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Agile and Innovative – the New Reality

By Steve Laing

I suspect that if any commentator were to pick an example of the new agile and innovative economy, they’d probably suggest Uber as being the great exemplar. And why not? Taxis have seen to be getting increasingly dirty, the drivers unhelpful, and often don’t know their way around. Add to this the usual casual racist remark that “they can’t speak English” (whilst conveniently ignoring the fact that they are often prepared to work long, antisocial hours for very little money), and you’ve got an environment that is perfect for an innovation shake-up.

Uber’s acceptance into some Australian states has happened remarkably quickly. And as you’d expect, taxi drivers aren’t happy. The license holders often have shelled out excessive amounts for their plates, only to find that they are now effectively worthless, as indeed are their vehicles, and the state governments who were responsible for setting the rules (and the costs) now seem quite happy to throw their rulebook straight out the window. Of course, the fact that many of these people are effectively the “small business people” that our government extols, is completely beside the point. We really don’t want to draw any attention to that fact. Nor do we want to highlight that certainly in Perth, (though it wouldn’t surprise me if this was an Uber model), that the general manager has very close relations with the current government. Political cronyism? What? Here in Australia!

Now at this point, I’ve got to state that as part of the government’s economic transformation, I fairly recently found myself having to look for work having made the decision to sell the business I built over ten years due to all the indicators suggesting that things weren’t going well, nor were they going to be getting better any time soon. So I made the call to lose a little, than lose the house. If only I had held on a little longer, I might have enjoyed the two company tax breaks from the government! However, given that most small businesses, after the owners have taken their own wages, don’t actually turn much of a profit, it’s fair to say that the net impact (very much like the immediate write-downs) was pretty much non-existent. However it has beautifully created the narrative of looking after the battling small businessperson to let them give their big business mates a bung in a few years time. I mean, have you tried working out how many cups of coffee you need to sell to buy a $6,000 toaster?

But I digress. The point is that I needed to get back into the workforce, whilst also finding a source of income. Fortunately given that I have a fairly new, insured and taxed four door saloon, no criminal record, and am now appropriately licensed, I have been able to join the ranks of Uber drivers to help fund my job search, and so can now pontificate on this service with some degree of authority.

First things first. Let us be quite clear, there are many, many things about Uber that are excellent. The fact that riders (the Uber term for passengers) can see who their driver will be (and can cancel if they don’t like the look of them), can phone and check if their boot is big enough for all their baggage to the airport (and cancel if it isn’t), can see that they are actually on their way. All good. Moreover you don’t have to have any cash on you, and no need to tip, has got to be a good thing. And it is cheap. I’d say about 40% of the cost of a cab for most trips!

And most of the riders I’ve picked have been delightful. We’ve had some great conversations, as well as some pleasant journeys entirely in peace. (My suggestion is that if you don’t want to chat, get in the back!).

From a driver’s perspective, helping passengers to their destination is great. And financially, it’s good too. But that bit isn’t the issue. It’s the bits around the edge. If you are keeping up with the story, I’m sure you’ve seen articles from around the world where Uber drivers are increasingly angry that Uber simply seem to saturate the market, to the extent that it can be at times hard to get enough fares to cover your costs, far less make a buck. The time between fares (including the time and the cost to get to the fair, which in one case was a twenty minute drive!) is picked up entirely by the driver. So whilst those long journeys out to the suburbs make a decent amount, the usually rider-free drive back can make that journey less rewarding. Moreover the Uber app doesn’t let you know where the rider wants to go until you’ve picked them up, so when you are ready to knock-off for the day, you either turn off the clock or take the risk that any new fare might take you miles in the opposite direction.

Uber also has a pricing mechanism called surge pricing. This means that where demand excessively exceeds supply, the customer pays more. The app shows the areas where surge pricing is happening, which encourages drivers towards those areas. But in a month’s driving, I’ve only seen surge areas on the app four times, suggesting that supply is already far exceeding demand (yet they are still advertising for new drivers).

Anti-social hours? Weekends? Public Holidays? No difference in rates. Price is dictated entirely by supply and demand. The market rules. And to help the market along, Uber in Perth has recently dropped the prices, yet increased their share of the fare from 20 to 25%. On average to date, my takings from driving are about $20 an hour. And that is before expenses, and GST. So overall I’m making less than the minimum wage, but since I’m effectively self-employed, who gives a shit, right?

