Andrew Leigh

There's been a lot said about how 'sharing economy' services like Uber benefit young, tech-savvy consumers. But I think there can be real benefits for all Australians, as I explore in this piece for the Melbourne Herald Sun.

Get the rules right and it will pay us all to share, Herald Sun, 19 January

Recently, I caught up with my brother and his partner for dinner. It was one of those busy nights, with clouds looming, when you can be left waiting for a taxi for ages. So I did what millions of people around the world are now doing every day. I tapped on the Uber app on my phone, and within minutes a car had appeared.

The driver was a migrant who’d been in Australia for a couple of decades. He’d worked as a taxi driver previously, but told me he preferred being an Uber driver since he got a bigger slice of the fare, and had the flexibility to take a break in the afternoon to pick up his kids from school.

As we chatted, it struck me that much of the talk about the rise of new ‘sharing economy’ services has focused on how these make life better for a small group of hipsters and tech-savvy Silicon Valley types.

But the benefits are potentially much bigger than that, and will be enjoyed by many more regular Australians if we can get the rules around them right.

Take ride-sharing services like Uber and Lyft, for example. Public transport is great for everyday use, but cars come into their own for hefting big loads.

How often have you struggled with heavy luggage on the bus to airport, or lugged home bags of shopping on the train, and wished you’d been able to get a taxi?

Ride-sharing services increase the supply of private transport, making it easier to get a lift when you need one. Through increasing competition, they also lower prices so that more people can afford to use them.

At the same time, these sharing economy services create ways for people to make more productive use of expensive assets they already own – like the driver who picked me up the other day.

He’s earning a decent living from a driving job that’s more flexible than most. That’s something plenty of Australians would appreciate as they battle the twin squeeze of time and money.

It’s not all beers and skittles of course. Uber has recently been in the news over concerns about poor background screening of its drivers. Its application automatically imposes “surge pricing” when demand increases – something that people can understand on New Year’s Eve, but which led to outrage when it kicked in during the Martin Place attack on 15 December.

At the moment it’s also hard to know if the people providing these services are paying their taxes and doing the right thing when it comes to insurance and other consumer protections. 

These are complex policy challenges, to be sure – but we can resolve them if we think creatively and put consumers first.     

For sharing economy services, we’d ideally have a set of rules that offer core protections for public safety, and make it easy for everyone to pay tax on what they earn. At the same time, those rules would be flexible and simple enough to support the growth of these services. We should particularly aim to avoid strangling them through over-zealous regulation, because regular consumers would then miss out. The rich will always be able to afford a taxi, but for some people Uber may be their only option.

There’s a huge amount of potential in this new segment of the economy. Getting the rules right will mean that all Australians can share it.