John Key shows principle

Yes!! Remarkable really. Good for him though. It looks like a coalition or confidence and supply agreement between National and NZ First is ruled out. The NZ Herald quotes him saying;

"I am ruling out Mr Peters. He simply doesn't have the integrity in my view unless he can somehow change that".

It is more than what Jim Bolger said or did, but then the same Jim Bolger who voted to privatise NZ Rail Ltd is now on the board of the renationalised railway. The same Jim Bolger who sits on the board of Kiwibank. However I digress.

I do wonder though, that if National did need NZ First, whether it would surrender power to a Labour mongrel coalition. However, it is worth noting a rare appearance of backbone.

NZ First has always been a party of blatant brainless populist opportunism, it seeks to tap the mindlessness of talkback radio, the very worst of much of New Zealand culture. The envy dripping suspicion of foreigners, the envy dripping suspicion of successful businesses, the belief that state owned enterprises are good when they are state owned, regardless of how poorly they perform and the resentment and anger of their privatised equivalents. The kneejerk belief that the "guvmint should do something".

However it has not done this in a vacuum. It has tapped a series of trends that have a grain of truth in the concern that NZ First voters carry.

NZ First would not have succeeded had National not lied to the electorate in 1990. Some of National's supporters today try to reassure the likes of me, and other libertarians that "wait till the Nats get in office then they can do some of the things you like", even though the Nats are saying little different from Labour. It is THAT kind of politics that NZ First rejected. One thing you can't say about Winston Peters is that he isn't clear about his policies. Jim Bolger promised to remove the hated superannuation surtax, but continued it after 1990. That single move decimated National's support among senior citizens. National created Winston Peters, he was one of them and it delivered an enormous deception to voters - greater than anyone could claim Labour generated in 1984 and certainly in 1987.

NZ First was also an early carrier of disenchantment at the Treaty claims process. A resentment from some taxpayers that some Maori were benefiting enormously from their taxes, and that the benefits were enriching a small number very well, was a genuine concern Winston tapped. However, he then went on to focus on the Maori seats and taking them all in 1996. Having moved across the spectrum on this issue, NZ First retains a not insubstantial level of support among Maori voters.

NZ First's big issue has been immigration, but sadly although there are serious issues about whether new migrants should be able to claim anything from the welfare state including health and education, Winston focused on race and bigotry. He played the race card, and stirred up a vile level of anti-Asian sentiment that appeared focused on successful East Asian migrants - you know the ones not filling the jails, welfare lines and talkback call lines. It was possibly the most poisonous recent part of modern politics, one that didn't stop National signing up to govern with NZ First, and didn't stop Labour.

NZ First also tapped the ongoing popular outrage at crime and the poor performance of the criminal justice system in addressing this, although it was little more than a repositary for rage. It still showed that Labour and National had not got to grips with a core concern of the general public.

However it is telling that while the superannuation surtax issue provided a huge catalyst to Winston's political career, his supporters did not reward him for removing it. Policies don't matter to voters as much as impressions and feelings, and NZ First was decimated at the 1999 election for its appalling performance as a team - even though it delivered on several promised policies, including abolishing the super surtax.

NZ First attracts protest votes, votes from people who don't like the status quo. It is hurting because Winston keeps Helen Clark and Michael Cullen in power - he can't evade or dodge that, as he is desperately trying to evade the allegations around donations. His politics were built on National lying, and tapping populist resentment that National has since partly tapped (although has also since backtracked on). Winston has built a career on being upfront and honest, and not having a secret agenda - his political career may be finished if National keeps its word and offers a government of bland "me too" policies that the public appears to be endorsing.

The problem is National looks like it has a secret agenda - given that it has virtually no policy differences from Labour, it is the only hook others have to attack National. It is the hook Winston has, and if it proves to be true even though I may agree with some of the policies it is still deceit and contemptible. Winston's political career will be reinvigorated if National has a secret agenda.

However, if National does not seek to govern with Winston's support, and enters government doing what it has said, then Winston's poison will have expired. It is clear that Labour is happy to govern with his support, and it is that which should be the focus. Labour is no more principled than National, it's just more deft at hiding how it sells out.

Comparing parties' transport policies (in progress)

Given the blogosphere in NZ in terms of transport policy debate is dominated by one (well-meaning) blog that is almost entirely focused on one dimension of transport (how people move about in cities, specifically one city), and with one philosophical perspective (central planning, state funded, as opposed to market driven, user funded), I thought I'd do a quick review of parties' transport policies for this election.

My test for them all is:

1. Understanding of the transport sector:  Most politicians don't know who owns what, who is responsible for what and what exists and doesn't exist.  Those that do deserve some credit.

2. Support for competition, innovation and entrepreneurship:  New entry both of operators and vehicle types, and new modes of transport should generally be encouraged.  This includes those who wish to do what the government fails to do.

3. User pays:  Taxpayers generally shouldn't be subsidising users of transport services or infrastructure, but it does allow cross-subsidisation of marginal users of networks that are inefficient to charge for (e.g. footpaths).  Infrastructure costs should generally be recovered by users of those networks, not by other network users.

4. Economic rationalism:  Where the state does intervene, the net economic benefits should exceed costs, demonstrably.  This includes spending and reducing compliance costs for unnecessary regulations.

5. Wider impacts:  Make this safety, environmental and social impacts, and say I'm being soft.  What this basically means is, will the policy help or hinder reductions in accidents, noxious pollution, and improve people's ability to access what they want (bearing in mind the impacts on others who may have to bear the costs of the measures).

I'll give each a score out of 5, giving a total possible score of 25.  Bear in mind I am looking at land, air and sea transport.  Any party that says nothing about any mode is presumed to agree with the status quo, which is generous I believe.  I am guided only by the parties' expressed policies online, unless there is a statement by a leader or leading spokesperson that gives cause to vary this.

following the order of registration by the Electoral Commission:

National: 5, 3, 3, 2, 3 = 16 out of 25.  It's about big roads, some of which aren't good value for money, some of which are.  There's a lot for public transport, not enough for the fundamentalists, and spending on Kiwirail is likely to be the best last chance it gets to show it is worth anything.

NZ First: 2, 2, 2, 1, 1 = 8 out of 25.  Suddenly an obsession about public transport, especially reviving long distance passenger trains. Remember the Northerner, the Southerner? They'd be back. Get rid of road user charges, replace them with fuel tax, then replace fuel tax with tolls like road user charges.  Usually silliness you'd expect from a cult that gets one member to write policy.

ACT: 3, 4, 4, 4, 3 = 18 out of 25.  It's all about roads, and having them run like businesses, with user pays for public transport and allowing the private sector to build competing roads as well.  It's light in terms of content, with nothing on other modes, but given air and sea largely look after themselves, that's not a bad thing.  It's a start, and it would mean some of the Nats' pet road projects would come under closer scrutiny.

Labour: 1, 2, 1, 1, 2 = 7 out of 25. "The current government has been obsessed with a handful of hugely expensive projects that it selected for political reasons" then Labour selects the ones it agrees with, for political reasons, including the big Auckland underground rail loop, building a new line to Marsden Point and reopening the Napier-Gisborne railway, so it can carry the 12 truckloads a week it once carried.   Lots of spending, lots of utter drivel, and it supports the so-called "congestion free network" promoted by leftwing/greenie/central planner ginger group "Generation Zero" (which will do next to nothing for congestion on the network people are prepared to pay for).  It's Green Party policy-lite and just as intellectually robust, with silliness on motorhomes and trucks not being allowed in fast lanes on motorways to give NZ First something to admire.

Democrats for Social Credit: 2, 1, 1, 1, 1 = 6 out of 25.  Central planning obsessives with weird statements like "Air New Zealand as an important means of transporting perishable goods to overseas markets".  The mental contortions required to give credibility to the funny money men adds to it (but then funny money is more common than we think).

