13 August 2009

Privatisation improved train reliability in UK

Yes, this is according to a BBC report.

"According to Hassard Stacpoole, media relations manager for the Association of Train Operating Companies, the value of improvements to punctuality is greater because the network is getting more crowded.

He said: "You will find that we are running 20%-plus more trains than we were under British Rail, in what is a busier network.

"Overall we would say punctuality is much better than even under BR. We have one of the most punctual railways in Europe.


So the doomsayers are wrong, railways in Britain are carrying more people than they have for over 50 years, and more reliably.

"Mr Stacpoole adds that commercial incentives, which did not exist under the nationalised BR system, work as a safeguard to improvements.

"If the trains are not going to run on time that's going to cost you money. Network Rail will have to compensate the operators or vice-versa (depending on who is at fault).

"There's an incentive to get things right. People expect their trains to run on time.
"

You see if it is the fault of the track owner (Network Rail) the train operator, which pays to use the track, gets compensated. If the train operator is late in using its slot, then it pays more to use it later, as others are disadvantaged by the change.

Now there remains mistakes, massive subsidisation of major infrastructure projects that should have been financed directly. Political subsidisation of uneconomic lines and projects, but by and large, it has been a success going this far. Another loony leftwing legend about "good old British Rail" (which closed more railway lines than private railways ever did) is blown away by the facts.

New reasons to abolish the ARC

Number 1: ARC wants to force people to pay for a tourist tram. It is already going to waste Auckland ratepayers' money on a "feasibility study", even though it doesn't own the roads or property that such a tram would run on. Given the loud silence from the private sector, this is just another toy from the same people who made you pay for a big elaborate train set to replace commercially viable bus services. Of course it hasn't stopped legions of gormless idiots saying it's a great idea on the NZ Herald website, none having the slightest idea as to how to pay for it.

Number 2: ARC wants to force people to pay for a far more elaborate SH20 motorway extension. Whilst there are issues with the government's less expensive plan to complete the South Western Motorway in Auckland (mainly how it wont obtain consent from all property owners), the ARC has shown that other people's money is no object. Again. It is campaigning to extend the motorway from the current end at Mt. Roskill through Rosebank Peninsula to the North Western motorway. Why? It is "superior" strategically, and has less environmental impact. Given the ARC has no responsibility for roads at all, belongs to the railway religion, and the views are expressed by hard-left shrews like Sandra Coney, you can see where economics escaped them all. Mike Lee is "annoyed" this very high cost option was ruled out. Well Mike, it was ruled out by the previous government as well, and nobody sees the ARC coughing up money to pay for it (let alone the private sector).

So couldn't Auckland local government reform simply wind up the ARC as a good start?

Simple policy lesson on energy

The Electricity Commissioner position was created by the Clark Labour Government.

It was never needed before. Jim Anderton and Helen Clark were keen on Ministerial Inquiries into industries that had no fundamental problems.

The Electricity Commission isn't needed, nor is an Electricity Market Authority.

My first step would be to choose another electricity SOE to privatise. Although whilst National has promised to sell nothing, there is no reason why it cannot issue shares in an electricity SOE watering down the shareholding. Similarly, shares could be distributed to everyone. Private owners, after all, demand better performance and seek to be more competitive than the state.

Lines companies should be allowed to retail electricity, as the recent review recommends.

So hopefully Cabinet will agree on modest steps to liberalise and get crony bureaucrats out of the way - and so the question will arise as to why the government owns the majority of the generation and retail market.

Driving distraction

I'm not surprised at the ban on using handheld mobile phones while driving.

It is politically popular with older drivers, and undoubtedly there are people who can't drive while talking on the phone.

Although I recall discussions with the then Land Transport Safety Authority a few years ago which confirmed that far more accidents at the time happened while people fiddled with the car stereo. Changing radio stations and fumbling about for CDs (and before that cassettes), was a bigger distraction because it involved a fairly short burst of activity and frustration.

There are other distractions while you drive. Talking to other passengers, controlling children, pretty girls on the side of the road as you drive by. All of these can contribute to a driver failing to take care.

However isn't THAT the issue? The philosophical belief that when people cause an accident, it isn't them to blame per se, but because they did something they shouldn't have. Why is it easier to produce a rule to ban something, than to focus on people who drive dangerously and cause an accident?

Is it because it is easier for the Police, who can treat talking on the cellphone as the reason to prosecute, rather than negligent driving?

Or is it because of ACC? ACC remember removes your civil liability from being to blame for causing personal injury by accident to anyone else (although not property damage). Indeed your ACC levies for owning a car (equivalent to accident insurance) don't vary if you have a good or bad driving record. So perhaps opening THAT up to competition, so bad drivers pay far more for accident insurance, and good ones pay less, might make a modest difference?

