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Beyond the political showboating

Written By: - Date published: 10:10 am, July 7th, 2008 - 36 comments
Categories: economy, slippery, transport, workers' rights - Tags:

Ok. Now that the political theatre is done maybe National and its allies would like to engage in proper debate on the freight trucking industry.

Here’s some issues for debate:

Road user charges are less than 10% of costs and the increase, half what was recommended meaning petrol vehicles are still subsidising truck companies, is less than 1% of costs.

The price of diesel has increased 100% in the last year entirely due to the price of crude, and that is hurting the industry – the price of crude is only going up, so it’s only going to get more expensive to move freight by truck. So, shouldn’t we be looking at cheaper, more fuel efficient alternatives? maybe some kind of ‘super-truck’ that would glide on low-friction rails? hmm

Also consider this from the NDU, which represents truck-drivers:

If the industry is saying that other taxpayers should be subsidising its activities with lower road user charges then it has to be prepared to open all its activities up to scrutiny and debate … Cut throat competition has driven down both wages and owner-operator incomes.

“Rather than train new people into the industry and pay them decent wages, organisations like the Road Transport Forum want to bring in migrant workers to drive their trucks on the cheap.”

While we’re at it, let’s consider these two questions: Is it possible to organise a protest involving dozens or hundreds of companies, thousands of vehicles (that run on tight, pre-planned schedules) in one and a half days? And what is National’s ‘positive and ambitious’ plan for freight in New Zealand?

36 comments on “Beyond the political showboating”

  1. vto 1

    I always thought Owen McShane’s idea of using the rail corrider (without rails) for trucking purposes was worthy of consideration. Would get the trucks off the road for large parts of their journey. Technical and practical matters would probably de-rail (boom boom) it.

    I suspect though that the movement of goods around the globe will follow other things in becoming more localised. For example, I see power supply moving away from large central generators that distribute it far and wide, to more localised smaller generators (e.g. one windmill per suburb, to be rough about it), or even within each home (solar and wind on the roof – this is the one).

    Similarly with much else of the economy – the globalisation trend will subside, or ease, as its weaknesses get exposed, in favour of more localised everything. As such the movement of goods should abate over time. Don’t hold me to it though.

    And similarly with political power – it has been centralising but I suspect its dissipating again to the nosybody local.

    a rough 2c.

  2. interesting – hundreds of comments on threads around the protest, but none of our righties (save vto) want to seriously engage on the issue of freight in nz… disappointing but predictable

    vto. I think that using the rail corridors for trucks wouldn’t be practical (not wide enough for two way roading for one) and the conversion would be enourmously costly, moreover, rail is cheaper over large distances.

  3. Stephen 3

    No one is mentioning ‘shipping’ these days either – perhaps because it isn’t worth mentioning?

    No ‘righties’ on this thread yet because no one was really contesting the rationale behind the increase, just the timing? I don’t really know, haven’t been following this too much on this blog.

    captcha: Locomotive be (haha!)

  4. vto 4

    SP, of course the obstacles would be probably insurmountable. But I like oddball suggestions.

    Re the actual issue – who should pay for road upkeep and cross-subsidisation. User-pays I think tends to lead to the best outcomes over time. The actual and true costs become very clear, and anomolies or problems within whatever is being paid for also become apparent and can be resolved more easily. In addition, user pays allows the costs to eventually be passed on so that the workers and investors within the particular industry will end up receiving a roughly consistent income over time. This will without doubt happen with these ruc increases.

    As for the detail about what the costs of the roads are and who uses the roads in what proportions I have no idea and no time to consider. That’s someone else’s job.

    But doesn’t cross-subsidisation occur all over the place?

    Several commentators over the weekend have described, correctly, the protest as a spark to the background fumes of discontent. It was not really about the ruc increases, but more about what they represent.

    I agree though there has been some hypocrisy over this protest – from both right and left. If it had been the cook strait ferry staff or the wharfies causing inconvenience the reaction would have been decidedly different – from both the right and the left.

