New forms of regulation urged for Uber and the rest of the sharing economy

Governments need to stop trying to hold back the sharing economy and develop new regulatory frameworks for the companies such as Airbnb and Uber says a new report from the Mowat Centre.

Governments can't hold back new ways of doing business and need to adapt

An Uber driver in Japan contacts customers via iPhone. A Mowat Centre report urges cities to allow Uber, but find a way to regulate it. (Junko Kimura-Matsumoto/Bloomberg)

Governments need to stop trying to hold back the sharing economy and develop new regulatory frameworks for the companies such as Airbnb and Uber says a new report from the Mowat Centre.

Ride-sharing service Uber has met with protests from taxi drivers, cities and governments around the world and U.S. cities have been trying for the past 18 months to find a way of regulating house-sharing service Airbnb.

“To date, the reaction from governments has felt like a frantic game of "whack-a-mole" — struggling to contain these new enterprises while even more pop up,” said the report from the Mowat Centre, a public policy think-tank based in Toronto. 

These services are going to grow, but they shouldn’t become entrenched in their habits in a situation in which they are allowed to self-regulate, the report said.

Issues of safety, worker protection

A labour-sharing service such as TaskRabbit, in which people volunteer to do odd jobs, has the potential to exploit workers by paying less than minimum wage, while there are safety issues for women who get into Uber cars with drivers who have not been fully vetted.

The sharing economy is raising issues of safety, labour rights and accessibility that need to be addressed, said Sunil Johal, policy director with the Mowat Centre.

"Once they’re operating and consumers are comfortable with the services, it’s more difficult for governments to step in," he said.

Governments need to recognize that these businesses are here to stay and attempt to create nimble regulatory environments, he said.

Policies need to be thought through, as a "reactive approach" doesn't work, Johal said in an interview with CBC's The Exchange with Amanda Lang.

"The first starting point is for governments to establish a bit of a strategic operating framework and think through some of those big issues such as what are our health and safety, public policy objectives, what are the fiscal implications for government around some of these enterprises and what are the consumer choice issues," he said.

That doesn’t mean stifling innovation by applying the 40-page Toronto taxi licensing manual to Uber drivers, he said. Rather it calls for modernizing of the existing regulatory framework.

“In order to foster marketplaces that promote both innovation and competition, governments should focus on reducing the ‘regulation gap’ between new and existing operators,” the Mowat Centre report said.

Reduce the 'regulation gap'

That might mean reducing the regulatory burden on taxi licences and allowing new operators such as Uber, but with a regulatory regime that maintains customer safety and ensures cars are insured.

The speed and scale of change in technology-related businesses such as Kickstarter, Etsy, Lyft and Uber make it difficult to draft new regulatory regimes, Johal said. Governments are risk-averse and prefer to regulate something that is easily defined – like the hotel sector, rather than something that is difficult to pin down – such as peer-to-peer home sharing.

Johal urges a “cultural change" in governments’ approach to designing new laws that would put end-users first.

"So think about how the citizen is using the services interactively, why is it easier to use these services than existing  services interactively, what are the problems for cab drivers?" he said.  

“Laws and regulations that are easier to understand are more effective and get higher rates of compliance,” he added.


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