October 2015

Industry dreads Uber-style deregulated free-for-all

by Mike Beggs

The City’s Licensing & Standards Committee did “the right thing” on September 16 in choosing to strike down staff recommendations legalizing Uber X.

While smartphone-bearing Torontonians say they love this “reliable and affordable” service offered in private cars, the councillors on L&S clearly sympathized with licensed operators claiming the establishment of a new category for Transportation Network Companies (TNC’s) would open the floodgates for Uber X and sound the death knell for their industry.

But given Mayor John Tory’s unrelenting position that this cutting edge app technology is “here to stay”, and the City’s long history of gouging, patronizing and mismanaging its taxi interests, industry members had good reason to be fearful counting down the days to September 30 when the matter was slated for final resolution at City council.

Having lost almost half their trade to the unlicensed Silicon Valley interloper, many in the taxi industry have been asking why the City appears to be “bending over backwards” to accommodate the mammoth U.S. corporation, which operates Uber X with no regard for municipal regulations, commercial insurance, or business taxes.

“Nobody knows why. There’s a lot of rumblings to make room for them, and I don’t know where that comes from. But they don’t follow the rules,” said Beck Taxi owner Gail Souter.

In a guest column in the National Post, she alleged that, “an entrenched part of Uber’s global business model is ignoring local regulations.” She deemed it, “brazen and unacceptable.”

And she stressed that the City of Toronto already has all the power and authority it needs to regulate Uber -- as stated in a recent Ontario Superior Court ruling.

President of the Toronto Taxi Alliance (TTA), Souter said she was “very hopeful” about the outcome at Council.

Now operating in 350 cities around the world, Uber maintains it is not a taxi brokerage but simply a technology provider. Part of the burgeoning “sharing economy”, in Toronto Uber claims to be, “energizing the local economy, helping make the streets safer from drunk and distracted driving, and fostering a more connected, less congested environment.”

The company launched an online petition for support heading into Council -- attracting some 20,000 names in the first day. Ward 7 York West Councillor Giorgio Mammoliti answered back with an opposing petition of his own.

Cab industry leaders couldn’t help feeling a sense of deja vu heading back to the Council Chambers after the session in May when the Mayor stepped forward to hijack a unanimous L&S recommendation that would have re-established the Standard plate to its secure status prior to the City’s bombshell reforms of February 2014. Tory deferred the motion pending the outcome of the Superior Court decision pertaining to Uber, arguing that such app technology is the way of the future, and must be included in any “sensible” discussion about taxi regulation.

Many industry veterans viewed the enactment of the Toronto Taxi License in 2014 as the City’s latest attempt to devalue a collective $1.5 billion in Standard taxi plate equity and surreptitiously deregulate the industry. They say, by pushing through the TTL the City has reneged on its promise that the Standard plate would be their “taxi driver’s pension” in their retirement – leaving aging drivers, their families, and widows in the lurch. Such industry frustrations date back decades, with the City resolutely neglecting to enact an effective plate issuing formula and issuing many hundreds of taxi licenses in excess of market demand.

After years of struggling to make a living in this brutal market, Toronto taxi drivers say the arrival of Uber X represents the culmination of the perfect storm.

With the lax conditions MLS staff proposed for TNC’s, iTaxiworkers Association president Sajid Mughal wondered what possible good could come of the Mayor’s promised “level playing field”. Under the recommended TNC licensing model, Uber X and its ilk would face no metered pricing, no caps on the number of vehicles – effectively unleashing a deregulated free-for-all.

“There will be 20,000 of them, everybody will be struggling,” he stated. “This is what we do not want: Uber X to have an outrageous advantage over the taxis.”

“How can we ever compete under the new rules -- if one business is to follow one set of rules, and one another?” asked fleet operator Baljit Sikand. “It’s not fair. That’s not what this country is about. The Charter of Rights guarantees everybody has the same rights.”

Royal Taxi owner Mitch Grossman observed that Recommendations 7 and 8 in the report would serve to devalue the Standard plate even further.

“I’m hoping our politicians and regulators understand we already have a bylaw in place. So, why can’t they come in and follow the legislation,” he stated.

“And why has the City allowed them to continue (operating illegally) for the last year? Nobody has answered that question.”

The City has absorbed heavy criticism over its lack of enforcement against Uber X – while other cities across Canada (Ottawa, Montreal) have cracked down by towing and seizing unlicensed carriers.

