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The New South Wales Government is embracing startups and disruptors such as Uber, Airbnb and Kickstarter with a series of new initiatives announced to boost the NSW sharing economy (also known as the collaborative or peer-to-peer economy). In a position paper released this month, Minister for Innovation and Better Regulation, Victor Dominello, said the sharing economy was worth $504 million to the NSW economy last year. The benefits of the sharing economy are evident and has so far created a wealth of new opportunities. So, what are the upcoming changes to the regulatory framework for sharing economy participants?

Supporting a Culture of Innovation

The NSW Government will assist startups to grow and scale quickly by removing barriers to entry. By recognising the pivotal role of innovation in increasing productivity and minimising underutilised assets, startups will receive greater support through deregulation. It’s unsurprising that with the number of mobile phones exceeding Australia’s population, technology and the rapid growth of on-demand apps has played a pivotal role in facilitating the rise of these services. 

These regulatory and policy changes have already begun, with the recent legalisation of UberX and other ride-sharing services in NSW. Passengers in NSW will be required to pay a $1 levy per ride to pay for a compensation package worth $250 million for owners of taxi licence plates. The legalisation of UberX is an example of how the NSW Government has taken action to reap the benefits of innovation in delivering economic, social and environmental outcomes.

Regulation and Promoting Competition

The position paper also sets out a number of guiding principles on how to approach regulatory challenges. The government has acknowledged that “simplification, repeal, reform, or consolidation of existing regulation should be considered.” The government has also identified that enhancing the availability and transparency of information to government agencies will assist in developing regulatory measures. The flow of information collected by sharing economy participants will not only assist the NSW government in understanding consumer behaviour, but it will also create a level playing field.

Tendering work for government procurement work will also be deregulated to facilitate greater competition between sharing economy providers and platform owners. By allowing more innovative competitors enter the procurement work sphere, this will result in more efficient outcomes for government work.

Customer Protection and Safety

The sharing economy utilises private assets such as cars and homes, which presents a new set of challenges for public safety. While startups implement self-regulatory and accountability mechanisms such as customer rating systems, the government will need to consider new innovative approaches to ensure compliance with legal obligations. For example, the Australian Consumer Law will apply to products and services sold to consumers, including consumer guarantees and product liability. Providers of sharing economy services, such as hosts on Airbnb and UberX drivers, must ensure they carry the requisite insurance and abide by any local government and council regulations.

Drive for Collaboration

With an estimated 45,000 people earning income through the sharing economy and 50 per cent of NSW consumers engaging in the sharing economy in 2015, it is encouraging to see the government support innovation, recognise its tremendous economic contribution and promote deregulation in the sector. We will be closely following the developments in the sharing economy this year and provide frequent updates on the upcoming legislative changes.

What do you think? Tag us on Twitter @legalvision_au and let us know. Or, ask our startup lawyers on 1300 544 755.

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