The cost of creating of new business category
Uber paid $16 million to do business in Toronto in 2023. This money is paid through a 33-cent-per ride trip fee.
This fact makes me think back to that raucous period of time when the City announced it was revamping its procurement process to allow corporations to purchase access to business.
Remember the uproar that ensued when businesses received notice that permission to ignore or re-write laws would be auctioned off to the highest bidder?
Overnight, the time-tested “Old Procurement” principles of transparency, competition, equal treatment, conflict of interest management, clear specifications, consistent evaluation criteria, and compliance with existing laws and regulations were eliminated.
In their place, Toronto proudly ushered in a new era of backroom deals complete with fuzzy specifications, mysterious evaluation criteria and allowance of illegal activities; flagrant conflict of interest became the order of the day. Media had a field day with screaming headlines about how the “New Procurement” process could potentially harm other City services like law enforcement and restaurant inspections, and whether voters should have been given a chance to understand and approve the New Procurement system before it was implemented.
Well, OK, I may be mis-remembering some of that. Actually, the changes were not announced, or covered by media as such.
For sure, Toronto DID change its process – unofficially. The public, media, and voters were never actually told explicitly that Toronto would be auctioning off business opportunities to the highest bidder; apparently, it just happened.
This is how the New Procurement works: in place of transparency, there is mystery and gas-lighting.
“Basically, Uber is buying the business,” points out Marc Andre Way, President of the Canadian Taxi Association.
(The same thing is happening again right now, at Pearson Airport and the Greater Toronto Airport Authority. But that’s a separate story.)
Indeed at first glance, the $16 million Uber paid to the City of Toronto in trip fees 2023 seems like a great deal for taxpayers. However, there are probably a dozen competing businesses that would have liked to have a chance at “buying the business.” Maybe one of them would have offered more than .33 per fare; maybe no one would have. We don’t know, because the New Procurement process means that no one else ever even knew it was an option.
For certain, competing Toronto businesses would prefer to bid on a consistent package; for example, while all ground transportation firms would have to pay the same trip fee to the City, everyone would also be required to invest in sufficient Accessible vehicles. Everyone should also carry the same insurance: either the same higher-cost commercial insurance Taxis must pay, or the same inexpensive wrap-around policy rideshare is allowed to use. But it should be consistent.
The New Procurement process means that because individual providers may end up delivering wildly different packages (and they have), no one can calculate whether taxpayers are getting the best deal, a good deal, or a horrible deal. No one knows.
Another disquieting element of the $16 million Uber paid Toronto is that it makes up 33 per cent of Licensing and Standards’ $49 million budget. Having a single corporate entity fund one-third of the agency tasked with regulating it seems inappropriate at best, a conflict of interest at worst.
“Imagine, if restaurant inspectors got paid by the restaurants they inspect,” plate owner David Reti asked recently. “How do you suppose that would go?”
“Probably great for the restaurants and the inspectors,” I laughed, “but I’m not so sure how great it would be for the customers. That was Mussolini’s definition of Fascism: ‘government and corporations aligned against the citizens.'”
Since Uber was allowed to “buy the business” in Toronto, the number of working Taxis has plummeted from 5,500 to 2,764 while the number of rideshares cruising the streets is 55,000. Maybe this, plus $16 million, is better for Toronto.