Wednesday, October 29, 2008

Vote Labour for your taxes to subsidise importers

Yes, the Prime Minister took a train trip from Wellington to Paraparaumu where she was briefed about a very expensive project to duplicate the rail tunnels between Pukerua Bay and Paekakariki. The press release says it would cost NZ$150 million, not a small amount of money, and for what? Well it will allow bigger containers to operate on freight trains between Palmerston North and Wellington, and allow more frequent train services to the Kapiti Coast.

Who are the main beneficiaries of this? Well large containers coming into Wellington are primarily about imports, as the goods flow southbound is primarily about delivering consumer goods to Wellington and the South Island, after unloading and dispatching from Auckland based distribution warehouses. Exports tend to flow out of more regional ports, so in fact the south-north rail freight flow has historically been lighter than north-south. Wellington doesn't produce much that goes north by rail.

Secondly, of course, are Kapiti coast commuters who would enjoy perhaps a 3-5 minute travel time saving on the train trip, and the chance for a major increase in train service frequencies at peak periods.

So who is Helen Clark expecting to pay for this? The freight customers who presumably would want to pay a premium for " improving journey times, reliability, and capacity for freight trains" as she says. No. Presumably the benefits aren't good enough for Kiwirail to borrow and charge these customers appropriately for the added convenience.

What about the commuters? Shouldn't they expect to pay more for some travel time savings, and a more frequent service? Shouldn't enough extra passengers make it worthwhile? Well no. You see they already don't pay enough to cover the cost of running the existing trains, and a more frequent service would mean buying MORE trains, which is an added cost - and most of the day those trains would be sitting in yards doing nothing.

So it's simple. Helen Clark wants your taxes (or to borrow, your children's taxes) to give Kiwirail freight customers a subsidy, presumably damaging the business of the competing trucking (and shipping) companies, so they can shift containers of largely imported consumer goods into Wellington and down to the South Island more cheaply. She also wants you to give the safe Mana and highly marginal Otaki electorates Kapiti Coast commuters a subsidy for their trips into Wellington.

I looked at this project in some detail a few years ago, and it isn't worth it. If Kiwirail wants to pursue it, it should borrow the money and recover it from charging customers over the depreciated life of the project - which would admittedly be many years. However it wont. It's not worth it. It's a waste of your future taxes. It's money you should have back yourselves, to decide what to spend it on.

4 comments:

Canterbury Atheists said...

Using a thinly guised word for a tax, called a fee, The N.Z Government (care of N.Z Customs Department) has been charging N.Z Importers for every import entry processed for approx 5 years now.
This fee is triple that for exporters, it was more to start with & for exactly the same job and is currently worth in excess of 25 million P.A dollars into the public coffers. Importers could argue their extra fees are going to pay for something that will benefit them like decent roads into and out of ports.Ta. Paul

Joshua said...

If all those containers are coming in anyway, then surely it's better to have them on train than clogging up roads? Ever done research into the amount of roading maintenance require to subsidise the road transport industry?

Clunking Fist said...

Joshua: like "Road User Charges" that is based on distance travelled and weight of vehicle?

Josh, have you ever been caught in a traffic jam with freight trucks? No, me neither: I guess they do most of their driving outside of peak commuter times.

libertyscott said...

Joshua, the road user charges paid by trucks on State Highway 1 covers well beyond the maintenance costs for that highway.

You've been reading too much of the faith based nonsense by the Greens. You should read the government's own study - Surface Transport Costs and Charges, specifically the case study on Auckland to Wellington freight.

The state highways are entirely funded by road users, the railways not.