Tuesday, July 01, 2008

Sue Kedgley's latest economic lunacy

Petrol prices rise (as do diesel prices). Demand for buses goes up in response, buses start overcrowding. The solution proposed by Wellington Regional Council? Increase fares, as it will moderate demand, recover the increased cost of fuel and reduce net subsidies. A great chance to lower costs to taxpayers, give bus companies more money from passengers that could be used to increase service capacity and encourage more people to walk or cycle instead of riding the bus.

No no, it's so wrong. Ignoring the value of increasing fares, Kedgley wants the money tree to be plucked to subsidise them more!! She wants people who aren't riding buses, ratepayers, to pay for those who do - to encourage people to overcrowd the buses.

It is sheer economic lunacy.

The opportunity now is for bus subsidies to end, for bus passengers to pay the costs of providing them with services, reducing demand from those who are price sensitive (and likely to walk, bike or not travel instead), providing room for those who are willing to pay, and incentivising the bus companies to put on more services to make money from the higher fares. However, Sue doesn't care about the much harangued ratepayer.

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