Greens: 3,1,0,1,2 = 7 out of 25.  So much money wasted on road projects with poor economic returns, stop them and build railways with even worse ones.  Well that's not what they say, but it is the truth. The Green mantra is that walking, biking and riding rail based transport puts you into the promised land, but driving is a curse.  Those who drive are "auto-dependent" and are "forced" to use your car, and you're just aching to walk to a tram stop to wait to ride a tram with lots of other people to go to the place you want to go.  If only everyone could get about this way it would be smart. Except its not. It's a tired, old-fashioned obsession with building your way out of problems, except this is with railways and busways, not roads.  What's got to be most stupid is that unlike green parties in other countries, the Greens have ignored congestion charging as a way of reducing traffic congestion and pollution.  Politics over evidence.  

ALCP: no policy

Maori: no policy

Internet Mana: 2, 0, 0, 0, 1 = 3.  Well you didn't exactly expect much did you?  Rhetoric on nationalising parts of the transport sector that are already government owned, but the big deal is free public transport. Everywhere.  It's an old-fashioned tired old leftwing proposal that claims it would free up the roads, but what it would do is shift a lot of air by rail and bus.   It wont ease congestion, it will cost a fortune (uncosted), and don't expect any innovation or competition, but a large union dominated set of monopolies.

Conservative: no policy

MORE TO COME

United Future:

Focus NZ:

Civilian:

Independent Coalition:

More detail..

Brian Rudman - a little knowledge isn't dangerous, just ignorant

Brian Rudman is perhaps the most regular of the NZ Herald's columnists to comment on transport issues in Auckland.  He comes at it from a rather predictable standard point of view which blends the railevangelism of the Greens with the cynical populism of NZ First.  To be fair to him, he does a bit of research, but the conclusions he comes to shows a rather dire lack of understanding of economics, a paucity of depth of knowledge about the sector and an unfortunate tendency to be driven by faith rather than evidence.

His latest column is headlined "tolls alone won't unclog our roads".  The implication being that someone claimed that they would.   A more honest headline in response is "trains wont unclog our roads", since column after column he has been preaching the gospel of the church of passenger railways.

What he is talking about is a proposal to introduce new tolls on Auckland's existing motorway network to "raise revenue" tax road users to pay for Auckland Council's grand transport plans, much of which is to fund infrastructure for subsidised public transport services.

There are three substantive issues here:

1.  Is the NZ$11.7 billion "funding gap" real and justified?  (i.e. should that much extra money be spent on transport in Auckland? What is gained by that? Who are the winners, and are they the same as the losers?  Why should anyone trust Auckland Council on this?  Given that all of the future money taken from motoring taxes and rates is already taken into account, has anyone asked Aucklanders whether they are willing to pay more?

2.  If there is a gap, how should it be funded?  Should users pay more for infrastructure and services they will benefit from?  Should ratepayers pay for infrastructure that increases their property values?  Should existing taxes go up? Should there be new taxes?

3.  Should Auckland roads have direct tolls/road pricing introduced as a different way to charge for road use, which could also reduce congestion by introducing the price instrument?

Is the NZ$11.7 billion "funding gap" real and justified?

On the first question, Rudman fails.  He doesn't ask this question.  With some irony, the Greens are attacking (with some good reason) central government's Think Big highway spending plans for being poor value for money.  Neither the Greens nor Rudman apply a similar test to the Auckland Council project list.  For many years, the former Auckland Regional Council had unfunded transport wishlists, is it any surprise the new Auckland Council has simply grandfathered that wishlist and added to it?

He simply parrots the simple line that Auckland "needs more public transport " and the myth of "building the passenger transport options that might well help unclog the roads without the need to build more".  Might well? Where in the new world have major rail projects actually unclogged roads?  What city has accomplished this successfully?  It's a simple belief system - it is one the Greens share - but it is just that, a belief.  The bare fact is that no new world city has significantly reduced traffic congestion from construction of a new rail link - none.  Advocates may argue that congestion would be worse without them, but that's just hypothesis, and it isn't based on any significant difference in mode share from car driver to rail after a line has been opened.

So let's take the highest profile project that he and the Greens advocate - an underground CBD rail loop.

The Treasury/MoT report that reviewed the Auckland CBD underground rail tunnel states that this project, estimated to cost NZ$2.4 billion in capital, with ongoing additional costs of NZ$37 million per annum (although revenue offsetting that is not mentioned), will only reduce car trips into the CBD by 2,000 a day - out of a total of 40,000.  Now 88% of commutes in Auckland are not to the CBD.  That stark fact is constantly ignored by almost all advocates of rail in Auckland.

Of the remaining 12% around, 42% of motorised commutes to the CBD in Auckland are by car - yes a majority go by public transport now. You might ask why that is a problem.

So his pet rail project, will reduce 5% of 42% of 12% of Auckland commutes, which means only 0.25% of Auckland commutes will be shifted from car to public transport.  It's a brave person indeed who claims that is worth NZ$2.4 billion.

However, he completely blanks out the other effect.  The CBD rail project reduces bus trips to Auckland CBD by 10%, with double the number of people taken from existing bus services, both subsidised and unsubsidised, than from cars.  NZ$2.4 billion would in part be about shifting more people from buses than cars.  In short it is estimated to accommodate only 19% of the growth in future trips to the Auckland CBD.  The rest would be travelling by bus, car and ferry.  In his own article on this very report he blatantly misses this point by saying that other improvements wont be able to "cope with the predicted 32,000 extra passengers into the CBD in the 2041 morning peak. For that we need the rail loop." No Brian, only 6,000 of those 32,000 will use the loop.  It's deception to claim otherwise.

So it has a negligible impact on congestion, in fact the effect is so low it will be more than offset by forecast growth in traffic.  It reduces bus use more than car use, and only 1 in 5 future Auckland CBD commuters (which are themselves a subset comprising 1 in 5 of all Auckland commuters) would use it.

Even if you presume that all of the car commuters to the Auckland CBD benefit from the 5% reduction in car trips (and presumably a handful of fewer buses), that means that only 5% of all Auckland commuters experience a reduction in the negative externality of congestion.  So quite why should anyone pay over NZ$2 billion, plus ongoing operating subsidies, for 6,000 new rail commuters and for 5% of car commuters to save time (which they would do, on the margins), is a mystery.  It either hasn't occurred to Rudman (the report is rather clear on this) or he is evading it.

If there is a gap, how should it be funded?

However, let's leave that to one side, because his column does.  How should the money be raised if it was legitimate in the first place?  He doesn't spend much time on how it should be funded, rather how it should not be.

The solutions be posits are to both spend existing funds differently and raise new taxes from motorists.

He wants the state highway budget "redirected" towards public transport. Beyond the Puhoi-Wellsford motorway project, he isn't too clear on what other funded road projects shouldn't proceed.  In the past he has bemoaned other parts of the country getting money for roads, when his beloved Auckland can't get enough to pay for what it wants.  What he neglects is that outside Wellington and Tauranga, virtually all state highway projects are about reducing accidents, not reducing travel time.  However, he is an Auckland advocate so let's just accept that bias as being natural to him.  To be fair to the Greens, they do seek to abandon large swathes of road projects, including the Waterview connection, Puhoi-Wellsford and Waikato Expressway series of projects. 

For new money, he supported the regional fuel tax Labour tried to introduce, but which the National government scrapped.  This was a stupid idea, and tends to be embraced only by those with a paucity of understanding of such taxes and their role in New Zealand.

For a start, regional fuel taxes in the past have been opposed by oil companies because of the administrative cost in applying differential taxes for a commodity distributed nationally.  Service stations near the boundaries of Auckland (which most people wont be aware of) would be winners or losers for fairly obvious reasons if applied regionally.   National tried regional fuel tax in the early 1990s and had to abandon it because oil companies calculated the revenue that should have been collected based on consumption in the regions, but applied the tax nationally to save on the administrative costs and boundary effects.  Regional fuel tax for Auckland risks being applied nationally again, unless government applies stiff enforcement procedures to stop oil companies repeating this - which adds another cost.  Something Brian curiously ignores given his pleading on the cost of operating tolls.

