I may be wrong but . . . .

I may be wrong but … there seems to me to be some faulty economics going on behind the decision to put the pressure on Kiwirail to pay its way. Or is it just a case of starting the debate with the wrong set of assumptions and being totally unable to change our mindsets?

The charge that a rail network in New Zealand needs to be subsidised and therefore should be scrapped just doesn’t wash with me.

Most of its services cannot pay their own way because they cannot compete with road services (trucks for freight, cars and buses for passengers).  But do roads pay their way? Of course not!

We all heavily subsidise roads through taxes. If all road users (freight firms and private vehicles) were to pay for ALL the costs for the creation and maintenance of all roads, through some all-enveloping road user charge (such as tolls based on vehicle weight) rather than through taxes, then we would be not only screaming at the cost but also looking for some alternative – including public transport and rail.

The trouble is, we have a fundamental, rarely questioned assumption that roads should be there so we can drive on them whenever and wherever we wish, and that the government must make them available seemingly for nothing. This assumption has an obvious corollary – that alternative transport modes are add-ons to our car-based lifestyles and must therefore pay their way (because we rarely if ever use them directly).

This is feeble but sort-of okay until we start to look out a decade or more into the future, with fuel costs continuing to rise and roads getting increasingly clogged with heavy trucks (requiring higher-capacity roads at huge cost to subsiding taxpayers). It seems obvious to me that the realisation will eventually dawn that winding down rail for short-term, political reasons has been foolhardy.

So then we will find ourselves debating the seemingly prohibitive costs of buying land and re-laying tracks to build or re-open parts of the network that were sold, left to ruin, poorly maintained or built over.

Christchurch city shows one pretty obvious example of how hindsight is easy but paying for winding back abandoned networks is horrendous. Once it had a tramway system, now all gone. The cost of re-establishing one small part of it (for tourists) has been huge, and this would be magnified greatly if old suburban routes were rebuilt. Much running argument in that city centres on the need (and huge cost) of a light rail system to serve the future. If only all those abandoned networks had not been thrown away, it may have been possible!

And now we have the prospect of closing down existing smaller railway services that cannot pay their way. Doubtless Kiwirail will also sell some of the land these lines occupy in order to free up more money, making it even harder and more expensive for the lines to ever be rebuilt when they do become potentially desirable to run.

This entry was posted on Wednesday, May 19th, 2010 at 4:41 pm and is filed under Economics, Environment, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.