  5. BeShakey 5

    The government recently released a shipping strategy aimed at increasing the use of shipping. I’m pretty sure the shipping industry will see the buy back of rail as a good thing too.

    Another question for the Nats: do you support the taxpayer subsidising business? If so, what do your backers in Federated Farmers think of this?

  6. Daveski 6

    In the short to medium term, buying back Rail is simply a political gesture and ironically one that certainly wasn’t explicit Labour policy. Funny that.

    Rail has never been profitable in NZ and by nature only suits a small part of the transportation as you note – large scale over long distances. The relatively small population of NZ combined with the topology makes it even more difficult.

    On top of that, apart from bulk going direct to say ports, every item needs to be delivered to rail by truck and picked up by truck.

    A slight digression.

    In terms of your post, every situation needs to be considered in context. In itself, the additional cost of the user charges is not huge – agreed. However the context is massively increased operating costs for businesses (Kiwisaver, 4 weeks leave etc may be good for employees but they add additional costs).

    The lack of consultation or notice did not help either so in the context of what’s happening in NZ, consider it a tipping point.

    The context of the timing is also significant. It may not have been unintended, but the timing suggested to some that the Govt was prepared to shaft one industry to benefit a State owned rail.

    The fact that the popular reaction to this was positive (read the papers) suggests that it is indeed a tipping point.

    Rather than question the authenticity of the response, Labour should be taking the above messages. However, the Laboru view is that it’s all a conspiracy, the polls are wrong, we are right so they continue to fail to listen to the message.

    I do accept your point re National’s policy. The answer though is politics not policy which I’ve discussed previously. Sadly, this is the reality of where we are at – Labour is just as guilty but I doubt the consensus will agree here. The electorate will however.

  7. Felix 7

    Technical and practical matters would probably de-rail (boom boom) it.

    Those pesky “technical and practical” matters have ruined 3 or 4 of my brilliant ideas already today.

    I tend to agree with much of what you’re saying though and I think this is something that has been largely overlooked in most of the public debate about transport: that while it’s very important to move stuff around as efficiently as possible it’s (at least) equally so to move less stuff around. Or not move it as far.

  8. BeShakey 8

    “Rail has never been profitable in NZ…”

    Of course one of the good reasons for the government owning the rail is that, as a business rail may not be profitable (although many would debate that), but it can still make an overall positive contribution to the economy in the medium to long term(taking into account the initial purchase price and subsequent investment). To do this it is likely to require investment with a return horizon that is beyond the scope of business, and of course for business the return is measured solely on business returns, whereas for the government a much wider range of returns can be considered.

  9. burt 9

    Steve P.

    interesting – hundreds of comments on threads around the protest, but none of our righties (save vto) want to seriously engage on the issue of freight in nz disappointing but predictable

    The road transport people engaged and were ignored – the message is clear – don’t bother trying to talk sense to people who don’t listen…

    Imagine the sky falling if people pre-purchased RUC in advance of a price rise… all that money up front is not good enough for the govt that like to run a surplus in a recession – I guess Labour can’t inflict enough pain on the productive if advance warning is given…

  10. From someone whose grandparents were both killed in an accident with a truck, I applaud any moves which transfer freight onto rail from road where possible.

  11. Daveski 11

    BS – agreed

    Profitability is not the only criteria for success – there is a public good element.

    I would still be peeved though if I thought my business was being increasingly taxed while a competitor was able to run at a loss propped up by tax payers.

    That’s not to say there isn’t a role for rail but it is also not right to say that rail is the solution to all our transportation woes given the other points I noted.

    It’s also true that NZ has relied significantly on state investment in a range of areas given the points I make, not just rail.

    I wouldn’t be so analytical if my business was tied up in a truck!

  12. Rob 12

    Steve Pierson

    You wont get to many righties commenting on here as you boot them off with Gay abandon (excuse the pun).

    Burt is absolutely correct Anette King broke a promise and caused the problem. Helen Clark had to go into damage control for her and all in all it wasn’t a good Look for the Government.