Co-Op Cabs GM Peter Zahakos noted that the Mayor had promised industry leaders a level playing field, reduced regulations, and one bylaw for ground transportation at a recent meeting.

“We made a bunch of recommendations, and not one recommendation do we see (in the staff report),” he complained at a TTA press conference, prior to L&S.

“What you see instead is a parallel taxi industry, which is almost deregulated. There’s no way we can compete if you allow that. You have a choice here, you can have a cab industry or you can have Uber, you can’t have both. It does not work.”

While hosting a taxi “swarm” outside his constituency office on September 23, Mammoliti was demanding answers.

“I want to get that out: What happened between November 18 of last year when we were suing Uber as the City of Toronto, and now, and if there was any influence on staff? I think the bureaucrats need to say who they talked to between then and now. They changed their minds on this and I’m going to find out why.”

In the staff report, he alleges the bureaucrats and politicians were attempting “to appease industry” by offering a drop in the meter rate, and the recommended issuance of another 100 TTL’s.

He characterized the battle between these two sides as a “David and Goliath fight”.

“You’ve got a huge corporation from California elbowing their way in in typical Yankee style, and you’ve got a group of very diligent, hardworking, morally- oriented individuals, this is their livelihood. The only way to get rid of the conglomerate is by numbers,” he told the angry group of drivers.

“We’re going to kick out these guys,” shouted 26-year man Ahmed Sheik. “Uber is the Mafia from California.”

Ward 39 Scarborough-Agincourt Councillor Jim Karygiannis agreed the staff report would allow Uber to continue as it has, “with no respect for laws, rules and regulations”. And he raged that the report has lost the spirit of his motion to create a level playing field, put forward at May Council.

“The taxi industry, whether it is brokerages, owners, operators, fleet operators and garages are all regulated and have a set of rules that we, the City has imposed on them,” he said. “Allowing Uber to regulate itself is like allowing the fox in the chicken coop.”

He deemed the staff report, “a race to zero”, given that Uber X offers no commercial insurance while operating as taxis, no hard evidence of collecting HST, no in-car security cameras, no service for seniors or others who don’t have a Smartphone or credit card, no regulatory fees, and no controls over surge pricing during busy times.

Uber management claims to carry $5 million in insurance beyond the Uber X driver’s private insurance, and has a working relationship with H&R Block to advise its driver partners about their HST obligations. However, the questioning of Uber X drivers and management at L&S left some glaring question marks about these claims.

Both Uber Toronto management, and Mammoliti maintained they had the necessary votes lined up heading into Council.

But veteran owner/operator Gerald Manley was among those to suggest this is only the latest example of the City using the industry as a licensing cash cow, while paying only lip service to operators’ concerns. And he maintains that the Uber controversy arrived as a convenient tool for the City to push through its hidden agenda of deregulation.

“Backdoor deregulation has been whispered around this industry since 1998,” Souter observed. “I think that we’re always surviving in spite of the City.”

Several industry sources were encouraged that the councillors on L&S listened to their concerns, and “gave us justice”.

“I don’t understand why the Mayor and the rest of the councillors can’t hear that,” said owner/operator Frank Kelly.

While it was a “good day” at L&S, veteran independent Stephen Hozack was dismayed to hear the Mayor’s pro-Uber comments that same afternoon on 1010 Talk Radio.

“No matter what we do, it’s not good enough,” he said. “All I can see is years of fighting. I’m hoping, but not much hope.”

Lucky 7 Taxi owner Lawrence Eisenberg alleged that Mayor Tory, “has been talking out of both sides of his mouth”, when expressing concerns about the livelihood of licensed operators. He blamed the City for driving down plate values to between $90,000 and $100,000, and for “dividing” the industry over the years.

He projected it would be hard to go against the Mayor at Council, but that, “it could happen.”

“The Councillors are listening to the speakers. But at the same time it all depends on the Mayor,” Sikand chipped in.

“We are here requesting that the councillors and the Mayor have fairness in the system. And that can only be achieved if there is one set of rules for all.”

After L&S, owner Andy Reti -- a veteran of countless showdowns at city hall -- observed, “We’re out of the gate, but it’s a long race.”

His advice heading into

“Let this (injustice) be known to everyone. Go to your local councillor. We have only a few weeks -- it is now or never. This is now the No. 1 assignment for everybody in the cab business. If you’ve never done it before, this is your last chance.”

Looking ahead to Council, City Taxi owner Avtar Sekhon added, “We’re going to bring the kids, too, by 7:30 a.m. He’s taking all our food way.”


© 2015 Taxi News

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