Wednesday, January 30, 2008

Scotland drops tolls, ignores economic truths

The Scottish Executive, which governs Scotland under devolution with taxpayer funding directly from Westminster, is abolishing tolls on the Tay and Forth Bridges. So, instead of road users paying for the maintenance and upkeep of the two bridges directly (and paying off loans associated with the Tay Bridge), money will come from general taxpayers. Socialism at work - shifting from user pays to bureaucratic planning and taxpayer pays. According to the Scottish Transport Minister this ends "years of injustice". Apparently the injustice is that those bridge users pay for their bridges, but other Scots get their bridges subsidised by everyone else in the UK. Maybe food should be "free" too.
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Well it wouldn't be if you applied some economic rationality. For starters you could have dedicated the average amount of fuel tax collected from users of the bridges to the bridges themselves, and used the tolls to collects anything left over. You could have sold the bridges. Yes, I know you'd almost rather paint a St. Andrew's Cross on yourself and call yourself English that do something so instinctively anti-Marxist, but you could've. Then you'd still have people saying they pay fuel tax and tolls, but you could have offered to refund the fuel tax, or credited it towards the tolls. After all, what's wrong with user pays? Oh I forgot you're running the Scottish Executive, everything is wrong with user pays isn't it? Because the users wouldn't pay if they had the choice.
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Of course abolition of the tolls is meant to bring great benefits, by elimination congestion at toll booths. Again, a modicum of research would point out that toll booths are yesterday's technology to tolling, as electronically tolled roads in Canada, Chile, Australia and elsewhere have proven for several years now.
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The truth will be in a few months time and a few years down the track. Removing the tolls lowers the cost of using the bridge, this increases demand, which will in itself mean congestion at peak periods of demand. This will bring demands for new bridges, which are not cheap. So then you have to decide do you have those who demand the new capacity pay for it, or just be good socialists and make everyone pay for it.
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In Tauranga, it was less than 2 years after the toll was removed that there were regular reports of lengthy delays on the harbour bridge, and calls for a duplicate bridge. Now the bridge is being built, paid for by all road users nationwide, after NZ First Leader Winston Peters lobbied for it not to be tolled as part of the confidence and supply agreement with the Labour Party. No doubt in 10 or so years time there will be demand for yet more increases in bridge capacity or at least peak periods of congestion.
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Selling the bridges would make far more sense. You may then see the following happen:
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1. Operators of the bridges that want to maximise their efficiency, so would shift towards lower cost electronic tolling and optimise maintenance;
2. Operators of the bridges that want to maximise throughput of the bridges. This means charging more at times of peak use, but correspondingly ensuring traffic is not severely congested. It also means responding quickly to accidents or blockages, and ensuring maintenance activities are carried out at off peak periods. Don't believe me? Look at the privately built, funded, designed and owned Citylink motorway in Melbourne, because this is exactly what happens.
3. Operators of the bridges that make profits, and might reinvest the surplus in other worthwhile business ventures, pay dividends to shareholders or even build duplicate bridges if they were deemed worthwhile. This is bound to be better use than politicians spending the surpluses.
4. Government would get a substantial windfall of cash it could use to pay off debt and reduce taxes overall.
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Or you can keep doing the old fashioned tried and tired central planning option for roads. It has been a stunning success hasn't it?

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