Deregulating the taxi industry would not necessarily increase providers in the Illawarra, according to the NSW Taxi Council.
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A national review of competition policy was released this week and claimed reform in the taxi industry was "long overdue".
"Many restrictions remain that limit competition by creating barriers to entry and preventing innovation," the report said.
While not endorsing controversial ride-sharing services like UberX - where regular drivers give people lifts in their own cars - the report suggested a change in regulations that "allows new entrants to meet consumer demand, while continuing to ensure the health and safety of consumers".
The Illawarra is serviced by only one taxi company, Wollongong Radio Cabs, and NSW Taxi Council chief executive Roy Wakelin-King said deregulation would not suddenly lead to competing firms in the city.
That was because there was already scope for this to happen, he said.
"There is no statutory limit on setting up another taxi network here in Wollongong," Mr Wakelin-King said.
"Any organisation or any group of individuals could come and set up a taxi service here in Wollongong tomorrow provided they meet the necessary standards.
"So this perception that there is constraint in the number of taxi services in NSW is frankly rubbish. The ability for there to be competition exists today."
Mr Wakelin-King said the free Gong Shuttle bus has had a "significant impact" on the public's use of taxis, a factor he said was part of the reason no competing taxi service had turned up in Wollongong.
"What the market has said is there is a provider in this area and the market has determined that at this point in time there is insufficient demand to compete. The fact the market has arrived at this position doesn't mean there isn't the framework for that competition to occur."
Mr Wakelin-King said deregulation would affect the more than 100 privately owned taxis in the city and would lower standards and - based on international experience - raise costs.
"Wollongong Radio Cabs isn't the organisation that owns all of those cabs, you've got a hundred families involved in the ownership and operation of those taxis," he said.
"So there'd be a lot of social and economic impact that is negative on the families involved."
ghumphries@fairfaxmedia.com.au
