Technology and online rights

Victorian taxi industry waves the white flag


After a year-long campaign of misinformation, the Victorian Taxi Association (VTA) has finally raised the white flag. The Guardian reports:

Victoria’s Taxi Association has abandoned industrial action and campaigning as a response to Uber, admitting the industry has not responded well to customer criticism.

On Monday the association’s chief executive, David Samuel, announced an initiative calling for honest feedback from taxi customers so that the industry could adapt and respond.

To say they haven’t responded well to customer criticism is putting it mildly. As customers unhappy with the level service, availability, and convenience of traditional taxis have gradually abandoned them for new competitors like Uber, the VTA has responded with fear-mongering and calls for government crackdowns.

Their favourite claim was that Uber is unregulated, and therefore unsafe.

On the first point, Uber drivers is not “unregulated”. They are regulated by the same road rules and laws that cover all drivers. They are also subject to a variety of safety measures, which include third party criminal background checks.

Perhaps most importantly, there are quality control and feedback measures embedded in the Uber app, which are intrinsic to their business model. As I argued in the Herald Sun in May, this not only makes Uber (and competitors like Lyft) more convenient than traditional taxis, it also makes them safer.

At the very least, the Victorian Taxi Association seems to have finally realized that this strategy will not work.

The industry’s only chance of survival is to adapt, innovate, and compete with Uber — and future competitors — in the marketplace. Something which, so far, they have failed to do.

But to be fair, this isn’t entirely the taxi industry’s fault. Decades of government protection insulated the industry from competition, lowering the quality of service, and making them less responsive to customer demands. The industry benefited from this protection for decades, time will tell if it will be the cause of their downfall.

The Victorian Taxi Association’s olive branch is a step towards positive legislative reform. Perhaps if they had spent less time attacking their critics — like yours truly — we might have got to this point sooner.

For more on the sharing economy, check out the IPA’s paper by Chris Berg and Darcy Allen: The sharing economy: How over-regulation could destroy an economic revolution.


Racing integrity commissioner to have access to retained data?


Sal Parna, Victoria’s Racing Integrity Commissioner

Politics, like comedy, is about timing. This week Melbourne has been under its usual racing induced fever. So Victoria’s Attorney-General Martin Pakula took the opportunity on Monday to publicly appeal to the federal government that the Victorian Racing Integrity Commissioner be reinstated as one of the authorised agencies for warrantless access to telecommunications data under the data retention scheme.

Under the data retention bill passed earlier this year, the number of agencies with access had been strictly limited to criminal law enforcement agencies. As the IPA argued at the time, this was almost certain not to last – regulators across the country have been chomping at the bit for years to get a hold of our internet records, and it would be trivially easy for this or future governments to quietly reinstate these agencies into the data retention scheme.

Mandatory data retention is a rolling violation of our privacy. Is such a violation justified in order to protect the “public confidence” in the racing industry?  There are more fundamental issues of public confidence here – the public’s confidence that the government is not routinely harming the privacy of its citizens just to make regulatory enforcement slightly less bureaucratically onerous. If the Victorian Racing Integrity Commissioner needs to access data, they ought to get a warrant.


Mandatory internet data retention comes into operation today

Simon Breheny and I have been arguing the case against data retention since it was first mooted by the Gillard government – it violates the privacy of every Australian just in case they are later accused of criminality, it will be used for more than just anti-terror policies, and there are alternative policies and approaches which better respect individual liberty. You can read the IPA’s submission to the parliament’s data retention inquiry here.

But all the critiques aside, data retention is shaping up to be a case study in poor policy implementation.

Internet service providers have long argued that retaining that amount of data would be prohibitively complex. In fact, one of the most striking things about the whole debate has been the gap between how easily government has suggested implementing data retention would be and how ISPs have said it would be.

No surprise then that Fairfax is reporting that 80 per cent of ISPs are not actually going ‘live’ with data retention compliance today, but have applied for extensions of 18 months. There is widespread confusion about how much data is to be retained, and no transparency on how the ISPs will be compensated for storing masses of information on their customers’ activity.

Implementation was going to always be a problem with data retention. But it is hard not to conclude that the implementation problems ISPs are now experiencing are the direct result of the government’s lack of conceptual and technical clarity about how data retention relates to current ISP practices.


Survey shows Uber offers better service than taxis

choiceConsumer advocate group Choice has published findings of an investigation comparing taxis and ride-sharing services in Australia. As reported in The Guardian today:

Choice found little evidence to support the claim by the New South Wales Taxi Council – printed on billboards around Sydney – that ride-sharing services such as UberX were “no safer than hitchhiking”.

The UberX feature, which connects passengers with registered private vehicles, has triggered protests around the world by the taxi industry, including earlier this month in Melbourne, Sydney and Canberra.

But ride-sharing has taken off in Australia, and was used more than 1m times in the year to May, Uber says.

Investigators from Choice compared 28 taxi rides to the same number of trips using UberX. They found that taxis were more expensive nine times out of 10, and by an average of 40%.

Only with surge pricing – which boosts the cost of a UberX trip when demand is high – did taxis become cheaper, by about 6% in most instances.

