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Vested opposition to a sharing economy

By David Leyonhjelm - posted Thursday, 3 August 2017


If a man's home is his castle, he should be free to allow anyone he wants to stay in this castle. If a woman's car is her chariot, she should be free to offer a ride to anyone she wants. And unless we are slaves, we should be free to offer our time to do odd jobs and to offer our goods for sale.

These are age old truths, so basic that no one ever bothers to question them. And as we increasingly rely on the internet, it is also becoming easier for people to offer their homes to visitors, their car for trips, their time for odd jobs, and their goods for sale. Mutually beneficial exchanges are blossoming everywhere.

This is the sharing economy, made possible because we live in an essentially harmonious society where people get along, we trust our neighbours, and contracts are enforceable. The development of the sharing economy is truly something to celebrate.

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But there are leeches who want to spoil the party, and who are getting governments to do their bidding.

Hotels, real estate agencies, taxi companies, unions and retailers are lobbying for bans, regulations and taxes to discourage people from participating in the sharing economy, because it disadvantages them. They have taken aim at sites like AirBNB, Cubbi (a site to find a home to rent), Uber, Airtasker and E-bay. They want to protect their interests at the expense of everyday Australians.

Hotels are lobbying for a tax on people using AirBNB. Taxi companies have succeeded in hitting Uber drivers with GST even when their annual turnover falls short of the $75,000 small business threshold. Unions are busy labelling every odd job arranged through sites such as Airtasker as sham contracting. And the big chain stores have succeeded in imposing GST on people who buy items from overseas through sites like E-Bay, even when the item is below the $1,000 low‑value imported goods threshold.

These vested interests invariably argue that people making mutually beneficial exchanges through the sharing economy are being exploited. Yet, oddly enough, they struggle to find anyone who thinks they've been exploited. To the contrary, the vast majority of people who find somewhere to stay using AirBNB, take a trip on Uber, get an odd job through Airtasker or buy something on E-Bay value the experience. In fact, they do it again and again. If this is exploitation, Australians are a bunch of serial masochists.

The vested interests argue that people making money in the sharing economy are dodging tax. But how would they know? People who make money letting out their home through AirBNB are obliged to declare their income to the tax office, not the lobby group representing resorts and motels.

True, if you rent someone's home through AirBNB it might not have wheelchair access and the cupboards and appliances might not be child-proofed. The same applies when staying in a friend or relative's home. It's also a risk that no‑one is forced to take, and yet millions are willing to take it. The old adage of 'buyer beware' applies.

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As it happens, the quality of service in the sharing economy is second to none. For instance, when you arrange a ride with Uber, the car is invariably cleaner and delivers a smoother ride than a taxi. This has something to do with the desire to get repeat business, and that you can read and give reviews of the people offering their services. But it is also a result of the basic hospitality of everyday Australians in their person-to-person interactions.

Rather than attempt to shut down the sharing economy, those in the old economy who are complaining about it should lift their game. Service, quality and price are still the keys to success.

And rather than heed the special pleading of the vested interests, governments should learn some lessons from the popularity of the sharing economy. People are happy to stay in a house that isn't plastered with warning signs on the walls, and to ride in a car that doesn't have bureaucratic notices stuck all over the windscreen.

Regulation in the old economy that wraps us in cotton wool and adds layers of costs should be pared back, rather than extended to everyday Australians voluntarily participating in the sharing economy. And lower taxes on the old economy would be a welcome development too.

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This article was first published in the Australian Financial Review.



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About the Author

David Leyonhjelm is the Liberal Democrat Senator for NSW.

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