You see, I by and large don't give a damn if stupid people cause accidents damaging their car and themselves. The state has better things to do that protect people from themselves. I do care about such people taking me or others with them. That is where rights to drive should be removed and penalties imposed.

It would be simpler though, if roads were privately owned. Road owners wouldn't want accidents to be common. Accidents generate blockages and cause congestion, making it less attractive to use the roads. Accidents can damage road property or property of adjoining road owners, which could see the road owner liable for letting idiots use its property in a way that could reasonably endanger the neighbours. Other road users may feel the same way. So the incentives to have a safe road are quite high, much like airlines which know a bad safety record is devastating to revenue. Korean Air was aware of this in 1999 and made radical changes, because non-Koreans would deliberately avoid the airline due to safety concerns.

However, selling roads may be a step too far for this government - but changing the incentives around ACC, and encouraging the Police to do their job (enforce dangerous drivers not victimless offences) would help. Dangerous driving causing death, injury or damage should subject people to prosecution and removal of their driving licence for any period from 6 months to life. Dangerous driving recklessly endangering people or their property should mean fines commensurate to a disincentive to stop. Driving in a way that poses a slightly higher risk than otherwise (and is no different from other behaviours that are legal) shouldn't.

Otherwise, the next road safety initiative will be to ensure all good looking women (and men) dress to cover themselves up when they walk adjacent to any road.

Why bother with PPPs?

You see I have friends who can't wait for this - they would make a fortune screwing public servants of money to do something none of them really understand. The key to getting the best value out of them is simply letting the private sector build something and charge people for using it, and bear the risks of overspending, poor customer service and lack of demand for the service - like the Melbourne Citylink toll motorway - a great success, because the private consortium that designed it, chose the route, bought the properties, built it and now operate it - were allowed to do so, albeit with enormous contracts and a legal framework to keep (excessive) oversight. In that case the road exists because the owners borrowed to pay for it, and use tolls to pay back the debt. You wont find too many PPPs quite that elegant.

PPPs make sense when governments want to hide borrowing they make. PPPs probably make sense in developing countries when they want to build infrastructure and don't have legal frameworks to readily allow private investment to be securely made. However, I am not convinced they are better than privatisation OR the state sector contracting out activities it isn't any good at.

Bill English is keen on public-private partnerships, the privatisation you have when you want to privatise profits and socialise the risks.

He waxes lyrically about how much it is done in Australia
. Music to the ears of management consultants, lawyers and the big 4 accountancy firms all keen to have a slice of the expensive pies involved in setting them up. You see, precious few public servants have a clue about what to do, so a lot of your money would be expended on consultants to help them out. Given I know some of the people who would do this, it is pretty clear to me that the you better have a good reason to spend such horrendous amounts of money trying to match clever people in the private sector out to milk profits and minimise risks.

English lists sectors he clearly approves of being involved in PPPs. Lets go through them:
- Roads: Well quite simply there aren’t enough road projects in New Zealand big enough to be worthy of the transaction costs involved in a PPP. Far better would be to allow private companies to design, build, own, operate and toll roads with little government involvement at all, except interconnecting with existing roads. For example, the Auckland Harbour Bridge and the approaches from the Central Motorway Junction to as far north as Constellation Drive, could be sold – lock stock and barrel, it could have included the Victoria Park Tunnel project and the right to toll (and either refund road taxes spent using the road or pro-rata the payments to the company). THAT would have made a lot of sense and be a model for the rest of the country.
- Rail: Look it isn’t profitable. Unless you’re going to sell the freight business off, then this is just paying the private sector to manage a black hole. A PPP would be worse than the status quo.
- Water: Why not privatise? It has been successful in England, and has addressed serious deficits of core infrastructure. Besides, this is a local authority function. Private providers would encourage water conservation, because they would seek to maximise returns by charging what the market could bear.
- Energy: Given it is partially privately owned, why even think of a PPP? Contact Energy works, so lets just privatise the other three SOEs and Transpower.
- Defence: A core role of the state. Why would you allow anyone to profit from supplying property and managing national security? What happens if that PPP provider is sold to a foreign owner with hostile intent? Certainly you may contract the private sector to manage property or assist in advice, but supplying infrastructure?
- Hospitals: Again, why not just let private companies supply hospital capacity that you buy services from? Why sign up to a monopoly provider to guarantee its returns?
- Schools: As with hospitals.
- Prisons: As with defence. Management contracts and advice are all very well, but having the private sector responsible for incarceration has always worried me.
- Radio networks: Why own these at all? Radio New Zealand can hardly be privately run as a PPP given it makes little revenue, so why not just privatise it and let people pay for it voluntarily?

With that, and his ever bright and political popular ideas of a capital gains tax and reintroducing the land tax that Ruth Richardson abolished, is it any wonder that Bill English is starting to look like the Finance Minister we might have got had Labour been re-elected?