Ottawa’s “Taxi mistakes” date back to 1971: Denley

PostMedia columnist Randall Denley Photo: Twitter

No one imagined Ottawa would allow another service to launch and run and ignore every Taxi rule the City had written “because Uber is every bit as much a Taxi service as the Taxi services we already have.”

–Randall Denley, CityNews interview

The City of Ottawa’s biggest Taxi mistake dates back to1971, according to PostMedia columnist Randall Denley.

Denley was interviewed by CityNews’ reporter Rob Snow on January 12, and provided listeners with a succinct historical summary of the situation that has landed Ottawa in court this month.

The big mistake, Denley explained, occurred  in 1971, when the then-City of Ottawa decided to “fix” the number of Taxi licenses that would be issued; any more Taxis than that would be too many. Ottawa then perpetrated that system for decades.

“There were many times where Councils tried to come to grips with this, because it had gotten kind of crazy. There was obviously more demand to drive a Taxi than there were plates, so people started paying hundreds of thousands of dollars for plates. From the beginning, it should have been like running any other business,” Denley noted, pointing out that Ottawa has never decided, for example, to fix the number of restaurants allowed to open.

 “If the city said, ’Well, there’s only a certain number of restaurants we need here in Ottawa, so we fixed the number. If you want to start another restaurant, you’re going to have to buy a restaurant license from somebody else.’ People would think that’s crazy.

“The City’s thinking in the Taxi industry was paternalistic, to say ‘Well, we, the bureaucrats and councils, have figured out just the right number of taxis; any more, nobody can make a living. So, we’re protecting you Taxi guys by limiting the number of plates.’

“This went on and on. From the perspective of Taxi drivers who bought plates, it was a pretty good deal because they thought ‘I’ve got this plate and I paid more than I wanted, but it’s worth more today, so someday I’ll sell it and that’s my retirement. It’s a lot of money, but I’ll get it back.’

 According to Denley, “Nobody foresaw the day when Uber would come along and ‘Say, yeah, well, we’re not doing any of that. We’re just going to run cars and pick up people.’”

No one imagined Ottawa would allow another service to launch and run and ignore every Taxi rule the City had written “because Uber is every bit as much a Taxi service as the Taxi services we already have.”

When the Taxi industry learned that Uber was launching, they believed the City of Ottawa would enforce the same laws on Uber that it enforced on Taxi. They believed Ottawa would protect the Taxi industry it had created.

“It’s kind of like the supply management system we have for dairy. It seemed like a good idea at the time,” Denley noted, “but then once you’re into it, how do you ever get out of it?

“The way the city got out of it, in the end is just to say, ‘Well, we’re just going to let Uber run as many cars as they like. Tough luck.”

 “To me, having created this monopoly, which they never should’ve done in the first place, and having known that people were spending huge sums of money for the right to drive a cab, it’s a problem the City created. They knew about it; they could have fixed it. They didn’t,” Denley summarized.

When CityNews reporter Rob Snow asked Denley why he thought the City never “fixed” the mistakes it made beginning in 1971, Denley replied:

“Because it was a difficult thing politically. Those who had a plate said ‘I like it just the way it is. I’ve got my protected investment.’

“The easiest thing was to do nothing, just let things go on as they always have. Uber coming here that changed the whole equation, and I should point out that obviously it’s not unique to Ottawa, it’s not to Ontario.

“Quebec is an interesting example here, because it faced the same problem. The provincial government stepped by deregulating the taxi industry, which is what should happen here.

“Quebec said ‘Look, we know that you guys have had these plate investments and all that, so we’re going to provide $500 million in compensation’ which they’ve done, and now they’re going to impose a per ride charge $0.90 a ride on those Taxis and Ubers and this is going to regenerate an additional $270 million. So…riders will bear part of the costs.

“It’s a matter of fairness really because the city did create the problem, and I think they have to have some role in fixing it.

“There’s a lawsuit on, as you know. The Taxi industry has lost a lot of money and the city’s stance is ‘Nothing to do with us, not our problem.’

“I can see why you might argue that in court, but it’s a moral stance.”

Rather than limit the number of Taxi plates issued and micro-managing the industry for half a century, Ottawa should have let the free market determine who would deliver Taxi services, Denley suggests: “Had they not created a monopoly, the plates would have been worth whatever the nominal value is and somebody else could have said, ‘I don’t think that taxis in the city are that great, I’m starting a new company, here’s how we’re going to do it better, I’m going to get 30 plates from city hall, get some drivers on the road.’

“That’s how it should always have been done and that’s how it should be done now. There’s this whole ‘regulate the taxis to death’ regime it’s all still in place too.

“That’s one of the grievances that drivers and plate owners have is that City rules for Uber are pretty simply summarized: ‘Go for it.’

“The City’s rules for Taxis, well, that’s a whole different thing and even what they charge, that’s controlled by the city. Uber’s charge is not controlled by the City.

“Taxi micromanaging down to such a small level that a few months ago, the city approved for the first time in ten years an increase in taxi fares. So much to get the cab to start up from the first few kilometres. For every 0.86 kilometres after that, so many more cents. 0.86 kilometres. I don’t know what kind of bureaucratic thinking you get down to ‘Let’s only make it increment so much per kilometre, no, no, 0.86 kilometre.’

“They operate under a great deal of regulation and that was part of the trade off, ‘We’ll grant you a monopoly but regulate the heck out of it.’

“So, now you don’t have a monopoly, but they still regulate it. I think that’s something the city needs to get out of, and this is a way to get out of it: as a settlement to say ‘Hey, you’re going to get this per ride provide, we’re going to deregulate you, good luck and if your business collapses totally and Uber takes over, well, that’s your problem, not ours’ and I think that’s a fair statement.”