Secondly, he ignores the effect on diesel.  There is currently no fuel duty on diesel, because diesel powered vehicles are liable for road user charges (RUC), paying in advance for distance travelled on roads based (shortly) on maximum vehicle weight.  There are various reasons for that, but what it means is that RUC, in its current form, cannot be applied regionally because diesel vehicles have distance bought before they travel regardless of where the roads are.  So regional RUC wont work for now, without a significant change in technology.  Regional diesel tax would mean the 36% of diesel usage off road would have to have a refund scheme (as applies to petrol tax), which imposes an administrative cost on the agriculture, industrial and fisheries sector to which this largely applies - unless Brian thinks that off road users of fuel in Auckland should pay for Auckland transport, in which case he is arguing to get rid of refunds for off road use of petrol and LPG as well (and why only abolish refunds in Auckland).   He simply wont be aware of these implications of imposing new costs outside the transport sector.

In other words, his bright idea for new money is full of holes, but since Labour tried to do it (against official advice) it must be ok, because he trusts politicians of a leftwing bent.

Should Auckland roads have direct tolls/road pricing?

Most of Brian's latest comment is a diatribe against road pricing.  That puts him firmly in a camp I describe as populist left-wing opposition to tolling - he shares this with NZ First.


I am, in principle, in favour of road pricing as a replacement for taxation of motorists, because it creates a direct relationship between the road user and road provider, sidestepping the interfering influence of politicians seeking to spend motoring taxes on pet projects.  However, from an economist's point of view, it enables the price instrument to be applied to roads.  That alone means road users can be charged directly for the costs of the roads they use, accordingly to the proportion of usage, according to the wear and tear they impose on the roads, and according to the vagaries of demand and supply.   Congested roads would cost more, managing demand, but generating revenue that might be enough to remove bottlenecks and build new capacity, or may simply mean off peak charges are lessened to spread demand.  It is this lack of the pricing instrument, which affects both demand for road use, and the funds to supply roads, that is the biggest single factor in facilitating traffic congestion, and the negative externalities from that in the form of wasted fuel and increased pollution.  Even when applied bluntly, the effects of pricing on congestion have been seen clearly in Singapore, Oslo, Stockholm and London.

It would appear Rudman is almost oblivious to this, or at best dismissive of it.


He claims tolling is "not fair", because he doesn't believe Aucklanders should pay more for their roads and public transport than other New Zealanders.  Rather odd that, if Aucklanders actually wanted more roads and public transport than other New Zealanders, they shouldn't pay.  Who should pay?  Aucklanders pay more for land and property now, does he suggest people living in Oamaru pay a land tax to equalise it, or should Auckland land be subsidised? However, this is a man advocating a REGIONAL fuel tax, which would mean Aucklanders would pay more.  He can't make his mind up. It is a specious "argument" worthy of a drunken talkback caller.   Aucklanders should pay for the transport they want, maybe if they did, they may want less of it (and nothing could be "greener" than that).

He repeats the claim by Chairman of Auckland Council's business advisory panel Cameron Brewer that "tolling is a flat tax that hit the poor the hardest".  Yet I have never seen Brian advocate that poor motorists get a discount on their petrol tax (the equivalent to a toll now), or discounted train fares, or discounted phone line rentals.  Why is a user charge for one service a "tax" when it doesn't apply to others?  Again, a specious argument.  Even though Brewer's sensible suggestion that "it be levied at a reduced rate for service sector shift workers in off-peak times" has economic merit in that tolls should be lower at times of low demand.  Brian's regional fuel tax, which would be paid most by those in least fuel efficient (i.e. old) vehicles on slow lengthy trips would be paid more by them, but he blanks out even considering that.

His next claim is that tolling targets private motorists, whereas commercial road users and councillors (cue NZ First type rhetoric here) can pass it on.  Well what would a regional fuel tax do Brian? 

However, moving beyond this rather facile rhetoric, his big opposition to tolls appears to be because the collection costs are higher than fuel tax.  Now I've already fisked him on fuel tax given that the regional fuel tax would cost more than he thinks, and so would mean costs for administration by both government and oil companies, and for those off-road users of diesel facing a new refund regime.  However, he does use both the Northern Gateway toll road and the earlier Auckland Road Pricing Evaluation Study work to back up his claim that, yes indeed, having a direct customer relationship with users one by one and being accountable to them is more expensive than a tax.  However, as I have written before, the costs now claimed are for a government specified bespoke system that is far more expensive than it should be.  Work I've done elsewhere indicates the costs of collection can be much much less if you have the volume to sustain it and outsource much of it effectively, like utility companies do.  So this argument is less worthy that it appears on the face of it.

Yet the real benefit of tolls, compared to taxes, is that they can charge according to costs and demand.  The benefits to Auckland of road users paying tolls to use roads, compared to more taxes, is that they could be charged more for roads close to capacity and could be charged less for roads at off peak times.  This can spread demand, encourage use of other modes at peak times, and cause people to think again about whether it is worth using that rather expensive piece of infrastructure when it is highly priced.   Yes for "revenue" alone it isn't clever, but if that was the only measure, then electricity would be free and everyone would have paid for it through their taxes, so would phone calls etc.  The effect on use of electricity if it was paid for through your rates or income taxes would be dramatic.

To be fair to him, he is right in quoting the Auckland Road Pricing Evaluation Study work in opposing tolls on the motorways only.  I don't believe this can be justified in Auckland today, but I do believe that a shift from rates and fuel tax based funding of roads to tolls is justified.  The issue is how that is done (privatising Auckland Harbour Bridge might offer a clue).

If Auckland did have largely privately owned roads, charging usage on various basis (e.g. tolls, distance charging, property access charges), it would transform transport in Auckland, particularly by eliminating rates funding of roads (cutting your rates by 10-15%) and fuel taxes (cutting fuel prices by 20%).  It would mean users of main roads at off peak times would probably pay less, whilst at peak times they would pay more.  It would mean buses wouldn't need bus lanes in most locations, except where bus companies were willing to pay for special access.  Truck operators would probably change times of travel.  Short car trips would be more likely to be replaced with walking and cycle trips.  The legacy railway might even have a financially sustainable life, somewhere where it parallels road corridors too expensive to expand (or it gets taken over by them).  

Quite simply, it is Rudman who doesn't have a transformational state of mind.  He, and the Greens, are trapped in tired old solutions implemented en-masse in the United States in the 1970s and 1980s that have failed - in the form of new government provided rail transit systems.  He ignores road pricing, like it was ignored then (except at least then, technology was a bigger limiting factor than it is today).  He swallows the hackneyed and overused line that "building more roads leads to more traffic" (given Auckland has had a lot of new roads lately but no more traffic, he has failed to join the analytical dots).  He wants taxpayers to spend a lot of money for what are pet schemes, whilst he resists economics and employs contradictory arguments.

Auckland's transport could be transformed, with technology, pricing instruments and a more commercial and market oriented approach to the provision of infrastructure and services.  Cities from London to Stockholm to Singapore to Tehran even, have had success in better pricing of roads to reduce congestion, yes reduce.  New technologies in San Francisco and Los Angeles are offering real time information on parking availability with the scope for dynamic pricing of parking.  Bus rapid transit has demonstrated enormous success in Auckland in limited form as it is, and has also been a success in cities in the US, Brazil, Germany and Australia.

It is overwhelmingly clear that the advocacy of rail in Auckland is not about transport policy outcomes, but a broader agenda that is about intensification of the Auckland CBD, moving more Aucklanders into high and medium density housing, for environmental policy reasons, and because of a warm fuzzy feeling that electric trains are just great, but cars and roads are just wrong.

It isn't about Aucklanders making the best choices about how to get around based on the costs of travel, it isn't about balancing what people want in homes, businesses and leisure activities, it isn't about real environmental outcomes (because road pricing would deliver a bigger constraint to sprawl and reduce pollution due to traffic jams, than any rail scheme), it is about grand centrally planned visions that look nice in drawings and in theory, but don't actually deliver the real-world trade-offs people actually want.

