The Productivity Commission released its International freight transport services report (PDF) today. I've highlighted a few extracts, and the one that really stood out for me was about the additional cost New Zealand faces because of the distance to our offshore markets:
Basically it costs us more to export and import because of our location. It's therefore in our best interests to only export higher value produce, instead of focussing on things like unprocessed logs. By having an economy dependent on low value exports, we're at a huge disadvantage in a global market.
The Commission doesn't really answer this problem, and also stupidly thinks we should not reintroducing cabotage (reservation of domestic coastal trade to New Zealand-owned shipping operators). They obviously didn't consider the safety aspect of so many foreign vessels cutting corners in our waters.
In fact the pro-rightwing sentiment is apparent throughout the report:
The Commission provide no evidence to back up this assertion though. In fact I've never seen a good argument that shows private ownership is preferable over public. They simply do not have the evidence to back up their arguments, especially when you factor in the common good.
Interestingly the Commission use the report to have a sly gibe at the Auckland Council:
The Commission doesn't elaborate on what these "efficiency improvements resulting from increased private involvement" actually are? It would seem to me that the problems often occur specifically because of private involvement and free-market idealism.
Likewise the Commission doesn't elaborate on where the government is failing to be transparent concerning our rail infrastructure:
That's funny, being that there's no cost-benefit shown for many of National's major roading projects. I agree with the last bit of the sentence though, particularly in how our overall transportation requirements can be better managed. This would mean utilizing our rail infrastructure more for redistributing bulk cargos, which are currently being trucked. The Commission states:
That's the best advice in the entire document. If you've travelled recently where trucks frequent, you'll know the roads are in terrible repair. We have in fact had an increase of trucks and the weight they carry without any comparative increase in their road user charges.
Trucking therefore has an advantage over rail because much of the maintenance cost is passed onto the general public. Despite this, the Commission recommends increasing load weights.
New Zealand massively under utilizes our rail network; specifically because of the maintenance advantage (cost advantage) trucking has over rail. We are effectively subsidizing the trucking industry to ruin our roads. Disappointingly the Commission only gives this a cursory glance with some incorrect statistics:
Well that's just more rightwing wishful thinking and window-dressing. The shippers are always going to choose the most cost effective transportation model and the externalities are never factored in. If they had to consider their CO2 footprint for instance, we would have a transport sector that looked completely different... it would also be a whole lot more efficient.
Ad valorem sea freight costs (measured as the price paid for freight relative to the value of the goods being transported) have been coming down over the last 20 years, although the rate of improvement slowed in the 2000s. After accounting for compositional factors, ad valorem sea freight costs are about 21% higher in New Zealand than in Australia.
Basically it costs us more to export and import because of our location. It's therefore in our best interests to only export higher value produce, instead of focussing on things like unprocessed logs. By having an economy dependent on low value exports, we're at a huge disadvantage in a global market.
The Commission doesn't really answer this problem, and also stupidly thinks we should not reintroducing cabotage (reservation of domestic coastal trade to New Zealand-owned shipping operators). They obviously didn't consider the safety aspect of so many foreign vessels cutting corners in our waters.
In fact the pro-rightwing sentiment is apparent throughout the report:
Effective governance of organisations is central to their ability to make value-maximising decisions. The governance arrangements for publicly owned enterprises need to be of high quality because publicly owned enterprises face less discipline from other sources than comparable privately owned enterprises.
The Commission provide no evidence to back up this assertion though. In fact I've never seen a good argument that shows private ownership is preferable over public. They simply do not have the evidence to back up their arguments, especially when you factor in the common good.
Interestingly the Commission use the report to have a sly gibe at the Auckland Council:
There are three areas where the governance framework applying to council-controlled port companies is not currently optimal: lack of clarity of purpose of the companies; failure to properly manage conflicts of interest; and insufficient monitoring and transparency of performance information.
Councils should consider landlord port models in which land ownership is separated from terminal operations. This may be an efficient mechanism for maintaining control over port land use while benefiting from the efficiency improvements resulting from increased private involvement in port operations.
The Commission doesn't elaborate on what these "efficiency improvements resulting from increased private involvement" actually are? It would seem to me that the problems often occur specifically because of private involvement and free-market idealism.
Likewise the Commission doesn't elaborate on where the government is failing to be transparent concerning our rail infrastructure:
The Government should improve the transparency of decision making around rail infrastructure projects, including the publication of cost-benefit analyses, comparable to the ones produced for major road projects. Decisions on rail also need to be forward looking. The focus should not be on evaluating whether past investment should have occurred, but on the optimal strategy for the future.
That's funny, being that there's no cost-benefit shown for many of National's major roading projects. I agree with the last bit of the sentence though, particularly in how our overall transportation requirements can be better managed. This would mean utilizing our rail infrastructure more for redistributing bulk cargos, which are currently being trucked. The Commission states:
The Government should examine ways to share the increased road user charge revenue from high productivity motor vehicles [trucks] with councils, so as to encourage the local road upgrades required to support these vehicles.
That's the best advice in the entire document. If you've travelled recently where trucks frequent, you'll know the roads are in terrible repair. We have in fact had an increase of trucks and the weight they carry without any comparative increase in their road user charges.
Trucking therefore has an advantage over rail because much of the maintenance cost is passed onto the general public. Despite this, the Commission recommends increasing load weights.
New Zealand massively under utilizes our rail network; specifically because of the maintenance advantage (cost advantage) trucking has over rail. We are effectively subsidizing the trucking industry to ruin our roads. Disappointingly the Commission only gives this a cursory glance with some incorrect statistics:
A small proportion of the road freight task is contestable by rail, and one estimate is that 8% of the overall freight task in tonnage is contestable by coastal shipping. For those products and routes on which transport is contestable by different modes, it is desirable that price signals encourage shippers to choose the mode that imposes the least costs on society (for the required service quality). To the extent that subsidies distort these choices, they impede this economic efficiency goal. Explicit subsidies involve payments to providers, price discounts to consumers, or a government-owned entity deliberately accepting a low return on capital provided. Implicit subsidies occur when externalities are not priced. Examples may include greenhouse gas emissions, water pollution and other forms of air pollution.
Well that's just more rightwing wishful thinking and window-dressing. The shippers are always going to choose the most cost effective transportation model and the externalities are never factored in. If they had to consider their CO2 footprint for instance, we would have a transport sector that looked completely different... it would also be a whole lot more efficient.
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| Whirokino Bridge, south of Foxton - 23 Apr 2011. |
