Thursday, July 03, 2008

Greens so wrong on trucks

Well why should I be surprised? The Green party response to the truckers protesting against a government that lied to them is to say "It is time to stop subsidising the trucking industry". I've fisked this nonsense before, but if you dare... read on.

You really do have to wonder how these people can say on one side of their face don't subsidise one industry, but go ahead, subsidise the competing one to the hilt!

The Greens cheer lead the renationalisation of the entire railway sector, cheer lead taxpayers subsidising rail maintenance costs, cheer lead taxpayers fully funding new railway lines which only a handful of rail freight customers will benefit from and generally slobber with excitement at the prospect of taxpayers' being pillaged to prop up their totems of twin ribbons of steel on concrete. Subsidising trains is good. Remember subsidising coastal shipping is good too, so is subsidising buses - in the Church of the Uninformed Transport Environmentalist (not quite a rude acronym) these are the holy words, not to be sullied by evidence or analysis, but full of nonsensical scaremongering.

Then they say "don't subsidise trucks".

Are trucks subsidised? Well as usual the simpleton kneejerk headline grabbing approach of the Greens obfuscates, confuses, distorts and frankly gets it very wrong.

Jeanette Fitzsimons says "At the moment, truck drivers only pay 56 percent of their costs to the economy, compared to rail freight users who pay on average 82 percent and ordinary motorists who pay 64 percent, according to the Ministry of Transport's Surface Transport Costs and Charges study from 2005"

OK let's pull that one apart:

1. "At the moment" is wrong, the study was a snapshot of 2001/2002 statistics. Before the government bought back the track or the entire railway, before it started subsidising the maintenance of the railway track and before it increased Road User Charges on heavy trucks twice. Rail freight users are undoubtedly paying less than the putative 82% and truck "drivers" (well the owners) will be paying more than they are now. That's if we accept those figures, and I don't. After all I've read the report, many times.

2. If you break down the costs, which are total costs, then we go from costs that are real and actual, to ones that are putative and notional. This is when it gets complicated.

The "56%" recovery of truck costs includes such things as return on capital of recoverable assets. Now since rail isn't expected to make a return on capital on the track and right of way, we can remove those from trucks too. Suddenly this 56% figure goes up to 72%. However that includes externalities mainly for pollution. The air pollution figure is telling, as it is back in the days when diesel was dirty with 1500ppm of sulphur (which is the dominant contributor to PM10 - particulate matter, which is by far the most damaging pollutant). Diesel now has 3% of the sulphur that it had in 2001/2002, easily stripping out the majority of the air pollution "cost". Then there is noise, which is valued at $87m. Now noise tends to be factored into property values, so arguably can be stripped out as well.

So now this 56% cost recovery figure is 91%. Remember heavy RUC has now been increased twice since then, although maintenance costs have increased as well, so let's be generous and say RUC has gone up to cover that.

We know that half of the cost of local authority roads is recovered from rates. This is deliberate and could easily be addressed by another increase in RUC (but councils better be required to cut rates in compensation). Simply recovering this additional cost from trucks would more than overcompensate for the 9% "subsidy".

Still following me? Thought not.

So the 56% is rather illusory, especially when you ask trucks to be treated the way rail is now treated, when you take into account the dramatic reduction in pollution simply through now having far cleaner fuel, and you eradicate the rather esoteric monetisation of noise. The gap is simply the cost of maintaining local roads which comes from rates - and local roads do not compete with rail.

So this subsidy is not only hypocritical, but at worst a rather insignificant contribution that is about local roads - which you could also argue is about property owners paying for access to their properties.

Funnily enough doing the same rejig for cars puts cars on the same figure of about 91%.

3. Jeanette says "It is important to remember that Road User Charges for trucks have been increased only once since 1989". This is nonsense. RUC for trucks over 6 tonnes has increased twice now as of 1 July. RUC for smaller trucks has been increased several times since 1989 (trucks 4-6 tonnes) so she is wrong. However there is a reason why RUC for heavy trucks has only gone up twice. The maintenance costs for roads have not gone up at the same rate as kms driven because of the efficiencies since 1989 of contracting out maintenance to the private sector on a competitive basis, instead of having the Ministry of Works and councils doing it. Something, no doubt, the Greens probably would have opposed as "privatisation". So revenue from heavy trucks has, pretty much, increased faster than road maintenance costs until recently, when the cost of oil has meant bitumen prices have risen considerably. So the point is, so bloody what Jeanette? Why should they go up faster than costs?

4. Jeanette says "If we want to see more of our heavy freight on rail instead of big trucks on the road, we need fair Road User Charges." Fair? You mean recovering more than the financial costs they impose? How about recovering all of rail costs? Oh yes forgot that, it's ok to subsidise the church of rail - but not roads.

Now there is no point reiterating the OTHER finding of the STCC study the Greens love quoting. You see the figures Jeanette talks of are total costs, but this doesn't tell you how much extra cost shifting a tonne of freight by rail or road imposes relative to those costs. Those are marginal costs (asleep yet?). As I have said before, the marginal environmental costs of hauling freight on a tonne km basis sometimes are higher by rail than by road (between Auckland and Wellington), sometimes similar (between Napier and Gisborne), sometimes lower (between Kinleith and Tauranga).

So you see, whether or not freight is greener by rail or road depends very much on the circumstances. However the followers of the rail religion don't want to hear that - it destroys the mythology they have around transport, which quite frankly is truly bizarre.

1 comment:

Oswald Bastable said...

Well, a bit of of it is about the cost of transport- but mostly it's about an idea.

The idea that people seem to be finally becoming aware of.

That government has spread through our lives like a cancer As with so many cancers, it is at the point of killing you when you finally become aware of it.

We are about to get this cancer cut out. That much is obvious now.

But cancer has this nasty habit of coming back.

Today's protests- rather small beer on the world stage- serve notice that that apathy levels in NZ have finally been overcome. This SHOULD be a strong message to ALL parties that we are sick of being continually leeched upon to support the agendas of a few.

I know that NZ can be roused to far more meaningful demonstrations than a traffic jam. Study your history if you think this rhetoric.

Today's gesture was the first rocks tumbling down the slope before the landslide.