The biggest irony is that the greatest beneficiaries of this agenda, if it gets pursued, are owners of commercial property in downtown Auckland.  Now they are far from willing, it would seem, to pay for more than a tiny fraction of the grand CBD rail project.   Is it not ironic then, that Rudman and the leftwing promoters of this plan are advocating a massive transfer in wealth from taxpayers across the country, to this small, some may say, elite group?

My birthday rant

I've been extremely busy, so have had little chance to rant.  So here are my two cents on the events that have provoked me:

Mladic the thug:  Few events were more shameful for Europe (and the United States and New Zealand as a member of the UN Security Council at the time), in my view, that the brutal neo-nazi style genocide inflicted in the Balkans in the 1990s.  It is astonishing that if a civilian kidnaps children and then massacres them en masse, that there is more horror than when a "general" is given endorsement by politicians to do the same, that there is craven appeasement to it all.   UN peacekeepers sat by and did nothing whilst Srebrenica - a town declared a "safe haven" (for whom!) by the UN Security Council, was "ethnically cleansed" by Mladic and his knuckle dragging fascists, all happily appeased by the Serbian Orthodox Church as well.  The role call of dishonour and shame at the time is long and disgraceful.  It took Slobodan Milosevic's attempt to do the same to Kosovo for serious action to be taken, by then thousands of men and boys had been slaughtered in a style reminiscent of the Nazi death squads that rounded up and annihilated Jews in Lithuania.   The other victims, the women and girls (don't think too long about the cutoff age because there really wasn't one) who were raped, not only as conquests by the semi-literate Serb brutes, but also to breed little half-Serbs as part of a deliberate "race" driven policy.   However, as blatant and disgusting as was the Serbian ethno-fascism, one shouldn't forget Croatia was led by men who were not much better.  Visit the Krajina region of Croatia today, and try to find the Serbs who still live there, after Croatia's military terrorised the Serb population and chased them from their homes and farms, families with roots there for generations.  It is a primary reason why Croatia should not be allowed to join the European Union - for it must fully face up to its past.

The arrest, trial and condemnation of Mladic should provide an opportunity to remind us all of this period in history and how easy it is to provoke poorly educated, semi-literate young men to perform atrocities with the endorsement of politicians and religious leaders.  It should also remind Muslims that the Western interventions in this case were to save Muslims (albeit moderate or even nominal ones).   It should also provoke at least some consideration from the self-styled "peace movement" about what should have been done, since the left was divided about humanitarian intervention in this case. 

Brash ACT:  Don Brash's takeover of ACT is a lifeline, and also notable among libertarian circles is Lindsay Perigo's employment related to ACT.  I'm cautiously optimistic.  The greatest weakness Don Brash faced in 2005 under National became those in National who sought to spin and populise messages in ways that backfired.  His willingness to address state activities that granted differential treatment of Maori was not portrayed well with "Iwi, Kiwi" which implied something it should not have.   However, Brash is both economically and socially liberal.  He has the intelligence and the ability to take ACT down a path of being consistently in favour of less government and being tough on crime that involves victims.  He is no libertarian, but if this is a chance to shake up the next National government and wean it off of the statist racists in the Maori Party, then it shouldn't be dismissed out of hand.  I'm going to be watching this space very closely.  It is clear I have always been affiliated with Libertarianz and remain so, but Brash's leadership could cause me to think carefully about who to vote for this year.  

Auckland rail boondoggle hog-tied:  The Ministry of Transport and Treasury have reviewed the Auckland underground rail loop business case and found it wanting. It is hardly surprising.  Auckland rail has been a faith-based initiative from the start, primarily because the enormous cost premium to move people by rail, compared to bus is not justified by the change in behaviour it provokes.   Auckland rail advocates think because it is attracting lots of passengers (all of whom pay less in fares than the cost of operating the service, let alone the cost of capital) it is a good thing, but scrutiny about where those users are coming from indicates some pretty clear home truths.

First, around half of all trips into central Auckland in the morning peak are by public transport today.  This mode share is high by the standards of any new world city, and most of them are travelling by bus.  Trying to increase this in the absence of any form of congestion pricing is difficult, as the current strategy is to take money from all motorists to subsidise a minority of trip.  The number of trips by public transport has increased by 50% in ten years.  However, 40% of that increase has been by rail, 33% by the Northern Busway alone (bear in mind this is one route that has cost around a tenth of the cost of the rail network which has 2.5 lines) and the remainder by conventional bus and ferry services.   Rail has been important, but for the money spent on it, has not delivered compared to the other modes.  

The notable figure is the 15% decline in car trips, which are partly a function of increased fuel prices.  This will have had an effect on reducing congestion, although not as much as the figure may suggest.

Given only 11% of employment in Auckland is in the CBD, this modeshift is minor in the scheme of transport in Auckland.  However, the officials and politicians involved are totally CBD focused.  In short, the impact of more trips to the CBD by bus and rail is very low on congestion.  

Furthermore, the scope for significant increases in public transport usage is limited, most new world cities would be thrilled to have this sort of CBD mode share.  

However, there is something else the rail enthusiasts ignore.  There is already a NZ$2 billion taxpayer funded commitment to electrify Auckland's rail network with projections of a doubling in rail patronage.  However, these forecasts are not realistic because, as the MoT/Treasury report states:

Much of the future patronage growth forecast for the rail network comes from areas where significant intensified residential land use in growth nodes has been assumed in the model. Future rail patronage growth, including from the electrified do minimum, is therefore likely to rely, in part, on the realization of these land use assumptions.

In other words, it will come only if Aucklanders choose to live in medium to high density housing near railway stations AND work in the CBD AND choose to commute by rail.  A bold assumption, that is not exactly plausible.  It is part of the planners' wet dream that Aucklanders are gagging to live in London, Paris or New York style apartment conditions near railway stations in the suburbs.  Yes, apartment living has appeal for some, by only typically for living near the city so one can walk.  Quite why people in Auckland would want to live in such housing in the suburbs is unclear.

In essence, a fortune is being spent upgrading Auckland's rail network based on patronage forecasts that are fanciful and difficult to believe.  If they prove to be correct, then the network will be constrained without an underground loop (although the constraint will only be in the morning and evening peak - a few billion dollars for a few hours a day).  If wrong, then not only will an inner city underground loop be a destruction of wealth, but so will the electrification.

What is most damning is this statement from the review:

Significant parts of the Business Case assessment were not compliant with the procedures outlined in the NZTA‘s EEM for calculating transport benefits.

In other words, Auckland Council gerrymandered its assessment to suit its own needs.   That isn't even counting the gross exaggeration of wider economic benefits on a scale not seen on comparable projects in other countries.

The Green Party of course went along with this, at the same time as it damned the government for supporting road projects that - analysed correctly - had negative benefit/cost ratios.   

In short, the underground rail loop in central Auckland is a boondoggle. A complete waste of money that ranks alongside the grandious highway projects the government is funding north of Puhoi and north of Wellington.   Those who damn one should damn the other and vice versa.   For the government to embrace negative BCR "roads of National significance" but not the railway, is partly hypocritical.  Partly, because roads are funded from road users, railways are NEVER funded from rail users.  However, for the Greens, the Auckland Council and the railevangelists to damn the roads, but bow down to the altar of the railway is at least as hypocritical.  It is time for the railevangelists to be honest - their belief in rail is no more than that - a non-evidence based feeling that trains are good, better than buses and that whatever it takes to build railways is justifiable.  One need only read the Auckland transport blog regularly to see the evangelical enthusiasm for spending other people's money on new rail lines all over the place.  None of it is linked to demand forecasting, willingness to pay or economic evaluation - it is just a rail enthusiasts build-fest. 

Oh and the same should apply to road building too.

Toll NZ demands you subsidise its investment

The Toll NZ CEO David Jackson is in the NZ Herald pleading the case for you being forced to pay to prop up its investment, having done a deal with the government a few years ago that has gone sour.

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Oh dear, how sad. Having already NOT paid what it was meant to in track access fees to OnTrack to cover the maintenance of the network it uses to make a profit - it wants more and the reasons it gives are worth closer investigation. Below are some of his points and my response:

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"Statistics show a significant conversion of freight from road to rail (meeting the Government's objectives), and the industry is poised to move forward, more so, arguably, than at any other time in the past 50 years."

