About 11 per cent of Sydney residents have used ride-sharing services like UberX in the past six months, despite the fact they are illegal, the independent regulator says.
New figures quantifying for the first time the rapid rise of UberX in Sydney come as the regulator proposes freezing taxi fares for a year from July to help the industry compete with aggressive new entrants.
In a report released on Thursday, the Independent Pricing and Regulatory Tribunal is also calling on the government to establish a new body to monitor and regulate taxi services and taxi-like services such as UberX, in which motorists pick up passengers using their own cars.
Taxi drivers are earning less money per hour than they did in 2011, IPART says. They are also not earning any more money as a result of IPART's earlier proposal to increase fares on Friday and Saturday night.
IPART attributes the weakness in the industry to competitors such as UberX.
"Demand for point-to-point transport is linked to population growth and business and tourism activity, and all the indications are that these sources of demand have continued to grow in Sydney since 2011, yet demand for taxi services has dropped over the same period," the chairman of IPART, Peter Boxall, said.
"We can only conclude that this demand is being taken up by competitors to taxis," Dr Boxall said.
"In this environment, increasing fares would simply encourage more passengers to choose alternative transport more often, further eroding the competitiveness of taxis."
The state government says the ride-sharing service UberX is illegal. Yet it has struggled to clamp down on the service, hindered, in part, by the difficulty enforcement officers have had in proving drivers are breaching the Passenger Transport Act.
Consumers, meanwhile, have been drawn to UberX because it can be cheaper. A survey commissioned by IPART showed about 50 per cent of car-share riders used them instead of a taxi because they were cheaper.
IPART said competition had the potential to improve options for consumers but entrants should operate on a level playing field.
Drivers working for UberX avoid many of the costs of driving a cab - such as about $28,000 a year in lease costs for licence plates, as well as network fees and insurance premiums.
In a draft recommendation, IPART said the government should set up an independent body to make recommendations on the "point-to-point" transport industry, which includes taxis and Uber.
According to IPART the new body would make recommendations that took into account new technology, applied to all point-to-point transport services, focused on the safety of drivers and passengers, and encouraged innovation.
Roy Wakelin-King, the chief executive of the Taxi Council that represents the established industry, said he welcomed a separate proposal of IPART's to not release any more taxi licences.
But he said his initial inclination was that the government should manage the regulation of the industry, not a new body.
A spokeswoman for Uber said in an email: "Uber welcomes the recognition of ridesharing as an alternative transport choice in IPART's draft review of Sydney taxi fares and licences."
"We call on the Transport Minister, Gladys Berejiklian, to acknowledge the benefits of ridesharing, begin her promised consultation process and work quickly to adopt safety-based, innovation-friendly regulations that provide certainty for consumers, drivers and the ridesharing industry."
Ms Berejiklian said she was keen to see submissions to the review.
"There's no doubt we are also watching what's happening in other jurisdictions, both in Australia and overseas," Ms Berejiklian said. "But I want to say in the interim that the law is the law, and people have to respect the law."
IPART's draft report is open for submissions, and a final report is due in February.
