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Uber could be legal in NSW by Christmas. But will it still be cheap?

Uber looks set to win the fight to operate legally in New South Wales, but the trade off could be higher prices.

The Daily Telegraph reports that in response to an inquiry into “point to point” transport in NSW, the state government will announce that the low-cost ride sharing service UberX will be legalised as early as next month.

Currently UberX drivers are breaking the law, but the ride sharing service has flourished in spite of this. In the second half of 2014 alone, 11 per cent of Sydneysiders used the service.

Uber said in May that in the year since UberX launched in Sydney, one million trips had been taken.

So what will change?

According to the Daily Telelgraph, Uber will pay a licence fee and taxi owners will receive compensation for losing “exclusive” access to the market.

Taxis will still be the only ones allowed to use ranks and pick up passengers hailing from the street.

Under the reported change, Uber drivers will have to purchase licences, and will not be licensed if they have a criminal record.

There will also be more regular safety checks for vehicles.

UberX in Sydney has a base fare of $2.50 plus 40 cents per minute or $1.45 a kilometre. The minimum fare is $8, and if you cancel your ride, it’s a $10 deduction.

Uber splits that fare between the company and the driver, and have said that 80 per cent goes to the driver. The company says that some of the rest of that money is used to meet regulatory costs imposed by governments. “A large portion goes to cover variable expenses within the service. These expenses include payment processing, payment fraud, refunds, customer support, dispute resolution, cellular handsets and service fees for the drivers, and local regulatory efforts,” a blog written by Uber board director Bill Gurley says which would suggest that any increased cost for drivers would be absorbed by Uber. After all, price is a huge part of the attraction of UberX. The Australian Capital Territory was the first Australian jurisdiction to legalise the service that launched in October. The company says UberX fares are 25 per cent cheaper than a taxi.

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The ACT Government imposed similar licensing and safety regulations on the company to those that are reportedly being proposed in NSW as well.

It’s not clear though whether legalisation is on the horizon. NSW Premier Mike Baird told Sydney radio that the report in the Daily Telegraph “had jumped the gun”.

The NSW Taxi Council, which has waged an aggressive campaign against Uber, also says the news in the Daily Telegraph is premature.

“The story appears to be premature to a proper Government announcement on this complex and critical issue,” the Taxi Council said in a statement.

“The NSW Taxi Council is not opposed to well-considered reform of the NSW Taxi Industry and the point to point transport sector generally, however any such reform must ensure safe, reliable and quality taxi transport services through a proper and enforceable level playing field for all point to point transport operators.”

Uber on the other hand, was cautiously optimistic.

“We welcome reports today that the New South Wales Government is listening to the hundreds of thousands of people choosing ride sharing in the state and propose to open up choice and opportunity to its citizens through specific ride-sharing regulations,” David Rohrsheim, General Manager of Uber Australia and New Zealand, said.

“We look forward to seeing the detail in due course and fully expect that any regulations will be safety based and made in the consumer interest, rather than to appease the incumbent industry.”

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