Third, peer-to-peer platforms are only the most visible part of a broader shift towards platforms across the economy. Consumer, civil society and business functions – from navigation to communication and finance as well as increasingly sophisticated computing – are increasingly managed on platforms.
Because the value to a platform user may increase as the number of other users increases, a leading platform may acquire a strong competitive position. By the same token, platforms may compete strongly with one another, to the benefit of consumers.
Data access and privacy also become complex challenges when more work is done through online platforms.
Finally, platforms pose tax challenges. By growing the economy and handling payments electronically, they can grow the tax base. But multinationals may not pay much local company tax and smaller peer-to-peer providers may not pay much GST.
FROM ANOTHER ERA
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.
These worries are not groundless but they should not be used as excuses to retain policies, such as taxi regulation, which were designed for another era and no longer fit.
State and territory governments should follow the lead of New South Wales, the Australian Capital Territory and others by legalising ride-sharing services such as Uber.
In peer-to-peer accommodation, local councils should allow short-stay rentals run by platforms such as Airbnb, but state governments should 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 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 Jim Minifie is Productivity Growth Program Director at the Grattan institute
You can read the report Peer-to-peer pressure: policy for the sharing economy here.