Here's at least one story of someone's woes after being hit by a taxi driven by an unlicensed driver. It didn't take much effort to find.
http://m.theage.com.au/national/its-fare-game-20090702-d6lq.html
In this case, it was only property damage. Now imagine the guy was killed, leaving behind 3 kids, a wife and a mortgage, and was the primary income earner. Wife hadn't worked for 12 years because she gave up work to raise the kids. The guy who owns the taxi is probably going to be liable, his public liability insurance is null and void and if he doesn't have the means to pay, no amount of compensation is going to matter. He can't pay it.
I don't subscribe to the notion that it's ok to lend your taxi to a mate.