National Party Leader Chistopher Luxon caused a stir yesterday after attacking public transport spending in response to questions from journalists.
The case for ongoing public transport subsidies does not stack up, National Party leader Christopher Luxon says.
As part of a package to ease financial pressure, the cost of public transport has been halved from April through to the end of June.
This year’s Budget will be held on May 19, and there have been hints public transport will feature.
When asked if the cut-price, subsidised fares were something he would like to see extended further, National’s Christopher Luxon said he believed services should not have to be propped up by taxpayers.
“There’s a need for us to continue to drive mode shift, I get it, but you’ve got to build good quality public transport options that people choose to use.”
While it had been a helpful to help people right now with the “cost of living crisis”, it needed to be revisited, Luxon said.
“But ultimately, public transport needs to stand on its own feet. It can’t be subsidised or underwritten … it has to be able to build on its own case,” he told reporters.
Firstly he is right about two things: we need to drive mode shift and we need to build good quality public transport options that people choose to use. As I wrote last week, we need better quality services if we want a lot more people to use them, otherwise “a crap service that’s cheap (or even free) will still be a crap service“.
But it’s the subsidy aspect that’s got the most attention.
All transport is subsidised
The reality is all transport is subsidised and you’d think a former leader of an airline that only exists today due to multiple government bailouts would understand that well. Part of the issue is that while some subsides are largely fiscal, others are largely hidden in externalities. For example, let’s take a look at some of the ways we subsidise roads, both directly and indirectly.
- Local Government Rates – Road users, particularly the trucking lobbies, like to claim that roads are paid for by fuel taxes and road user charges – which are the main contributors to the National Land Transport Fund (NLTF). While they do cover the costs of some roads, they don’t cover all of them and local authorities fund at least half the costs for delivering and maintaining local roads, most paid for by rates. Local roads make up close to 90% of all the roads in NZ, though account for just over half of the vehicle kilometres travelled.
- Direct government funding – Over the last decade or so we’ve increasingly seen successive governments sidestep the NLTF and fund roading projects directly from crown revenue. the most recent example of that has been the NZ Upgrade programme (NZUP) which included billions in funding for projects like Penlink, Otaki to Levin and the Takitimu North Link Stage 1. In total the NZUP package includes more than $4 billion in direct subsidies for new roads.
- On-street parking – As part of the recent discussion of Auckland Transport’s new Parking Strategy, AT revealed that we effectively subsidise driving by providing on-street parking to the tune of around $1 billion annually. Add in cheap-to-free parking all over the rest of the country, and that number will climb.
Annual free parking subsidy in Auckland is about $1bn per year (based on the land value of the approx 900 hectares used for on-street parking). I look forward to reading National's feedback on AT's parking strategy https://t.co/sy0IAzNOT6
— Pippa Coom (@pippacoom) April 12, 2022
- Land Use – Decades of land use policy and forced masses of off-street carparking as part of minimum parking requirement rules – something councils are now being required to remove as part of the government’s National Policy Statement on Urban Development. Combined with designs that prioritised access by car and we ended up with places actively hostile to anyone not in a car, like Botany, shown in the image below. Furthermore, all that land used for parking doesn’t come cheap and so even if you managed to get to the shops without a car, a part of the cost of the goods you purchase goes towards paying for that parking.
- Deaths and Serious Injuries – These are tragic at a personal level and they can also have a massive impact on our economy. As the Ministry of Transport say in their paper on the Social Cost of Crashes –
“Road crashes impose intangible, financial and economic costs to society. These costs include reduced quality of life for survivors, reduced economic productivity, and medical and other resource costs“.
They estimated the cost of crashes in 2019 alone was $4.6 billion – they haven’t yet provided a 2020 estimate. That’s a massive figure and a cost we’re paying every year and one reason why it’s so important we improve safety on our roads.
- Public Health – It’s not just those in crashes that suffer, our high rate of car use helps contribute to increased rates of obesity and the preventable diseases that result from it. This has impacts on not only individuals but also our health system.
- Climate Change – Transport is one of our largest sources of emissions and is also the fastest growing. The costs just to try and mitigate the impact of climate change, let alone to reduce emissions are massive. Our environment suffers other ways too, such as the impact of road runoff polluting neighbouring environments
- Congestion – Roads are one of the rare cases where, when we make a better product, we don’t want more people using it. Yet of course that’s exactly what happens, and that’s when we get congestion. That congestion then impacts on those who need to use the road, such as delivery trucks and tradies, meaning they can do fewer jobs in a day, so we ultimately pay more for their services.
I’m sure there are more examples people have.
Imagine just how much more expensive driving would be if drivers were required to pay the full cost of all the externalities it imposes. Would roads be able to “stand on their own feet” under such a scenario?
If we’re going to talk about the costs of public transport, we should also talk about the benefits that come from providing the public access to our cities and preventing the need for further spending. In some ways it should be seen more like a public investment, like we might do for other sectors, such as water supply.
Cities are about the possibilities that spring from human connection. Making those connections as easy as possible will produce benefits borne by everyone in the city. Public transport done right helps provide access and can provide significant capacity to do so.
As well as providing access, ongoing investment in public transport can reduce the need for even larger investment in the future. The discussion of a new Harbour crossing is a prime example of that as investment in the Northern Busway. The project has been so successful it has delayed the need to spend around $15 billion on an additional harbour crossing for cars. The same thing occurs on smaller scales too, preventing us from needing to endlessly expand roading capacity. So while investing in public transport does cost us, it costs us a lot less than the alternative.
Ultimately, the money saved is from investing in PT is money that can go towards other things, such as health or education.