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Well fine, so you've had success. Good for you.

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"We have taken no dividends, we have improved the efficiencies, we have motivated staff and we have a business that is now viable. We have done a lot of this with fundamentally the same set of tools (people, rolling stock and assets) that we started with."

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This puts paid to the doggerrell spread by the Standard that Toll has been asset stripping, which is a complete lie.

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"We are prepared to invest more but require reasonable returns. We want a regime that puts tensions in place to achieve the most cost-effective outcome, that all stakeholders are accountable in this essential service to the country, and that a true, positive economic outcome is achieved. With limited funding, maximising value is critical."

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Ohhh wait for it. "All stakeholders accountable", I know what you want, because you then say...

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"For that to occur, a subsidy is required in some form."

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Ah, so we all have to prop up your investment, by force. Some investment.

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"Road transport in itself does not carry its full costs. There is no recognition of road operators receiving a subsidy but arguably they do. "

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Neither does rail, since you are getting a subsidy on maintenance of the rail network. The only subsidy of road transport is spending on local roads from rates. Besides, since you operate a trucking network you already get a subsidy then? So presumably charges for your trucks should rise then instead? No, didn't think you'd advocate that.

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"Rail operations the world over do not meet their costs and require significant subsidisation."

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Oh really? So that's why British rail freight operations are commercially operated, why US railways are commercial and privately owned, and so are most Australian rail freight operations. What nonsense.

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"I think it needs to be understood that in a country of four million people, with distances which make rail difficult to run commercially and growth opportunities that restrict the opportunity for scale improvements, there can be no room for inefficiencies."

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In other words you bought something marginal, and it's proving harder than you thought.

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"A final word of warning - customers are key. Without their buy in and satisfaction of their needs, rail has no future. If a subsidy is required, it is ultimately the customers along with the country as a whole, which is so desperate for infrastructure improvement, who will be the true beneficiaries."

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There we have it. So Fonterra, Solid Energy and the various forestry companies and freight forwarders - give Toll an offer. You are the true beneficiaries - so you should pay for it. The average family with two kids shouldn't be subsidising your freight movements. Oh, and all those on the left who think it is strategic - you chip in too, since you think it is so important put YOUR money where your mouth is - oh you don't tend to do that do you?

Why fear privatisation?

What has National become?

A party with the testicular fortitude of a eunuch doormouse that is terrified of even engaging in the debate on this issue (among many many others).

The snivelling, quivering backdown essentially begging:
- Oh believe us, we're no different from Labour on this;
- Don't believe the guy who we want to be next Finance Minister, he has ideas, but he "doesn't choose his words wisely", just to give you confidence in how we want him to spend a good deal of your money in the next three years;
- Please don't discuss this anymore, it's a bit like discussing sex in front of our parents, it embarrasses us to be reminded that we once had a different policy;
- After all that you'll still vote for us right? Labour is worse remember.

It’s very simple, there are solid strong arguments for privatisation. Arguments that have held sway with governments throughout the world, of both sides of the political mainstream.

There have been very successful privatisations in New Zealand that have gone without a peep. The following were easily successes:
- Auckland International Airport;
- BNZ (after a disastrous bailout following the 1990 election);
- Contact Energy;
- NZ Steel;
- Postbank (despite the wasteful emergence of Kiwibank);
- Rural Bank;
- State Insurance (yes the name remains but it hasn’t been “State” for a while);
- Works Infrastructure (yes the old Ministry of Works);
- Wellington International Airport.

Who would argue any of these haven’t worked, that these haven’t become successes, with new investment and better run outside the state? Well the Greens and various socialist retards of course, but otherwise no. Privatisation has worked in many cases, with little evidence to the contrary.

The ones most subject to criticism are largely criticised on flawed grounds (Air NZ, NZ Rail, Telecom).

Take Air NZ. After privatisation it was hamstrung by two actions, both of governments. It saw expansion as necessary in an increasingly competitive market, and wanted to enter the high cost Australian domestic market, but the Australian government prevented it, so it bought 50% of Ansett, with many government terms and conditions stopping it from making serious efficiency improvements to that airlines. Its second and most fatal problem was that the NZ government effectively vetoed by delay the investment of capital by a willing investor – Singapore Airlines – which had it been allowed, would have avoided the government bailout.

The current Labour government let Air New Zealand fail so it could nationalise it and do a deal to part privatise it again with Qantas – which also failed.

Telecom was privatised at a time when technology in telecommunications was starting to move a lot faster than it had in the previous couple of decades. The market was opened up to competition and Telecom simply required on privatisation to allow interconnection with competitors’ networks.

Privatising Telecom brought in enormous new capital, significant efficiencies, technological innovation and responsiveness to competition. For example, $5 unlimited national weekend phone calls were a Telecom innovation which broke the back of years of complicated expensive tariffs for long distance toll calls. Whilst arguments may be made about the levels of investment, there is little doubt that Telecom was sold for a price well above expectations and needed serious capital. In addition it provided an opportunity for thousands of New Zealanders to own shares in a fairly stable growing sector.

Then there is TranzRail. A great myth around that privatisation is that it was pillaged and stripped, and great profits were carved out of it with nothing left behind. This myth is peddled by the rail religious, when the truth is quite different. There was substantial investment in wagons, including on passenger services during most of the 1990s, and a big drive for efficiency, customer service and logistics. In other words meeting the needs of freight customers not politicians. Now some of the customers had a few issues when Tranz Rail wanted it to invest in wagons, and some lines had come to the end of their useful lives (worth running into the ground, but not worth replacing the wornout lines), but that was it. The anti-privatisation story doesn’t really bear close examination.

But what do the public think? Do they believe Air New Zealand failed because it was privately owned? If so, how do they account for so many privately owned airlines in the world, or do they not think any further?

Do they believe Telecom has failed as a private company? They honestly think broadband would be cheaper and faster if government provided? Well clearly the government and Nats thinks so.

And railways? Do they really think railway lines that they have barely ever seen a train on it would be any better under government ownership? Do they really think railways will do anything more than they have done for years – move containers and bulk freight long distances, besides commuter services in Wellington?

So why is National afraid? Is the fear of privatisation about foreigners? The brainless xenophobia of Winston Peters and the Greens? Is it about capitalism, businesses run as businesses, efficiently and to attract customers, being bad? Is it nostalgia that somehow some businesses that are no longer viable should be propped up?

What has gone so wrong with privatisation that politicians, except those in ACT and Libertarianz, wont engage on it?

The bill starts rolling in

So according to Stuff $80.2 million for the newly nationalised railway, most of which is to replace the long distance passenger rail rolling stock. Now the $25.54 million for the Tranz Alpine is slightly odd, since it is actually quite a profitable service. I'm convinced if the damned thing had been sold this would happen anyway. The Tranz Coastal is profitable, but marginally so, and the Overlander is in the same category. So you might ask - why should $27.5 million be spent on a couple of passenger trains instead of raising fares so that the owner can borrow against future fare revenue? After all it is how bus companies and airlines work.

However, nooo Dr Cullen evades the truth about why this is "necessary". "The selling off our rail system in the 1990s was followed by asset-stripping and a failure to properly invest in the services" he said.

Well hold on. What investment was there BEFORE the 1990s? Well you only have to look at the age of the current rolling stock. The carriages currently used on all these services were built between 1937 and 1945. Their economic lives were coming to an end in the 1970s when it was state owned, and nothing was done except patching them up, much like the 1980s as well. I remember the services that are now the TranzCoastal and the TranzAlpine when they received oodles of state subsidies every year - and the rolling stock was not air conditioned, had no on board catering (trains stopped halfway at a station for people to rush out for the stereotypical pie and a cuppa), virtually no marketing, no on board service of any kind (unless you count asking the guard questions the odd time he walked around). The toilets dropped waste onto the tracks and were never serviced during the trip.

