The Taxpayers’ Union has told the National Business Review that it welcomes the engagement of the Green Party to evaluating transport investments without any bias or favouritism to one transport mode over another.
According to a column in the National Business Review by Taxpayers’ Union research fellow Jim Rose, all transportation investments should be hard nosed.
“The Taxpayers’ Union calls on the Greens to join us in asking for an immediate public inquiry by the Productivity Commission into the future of KiwiRail,” says Rose.
Rose says all cards must be on the table if the question is to be “what is the best investment we can make” in KiwiRail.
“We could not agree more with Julie Anne Genter when she says the question ministers should always ask is ‘what is the best investment we can make’?” says Rose.
“All transport investments should pass cost-benefit tests that include all relevant environmental and safety effects. We agree with the Greens that only those transport investments with the highest payoffs should go ahead if there is to be the best value for taxpayers’ money,” he says.
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The test of the commitment of the Green Party to genuinely answering that question starts with KiwiRail according to Rose.
“The Minister of Finance admits KiwiRail will never be self-sustaining – that it will never come off life support from the taxpayer,” he says.
“Genter claims taxpayers have put only about $1.5 billion into KiwiRail, not the about $3.4 billion she said the Taxpayers’ Union previously claimed. She gave Auckland urban rail electrification spending as an example of our errors,” says Rose.
Rose says that in fact, the Taxpayers’ Union was wrong about how big a lifeline has been extended by the taxpayer to KiwiRail under various guises since its purchase for $690 million.
“After rechecking both our calculations and each budget, we found we had missed $90 million a year in rail operating support hidden away in each of the 2008 and 2009 budgets,” he says.
“The correct figure for taxpayer handouts to KiwiRail under various guises is $3.622 billion with $214 million of this in Budget 2016. We thank Genter for challenging us. We would not have picked up our error but for her,” says Rose.
Rose told the National Business Review that if the Greens want transport investments to be the best they can be, that hard-nosed scrutiny must start with considering all options for KiwiRail.
“These options include a managed decline, a trimmed network limited to its upper North Island freight business and its passenger networks, and a complete closure of its freight business,” says Rose.
“KiwiRail’s freight business brings in $450 million in revenues and carries 7% of total national freight. About 20% of that freight business is coal. The Greens want to close New Zealand’s coal mines,” he says.
According to Rose, Treasury recently calculated that a complete closure of KiwiRail’s freight business would save $150-240 million a year. These fiscal and economic savings are after factoring in both the cost of closing the rail freight network and upgrading roads for the additional freight carriage.
“The Treasury is right to say that such a major restructuring should be after an arm’s-length inquiry,” he says.
