Rail nationalisation?

So Dr Cullen is thinking about buying the entire railway business of Toll NZ, as there is disenchantment with the "network nationalisation" model that the Greens were cheerleading some years ago.

Let's recall what has happened in the last seven or eight years:

1. In 2000/2001 Tranz Rail brought on board a new chief executive, Michael Beard, to try to arrest an ongoing decline in profits, share price and a mounting legacy of infrastructure and rolling stock that would need hefty investment. In short, the company was not making a return on capital that was worth investing further in it - what that means is simple, the average investor was better off putting money in bank deposits than in Tranz Rail. Michael Beard announced a new focus on freight businesses by commodity, and that a whole raft of lines looked like they should be closed, with much publicity surrounding the Napier to Gisborne line - an expensive to run line, with barely enough freight to keep a train a day going. He also announced Tranz Rail would sell off its passenger businesses.
2. Government leaped, various Ministers declared this plan was unacceptable and negotiations began on saving various parts of the network/system with subsidies. Auckland local authorities sought to spend $120 million of ratepayers' money to buy the entire Auckland metropolitan rail network to meet aspirations for a massive upgrade of commuter rail services. Central government did it instead, spending $81 million to buy back the Auckland rail network, despite Treasury valuations at the time, of it being worth no more than a quarter of that. Meanwhile Tranz Scenic was sold, and Tranz Rail agreed to not close any lines while it continued negotiations with government on rail policy.
3. Tranz Rail's shareholders were keen to bail out, and a deal was struck whereby Toll Holdings would buy the company, in exchange for the government taking over the rest of the railway network for $1. The government would own and maintain the rail network, while Toll would have a monopoly on rail freight services as long as it maintained a minimal level of service on each line. Toll was meant to pay adequate track access charges to keep the network maintained, while the government agreed to put $200 million taxpayers' money into the network.
4. The railway network has been transferred to Ontrack - a Crown company - which is meant to negotiate track access charges with Toll Rail. These negotiations have failed, and an independent arbitrator has decided on charges that Toll claim are unacceptable.

So. What now?

Simple. The government should, at the very least, call Toll's bluff. It should insist on Toll either paying the track access charges or buying the network off it. Arguably the government should ask for what it has put into it, minus track access charges, but let's face it - it's a dud investment. Something socialists are good at finding. Either Toll will pay up and make a profit, or buy the network and do so, or buy it and run much of it into the ground, or sell up the business to a coalition of rail freight users (you know, the ones who claim it is "so essential", but wont pay enough to pay the cost of running it).

The clear answer is this - the government is not best placed to know whether the rail network is economically efficient or not. However, some think it is.

Idiot Savant for one, is cheerleading this, based on a number of strawmen:

• Rail services are vital infrastructure: Wrong, countries can exist and thrive without railways. About the only section that can be seen as "vital" is the Wellington commuter rail network, and even then only because the alternative (expensive road widening) is not as cheap as keeping the rail network. Rail services have never made a good return on capital for decades, road transport, by contrast, has been privately run for a long time, and the road network generates a substantial surplus from road user charges that is reinvested in that network. Rail cannot even generate enough revenue to maintain what its got. I don't doubt that some of the rail network could be sustained, but clearly less that what there is.
• the key problem of private ownership - the tendency of private owners to cut back on maintenance spending and run down the infrastructure: Actually this reflects an economic fact, it was not profitable to maintain the infrastructure to do more. For example, when you can only sustain one freight train a day on a segment of around 40km (Rotorua), and a high level of maintenance makes that unprofitable then what should be done? Should non-customers pay for something they don't use? By the way, have you noticed how run down truck fleets and bus fleets are, not? Most long haul trucks in New Zealand are an average of around seven years old, and most major bus companies don't keep buses beyond 15-20 years. There is not a long haul locomotive on New Zealand tracks that is younger than 20 (or a diesel younger than 28) (and yes I know they have a longer service life, but engine technology has moved on a lot since the 1970s!).
• (renationalisation will) allow us to have a properly planned rail network and services again: I wonder when he last thought this happened? In 1990 and 1993 it collectively had NZ$1.3 billion (in 1993 values!) wiped, this happened before in 1982 when around NZ$100 million in debt was wiped (it collected this debt while it had a statutory monopoly on long haul freight). Is this the proper planning that saw investment in new goods sheds that were shut a few years later, or the manufacture of its own rivets at several times the cost of buying them off the shelf?