THAT was the state owned subsidised long distance passenger rail service on those routes. What changed this was Richard Prebble announcing, in response to pleas from the Railways for money to buy new trains, that there would be one final year of subsidies, bulk funded so the Railways could make the services profitable. Suddenly things happened, the station cafeterias on these routes were shut down in favour of on board catering, the trains were refurbished with new seats and suddenly marketing emerged. The Railways actually cared about attracting users, not attracting subsidies. The Christchurch-Greymouth express stopped being two trains leaving each town at the same time, passing halfway and finishing their trips in the early afternoon, and amazingly became one train in the morning one way, and returning in the afternoon, making it a plausible day trip for tourists. That train also got big wide panoramic windows, then air conditioning. It started making money.

Ah, you say, that was still under government ownership. Yes it was, government ownership to wean it off subsidies. So what happened after that? Well progressively over the following years, other services were refurbished, this continued after the Railways Corporation became NZ Rail Ltd (as an SOE under the SOE Act), and under privatisation as TranzRail through to 1994.

Oh so after privatisation it was run down? Well. Dr Cullen has announced taxpayers' money is to be used to refurbish a series of secondhand ex.British railway carriages to use on current services. What he hasn't said is that those carriages were purchased by the privatised Tranz Rail in 1996 for this very purpose, and to upgrade the Capital Connection service (which was done, without any taxpayer funding). 69 were bought, but the cost of refurbishment proved prohibitive at the time, as car ownership costs and airfares fell, and TranzRail was more focused on freight and monitoring the profitability of the long distance passenger rail services. Of course subsequently several services were cancelled due to lack of patronage (Southerner, Northerner, Bay Express, etc).

So the myth about how the private sector didn't invest in rail is largely false, as is the implied myth that the public sector did. The truth is that there hasn't been a brand new long distance passenger train put into service in New Zealand since 1972 - you'll see them swanning around Auckland now in their twilight years - the 3 bespoke Silverfern railcars. There is a reason for that - most of you have chosen to fly or put your money into owning a car, and the rest aren't in enough numbers to justify any more than bus loads, except for a couple of tourist routes.

Oh and you might ask why taxpayers have to pay for an upgrade of Picton Ferry Terminal, when the Interislander in all its guises has been clearly profitable for 44 out of its 46 years of history.

How do the Greens spread misinformation? Part 2 – Kedgley’s speech

In Part 1 I explained the rather complicated background to the Kapiti expressway issue. It’s one Sue Kedgley feels she can contribute to. Let’s see how she did. She made a speech to a Kapiti environmentalist group, supporting the council. So what did she say that was wrong? Note I’m only selecting the most blatantly obvious mistakes…

She said the Government was “announcing it is going to bulldoze a four lane motorway through Kapiti” including on one strip of land that was originally going to be used for a motorway in the first place, but Sue blanks that out. She uses the word “motorway” although the proposal is for an expressway, a subtle difference, but adds to the drama.

“The government's justification for the proposed motorway from Foxton to McKay's Crossing” there is no proposed motorway from Foxton to McKay’s Crossing, the NZTA website explicitly says expressway from McKay’s Crossing to Otaki.

“is to… make the journey through Kapiti a few minutes quicker for long haul travellers and provide a fast lane between Wellington and Auckland for huge, juggernaut trucks” The NZTA website says nothing of the sort. This is further emotive hyperbole. It is to relieve severe congestion for local and through traffic. She made up “a few minutes” and the point about huge juggernaut trucks, for dramatic effect.

“there is overwhelming international evidence that trying to solve congestion on one road by building yet another one simply doesn't work.” In the context of rural bypasses in New Zealand this is complete nonsense. Porirua and Tawa have been bypassed for decades successfully, so have places like Fairfield, Timaru, Richmond, Stoke, Upper Hutt, Waitara, Kaiapoi, Albany, Pokeno, Mercer and more recently Orewa and Silverdale. Quite simply bypasses DO work. “It's an almost irrefutable transport law” sorry Sue, I just refuted it.

The Government will “build a massive and expensive 4 lane motorway that will have a devastating impact on your community and your local ecology but will be of little use to local residents when petrol rises to $2 to $4 dollars a litre, as it inevitably will?” devastating impact? Not if it is built along the route reserved for it. Will it really be of little use if petrol rises so much? It will have taken through traffic out of the town centres, but then again Sue isn’t putting her own money on oil futures, so she’s not THAT convinced roads will be empty.

“Two decades ago, in 1990, the then Commissioner for the Environment, Helen Hughes, investigated what would be the most effective way of solving congestion on the so-called Western corridor.” Yes, but the study was about access between Kapiti and Wellington, not traffic through Kapiti. Everything you say about this report is irrelevant, it did not touch upon roads through Kapiti. Nevertheless, you don’t tell the full facts about this either…

“She concluded that that upgrading the rail service, not building a new motorway, was the solution” No, she concluded upgrading the rail service should be the first priority, before building a motorway along Transmission Gully. You oppose Transmission Gully Sue. Selectively quoting a report isn’t very honest is it?

So you see, Sue has now switched the issue from how to manage congestion from traffic travelling around and through Kapiti, to how people commute from Kapiti to Wellington, an quite different issue. Her entire focus is now nothing to do with what the expressway is meant to resolve or even the Council’s alternative proposal. In short, she’s subtly changed the topic to talk about what she wants to talk about – commuter rail. Remember this, nothing she says from now on is directly relevant, unless you think trains going south of Kapiti can be some sort of answer for traffic within and going north of Kapiti.

“Since then, however, nothing has been done to rescue the rundown Kapiti rail service from further decline, although 48 new 2 car units were finally ordered last year, and the rail line is finally being double tracked and extended through to Waikanae.” What an oxymoron. Nothing has been done, EXCEPT order new trains, widen the track and extend electrification to Waikanae. Let's minimise hundreds of millions of dollars of spending.

Except she is wrong again. Since 1990, the current (Ganz Mavag) rolling stock was extensively refurbished from 1995 to 2002 with new seats. The double tracking also includes a wholesale upgrade of the signaling and electrics for the entire Wellington rail system. “Nothing” is false.

“we need to transform what is at the moment a rundown suburban rail service into a fast efficient commuter rail system that commuters will want to switch to. So why isn't that our priority?” Again it’s false. It is the priority. The money the last government set aside for the Western Corridor had rail as the priority, with new trains, extending electrification to Waikanae and increasing the frequency of services. By comparison, nothing substantial has been spent on the highway except investigation and design work on Transmission Gully. Money for construction has not been approved.

“Almost nobody drives from neighbouring suburbs into London, Perth, Tokyo or New York. They all commute by rail.” This is the Kapiti Coast Sue, not London. Besides which, how can those cities remotely compare, and the roads are all heavily congested in those cities. Funny that.

“according to Kiwirail, more than 13 thousand people use the Kapiti line every day” No Sue, that’s misuse of statistics. That is the number of people along the whole length of the line, including people going between Wellington, Tawa and Porirua. 13,000 is not those going to and from Kapiti, indeed it would be maybe a third of that.

“despite the fact that the trains are run down, 50 years old, often late, overcrowded, and freezing in the winter.” They are not 50 years old, they are 28 years old, hardly overcrowded at Kapiti and the heating is quite reliable. However, Sue doesn’t catch trains unless it is for a photo op.

“An 8 train carriage takes at least 592 passengers and gets the equivalent of 440 cars or 1.2 kilometres of traffic off our roads.” No it doesn’t Sue, not everyone who travels by train would have travelled by car.

“that's all it would take to solve the congestion on the Western corridor, as Helen Hughes predicted all those years ago, and for a fraction of the price.” Helen Hughes did NOT say that it would solve the congestion, and on price, how do you know Sue? You don’t give a price, but estimates I saw were that the track improvements alone would cost around $300 million, another 48 trains would cost $210 million, and then there are ongoing subsidies. So quite simply, you’re wrong compared to the cheapest expressway option of a maximum of $500 million.

“why is the government building massive new motorways around the country spending $6 on roads for every $1 on rail” Sue, you know because the $6 comes from road users and about 40% of that is for road maintenance. The $1 on rail comes from taxpayers.

