Victoria’s Government has announced plans to legalise Uber and it’s going to cost everyone $2 a ride

The Victorian government has announced that over the next two years it will be overhauling the commercial passenger industry, leading to the establishment of a single registration system for all commercial passenger vehicles including taxis, hire cars, and ride-booking services such as Uber.

The decision paves the way for Uber, which has been operating illegally in the state for more than a year and makes Victoria the final state to yield to the US-based giant.

But everyone taking a taxi or Uber will pay $2 a trip for at least the next eight years as part of a $378 million compensation package for the taxi industry.

Premier Daniel Andrews says the reform will put all operators “on an even playing field”.

“This is not just about changing the law for one company only to go through the whole process again when another app is with us in a week or month or a year,” he told media.

All drivers – including Uber operators – will have to be accredited by the Taxi Services Commission after passing police, medical and driving history checks. They will also be subject to ongoing criminal data matching.

Premier Daniel Andrews says draft legislation to be introduced this year to reduce the hire car licencing fee to zero, with a further raft of changes introduced in 2017.

“This is a comprehensive and fair transformation of taxi and hire car services, which responds to new technology that is changing the way people travel,” he said.

Cabcharge CEO Andrew Skelton said he hoped the changes would create a fairer environment for all industry participants, but called the compensation package inadequate.

“The Victorian Government has an obligation to taxi licence holders, because people either bought the plates from the Government or bought them on the secondary market on the basis that the Government would not undermine their value,” he said.

The Victorian Taxi Association (VTA) said it “broadly” supports the government’s decision to reform the industry, however noted it has “serious concerns” for the impact it will have on existing licence holders, in particular challenges associated with the collection of the proposed trip levy and what fairness the AU$378 million funding will deliver.

Victoria is the latest state planning to legalise ride-sharing, with the Andrews government claiming it will create 3,500 jobs.

All commercial passengers vehicles will be charged the levy, which the Andrews government expects will raise $44 million a year, and is to run for at least eight years.

Victoria is the last Australian state to announce the legalisation of ride-sharing.