Most of the analysis that has been done in this report does not examine the ongoing dynamic relationships between the public (who use the taxis), the owners ( who own licenses and in many cases extract rents from them) and the taxi drivers (many of whom are overseas students who are returning home in increasing numbers). These dynamic relationships unfold over time. For instance, the demand for the new licences from existing owner drivers will be related to the rate at which their current contracts expire. The number of new licences will interact with the decreasing pool of drivers. These dynamic relationships can be examined using simulation modelling
We have built a simulation model based on the draft report which looks at a number of scenarios over a 5 year time period and in particular looks at the returns to the various stakeholders in the industry.
Scenario 1: Existing licence holders drop assignment fees
The current licence holders match the government licensee and the number of new licence holders in the industry is limited to the normal rate of growth.
Scenario 2: Existing licence holders become owner-operators
All the existing licence holders decide to become owner operators and all the holders of the signed licenses take-up government licenses as their assignment contracts expire.
Scenario 3: Government policy interventions
The government introduces a series of policies to improve quality and customer service.
The model also includes:
- The dynamics of the driver shortage that the enquiry noted and assumes that the labour market for the text industry, which is primarily made up of overseas students, will decline over time.
- Fare increases at the historical rate of increase
The full report on this is attached to this blog.