huge help to drivers, particularly those seeking to become owners. They would no longer need to take out a huge loan to fund a plate. Many more drivers would have a chance to be self-employed.
Deregulating taxi industries has been shown to have enormous benefits for consumers. It has been done in many cities, in countries as diverse as the US, Britain, New Zealand, Japan, South Korea, Netherlands, Sweden and Ireland.
The results were invariably more taxis, less waiting, lower fares and improved standards.
While the desirability of the deregulation outcome is clear, reaching that ideal position is not simple.
Two extreme positions could be adopted -- full compensation to current licence holders, or no compensation.
In Victoria, buying back licences at their full current value would mean expenditure of well more than $1 billion, an unreasonable imposition on taxpayers.
On the other hand, a decision to deregulate without compensation, while delivering a much better result for taxpayers, would clearly impose significant hardship on many taxi licence investors who would feel that they had invested in good faith.
Probably the most equitable solution would be a phased scheme to issue extra licences -- and therefore to reduce their individual value -- over several years.
If Melbourne's taxis were delivering an outstanding service, one could understand there would be an argument against changing current policy.
But when the service is poor, there seems little argument against trying a different approach.
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