Why Australian governments should embrace the growing peer-to-peer economy

by Jim Minifie

The rise of the sharing economy can save Australians more than $500 million on taxi bills, help them to put underused property and other assets to work, and increase employment and income for people on the fringe of the job market, according to a new Grattan Institute report.

Peer-to-peer pressure: policy for the sharing economy shows that the prize for getting this new online economy right is large and governments should not try to slow its growth in order to protect vested interests.

Peer-to-peer platforms such as Airbnb and Uber use online technology to help strangers interact and do business. Platforms host markets in accommodation, travel, art, finance and labour, among other fields.

Grattan Productivity Growth Program Director Jim Minifie says that while the private sector will drive the peer-to-peer economy, government has an important role to play in supporting its growth while reducing any downsides.

‘Some say peer-to-peer platforms bring hidden costs by risking work standards, consumer safety and local amenity, and by potentially eroding the tax base,’ Dr Minifie says.

‘These worries are not groundless but they should not be used as excuses to retain policies, such as taxi regulation, that were designed for another era and no longer fit.’

The report calls on state and territory governments to follow the lead of New South Wales, the Australian Capital Territory and others, and legalise ride-sharing services such as Uber.

In peer-to-peer accommodation, the report urges local councils to allow short-stay rentals run by platforms such as Airbnb, but recommends that state governments give owners’ corporations more power to limit disruptions caused by short-stay letting.

Tens of thousands of Australians are already working on peer-to-peer platforms. These platforms will mostly improve an already flexible labour market, but governments must strengthen rules to prevent employers misclassifying workers as contractors, and bring some platform workers into workers’ compensation schemes.

Tax rules must be tightened to ensure that platforms based overseas pay enough tax.

‘Not all traditional industries are happy with the rise of the peer-to-peer economy, but if governments act fast, consumers, workers and even the taxpayer can come out ahead,’ Dr Minifie says.

Read the report

For further enquiries: Jim Minifie, Productivity Growth Program Director
T. +61 (0)3 8344 3637 E. media@grattan.edu.au