Talking of expenses, another little gem of information that Uber failed to provide me, was that I would require both an ABN and be registered for GST. Now I suspect that they would state that this isn’t their problem. Uber don’t employ me, they just send me fare requests, and then payment for such. But given that I’m probably unusual in that I am a little more diligent than I suspect your average driver would be, then there might be quite a number of drivers who might be having a few issues with the ATO come tax time. More work for an already overworked government department, paid for by the taxpayer.

However perhaps the biggest issue that I have is one that appears not to have been touched on much at all, namely road safety. Unlike taxis, Ubers aren’t immediately obvious. New fares pop up on your phone usually at the most inopportune moments. You will be at a junction, and in the wrong lane, when the customer request appears, and the desire to avoid a 5 minute detour to get to your customer (as you want to avoid them cancelling on you because you are taking too long) will encourage drivers to make rash, unsafe decisions. Whilst we are very wary of taxis doing stupid things on the road and give them appropriate space, we don’t expect a normal saloon to suddenly take rapid maneuvers. So be warned!

Moreover, constantly keeping an eye on the sat nav that is part of the Uber app, to help you find your rider, and then deliver them to their destination, definitely distracts you from what is happening on the road. I won’t Uber in the dark. The app is so bright that it affects my night vision, and I know it’s not safe. But more importantly, it is impossible to use the app effectively without illegally touching the device whilst driving. For reasons best known to the developers, the app will often direct you to the street behind the house, and the only way to check you are going to the right place is to flick between the destination screen and the navigation screen. Even when properly mounted your choice is to act illegally, or to potentially add so long to your journey that your rider will rate you badly. Maybe we just need to pay for more police patrols. Again at taxpayers expense.

In just four weeks, I’ve almost run red lights four times (in two cases I was warned by my passengers about them!), and have had three close calls where people have nearly driven into me because of where I’ve had to stop to pick up passengers. Whilst Uber apparently cover my insurance in such an accident, I don’t expect they care one jot about my downtime whilst my vehicle is sorted. Again, not their problem.

So is this the new agile and innovative economy? Minimal due diligence before hand, and a lack of regulation thereafter? No more workers, everyone’s a boss. Cheap service for those who can afford to be driven around. And poor people working for buttons, expected to be grateful for the privilege, with not a trade union in sight! It’s a Liberal wet dream. And perhaps a cautionary tale for Malcolm’s new economic model.

Also by Steve Laing:

Are we missing something here?

Democracy lost?

Another new fridge


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  1. keerti

    You might be interested to know that uber drivers in Sydney are banding together and looking for better conditions for drivers. Uber wherever it has gone has pissed off it’s slaves. In a world where uber style employment becomes more prevalent (does that mean innovative) workers conditions will be errodedeven while the companies make billions.

  2. bobrafto

    I mean, have you tried working out how many cups of coffee you need to sell to buy a $6,000 toaster?

    I’d say about 1,500 and probably in a week or less if you’re popping out 100 toast an hour. And business doing that sort of volume certainly doesn’t need the govt. to give it $6K. In my day I just leased equipment as I suspect most businesses do today.

    But I digress.

    I don’t agree with what is the unbridled greed of capitalism espoused by the LNP.

    So what does one do? apart from having the govt. changed.

    Even with a change of govt. the big end of town still calls the shots as we saw with the mining tax.

    The major problem is that Neo capitalism is so entrenched and with the enactment of laws favouring the big end of town it’s going to take a revolution to change the economic model from trickle down to trickle up.

  3. Sandra Hill

    * I’m sure you’ve seen articles from around the world where Uber drivers are increasingly angry that Uber simply seem to saturate the market, to the extent that it can be at times hard to get enough fares to cover your costs, far less make a buck.*

    But, aren’t you saying that Uber is now just the same as a conventional taxi service? I always thought (I may be behind the times) that Uber was just a way to make the occasional buck rather than being a job. Wow, what is the difference now then? They seem to have become just another taxi service, disappointing.
    I live in a small country town so I have not had anything to do with them – but I have to say that I have had some terrible taxi experiences in the past when I have visited large cities.

    Taxi plates have always been way over-the-top expensive and I get that they are angry about that, but times move and with the Uber and Airbnb model gaining ground for years people/companies must have seen the change coming and started to prepare for it. If they didn’t they only have themselves to blame, especially with all the problems and bad customer experiences which they have not handled.

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