The biggest winners and the biggest losers in Toronto's Uber battle

A promised one-year review of the city's vehicle-for-hire bylaw, which came into effect July 15, 2016, has yet to materialize.

Thestar.com
Oct. 14, 2017
By Betsy Powell

More than a year after council rewrote the taxi industry rules and legalized the UberX service in Toronto, the answer to the question did the city get it right depends on whom you ask.

Mayor John Tory says the city achieved a "balanced and effective" licensing and regulatory model.

The new regulations "embrace innovation" and are "working well," agrees Uber Canada, and give the public access to a "safe, reliable and affordable transportation option."

And despite the company's global challenges, including legal setbacks, lawsuits and scandals about Uber's corporate culture, the UberX service - rides with regular drivers booked using a smartphone app - remains a popular option for budget-minded passengers looking to get around Toronto and the GTA.

Not keen is the traditional taxi business, though the traffic-snarling protests and city hall demonstrations have ceased.

While the city loosened some of its regulatory burden, scrapping mandatory, 17-day driver training, for instance, the anger remains over the influx of UberX drivers - 49,585 now licensed by the city, including 33,000 who live outside Toronto - who are cutting into the taxi industry's bottom line.

There are an estimated 5,500 taxis in Toronto, though an additional 12,000 people hold licences to drive a taxi or limousine.

"When I think about these so-called balanced rules, the more embarrassed I am for anyone who has their name attached to it," says Beck taxi operations manager Kristine Hubbard. "UberX drivers are simply tens of thousands of cars on our already congested streets."

Uber Canada spokeswoman Susie Heath wrote in email that "it is important to note that not every registered driver is active, for example someone may have registered with the city to drive for a few weeks to make some extra money around Christmas time but may not have driven since January."

Adding to the taxi industry frustration is the absence of a promised one-year review of the vehicle-for-hire bylaw, which came into effect July 15, 2016.

"Is anyone at city hall paying attention to the dire state of affairs they've created in Toronto's vehicle-for-hire industry," screams a headline in latest edition of Taxinews, a trade newspaper filled with anti-Uber articles and stories about the plight of cabbies.

Municipal licensing and standards staff haven't had time to conduct the review because of other pressing matters, including the apartment and short-term rental bylaws and dealing with illegal pot shops, executive director Tracey Cook wrote in email.

"The complexity (of a vehicle-for-hire review) . . . requires a great deal of research and stakeholder engagement, and as such, will take time."

An area of concern the new regulatory framework appears to have addressed relates to insurance. It requires that all taxis and private transportation companies (a new category of licence) have at least $2 million in liability insurance.

Two of the three top insurance companies in Ontario, Intact and Aviva, now offer "hybrid" products that allow consumers to use their private vehicle both commercially and privately, says Peter Karageorgos, director of consumer and industry relations for the Insurance Bureau of Canada.

"From our perspective, the industry has been able to provide best possible coverage to consumers so people are protected," he said.

The Financial Services Commission of Ontario says it has not received any complaints relating to insurance coverage for ride-hailing activities.

So is Toronto better off with its new ground transportation order?

The Organization for Economic Co-operation and Development (OECD) studied the Toronto regulatory model and concluded it has been a success, though like any process there are winners and losers.

"Uber was likely the biggest winner by gaining first of its kind, friendly regulation in Toronto," says a 2017 OECD report called Working with Change.

The biggest losers?

The owners of taxi licence plates, which have plummeted "although it is hard to discern how much of that drop in value was due to the regulation," the OECD report says.

Joeri van den Steenhoven, the former director of Toronto-based MaRS Solutions Lab, one of the world's leading innovation hubs, believes the regulations strike "a good balance between defending public value and allowing innovation." While at MaRS, he was involved in helping design the Toronto regulatory framework.

"The goal of regulation is not to block market access for new entrants," he wrote in an email sent from the Netherlands, where he is now based.

"The regulation aims to allow innovation in the marketplace but without loss of public value the city needs to protect. It therefore states clear requirements in terms of driving licensing, safety, consumer protection etc. but in a way that it allows for different operating models."

But Sunil Johal, director of the Mowat Centre, School of Public Policy and Governance at the University of Toronto, says it's premature to know if the city got it right.

"We're talking about what had been a very closed market for a number of decades and when you open up suddenly to more competition and to more operators, it's going to take some time to observe what the impact of that change has been on the market in terms of profitability of taxis, customer service, and a whole range of different issues."

While he understands taxi business resentment over the two-tiered system that now exists, Johal believes Toronto was right, at least in the short term, to embrace "progress and technology."

"Opening up markets is a good thing for people but government and regulators have to keep their eye on the ball, and not say: 'We wrote the regulations back in 2016, we're done,'" Johal said.

"This is something you have to be monitoring very closely every year and adjusting rules when required."