Rob Granatstein: how city hall tries—and fails—to tackle the systemically screwed-up Toronto taxi industry

Rob Granatstein: how city hall tries—and fails—to tackle the systemically screwed-up Toronto taxi industry

Toronto’s taxi industry has been a mess for more than 50 years. As a passenger, you feel it as soon as you slide your bum onto the vinyl backseat and see the starting fare of $4.25. The meter quickly rolls higher as you lurch through stop-and-go traffic while listening to your driver blather away on his Bluetooth. For this dubious service, Torontonians pay more than taxi customers in New York and Los Angeles.

If it’s any consolation, your driver is equally ticked off. Despite the high price paid by riders, the average cabbie working a 12- to 14-hour shift is lucky to take home $75—after paying for the car, gas and dispatch fees. A 2008 academic study conducted by professors at Ryerson and U of T found that shift drivers, who rent their cabs from plate owners on a daily or weekly basis, can make less than $3 an hour. People in the taxi industry claim there are 1,000 too many cabs on the road, which is killing the drivers’ ability to make a living. Toronto currently has approximately one cab for every 520 people, whereas a decade ago, we had one for every 1,000.

Whenever politicians try to fix our troubled taxi industry, they inevitably make it worse. Yet city hall is wading in once again, with Councillor Cesar Palacio, chair of the licensing and standards committee, heading up a 10-month review that will attempt to resolve some long-standing grievances among drivers.

The last review, led by Howard Moscoe and Denzil Minnan-Wong in 1998, sought to eliminate the jalopies from the city’s fleet. Back then, there was only one class of taxi licence, the Standard plate, of which there were 3,480 in operation. Licence holders could either drive a cab themselves or rent the plate out to secondary drivers. The system gave rise to a class of investor-owners­, some of whom acquired dozens of licences that could later be sold on the open market. Complaints of driver exploitation were common, and the shortage of owner-operators was blamed for poorly maintained cars and low-quality service.

In order to ensure drivers were more invested in the state of their cars, councillors Moscoe and Minnan-Wong added a new class of licence, the Ambassador plate. The new plates were exclusively owner-operated and could not be resold. Those cabbies who bought into the program (there are currently 1,313 of them) naively believed that owning their own business would be the path to freedom. Instead, they became slaves to their cars. Whereas Standard licence owners can profit handsomely by leasing or selling their plates—the going rate is as much as $300,000—Ambassador owners can’t even loan their cabs out while they’re sick or on vacation.

Today, the divide between the Standard and Ambassador licensees is so stark, it’s led to accusations of racism. Asafo Addai, an Ambassador cabbie, and his lawyer, Peter Rosenthal, argue that the two-tiered program is discriminatory, with most Ambassador plate holders being from visible minorities, while the Standard plate holders are largely white. Their case is currently awaiting a decision from the Ontario human rights tribunal. I expect they’ll lose, as cabbies are simply victims of bad timing, not discrimination. New drivers are usually recent immigrants.

In 1998, when the Ambassador class was created, Toronto was experiencing an influx of African and South Asian immigrants. Go back a few decades and, according to Rosenthal, taxi drivers were predominantly Jewish, Hungarian or Greek.

So what’s the fix? During the 2010 election, Rob Ford made overtures about ending Toronto’s two-tiered system, and many cabbies believe he’ll collapse the two licence categories into one. But exactly how he’ll do this is anyone’s guess. TaxiNews, which services the city’s 10,000 cab drivers, has been filled with more rumours than the sports pages at NHL trade deadline time. One suggestion is a buyback scheme, in which the city would pay to eliminate the Standard plates, but this would be way too costly: can you imagine politicians spending millions of taxpayer dollars to pay off Standard drivers, while at the same time making cuts to TTC service and the High Park Zoo? Another way to even the playing field is to simply convert Ambassador licences to the gold-plated Standard version, but this is unlikely, too. Not only would it devalue the original Standard plates, but it would cause an all-out revolt among those who have spent their life savings to buy one. Rosenthal, for his part, wants the city to implement a new rule requiring that all cabs be owner-operated, thereby ousting investors who aren’t driving to survive. That would benefit lawyers, at least, who would get rich suing the city on behalf of plate holders who’d lost their income streams.

The most viable and equitable solution to the two-tier system is to allow Ambassador cabbies to pay for the right to convert their plates to Standard, for a fee collected by the city. Ambassador drivers will likely balk at the idea, but it’s the only way to protect the value of Standard licences.

Regardless of what happens with the plate issue, the city needs to step back and let the taxi industry run itself like a real business. And this is where a Ford-style government can work. If city hall eases the strict rules governing the industry, it might open the door to some creative solutions. Because when you get past all the red tape, the problem is simply one of supply and demand. If there really are too many cabs on the road, drop the rates to boost demand. It shouldn’t cost $6 to drive a few blocks in this city.

Alternatively, the industry could introduce a flat rate for downtown—say, $10 to drive anywhere from the lake to Bloor Street, Parliament to Bathurst. If taking cabs were less costly, more people would choose them for running errands or commuting. Diamond Taxi’s president, Jim Bell, and Howard Moscoe, who is now retired, both think it’s worth a try. The only expense would be a sticker promoting the new fare, so if it flops it stops. Ford could even sell it as his next battle against the war on cars.

Money will likely be at the root of any changes to the taxi industry. New York is set to raise $1 billion for its cash-poor coffers by selling thousands more taxi medallions, and that dollar figure has grabbed the attention of city hall, which is desperate for new sources of revenue. New York cab medallions have paid off handsomely for their owners, rising 400 per cent in value since the end of 2001, and now the city wants to cash in on the steep price. Toronto’s Standard plates have jumped about 250 per cent in the same time frame, but the city hasn’t benefitted as it hasn’t offered any new plates.

It’s tempting for city hall to see this as a potential revenue stream. I asked Cesar Palacio if he was facing any pressure to make increased cash flow part of the mandate of his review. He paused for an uncomfortably long time before finally offering a firm no. He said he’s planning to take his time with the review, to consider every angle. “I hope the solution isn’t too impulsive,” he added, signalling down the hall toward Rob Ford’s office. It’s true that the mayor has a way of pushing ahead on his promises, with or without council’s blessing. In the labyrinthine world of Toronto’s taxi licensing system, a direct route might not be such a bad thing.


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