High time governments embraced the sharing economy

Commentary, Frank Atkins, Robert Murray

As cities across both Canada and the U.S. continue to stumble their way through issues surrounding the introduction of ride-sharing services such as Uber, it’s clear the ongoing reluctance by municipalities to allow these services is less about ride sharing or taxis, and more about how Canadian politicians at all levels seem to believe that consumers will accept monopolies as fact of life.

The so-called “sharing economy” has been growing for years, with millions of Canadians making use of such services as Uber and Airbnb. In trying to explain why Canadians are becoming more interested in such services, one need only look to the highly restricted regimes in many Canadian industries such as taxis and air travel that limit choice through the creation of legislated monopolies.

Human nature is predicated on the idea that people like choice, and that competition brings out the very best the market has to offer. If a service fails to improve itself in the face of worthy competition, it dies and is replaced before long with another service that rises to rival the dominant services in a given industry. In Canada, we are far too accustomed to monopolies, and are thus far more comfortable with limited providers of services at very high costs.

The fact that sharing-economy companies have been welcomed to great acclaim in Canada signals that consumers are fed up with monopoly providers. This is not to say that services like Uber and Airbnb are by any means perfect, but instead, we feel it should represent the start of a broader process where local and provincial governments begin not only to recognize the value of the sharing economy, but also move to create policy that embraces such services and encourages further competition in a wider array of service areas that can benefit Canadians.

The response to Uber in particular seems to have ignited important questions about how Canadians perceive the sharing economy. In the Alberta context, both Calgary and Edmonton are currently faced with how to meet public demand that clearly favours the integration of Uber into the marketplace without further infuriating taxi drivers and risking losing the revenue from the monopolistic design of the current taxi industry, particularly from taxi licences. To date, both municipalities have failed spectacularly at trying to find reasonable solutions to the issue and seem more interested in regulating and limiting, rather than encouraging choice for Albertans.

The response by Calgary and Edmonton city councils speaks to a greater trends, in that for quite some time, governments shirked their responsibility in having to look at the issues by saying the sharing economy was too broad or too complex to legislate, or in other cases, governments quickly caved to the pressures exerted by those who benefit from the existing monopoly structures. In an effort to move the debate forward, Ontario MPP Tim Hudak recently introduced a private member’s bill aimed at taking advantage of the sharing economy. Mr. Hudak’s bill is the first of its kind in that it proposes a comprehensive framework that seeks to benefit both those who want to use sharing economy services, and also those seeking employment.

The fact the bill has moved past second reading in Ontario’s legislature is a testament to the fact governments may be waking up to the realization that not only are sharing-economy services in higher demand, but also that the time has come to begin finding ways to overcome Canada’s monopoly culture. Further, given the growing demand for sharing-economy services, governments are rapidly witnessing that Canadians themselves have finally had enough of an economy that limits choice and competition, and are seeking market solutions that favour better consumer outcomes over better producer outcomes.

The hope is that governments at all levels can appreciate the need and value of what Mr. Hudak’s bill aims to accomplish. Governments can no longer ignore the growth of the sharing economy and Canadians’ support for it.

Robert W. Murray is vice-president, research, and Frank Atkins is the chair of finance and capital Markets at the Frontier Centre for Public Policy.

This op ed was originally published by The Edmonton Journal on Monday, November 30, 2015: http://edmontonjournal.com/opinion/columnists/opinion-high-time-governments-embraced-the-sharing-economy