Industrial Relations Commission New South Wales Medium Neutral Citation: Taxi Industry (Contract Drivers) Contract Determination 1984 [2012] NSWIRComm 80 Hearing dates: 19 - 20 July 2012 Decision date: 20 July 2012 Jurisdiction: Industrial Relations Commission Before: Staff J Decision: 1. The Taxi Industry (Contract Drivers) Contract Determination 1984 is varied in accordance with the schedule attached to the application filed on 6 July 2012. 2. The variation shall have effect, consistent with the date of the fare increase, that is, on and from the first shift to commence on or after 22 July 2012. Catchwords: Contract of bailment - Application to vary contract determination - practice concerning pay-in rates for bailee taxi drivers based on Report of Independent Pricing and Regulatory Tribunal of NSW - formula - principles applied by Commission - pay-in rates varied consistent with basis for fare increases. Legislation Cited: Industrial Relations Act 1996 Cases Cited: Taxi Industry (Contract Drivers) Contract Determination 1984 [2001] NSWIRComm 320 Taxi Industry (Contract Drivers) Contract Determination [2009] NSWIRComm 1037 Taxi Industry (Contract Drivers) Contract Determination [2011] NSWIRComm 1036 Category: Principal judgment Parties: New South Wales Taxi Industry Association (Applicant)Transport Workers' Union of Australia, New South Wales Branch (Respondent) Representation: Mr D Fleming (Applicant) Mr O Fagir (Respondent) File Number(s): IRC 761 of 2012 DECISION EX TEMPORE 1The New South Wales Taxi Industry Association seeks, pursuant to s 311 of the Industrial Relations Act 1996 contract determination for the variation of the Taxi Industry (Contract Drivers) Contract Determination 1984 ("the contract determination"). 2The grounds and reasons relied upon included: 3.The fare increase is based on a report entitled "2012 Review of Taxi Fares in NSW; Transport final Report and Recommendations June 2012" to the Minister of Transport by the Independent Pricing and Regulatory Tribunal of NSW (IPART) (the Report). 4.Since 2001 following the decision of Marks J in the 2001 the Taxi Industry (Contract Drivers) Contract Determination Case (Matters No IRC 3119 and 3282 of 2001) the Commission has varied the maximum pay-ins by reference to the increase in operators' costs and drivers' entitlements by reference to the increase in drivers' notional wages as shown in the annual IPART Reports. In this respect we refer to the decision of Commissioner Connor the 2011 Taxi Industry (Contract Drivers) Contract Determination Case (IRC 122 of 2011) in which he describes the historical approach adopted by the Commission in dealing with applications for increases maximum pay-ins since 2001 in accordance with the approach adopted by Marks J in 2001. 5.The Report shows that operator costs have increased by 1.8% since 2011 (part 3.1, page 19). 6.The Report has calculated that driver labour costs increased by 3.7% (Line 1 Table 3.1, page 17). This year the Report refers to "driver labour costs" instead of "notional wages" but has maintained the same inflator value. 7.The maximum pay-in amounts in Table 1 and the entitlements in Table 2 of Part B of the Determination should be increased in accordance with the approach adopted by the Commission in previous years based on data presented by IPART. 3This matter was listed for hearing on 19 July after a directions hearing on 12 July 2012 when the parties gave an estimate of half an hour for the hearing of this matter. 4After Mr D Fleming, solicitor, who appeared for the New South Wales Taxi Industry Association ("the applicant") had made submissions, which I will turn to shortly, Mr O Fagir, who appeared for the Transport Workers' Union of Australia, New South Wales Branch ("TWU"), after opposing the application and after the Commission had raised with him the paucity of evidence that his client relied upon in opposing the application, made an application to have the proceedings adjourned for seven days to enable the respondent to file further evidence. That application was opposed by the applicant who submitted that the Director-General of the Department of Transport had issued a determination to increase taxi fares from 22 July 2012. Having heard the parties in respect of the application for an adjournment, I adjourned the application for hearing to 2:00pm today, Friday 20 July 2012. 5I turn now to the submissions of the parties. 6Mr Fleming submitted that the applicant relied upon the principles established by members of this Commission in matters referred to in the grounds and reasons together with the formula that has generally been followed in dealing with applications to vary contract determinations. The formula takes as a reference point, the Report of the Independent Pricing and Regulatory Tribunal of New South Wales ("the IPART Report"). The IPART Report assesses costs relating to the operation of taxi cabs being borne by operators and some costs being borne by drivers. Mr Fleming tendered a copy of the 2012 review of Taxi Fares in New South Wales. 