“The problem is that these juggernaut trucks will be too big to travel on most of our narrow winding roads, they will need four lane motorways to travel on.” No they wont. This is a complete fabrication. They do not need motorways. The former Transit NZ investigation into this indicated most major highways could easily handle an increase to 50 tonnes. Most 44 tonne trucks can carry 50 tonnes with no increase in dimensions.

“That's one of the reasons why the government wants to build a four lane motorway all the way from Wellington to Auckland, even if it means destroying hundreds of communities in its wake.” Really Sue? The government has said nothing about an expressway between Otaki and Cambridge. What community is being destroyed again?

“But instead of building motorways to cater to an endless stream of juggernaut trucks, we should be requiring heavy freight to travel by rail, which is so much safer and far more energy efficient.” Oh so you want to force freight to go by rail? Like the old days when trucks were prosecuted for hauling freight more than 150kms. The energy efficiency claim is heavily restricted to train loads of goods over long distances, not truck loads over shorter distances.

“This is code for saying that the proposed motorway which will cost a billion has a cost benefit ratio of .5% and that no matter how much they try to spin it or massage the figures, it will cost far more than any expected benefits.” No Sue, you’re wrong. You’re talking about Transmission Gully. None of the proposals has that cost, no matter how much you try to spin or massage the figures.

“Meantime public transport is so cash strapped, that we've discovered there won't be any toilets on the brand new Kapiti trains” There weren't any on the current or the previous generation of trains either. It isn’t news Sue, the trains were ordered by the Wellington Regional Council before the current government was elected, when the Greens worked in partnership with Labour on transport. Hardly National’s fault is it?

“So, on the one hand the government can suddenly pull a billion dollars out of a hat, overnight, for a motorway that no one wants. But on the other hand it can't even afford to put toilets on our new trains.” No Sue, no billion. $930 million is the most expensive option, the cheapest is $410 million tops. No Sue, this Government didn’t order the trains or fund them, it was a previous commitment.

So, exhaustively, you have it. Sue Kedgley has:
- Used heavily emotive language to describe what she hates (massive juggernauts, massive motorway, destroy communities), exaggerating for effect;
- Blanked out facts about the proposed expressway possibly being on land set aside for a motorway in the first place;
- Grossly misrepresented the Government’s proposals and justification for them, exaggerating them ridiculously;
- Claimed evidence for an effect which demonstrably isn’t true in numerous cases;
- Used a report to back her position that was not even on the topic in question, and which also supports a position she vehemently opposes;
- Talks extensively about a solution that is only slightly related to the issue at hand and talks not at all about the proposal at question (or even the counter proposal by those opposing it), maybe she doesn’t know anything about it;
- Says nothing has been done about rail, then lists several expensive projects that are being done;
- Claims rail isn’t the priority, yet the rail projects are the ones under construction, the road ones are being debated;
- Uses mega cities like London, Paris, Tokyo and New York as examples of how Paraparaumu and Waikanae can follow;
- Misuses official statistics about rail patronages;
- Is wrong about the age of the trains by over 20 years;
- Claims her preferred solution is cheaper than the ones proposed, when it isn’t;
- Misrepresents the cost of the proposed expressway and the economic appraisal;
- Makes a false claim that 51 tonne trucks need 4 lane motorways, when previous reports said the current state highway network can handle them no problem;
- Wants to ban long haul freight going by road, a new radical policy;
- Implies the current government is to blame for no toilets on new trains, when it isn’t, and none of the trains ever had toilets.

Now I can do this fisking on this issue because I know it very well. How many other times does Sue Kedgley misrepresent the truth out of ignorance or laziness, and how many other times does she exaggerate for propaganda effect?

Is she the only Green MP who does this? If so, why do the Greens tolerate such senselessness. If not, how can the Greens be taken seriously when they are so lackadaisical with the truth?

Finally, does anyone know if Sue took the train to this meeting or drove? Given I have seen her drive from a public meeting in downtown Wellington before, I’m not holding my breath that she even caught the train.

Greens propose insane bills on climate change

I don’t recall what MP said that the thing about the Greens was that it was odd that a party that was so concerned about the planet spent so little time on it, but its latest flurry of draft Bills to “combat climate change” are perfect examples of this. Besides the legislation fetish (pass a law to stop it happening or make it compulsory - demonstrating the Green penchance for authoritarianism), you don't have to guess what they MUST have been smoking when they wrote this.

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Snake oil? Yes, unfortunately they don't know how stupid they really are.

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There is one requiring the government to buy little cars (I couldn’t really give a toss about that frankly, except they have allowed the cops to have cars they can use to chase suspects - and well the government can regulate itself if it wants). There is one requiring electricity companies to eliminate fixed charges (so you can subsidise the cost of keeping accounts open for people who only use electricity occasionally at their bach, even though they want the lines to be available 24/7/365). They also want the Cullen fund to start investing in ways to minimise greenhouse gas emissions – which, given the Green grasp of fundamental economics, is simply scary. The Greens have to win an award for most wanting to set money on fire.

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However, it is the transport ones that, unsurprisingly, come out as being incredibly loopy.

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So, without getting into the debates about whether man made climate change is happening or not, let’s purely look at the merits of the Green’s proposed bills to tackle transport related greenhouse gas emissions.

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First, there is one to require all airlines to cap their current emissions (so don’t expect more flights) and then reduce them to 1990 levels. Now ignoring the fact this will breach the Convention on International Civil Aviation, this would mean a major hit to tourism and domestic air travel. Yes, airlines have been buying more fuel efficient aircraft, but aviation has been growing as well. So it would be back to $1200 return flights to Australia, infrequent provincial domestic flights and flying would, once again, be the preserve of the more wealthy. There would be jobs lots in tourism and export industries that use air cargo, but hey why should the Greens care? Ironically, Air NZ would be hit most hard, after all, its foreign competitors wouldn’t face these restrictions elsewhere and could probably take the hit after cutting their own number of flights. Of course, this wont affect climate change one iota – because one year of Chinese aviation growth would outstrip any “gains” from this proposal.

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Another Green proposal is a bill to require that two thirds of your road taxes be spent on transport modes other than roads (they don't need a bill to do this, the last one they supported means the Minister could direct this if she was so inclined). So this means massive subsidies to public transport, walking and cycling, rail, coastal shipping and travel demand management. Of course, to do this would mean not only ceasing all new road construction (that means new signage at intersections as well as motorways – ALL road improvements would have to end), but a 17% cut in road maintenance spending. So welcome those potholes, for the buses and bikes too – but hey, roads are bad aren’t they, rails are good? (much like four legs good two legs bad). Oh and if you wondered about delivering freight around town, it goes by rail, or by bus – think about it.

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However my favourite for sheer lunacy is the bill requiring the entire rail system to be electrified or using bio diesel by 2012. The Greens have even listed the lines they want electrified by then – being such transport experts, they must have got it right (hmm Christchurch-Greymouth means coal export trains – which form 90% of the trains on this line – will change locomotives twice in each direction as the coal goes from elsewhere on the West Coast to Lyttelton, but hey don’t argue with central planners). Of course this means almost all current locomotives get scrapped (no point retrofitting any, since almost all are more than halfway through their economic lives) 275 of them, at an average cost of (lets be generous assuming shunters are cheap) $2 million each. So there you have it, $500 million for locomotives alone (you’ll easily need $50 million in spares as well).

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However, the actual Think Big electrification (it is many times greater than the scheme Muldoon imposed) is amazing in itself. We are talking billions of dollars, because it isn’t just about stringing up wires and poles (and thousands of them), but also lowering tunnels, replacing the signals along the lines (electrification interferes with signals), safety protection at bridges (because high voltage lines mean electricity can “jump” a metre or so) and complete replacement of any copper wire telecommunication lines near the track. Given the electrification of the centre of the main trunk cost $350 million in 1986 dollars, which today be $600 million (excluding locomotives) – we are probably talking about another $3 billion. Given the current value of the entire NZ railway business is $600 million – I doubt this would increase its value fivefold!!