Twice, the booked taxis failed to show up, which Choice’s spokesman, Tom Godfrey, put down to drivers finding longer, more expensive fares.

“Part of the problem may be that taxi drivers are told the passenger’s destination, which may make short trips less attractive. Uber drivers, on the other hand, aren’t given your destination until they turn up,” Godfrey said.

In about 62% of cases, a car booked through UberX arrived more quickly than a taxi.

Choice’s full findings can be found here.


Coalition won’t privatize the ABC, but it should allow opt-outs


Australia’s communications minister has ruled out privatising the ABC. But that doesn’t mean reform can’t be achieved.

Speaking to ABC Radio’s RN Drive, on his first full day in the job, Senator Mitch Fifield stated that he was not seeking to change the ownership arrangements of the ABC.

I was, about seven or eight years ago, a frisky backbencher who sought to give a provocative speech… the key point I was making was that, although people talk about different ownership arrangements, ultimately the Australian public have a settled view on these matters. So changing the ownership arrangements of the ABC is not something that I am seeking to do.

Fifield was attempting to downplay a speech he gave to the Australian Adam Smith Club in 2008.  The wide ranging speech, available on Fifield’s website, included a few brief lines about the merits of privatising the ABC:

Conservatives have often floated the prospect of privatising the ABC and Australia Post. There is merit in such proposals.

But the likely strong public opposition means that any government prepared to go down that path would need to prepare the ground and make the case for the change.

This is hardly a radical statement. If anything Fifield was being overly cautious.

Nevertheless, he is essentially correct. Privatising the ABC is not politically possible with the current climate of opinion.

When the Coalition announced that ABC funding would be “slashed”, as The Conversation described it—yes, I mean the 4.6 per cent cut to their $1.1 billion budget—the proposal was met with outrage.

Simply put, the ABC is too powerful, and too popular, for a government to risk openly confronting it. Any privatisation proposal would bring down the wrath of a well resourced media company with, large audiences across radio, television, and online platforms. The damage done would be made worse by the fact that the ABC has the single largest contingent of journalists in the Canberra press gallery.

Forget about Rudd vs Gillard, or the Whitlam dismissal, fighting ABC privatization, without a change in public opinion, would be the greatest political battle since federation. In inner Melbourne and Sydney, there would be riots on the street.

None of this discounts the many principled arguments for privatising the ABC. The case for privatisation has never been greater, as the IPA’s James Paterson wrote in The Age last year:

Australians have at their fingertips access to more news from more varied sources than ever before.

Unfortunately, the politics don’t yet add up.

But that doesn’t mean the government should avoid all reform. There is at least one principled and politically feasible reform Minister Fifield could pursue. As I outlined in July’s Herald Sun:

The Abbott Government should make funding the ABC an option provided on tax returns.

That would allow Australia’s 11.5 million taxpayers to choose whether the ABC provides value. It wouldn’t require the introduction of commercial advertising and, at the current funding levels, funding the ABC would cost taxpayers less than $2 per week. If support is as strong as the ABC claims, then such a move wouldn’t have any significant impact on its budget. But it will create a level of accountability that doesn’t currently exist.

This proposal, which would be a similar (although voluntary) system to the BBC’s license fee, would keep ownership and funding in public hands. But it would allow people to decide for themselves whether the ABC is a service worth supporting. It would also help increase public accountability and make the ABC more conscious of public demands.


What taxi strikes teach us about economic growth


Next week, Victorian taxi drivers will strike in a futile protest against their likely demise due to the rapid uptake of the revolutionary ridesharing company Uber.

Maybe they should have checked out the similar taxi strike in the United Kingdom last year that increased Uber signups by 850 per cent.

But what this messy innovation process reveals is the engine of economic growth: creative destruction.

Entrepreneurship is about replacing the old with the new. And in the process innovation makes our economy more productive, our people more prosperous, and our lives more free.

But as new industries replace the old, it is inevitable that someone somewhere will be hurt.

The hurt is often felt by well established, visible, and cashed-up constituencies. Fearing their imminent loss, they begin (or continue) rent seeking — striking, lobbying, protesting.

Unfortunately, while this process is predictable, governments too often use a ‘precautionary principle‘ and side with the lobbyists. The IPA’s Jason Potts and I argued precisely this in a submission to the Productivity Commission inquiry into set-up, transfer and closure:

Precautionary regulation leads to slowing business entry and exit. Fewer businesses enter the market for fear of being regulated against; while incumbents sit idle behind barriers of regulations … this precautionary principle may continually creep into public policy.

When incumbents fear they may be out-competed on the market, their lobbying efforts begin. Their demands – largely based around hypothetical harms, or maintaining the status quo – generate more political pull than the potential benefits of small new business entries.

Just because there is friction does not mean quelling the tensions is good public policy. I pointed this out in The West Australian recently:

Unfortunately the transition from old rules to new rules will not be a frictionless. Traditional industries will continue to put up a fight. We are seeing this in real time with the Taxi Services Commission. And while these industries – which will be inevitably be destroyed – have every incentive to pay to protect their artificially high prices this does not make good policy.

