Greens worship at the altar of rail with your money

Worshipping at the altar of a railway line. The Greens are advocating forcing taxpayers to pay to bail out a foreign company that owns the provision of railway services - Toll. A party that tends to be at best sceptical of capitalism and loathes foreign companies is seeking to give it a free ticket out of New Zealand with a big hand out of taxpayers' money. What an incredible sell out all to worship the altar of the railway.

The Greens love railways more than any other mode of transport. So even in an age when oil prices are at a record high, when rail cannot compete for most freight efficiently, there are major problems with rail freight being competitive for most freight in New Zealand. This puts paid to notions that "we need" railways in an age of expensive oil - it seems that it STILL isn't cheaper to send most freight by rail for all sorts of reasons (e.g. double handling, speed, inefficiency of compiling trainloads of wagon or less than wagon load lots).

Sadly the Greens are woefully ill informed about the railways at all. Jeanette Fitzsimons claims there isn't the revenue to pay for upgrades and “Nowhere is this more apparent to the public than in the state of Wellington’s commuter rail services". What rubbish. For starters, the Wellington commuter rail services get around half their revenue from taxes - whether road taxes through Land Transport NZ, or rates from the Wellington Regional Council. Secondly, with comparatively new trains recently introduced on the Wairarapa line, and all of the older electric units recently refurbished (and a major upgrade of the track, signal and electrics infrastructure underway), the Wellington system is hardly in a poor state. Toll Rail's revenues are about freight, not passenger services. So she is either poorly informed or lying to get the public's sympathy.

She claims Toll "cannot afford to pay the track access fees that were always part of the deal with Government". Really? Does she have access to Toll's accounts? Could it just be gameplaying with a government that is soft on rail?

The government is already spending hundreds of millions of taxpayers' dollars on upgrading the rail network, but even that isn't enough. Why?

Well that is the question the Greens should answer. It isn't because trucks are underpaying to cover road maintenance costs, generally they aren't. It isn't because trucks have far higher environmental costs per tonne km than rail, because the government's own study points out that it varies considerably by route (in some cases rail is lower in some cases road is lower).

I suspect it quite simply is because - notwithstanding the low cost of RUNNING a train to carry a lot of freight, the handling of freight to load and unload a train, the time/cost of warehousing freight (effectively) in assembling/disassembling a train, the high capital cost of railway equipment, the limitations on the NZ railway network placed by many low tunnels (and almost always a slower alignment than roads), rail can't compete for most freight. It can compete for hauling bulk commodities, such as coal and milk, and to a lesser extent logs. It can compete for long hauled containers, but that's about it. Rail is a very heavy, capital intensive mode with its own corridors that, by and large, get little use compared to roads. For example, the Napier-Gisborne railway on average has one train each way every day. Imagine the road having one truck (or even the dozen or so that would replace the train). That one train would have to carry the full cost of maintaining and operating the line, whereas the road has many vehicles to spread the cost over.

Passengers are a peripheral activity, unlike the UK, in NZ long distance passenger rail is about scenic tourist trips by and large.

So the Greens might have to look beyond the altar of rail and dispassionately ask why it isn't working to do what they want. Given the very high cost of diesel, the notion that rail can "save the day" when it clearly is failing to do so, seems spurious. Similarly, as the environmental costs of road and rail freight are not that dissimilar, the alleged "green" benefits of rail freight seem equally spurious.

so when will the Greens stop worshipping rail, and start supporting evidence?

Bill English says Nats might sell railways, again..

Remarkably, after reports that Dr Cullen is looking to spend some of your money on making you buy a railway, National's Finance Spokesman Bill English shows that he has some principles and courage as he has been reported by the NBR as saying that "If the purchase was completed then a National government would get out of the business as quickly as possible."

First he says "We certainly wouldn't be buying Toll. The worst thing for our railway network would be for the Government to take it over using the OnTrack company". Ok...

then seeking to get out of the business as quickly as possible, although then he flip flops a little "We would go out and look for an operator and then you would have to decide whether they come in to operate it and the Government retained ownership or you sell it to them".

Why would the government retain ownership? How does that do anything for the taxpayer?

Of course Winston Peters wants to buy it back, it's not his money after all. He thinks it is a "buyers' market" - well go on Winston, make a bid with your money and those you can convince. Ask the Greens to help. Although the test of most nationalisers is that they will never risk their own money to do it. Funny that.

Abolishing income tax?

No Minister has posted about how the UK Libertarian Party has proposed abolishing income tax, by simply cutting government spending to where it was 5 years ago, given how high VAT is (17.5%).