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Of course all this electrification may actually be no cheaper to run, but if it is – it will be a subsidy to the main rail freight using industries – dairy, coal and forestry (and export containerised freight). I wonder what the greenhouse gas profile of those industries is?

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So what would this be for? It is apparently to eliminate the greenhouse gas emissions of the rail industry. What would the cost of those emissions be if New Zealand bought them under an international carbon trading scheme at an estimated high end price? The government's own study, which the Greens quote at their convenience says $5 million in 2002. $5 million!!! $3.5 billion to save $5 million a year!! You could earn $175 million off $3.5 billion on a bank deposit. Ahhh I see the Greens protest, saying that they want more freight to shift from road to rail saving more. OK, so lets say ALL road freight (other than local delivery vehicles) went by rail – patently absurd since railway lines don’t go everywhere and railways are usually inefficient at moving freight less than 150km – then the total cost of the carbon credits that are saved is $53 million a year. Still light years away from being a good use of your money – even if you had given permission for the Greens to spend it.

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So there you have it – even if you do believe that man made climate change needs to be combated, ask yourself if you are prepared to pay the price of:

- Shrinking the NZ tourist industry;

- Shrinking the NZ export sector dependent on air cargo;

- Significantly increasing the price of air travel for NZers;

- Rougher and more pot-holed roads as maintenance is deferred year after year;

- No road improvements of any kinds, from motorways to minor safety improvements;

- $3.5 billion in rail spending to get a gain that is probably at best $10 million a year.

No doubt they’ll say I’m mad and ignoring the Armageddon like catastrophe of climate change – in which case – I’ll remind them that they are mad – and that to slowly bankrupt an economy, because of ideological blinkering puts the Greens on a path worse than Muldoon.

Worthless asset - Part 1 - Why is it worthless?

A "investment" huh? Kiwirail is virtually worthless reports Bill English in the NZ Herald.

So what DID Labour and the Greens say about the renationalisation of the railway business? How did it come to this?

Well it started when it was privately owned and Tranzrail. Michael Beard was brought on board to be CEO because the share price of the railway had been in decline for several years. In essence, the railway had been run in the 1990s by railway enthusiasts who treated it as a network business, and expanded services. Beard found that it was not that much of a network business, but a business based on commodities. In essence about transporting:
- Containers long distances between ports, or between ports and major centres (Main trunk line Auckland-Invercargill, and Hamilton-Tauranga);
- Coal from the West Coast to Lyttelton, with minor coal business from Huntly to Glenbrook and Southland to South Canterbury;
- Logs and timber products in the Bay of Plenty to pulp and paper mills, and the Port of Tauranga;
- Milk from southern Hawke's Bay to Manawatu, and within Taranaki.

There is also a handful of other bulk commodity businesses, like LPG from Kapuni, and fertiliser to Gisborne, but that is basically it. Passenger services in the South Island are also profitable (urban passenger rail is subsidised like many bus services).

Michael Beard told the government that unless it subsidised the business, he would close unprofitable lines, and was seeking rail customers to invest in rolling stock to manage the capital risk. For example, log wagons gets damaged regularly in that traffic and have a long life. He was concerned that customers would seek short term contracts that could mean the wagons are useless to TranzRail if it loses the contract to road freight. On top of that, he also recognised that if TranzRail bought new wagons, its customers knew it had little option but to discount heavily to get business from them - because unlike trucks, which have more flexibility, if a major rail freight customers gives up rail for road, the wagons are useless. A big capital risk in a small country.

So Labour panicked and started on a path of rail policy. One of the first steps was to rescue Auckland ratepayers from Auckland councils' own insanity, and stop them buying the Auckland rail network from TranzRail. The Auckland councils were willing to spend over $120 million buying the network. Dr Cullen decided to override them and spend $81 million instead. The Treasury valuation at the time was that it was really worth no more than $20 million. From then we have the story of pouring money into Auckland's commuter rail network, but the bigger story was also bubbling along.

At the time TranzRail was seeking to bail out of the business, so after some extensive discussion, Toll Holdings was interested in buying the company. So a Heads of Agreement was signed with Toll that it would buy TranzRail (a private transaction), the government would buy the whole rail network for $1 and spend $200 million upgrading the track. Toll would have to pay track access charges to run trains on the line, and if it failed to keep up minimum levels of service, others could provide services. Toll promised to invest $100 million on new rolling stock.

The Greens fully supported this policy

In essence, Dr Cullen relieved Toll of the risk of the infrastructure, subsidised an upgrade of it, in exchange for Toll paying to use the network to cover ongoing maintenance. The only problem was that Toll didn't keep its end of the bargain.

Toll said it couldn't afford the track access charges required by OnTrack - the Crown company that took over the tracks. The Greens said the government should offer discounts (subsidies) on condition Toll carry more freight. So Toll kept paying less than the full amount, and ran trains, until ultimately it became clear it wanted out, and we all know what happened next.

Dr Cullen bought the lot - and bought it well above market price, when it really is worth very little. The claims that it was an "investment" are fatuous.

Kiwirail's locomotive fleet is aging and many will need replacing in the next few years if services are to continue. Much of the track is also facing renewal, as are some bridges. As rail is a long term investment (locomotives and wagons last a long time), it is only worth doing this if there is enough traffic to cover not only operating costs, but renewals and a return on capital. Otherwise, it is destroying wealth.

Indeed, when the railway was still state owned it used to run lines into the ground too. The Tapanui branch in Southland carried logs reasonably efficiently, but only barely covered operating costs. When a flood knocked out part of the track, it wasn't worth replacing it as there wouldn't be enough revenue to cover the cost - so it was closed.

The rail network is worthless if the view is taken that it all needs to be replaced in the next few years. I don't believe it would remain worthless if a business like approach were taken, like Michael Beard had suggested (although he wasn't entirely correct).

NEXT - What to do with rail?

Cullen struggles to justify rail purchase

Dr Cullen, according to a government press release (not election campaigning of course!), says that the purchase of Toll Rail was essential because "With rising fuel prices and growing awareness of the threat of climate change, the restoration of New Zealand’s rail system is now an economic necessity".

Yet rail customers weren't willing to buy it, which makes it rather a curious claim. Economic necessity? Hardly.

Furthermore, he bizarrely thinks that because Toll said the railway business was worth a lot of money, it must have been!:

“Toll believed, however, it was worth over $1 billion. As the government had to take national interest factors into account and as the existing owners of the track itself, we were always going to have to pay more than commercial rail operators who did not have an interest in keeping services open. In the end roughly half of the price the Crown paid was to buy Toll out of its long term monopoly right."

Well I can say my car is worth $100,000, but it doesn't mean it is - it means if you believe it, I'm ripping you off. If Toll believed that, why didn't it sell Toll Rail to someone who would pay it? Why sell to the government? It was a bluff, a standard commercial negotiating technique, which Dr Cullen is either too stupid to see, or was being willfully blind because he wanted to buy it, at any price (and could threaten to force a sale).

He admits he was willing to pay more than a commercial operator because he wants to keep services open that effectively can only be kept open at a loss.

The waffle ends with:

"Having KiwiRail in Kiwi hands will allow us to protect rail services for provincial economies, move more freight off roads and onto tracks, and help make our economy a truly sustainable one"

Protect them? So provincial economics need rail to move logs, milk, coal and containers, at a loss? So the loss of revenue from less road user charges will be saved in maintenance costs? Was the economy truly sustainable when it was illegal to ship freight more than 150km by road?

KiwiRail is going to be a huge success for our economy. Really? So after paying over a billion dollars to buy it back and upgrade the lines and trains, will it return dividends that will pay that back and some? No, of course not. It's smoke and mirrors, it is faith not facts, it is worshipping the same altar of religion of rail that the Greens bow down at.

It's bad economics and complete nonsense. Toll took Dr Cullen, the Labour/NZ First/United Future/Jim Anderton government to the cleaners, and flogged off an unprofitable business for a fortune. Now Dr Cullen is spouting out rubbish about the gains this "investment" will bring.

My challenge is simple to the government- produce an independent economic appraisal of the net economic return from the renationalisation of Toll Rail. I dare you.