If the Victorian government understands what economic growth is and how it comes about, they would do best to ignore the current taxi strikes and deregulate the industry.

You can read Darcy Allen and Chris Berg’s report, The sharing economy: how over-regulation could destroy an economic revolution, here. You can also read Darcy Allen’s OECD Insights piece on regulation design principles around the sharing economy, What is a taxi? Regulation and the sharing economy, here.


Netflix highlights the futility of internet filters


Internet piracy is declining, and it’s a direct result of new streaming services like Netflix.

That is the finding of a new report from consumer group CHOICE. The Australian reports:

Since Netflix launched in March, the number of Australians regularly pirating has dropped by a quarter, say consumer advocacy group CHOICE, which conducted the research.

This will come as no surprise to Netflix. As head of content and acquisition Ted Sarandos explained in 2013, similar falls in piracy have occurred all around the world:

One of the things is we get ISPs to publicise their connection speeds – and when we launch in a territory the Bittorrent traffic drops as the Netflix traffic grows. So I think people do want a great experience and they want access – people are mostly honest. The best way to combat piracy isn’t legislatively or criminally but by giving good options.

Netflix has become so confident in its ability to combat privacy that it has become part of their business strategy.

But this effect is not limited to Netflix. By making content cheap and easily accessible to consumer, online streaming services are only doing what Spotify has done for music, and what Steam has done for gaming.

This validates what the tech industry has been telling governments, and traditional media companies, for years: The best way to combat piracy is by making it it easier to access products legally. The one approach that has failed to have any significant impact is increased law enforcement.

Continue Reading →


The ATO is a national security organisation?


Remember when Chris Berg argued mandatory data retention was not about national security?

The IPA has been warning for years that some of the most virulent supporters of data retention aren’t security and law enforcement agencies, but economic regulators. (As we said in this press release from September 2012…) But if the scope of data retention wasn’t clear before, it ought to be now. This is not a targeted national security measure, and it appears the government has no intention of ensuring that it is one.

As reported in The Australian, the Parliamentary Joint Committee on Law Enforcement has recommended that the tax office be made a “criminal law enforcement agency”, meaning:

The Australian Taxation Office would have tough new powers to access intercepted telecommunications information under a proposal to help better track down major tax fraud that threatens public finances.

As the government wrestles with restoring the budget, a powerful parliamentary joint committee yesterday said it was persuaded the ATO should be able to access stored phone calls, emails and SMS to protect the public purse from “serious criminal activities”.

The committee pointed to ­Australia’s largest tax-evasion ­investigation, Project Wickenby, to argue the ATO should have some of the same powers as police, corruption commissions and the Australian Crime Commission under the Telecommunications (Interception and Access) Act.

The proposal, if adopted, would effectively see the controversial data-retention scheme ­expanded to include the ATO.

Of course, this is true to form. FreedomWatch was concerned when, more than three years ago, the ATO argued – to a parliamentary committee on intelligence and security which was examining the relationship between technology and counter-terrorism – it needed ‘tough new powers to access phone taps, text messages and other communications’ to combat tax fraud.

The parallels between then and now are eerie.


Sinclair Davidson highlighted another problem with this over at Catallaxy Files:

As I keep saying to people: You have no effective right of privacy against the government. When it comes to things such as the income tax, this is a feature of the system not a bug.

Know too that the Australian government is a strong advocate for tax information sharing – that means that any government in the G20 could be able to hear your phone conversations if it could be construed to relate to taxation. So you shouldn’t be saying anything on the phone that you wouldn’t want the Russian Mafia, or any other criminal organisation (not including government – they know already), to know.


Cater: Small tech is proving to be the enemy of big government


An excellent article from Nick Cater in The Australian today, on the natural instinct of progressives to resort to government regulation, and how this is under threat from new innovative markets, such as the ‘sharing economy’:

By any reasonable judgment, more red tape would be a disproportionate response to the assault of a police officer by [a street performer dresed as] Spider-Man on the corner of West 42nd Street and Broadway nine days ago.

The disgraced superhero appeared in court the next morning under the name of Junior Bishop and was duly charged with assault, resisting arrest and criminal mischief. No need for any further laws, surely.

Yet the instinct to make the authorities responsible for practically everything unpleasant in modern life is woven deep into the progressive psyche… Encouragingly, however, the state’s anti-competitive stranglehold is being loosened, thanks to technology.

Small technology is proving to be the enemy of big government.

Continue reading here.



Better late than never?

Months after it gave the government its support, the ALP has agreed to review it’s position on mandatory data retention legislation. As The Age reported from the party’s national conference:

However a growing list of non-criminal government agencies is authorised to access ordinary citizens’ metadata without obtaining a warrant, including local councils, Australia Post, the RSPCA, racing bodies and more.

“Labor wants to ensure that the types of agencies with access to the data and purposes for which the data is available are appropriate,” the amendment reads.

“We want to ensure that the current warrants scheme and the threshold conditions on warrantless access are appropriate and that freedom of the press is protected.”

That access to retained telecommunications data is not restricted to security agencies is no surprise as the IPA’s Chris Berg made very clear on FreedomWatch before the passage of the bill.