Wednesday, May 21, 2008

Now you're going to subsidise coastal shipping

Not satisfied with having paid over the odds for the right to run trains on its own network, and the rolling stock. Not satisfied with that including a coastal shipping service (the interisland ferries), the government now wants to spend your money to prop up, wait for it, the competitors to the railways and the ferries, the coastal shipping companies.
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It's not much money, $10 million a year over the next three years. Why?
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Coastal shipping has not been subsidised in New Zealand since the 1980s, when the fourth Labour government cut the subsidies to the Stewart Island ferry service (which was operated by the Ministry of Transport) and the Chatham Islands shipping service. Funnily enough both islands still have services of course. Before that the Kirk Labour government propped up the Wellington-Lyttelton overnight ferry run by the then Union Steamship Company with the ferry Rangatira. The subsidies ended by the Muldoon government because of poor patronage and because competing rail and air services were profitable.
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So what's changed? Well for starters, NZ First's Peter Brown is a shipping fanatic, he thinks it is the answer to many of the nation's transport problems. Harry Duynhoven is into it as well. So personal political missions sound like a good reason to make a decision don't they? So hey, why not prop it up. The goal is to double the amount of freight going by coastal shipping, which is because it is more fuel efficient, but here's the rub.
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You see other than the ferries, coastal shipping is about moving containers and trucks. It competes with rail because rail doesn't feed those ships, trucks do. So the government buys one mode on the pretence of the environment and fuel efficiency, while subsidising another on the same basis, but it also insists on running the roads on a non-commercial basis.
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The irony is if the amount of freight on coastal shipping doubles it could be largely at the expense of rail. You can barely wonder at the brilliance of paying over the odds for a business that you then undermine by subsidising its major competitors. Can transport policy get more stupid?

1 comment:

Matt Nolan said...

"The irony is if the amount of freight on coastal shipping doubles it could be largely at the expense of rail. You can barely wonder at the brilliance of paying over the odds for a business that you then undermine by subsidising its major competitors. Can transport policy get more stupid?"

Completely agree :)