    There was no Crosby Textor conspiracy just like there wasn’t one for the Asian crime march. People are starting to say they have had enough and want to be listened to. This Government has been poor on the active listening front and is now paying for it

    [lprent: There are quite a few ‘righties’ here. I boot for behaviour not for opinions. The behaviour you exhibited (from memory) was to act like a badly programmed machine. Act like a human interacting with other humans and you won’t get booted..]

  13. bill brown 13

    That truck strike was nothing to do with a supposed broken promise, it was organised weeks in advance as a shaking fist in the face to the government. Truckies just got lucky because it was an interesting – and rare – spectacle in the middle of winter.

    And did the people on the Asian crime march know who their front person was really like? That guy makes the SST look like a bunch of liberal pussy cats.

  14. Rob 14

    Bill

    So you think 15000 Asian people would have still marched if their hadn’t been two high profile murders in their communities. The crime is the problem not a supposed conspiracy on who might have the audacity to march against the Government

  15. bill brown 15

    I’ve nothing against people marching against the government, or anything else for that matter, so long as they know what they’re getting into.

    How many of those people agreed with the things that the organiser was saying this morning on the radio? How many would have marched behind him if they knew what the guy was really like?

  16. trucker 16

    Is it possible to organise this in two days, and did we plan in advance?

    Yes it is possible, in a motivated and angry industry. Did we have advance notice: given that the protest was about being given no notice it is hard to see how that could be. The truth is simply: no we did not have notice. We found out on Tuesday morning, and went to the streets on Friday. I hope that clears up Bill’s concern.

    Petrol vehicles do not subsidise trucks. Both pay their amounts to the government, and have done for years. In fact the RTF has argued, without rebuttal, that the amount paid has been too much. The Government accepted that argument until last year, and increased RUC without either justification or notice. The Minister agreed to rectify both issues and consult and give notice before any further increases. She did neither and that was the cause of our anger. The subsidy issue is a hoary old chestnut dragged out regularly, but based on a now discredited Booze Allen report. It says little for people that they continue to regurgitate a report that has been proven to be based on disproved theory.

    Your argument about using rail is valid, and provides a theoretical argument that sadly hgas no basis in reality. Currently our Rail system is working at capacity, and to increase that capacity will require HUGE investment. In a country the size of NZ we do not have the volumes of either freight or passengers to justify the size of investment needed.

    In percentage terms NZ now carries more rail freight per head of population than they do in the UK. That is not a bad achievement.

    Much was made of Tony Freidlander’s past job with National. That was 20 years ago, and he was then the Minister of Works, in the Government that introduced Road User Charges. It was his department that introduced them. He has pretty good knowledge about them, as his job with the RTF has kept him well informed. I don’t believe that it is a crime to favour one or another political party, and to try and shoot him for his previous employment is somewhat irregular.

    As one of the people heavily involved in the organisation of the protest I know that Tony’s role was one of a CEO carrying out the directions of his Board, not one of directing his members to take any particular action.

    Sorry guys, no conspiracy, no hidden agendas at all. Just seriously angry people who were let down by the government who happened to be Labour. Had National done the same thing they would have got the same message.

    Cheers

  17. trucker 17

    Sorry I missed a crucial word in my post above:

    In percentage terms NZ now carries more freight per head of population than they do in the UK. That is not a bad achievement.

    should read:

    In percentage terms NZ now carries more RAIL freight per head of population than they do in the UK. That is not a bad achievement.

    [Tane: Fixed.]

  18. T-rex 18

    Trucker – Interested to read.

    What is the RTF’s basis for arguing that they’re paying too much?

    I agree that Kings failure to give notice of the rises was a betrayal. As well as politically inept. And poorly founded. I support truckers in their objections in that regard.

    The increases seemed reasonable in themselves though. On what basis are you arguing they’re too high?

    If Rail is running at capacity isn’t that cause to increase capacity? If demand is there…

  19. burt 19

    T-rex

    If Rail is running at capacity isn’t that cause to increase capacity? If demand is there

    Demand will be there if the price of road transport is pushed up and up and capital for increasing that capacity will be available via the same mechanism….

