Tuesday, July 01, 2008

When the left is wrong about rail

Idiot Savant naturally is cheering the renationalisation of rail. Maybe no one bought him a train set when he was a kid. As is sadly the case of far too many on the left, he’s swallowed hook line and sinker the myth around Tranz Rail. There are elements of truth, but the story is far more complicated.

Though he treats the privatisation of New Zealand Rail as if it were something criminal saying “Unfortunately, the people responsible for that corrupt privatisation are still walking free Yes, one of course is the Chairman. However, what about those responsible for this outrageous nationalization? Why are those who have taken taxpayers’ money and paid for a company around double its market price ever able to show their faces in public again? If a company director did a deal to buy another company well over the odds in price, he better demonstrate it would generate returns – actually Kiwirail will cost the new shareholders a fortune, and for what?


Well according to Idiot Savant the “private sector's focus on short-term profit led to asset stripping and running a minimal service”. Like he’d know. He is pretty much just churning out the leftwing propaganda from the era. Like he noticed that the
privatised Tranz Rail increased long distance passenger rail services and ran them as such for some years before the impact of significant airfare discounting and cheaper car and petrol prices eroded patronage. The privatized Tranz Rail carried more freight per tonne km that the railways in New Zealand EVER did before. Just bigger longer trains on longer distances, many at night are invisible to most. Yes it didn’t spend up large on track, but a report in the mid 1980s said that the track had effectively been goldplated – overengineered for purpose in many cases. Privatised Tranzrail expanded its carriage of milk by rail and coal by rail, and even reopened the odd branch line for regular freight services (Dargaville). It bought a brand new ferry, which turned out to be a bit of a bad purchase, and started the Lynx Fast Ferry service which was eventually killed off by complaints against waves in the Marlborough Sounds that saw a speed limit imposed under the RMA. The last time a ferry had been bought by the government owned railways was 1983 and before that 1974, buying another and leasing a fast ferry was hardly “asset stripping and running a minimal service”.

He goes on “No matter what happens, freight and people are still going to be moved, but the market is unable to see far enough ahead to provide for it Really? Noticed how privatised airports tend to be no worse, and often better equipped that state owned ones. Notice how ports all effectively run as local authority owned businesses, unsubsidised. Notice how many railways were actually built by the private sector, indeed the entire US rail freight sector is privately owned and operated – and yes it carries very large volumes of freight. Some of France’s motorway network is privately owned and provided and the rest are government commercial companies. The market wont provide? More a lack of imagination, permission and crowd out by the state.

He continues with the idea that “road transport pay its real costs, rather than continuing to be effectively subsidised by the government.” He doesn’t actually know what that means I am sure. It’s often trotted out by the anti-truck pro-rail believers (it is a religion after all), when the evidence is that the road transport that competes with rail does pays its share of roading costs. You might argue about negative externalities, but then nobody pays that in any economic or non-economic activities (or charges for the positive externalities). It’s just part of the leftwing environmental religion around transport.

He then says National wouldn’t possibly level the playing field between road and rail “Instead, they're likely to "leave transport to the market", entrenching existing inequities and repeating exactly the same mistake which led to rail being run down in the first place.” Well again he’s well out based on the last National government, but then I wouldn’t ever guess what the John Key Labour lite administration might do. National before sought to require roads, like rail, to be run by profit oriented companies. What it will do in the future is anyone’s guess, but the key point is that the long held myth by rail enthusiasts that road freight has some enormous advantage over rail needs to be exposed.

There are problems with the current system of road funding, financing and management, but nothing will dramatically change the amount of freight that goes by rail for a simple reason – rail is only efficient at moving bulk or containerized freight over relatively long distances, with few exceptions. Subsidising it more is subsidizing those already using it. It’s about time the worshippers of the grand sacred religion of rail engaged their minds.

Oh and if you still subscribe to the rail good, truck bad theory, I've fisked that one before as a study commissioned by this government demonstrated that in some cases trucks have a lower environmental impact than trains per tonne km transported (in some they are higher and in some are the same). So if it's not economically efficient, if the environmental advantages are dubious and sometimes illusory, then why buy the railway at all?

Indeed Idiot Savant, why do you want taxpayers to subsidise:

- Solid Energy's coal exports to Asia;
- Fonterra's dairy export business;
- Forestry companies logging and wood product businesses?

Awfully funny position for a socialist methinks.

UPDATE: Rodney Hide tells it like it is - it's going to cost hundreds of millions of dollars for taxpayers without any return.

Jim Anderton talks the same mythology of Idiot Savant, claiming rail is a natural monopoly. Funny how it finds it hard to compete with road freight and coastal shipping, this really isn't the characteristic of a natural monopoly is it? He scares us into thinking the Nats might sell it again - frankly who cares as long as taxpayers don't have to pay any more?!

Reading the PM's speech she makes a key mistake:

- Rail does not necessarily have a fourfold energy advantage over road for freight movements, that is long dated (1981) and discredited figure. The true figure is probably closer to 2-2.5 given improvements in roads, truck technology and the types of freight now moved. The truth is that there has been no good study done of this since then.

1 comment:

Mark.V. said...

The government has just announced an unexpected increase in road user charges for road freight. The government has finalised the takeover of rail. The connection between these two events is that road transport competes against rail so the government has every incentive to increase road transport costs, which it can do simply by increasing road user charges.