However he makes one correct point "we're effectively subsidising them, and paying for their profits, by maintaining the infrastructure they depend on to run". Indeed, but the answer to that isn't to pay for the business, after all if YOU were Toll Holdings, wouldn't you ask a good bit of money for the business if the government wanted to buy you out? Labour might threaten to pass legislation to force nationalisation, but wouldn't that look a bit Robert Mugabe or Hugo Chavez - and in election year too.

So, I'm expecting this to drag on. Toll Holdings knows though that its best deal is almost certainly under a Labour government rather than a National one, so it will want to strike a deal - Labour also knows it wants to be the government that "saved rail" for whatever reason. In addition, the Greens will demand it as one of their "faith based initiatives". So you might find another wad of taxpayers' money being thrown into the rail network to prop it up a bit more, otherwise I dare all those who want the government to force New Zealand taxpayers to save rail to do something...

save rail yourself. Get like minded people to come together and offer Toll Holdings a price. You might need to get the rail freight customers like Fonterra, Solid Energy and the like to join you, but make the effort. If you're not so inclined, then buy a train ticket on one of the few long distance passenger services left - at least you can say you've used it, since your taxes have paid for the lines!

Freedom from the pre-modern Islamists

Gillian Gibbons' has received a Presidential pardon in Sudan, which is a tremendous relief - but for it to come to this is an indictment on the Sudanese legal system. She has also said she wants to go back to teaching in Sudan and "I have great respect for the Islamic religion and would not knowingly offend anyone and I am sorry if I caused any distress". Her choice of course, although whilst still in Sudan and having had her freedom achieved by Muslim peers means, at the very least, she is hardly going to say anything else while she is still there. She has nothing to apologise for, and her respect for Islam is misplaced. Of course it may be unlikely she has been shown the extend of local calls for her execution!

^

Neverthelessm what this shows is what happens in an Islamist state. It has a legal system that besides having laws against blasphemy (don't forget blasphemy is still a crime in NZ, and the last English prosecution for it was 1977, although it would be fair to say as a law its time is nearly up), doesn't even apply actus reus or mens rea to the crime. At worst she was negligent, she not only had no intent, she didn't DO anything.

^

Pity the Sudanese we never hear of who ever get accused of such a "crime". With mobs of thugs who regard execution as a legitimate punishment for blasphemy, something not seen in England since the 18th century, locals who inadvertently let children do something like - name a teddy bear - wont have the British Government or British Muslim peers on their side. The state of Sudan is just another instrument of initiated violence, and has the blood of hundreds of thousands on its hands because of Darfur.

^

Sudan needs to go through the renaissance, throw off the shackles of Islamist violence and have a state that protects citizens from each other, not turn on them because some offend others.

^

Of course, it's easy to throw stones when Western liberal democracies still have, largely nascent, laws against blasphemy. These should go, forthwith, there is NO excuse. A handful from the religious dark ages will come out and preach censorship, but they should be ignored.

^

By the way, the US Supreme Court decided in 1952 that "It is not the business of government in our nation to suppress real or imagined attacks upon a particular religious doctrine, whether they appear in publications, speeches or motion pictures" overturning the New York state blasphemy law. New Zealand and those European countries with such laws could do worst than to follow this example.

Have I got news for you

Damned thing wont post but there is buckets of this show on youtube.

Start with Boris Johnson hosting here from two years ago, this is absolutely magic. The man IS the best chance Londoners have of unseating Red Ken Livingstone - frankly, if as Mayor of London he spends more time hosting this show, I think we'll all be winners!

http://www.youtube.com/watch?v=hBxkrBaK8vk

http://www.youtube.com/watch?v=LaLbBmrS8dw

http://www.youtube.com/watch?v=gGKiGz4-Dy0

Is there political satire in NZ on TV yet? Can you imagine any MPs participating?

