A level playing field for the sharing economy

airbnb_poster

As reported in the Herald Sun yesterday, the $25 billion accommodation-sharing company Airbnb has come under attack from Tourism Accommodation Australia (TAA).

In a series of submissions, the TAA has called for a national system of registration out of concerns for the safety of guests, a future shortfall of tourism investment, and the payment of taxes.

The first and second concerns have little justification – safety and investment are solved by the market. As I argued in OECD Insights last December:

The solution is to encourage alternative approaches such as professional certification to signify quality. Certification does not legally prevent individuals from providing certain services; it allows the market to decide. The benefit is that private parties determine whether the benefits of the certification outweigh the additional costs of providing the good.

We must encourage the sharing economy to create, test and refine their own certification bodies. For example, AirtaskerPRO is an additional screening process including an ID check and an in-person interview to obtain a badge on the user profile. These need to be embraced.

The third concern, however, is where policy makers should focus. It is crucial that Australian legislation is equally and consistently enforced.

Much debate surrounds whether or not we should have a ‘level playing field’. The answer to this important question is a resounding ‘yes’.

We currently have two different playing fields – one set of rules for the incumbent hotels, and one for Airbnb. To get both on the same field, incumbents push policy makers to enforce the already existing rules onto the new entrants.

This is often the less politically treacherous path, but it makes little economic sense. This path leads to companies such as Airbnb being integrated into a highly regulated and heavily taxed environment.

This is not the set of rules we want companies to play by.

The important question is where we want the playing field to be.

Governments must create a new playing field – one with low taxes, a low regulatory burden, and a greater reliance on the technologies which have allowed these industries to emerge.

Deregulating the existing hotel industry will provide the level playing field we desire – it will just be at a different height.


You can read Darcy Allen and Chris Berg’s report, The Sharing Economy: How Over-Regulation Could Destroy an Economic Revolution, here.

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