B.C. Government’s Ride-Sharing Red Tape Hurts Consumers

Commentary, Disruption, Matthew Lau

Many British Columbians want car rides from Point A to Point B, and are willing to pay for somebody to drive them. Many other British Columbians have access to cars and are looking to earn some income by driving people between destinations. But the provincial government continues to prevent these people from connecting with each other to engage in mutually beneficial exchanges.

Despite the NDP promising during the 2017 election campaign that British Columbians would have access to ride-sharing services before the year was over, it now looks like the earliest date by which Uber, Lyft, and similar services will be allowed to operate in the province will be in late 2019 – a delay of two years or more compared to the initial timeline.

Even then, the ability of British Columbians to access ride-sharing will be severely restricted: there will be a great degree of government control over prices and supply, and illegal taxis and ride-sharing companies could face fines of up to $100,000 – a twenty-fold increase from the current $5,000 maximum penalty.

The government’s heavy regulations on ride-sharing, including its proposed cap on the number of drivers that would be allowed to serve the market, are motivated in large part by its desire to protect the existing taxi industry from competition. In doing so, the government is trampling on the rights of ride-sharing businesses and their potential customers.

Indeed, everybody agrees that there is nothing wrong for people to take a bus to school because it is cheaper than a taxi, or for people to drive or carpool to work because it is more convenient than a taxi. But people who take buses or drive cars, similarly to Uber and Lyft passengers, are depriving the taxi industry of income by going from Point A to Point B without using a taxi.

Given that there is nothing wrong with taking a bus or driving (or walking or bicycling between destinations) – even though these transportation decisions deprive the taxi industry of income – surely there is nothing wrong with taking an Uber or a Lyft ride, and government should not be restricting these ride-sharing services to protect the taxi industry.

In addition to price and supply controls aimed at protecting the taxi industry from competition, another unfortunate trampling of consumers’ rights is that drivers for ride-sharing companies will be required by the government to have a Class 4 driver’s license, instead of the standard Class 5 license that most drivers have.

The effect of this requirement will be to hurt consumers by cutting the supply of drivers by imposing an unnecessary encumbrance on drivers who want to serve the market. It is an especially large deterrent to casual drivers who would want to work only occasionally.

While the government claims that requiring a Class 4 license would protect the safety of passengers, this argument fails for two reasons. Firstly, the government’s own commissioned report, written by industry expert Dan Hara, concluded that drivers should not be required to have Class 4 licenses. More importantly, it should be up to the passengers themselves, not the government, to determine what level of risk they are willing to accept when they use ride-sharing services.

After all, nobody – including the government – objects if people accept more risk by selecting a more dangerous occupation (such as working as a logger or in construction) in order to earn a higher wage. So why should the government object if people are willing to accept a riskier car ride in exchange for paying a lower price?

The B.C. government’s delays and heavy proposed regulations of ride-sharing are not grounded in economic evidence or logic. The delays are unnecessary, and the regulations are harmful to those who want to use, or provide, ride-sharing services.