Russia's barely democracy

It has been clear in the years since Vladimir Putin became President, that Russia is slipping back to authoritarianism. It isn't quite the totalitarian terror of Marxism-Leninism, but something halfway - whereby there is some free speech, there is some private sphere but you daren't think about seriously threatening the incumbents.

^

Putin has been variously sabre rattling, being friendly with bullies to the east and south, and been trying to flex Russia's muscles, largely fueled by the high prices of oil and gas. Many Russians have benefited from this, from the wealthy to a growing middle class.

^

However, Russia has moved from the substantial freedom of the late 1980s and most of the 1990s, to controlled speech and media. In the last parliamentary elections in 2003, the party of Putin- United Russia - gained a plurality with around 37.6% of the vote. With 70 seats out of the 450 largely held by independents loyal to Putin, United Russia commanded a clear majority.

^

This time, the entire system has moved to proportional representation - because, you see, it clears out lots of small parties. The threshold for entering the Duma will be 7%, given only 4 parties crossed that in 2003, you can see what's going on. In 2003, the two main opposition parties to United Russia were the Communists and the Liberal Democratic Party - the latter being a fascist nationalist party (remember Vladimir Zhirinovsky?). The most promising ones (by any measure of support for Western values) - Yabloko and Union of Right Forces - only won 4 and 3 seats respectively last time.

^

So this time the contest looks like a foregone conclusion. State TV is overwhelmingly biased in favour of Putin and United Russia, and Gary Kasparov - who led a coalition of parties of left and right against Putin - is now in prison for leading an illegal march. Because, of course, he would have been allowed had he applied for permission! United Russia refuses to participate in TV debates with other parties

^

The Daily Telegraph reports "there are widespread stories of intimidation and planned ballot rigging. University professors, factory bosses and teachers claim to have been forced to vote for or join the party or face dismissal. Students claim to have been threatened with expulsion if they do not do the same. Regional governors not trusted to secure a sufficient share of the vote for United Russia have been removed."

^

Although it also reports that even in a free and fair election, United Russia may still win. However, it is aiming for more than that. It wants 70% of the vote, so it can change the Constitution, allowing Putin to remain President, although he is at the top of the United Russia party list so he could become Premier as well.

^

So should we fear Russia? Probably not. For now, almost all of its economy is based on fossil fuels - when prices slide back down, then there is little else left. Technology, services and manufacturing remain at a low level. It could well be the mine for China, but it is an expensive mine to operate given the climate, territory and infrastructure. Secondly, its population is in steady decline, falling at around 0.5% per annum. 15 years ago it had the 8th largest economy in the world, now it is 11th. Its rusty armed forces cannot project far, although it still has nuclear capabilities these probably have a serviceable life of about another 10 years at best - realistically speaking Russia will be confined to defending its borders within a generation. So no, it is unlikely to be a threat over the longer term, but this is sad

^

Meanwhile, pity Russians who had their taste of freedom and largely don't want it anymore. Unfortunately, the whole country is generations behind western Europe in having relatively low corruption, transparent politics and bureaucracy - the best hope to change that remains the examples on its borders. Sadly, with the exceptions of Finland, Poland and the Baltic States none are much of an example, and plenty are the opposite (Belarus, Kazakhstan).

^

So on Sunday hope that enough Russians will vote in enough number to ensure the gerrymandering doesn't give United Russia an overwhelming majority. While you're at it, buy a lotto ticket - you might have better odds.

Chavez threatens to not sell oil to the USA

Go on you Marxist thug.

Given CNN reports "United States is Venezuela's biggest oil customer and one of the few countries that can refine its low-quality crude. Venezuela accounts for up to 15 percent of U.S. crude imports". I think it's fine for a socialist to say he's not going to sell to his biggest customer, especially since his product is hardly that well sought after.

He's looking to remove term limits and put the Central Bank under his control, as well as reduce working weeks (given that the work ethic there isn't high according to some reports that wont help). Nice little recipe for more authoritarianism, and more wasting of money following a grand vision for "the people".

Keep watching political science students and economic students - learn how a country can be wrecked by socialism, and pity the average Venezuelan, the welfare state that has been built is unsustainable.