7At page 19, paragraph 3.1, under the heading "Different changes in costs for drivers and operators" the IPART Report observed: For calculation of the TCIs, it does not matter whether costs are incurred by drivers or operators. Nor does IPART play a direct role in determining the maximum bailment pay-in (which distributes fare revenue between drivers and operators). However, we understand that the Industrial Relations Commission uses our reports in making its annual determination of bailment pay-ins for drivers in the Sydney Metropolitan Transport District on Bailment Method 2, and we seek to assist the Commission by continuing to separately identify driver and operator costs. In urban areas, the costs faced by drivers rose by more than the costs faced by operators over the past year (urban drivers' costs rose by 5.4% and urban operators' costs rose by 1.8%). This is in part due to a significant increase in the cost of LPG fuel, which is a driver cost in urban areas, and the more moderate increase in overall operators' costs. In country areas, the costs faced by operators rose by more than drivers (country operators' costs rose by 3.8% and country drivers' by 3.4%). Again, this reflects the movement in fuel price, as in country areas LPG fuel costs are met by operators. 8At page 22, paragraph 3.2.3, the IPART Report observed: ... However, we maintain separate operator and driver cost items to improve transparency and to assist the Industrial Relations Commission (IRC) in its annual Taxi Industry (Contract Drivers) Contract Determination variation process. We understand that each year the NSW Taxi Council proposes to the IRC that the Contract Determination be varied to increase maximum pay-ins by the percentage that operator costs have increased, as measured by the TCIs. The NSW Taxi Council also proposes that entitlements be increased by the driver labour cost inflator that IPART uses. 9Based on the 2012 IPART Report, the applicant proposes the maximum pay-ins be increased by 1.8 per cent. The Report at Table 3.1 identified the increases in driver labour costs to be 3.7 percent. 10Mr Fagir, in opposing the application submitted: At a point in the midst of time, taxi drivers, bailors and bailees operated purely on the basis of a 50/50. At some time I can't identify precisely today the issue with the rate of bailor's paying in method was introduced. The concept underlying the pay-in moved so that it would simply reproduce what was happening in terms of the 50/50 split but with a dollar amount identified that reflected on average half of the intake and apparently there was said to be administrative advantage to that arrangement. 11Mr Fagir accepted that the pay-in amount had been increased in accordance with operator costs as identified by the IPART Report. He submitted that there was an assumption underlying that process which was critical. The assumption was that the increase in fares each year would result in a proportional increase in fare revenue and it was on that basis that it was said to be reasonable that the operator should continue to increase the pay-ins due to them on the basis of the proportion of increases in their costs. 12Mr Fagir further submitted that the assumption was false and contended that the most recent bailor's decision acknowledged that fact. In response to a question from the Bench, Mr Fagir acknowledged that this had been the situation since the contract determination commenced to be varied by members of this Commission. However, he submitted that there was objective data which was now available which had not been previously. It was further submitted that the system as it presently operated ensured that operators recovered their costs regardless of what happened with the actual fare revenue and drivers were left with whatever remained. In circumstances where fare increases do not translate directly in perfect proportion to increases in fare revenue, this has resulted, so it was submitted that the proportion that the operators take of the revenue has increased and the drivers' proportion has decreased. 13Mr Fagir tendered a statement of Mr Michael Jools which annexed a report of the Centre for International Economics dated April 2012 titled Reweighting of the Taxi Cost Index. This body was engaged by the Independent Pricing and Regulatory Tribunal as a consultant to provide a report to it. 14Mr Jools in his statement said that he had been a bailee taxi driver based in Sydney for over 20 years. He has for many years been an advocate for improved conditions for taxi drivers. 15Mr Jools observed that IPART issues an annual report recommending an increase in fares based on annual increases in the costs of operating a taxi. He stated that in recent years the IPART Report has separately identified the increase in operator (bailor) costs and driver (bailee) costs in percentage terms. He said the pay-ins due under contract determinations were originally varied in line with the Consumer Price Index. In recent years they have been varied in line with the IPART Report on increases in operators costs. That is, the dollar amount of pay-ins has been increased by percentage increases identified by IPART. This method of variation, he stated, was based on an assumption that fare revenue would increase in proportion to the increase in fares and that operators should be entitled to recover their share of the increase in revenue. He said that this assumption was false. 