He asked in relation to New Zealand "How much scope is there for a radical overhaul of our tax structure? Perhaps this is a task for Peter Cresswell and others to consider. How detailed are the NZ Libz with their policy prescriptions? Or is abolishing income tax 'pie in the sky' here too? Does ACT offer anything here?"

Well the Libertarianz (NZ) DOES have detailed policy on tax, on the party website here. It actually proposes the OPPOSITE tax reform, with all OTHER taxes being abolished other than income tax, which would be set at a flat rate of 15% with a $10,000 tax free threshold. This would be a transitional measure which itself would be phased down.

Why leave income tax and abolish others? Well it is a matter of two things.

Firstly, other taxes are largely invisible to the general public. GST, residents' withholding tax and various duties are paid, and the public treats these as part of the cost of goods or earning interest at the bank. It would be far preferable to notice that the cost of government is transparent and you pay that, rather than it hidden in multiple other taxes.

Secondly, abolishing all of the other taxes will lower compliance costs for businesses, end the "black economy" nonsense about paying under the counter for goods and services, and dramatically simplify tax arrangements overall.

How would this be paid for? Well by dramatically shrinking the state. Libertarianz has proposed alternative budgets for some years.

Now I remember Sir Roger Douglas proposed abolishing income tax in his book Unfinished Business, and it was originally ACT policy (he replaced income tax with compulsory health insurance, superannuation and education). ACT policy has been flat tax and more recently two step income tax. I'd be interested to see if ACT revives flat tax for 2008, but for now Libertarianz is the low flat tax party.

Don't want to buy a railway?

Tough - Dr Cullen is going to make you, if he can get away with it.

Not satisfied with spending $81 million for the Auckland rail network, when Treasury valued it at best at $20 million, not satisfied with spending $1 for the rest of the national network.

Not satisfied with spending from general taxation:

- At least $450 million to upgrade the Auckland rail network (track, signals and platforms) from 2005;
- $100 million per year for six years from 2007 to upgrade Auckland and Wellington rail networks;
- $25 million in 2008/09 and again in 2009/10 to upgrade the national rail network;
- $100 million upfront in upgrading the national network from 2003, and $25 million annually from 2004 to 2007.

Noting than absolutely none of that spending will boost the net financial value of the rail network at all (it is unlikely to be able to be sold for the amount being spent on it), now he wants to spend $500 million buying the whole lot according to Stuff. Toll wants $700 million, but presumably Dr Cullen will threaten "the state is sovereign" to force a compulsory nationalisation.

Toll is already paying the government $9 million per annum less than Ontrack (the Crown company which owns the rail network) is charging for its use. You might think Ontrack could simply tell Toll to stop trespassing, or to tell Toll that it will invoke the rail access agreement which means other companies can provide rail services on the network if they drop below a certain level. Yes, in case you didn't know, the "ownership" the Crown has of the track also gives Toll a monopoly on the use of the track, as long as it maintains a minimal level of service on the track.

Now a business minded government would take Toll to court to pay what is owed, or start confiscating rolling stock for part payment of the track access charges. After all, if a trucking firm doesn't pay road user charges to use the government's state highways, it faces being fined and the unpaid charges recovered, likewise airlines using airport.

No, after pledging to spend over $1 billion on its OWN assets, it wants to spend over $500 million buying the company that uses them which doesn't even pay what the government charges.

What this will mean is we will be back to the days before privatisation, when the railways lost money - and either were subsidised heavily (1982-1988) or getting bailed out regularly (1982, 1988, 1990).

Maybe the truth just hurts too much, maybe the government needs to give Toll the rail network back and say - make a go of it, and if you can't, then sell it to whoever wants it. While it's at it, it could sell the state highways as well, now that WOULD be worth a fair bit.

but what would John Key do?

How bad is it to get infrastructure built in Britain?

One post on an aviation message board says this about how quickly this writer thinks Heathrow Terminal 2 will be replaced (this isn't serious, but has a few elements of truth):

This is Britain we are talking about.

My predicted timeframe:

Oct 2008 - stop using T2.

June 2009 - Submit public tenders for various designs for its replacement.

July 2009 - All designs rejected by local residents.

August 2009 - A rare and previously thought to be extinct breed of dust mite is discovered in T2.

Late-August 2009 - A charity single entitled "Save the Mites = Save our future (and our Children's future)" is released by two ex-Pop Idol nobodies. It goes straight in at number one.