16Mr Jools also observed that the effect of variations had therefore been that the amount to operators had increased more quickly than the increases in actual fare revenue. Operators have therefore maintained their income at the expense of drivers who receive a smaller share of the pie with each passing year. The original 50/50 split reflecting the character of taxi operations as a joint venture is no longer in place. 17Mr Jools observed that he and others have attempted to make this point during various proceedings year after year. He observed unfortunately the weight of their submissions has been affected by a perceived lack of objective data. That lack of data has been remedied with the publication of a report by the Centre for International Economics. 18Mr Fagir relied on Table 6.3 of the Centre for International Economics Report which set out an estimate of driver earnings per shift. From this Table he extrapolated that the hourly rates for a taxi driver range from $7.50 to $14.60 per hour over a range of days. 19In my view, the use of an hourly rate comparison as if drivers are employees is misconceived. The drivers are bailees and entitled to keep whatever they earn beyond the pay-in. It has never been the case that they are entitled to an hourly wage. 20In summary Mr Fagir submitted that applying the historical formula was not a sound basis to justify the increases sought by the applicant, particularly in light of the evidence of Mr Jools. Mr Fagir accepted that it was for the applicant to make out a case for the variation on sound grounds. He initially submitted during the proceedings yesterday, that the TWU was not obliged to make a separate application to redress the issue. However, he informed me that the TWU earlier this afternoon made an application to have the rates varied. Mr Fagir therefore made an application that the TWU application be joined with this application. This was opposed by Mr Fleming on the basis that taxi fares, as I have already observed, will increase from 22 July 2012. 21Taking this matter into account, together with the late filing of the application by the TWU, which is not presently before me, I decline to join the two matters. 22Mr Fleming submitted that in order for the increased fares received by the drivers to be shared equitably with taxi operators and consistent with past decisions of this Commission, the increased maximum pay-ins should apply from the first shift to commence on or after 22 July 2012. 23Having heard the parties and taking into account their submissions and the evidence, I propose to follow the principles established by Marks J in the Taxi Industry Contract Drivers (Contract Determination) 1984 [2001] NSWIRComm 320 as subsequently followed by members of this Commission including Commissioner Connor in Taxi Industry Contract Drivers (Contract Determination) [2011] NSWIRComm 1036. These decisions have been guided by the annual IPART Report. The applicant contended that the system of determining the increases was fair and that the payment was essentially a lease payment for the use of the taxi and the driver was free to keep whatever he or she made beyond that amount. 24In respect of the application filed by the TWU today, I respectfully adopt the observations of Commissioner Connor in Taxi Industry (Contract Drivers) Contract Determination [2009] NSWIRComm 1037, where the Commissioner observed at [9]: I am obliged to consider the discrete matter before me, ie the current TIA [Taxi Industry Association] application confined to one issue - the amount to increase the pay-ins for taxi owners in the light of the recent fare increase - and that application is not the appropriate vehicle for any major review of the payment methods in the industry. If the parties wish to substantially amend the formula on which the pay-ins for taxi owner bailors has consistently been based they should lodge a separate application to that effect. 25This is of course what the TWU has done today. 26In my view, the increases in the pay-in rates are justified by reference to the IPART Report, the formula, and the principles established by this Commission. I find that it is in the public interest to vary the contract determination in accordance with the schedule attached to the application, which has applied the historical formula to determine the appropriate increases. I am not persuaded that in granting the application prejudice will be caused to the TWU or its members. 27For the reasons outlined in this decision, I vary the Taxi Industry (Contract Drivers) Contract Determination 1984 in accordance with the schedule attached to the application filed on 6 July 2012. 28The variation shall have effect, consistent with the date of the fare increase, that is, on and from the first shift to commence on or after 22 July 2012. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 July 2012