September 2009 - Local residents set up an action group called T.W.A.T.S - (Team Worried and Against Terminal Success) which pickets Parliament to demand that the area is left for animals to graze on, as anything other than this course of action represents what basically amounts to Planetary Homicide. They lodge their formal complaints to the planning commission, which rules that in light of the new complaints against the massive expansion of Heathrow airport and the obvious and irrefutable damage replacing the terminal building will do to London’s green belt, that all previous planning permissions and tenders are null and void. A new planning process is started.

October 2009 – T.W.A.T.S chain themselves to a chainlink fence on the airport perimeter and are forcibly removed by police.

November 2009 – T.W.A.T.S climb in the roof of T5 and splash red paint all over the place to illustrate the murder of the green belt. One tries to break a window and falls to his death. “Stinky” as he is known, of no fixed address, is immediately Martyred. The local Government releases a statement expressing their sincere sorrow at his death. His wife/partner “Crusty” also of no fixed address, sues BAA for having lax enough security to let them in in the first place, and is awarded three million quid in damages. She cuts her hair, has a bath, moves to Kensington, sets up an advertising firm and buys a Range Rover.

December 2009 – Local residents not affiliated to T.W.A.T.S pre-emptively sue the Government for millions because of the emotional hardship so brutally inflicted on their lives by the grim edifice of the new terminal, in whatever form it may take. A Government investigation board is appointed to appoint a committee to do a study of the plans.

June 2010 – Committee appointed.

October 2010 – Committee convened for half an hour.

April 2011 - Committee convened for an hour and ten mins.

November 2011 - Committee convened for a seventeen minutes.

December 2011 – Preliminary findings are released. They say – “It is the opinion of this Committee that a public enquiry should be convened to assess the lawsuit brought by local residents. Once this is complete planning process may begin on the new terminal”

June 2012 – New committee convened which meets for three mins in a bar in Whitehall before taking a treasury credit card to Spearmint Rhino. Signs are put up all round the now derelict and crumbling T2 site that say that BAA is ‘Caring for your future’

November 2012 – T2 blows down in a moderately strong wind. A national day of mourning is held for the dust mites which it is presumed all perished. A charity single rework of Elton John’s ‘Candle in the Wind’ is released, sung by Jason Donovan and a class of primary school kids from Bromsgrove, entitled “You weren’t just a dust mite to me (Give peace a chance)” – its rockets straight to number one.

December 2012 – Work begins on clearing the site. Local residents complain about the noise of the drills and diggers (over the noise of the planes) which are causing emotional problems and successfully get an injunction to prevent the contractors from using any mechanical tools at all. The rubble is moved by hand. Local residents win more millions in compensation, because BAA should never have allowed the building to collapse in the first place.

December 2013 – the site is cleared. The fourth appeal of the planning permission is in the process of being dealt with in the High Courts.

April 2014 – The local residents take their case to the European Court of Human Rights in The Hague.

June 2014 – Final design, an award winning masterpiece of modern design and technical genius from Sir Norman Foster is dismissed on costs grounds. A rival bid from Botchitt & Scarper Ltd is accepted. The commission expresses ‘concerns’ that the design does not have any gates, and that the water feature and timber decking in and around the hard stands are unnecessary.

November 2015 – Work begins.

December 2016 – Work finishes. BAA make a massive glitzy launch and much is made of the fact that it came in with no work overruns and actually early. Rather less is made of the fact that the work is 395% over budget.

March 2017 – Structural engineers state that the building is unsafe. It transpires that the contractors had just poured tar over the ground and stuck beams into the tar. The site foreman, a Paddy O’Murphy, went on record as stating that “It was fine mate, its fine for people’s drives, and its fine for de terminal tingy dat we’re doing for ya’s. Do ya like Dags?”

April 2017 – Botchitt & Scarper Ltd is found to be a fake company. Nobody at the planning commission bothered to do any due diligence because they all had their drives done as a bonus. The new T2 falls down in a light breeze. An Al-Qaida carbomb is blamed.


May 2017 – Local residents sue again for emotional distress caused by the length of the planning process.

July 2021 – A new terminal design is approved.

May 2027 – The new T2 is opened. It was fifteen years late and cost more than nine-billion pounds all told, or 30% more than an entire brand new airport in the Thames Estuary.

(btw, the truth is that Heathrow Terminal 2 is to close within the next year or so, to make way for the new Heathrow East terminal. All the airlines using Terminal 2 are being relocated to Terminals 1, 3 and 4 after BA is relocated out of Terminals 1 and 4 and into Terminal 5 next month)