    But I guess I don’t need to explain that – Annette King made that strategy obvious for all to see.

  20. bill brown 20

    Demand will be there if the price of road transport is pushed up and up

    Surely one of the main causes for this is the increase in the price of fuel, which no-one in NZ can control. Therefore an alternative is necessary.

  21. T-rex 21

    Stop being so bloody stupid Burt. Annette King has done SFA to the price of road transport, and it’s worth noting that what she has done is TO PAY FOR MORE ROADS.

    I would fully support cutting RUC’s and cutting development of new roading. Improve utilisation of the existing ones. Ounce of efficiency vs Ton of stupid outmoded strategy.

  22. burt 22

    T-rex

    and it’s worth noting that what she has done is TO PAY FOR MORE ROADS.

    Incorrect, she has allocated public funds to build more roads. You might want to thank the govt for that without thinking where that money came from, I’d rather thank the people who paid for it. Cheers trucker – you pay for maintenance today AND pay money for roads that may never be build and you may never use.

  23. T-rex 23

    Y’know, I’m just going to leave that one.

  24. Draco TB 24

    Trucker – bring out the report that truckers pay more than their fair share and I’ll believe you. Until you do I’ll continue to believe the previous report that says you don’t.

  25. trucker 25

    Draco

    You may believe as you wish. The response to the Booze Allen report was lodged with the MOT. I have read it, but I do not have a copy.

    Suffice to say that the Ministry accepted it and have acknowledged the accuracy of it, and have stopped referring to the Booze Allen report. That in itself says heaps.

    The only people who continue to refer to it are those who liked what it said, and were not interested in a contrary view.

    As I said you may choose as you wish.

  26. trucker 26

    duplicate post

  27. T-rex 27

    Trucker – do you have a link?

  28. Draco TB 28

    I would assume this is it.

    ATM I would say the ministry is taking it under advisement. If the ministry had accepted the response report then the minister would be using the figures from the new report instead of the one commissioned by the ministry.

  29. trucker 29

    sorry that is not the report I refer to.

    I do not have a link, or a copy.

  30. T-rex 30

    Ok… well until I see otherwise I’m going to stick with my present understanding, which is that trucks pay less on a per-ton basis than light vehicles, and do more damage per ton.

  31. Kevyn 31

    T-rex. I haven’t seen the report trucker refers to but I have read the full STCC (Booze Allen) report and nowhere does it claim that trucks don’t pay for all of their road damage. All it says, and it says this about cars too, is that if the railways have to earn a profit then so must roads. The study is GST exclusive which makes no sense when road externalality costs to the Crown are included. Either both have to be excluded or both have to be included. The study doesn’t provide enough information to work how much GST carsor trucks pay.

    Since the railways are no longer required to make a profit we can safely remove the return on capital figures from the STCC report and discover that trucks are paying 101% of their costs (GST and externalaties both excluded).

    I think your present undestanding is correct for all other OECD countries because they all rely on diesel taxes and gross weight registration fees. New Zealand is the only country where costs are recovered using the axle weight cubed (on top of the petrol tax equivalent distance charge paid by light diesel vehicles).

  32. Kevyn 32

    Trucker, Was Feidlander really the Minster of Works in the Muldoon Goverment? That means he was chairman of the National Roads Board when funding for highway improvements was cut from $360m a year under Big Norm to a mere $100m (inflation adjusted) when the rogergnomes took over. That means HE is the man responsible for the humungous backlog of roadworks that Transit is currently trying to catch up on.

    During the debate of the bill that replaced the NRB with Transit Richard Prebble had the gall to blame the appalling road toll on mismanagement by the NRB instead of accepting that SFA funding was the problem.

    If the rate of traffic growth hadn’t exceeded the rate of inflation during the 90s the situation wouldn’t have improved under National either.

    [I guess that rules me out for the “rightie troll of the year” award]

  33. Kevyn 33

    SP, You should know better than to take any politician’s assertions about the findings of study at face value. Politicians and lobbyists love to cherry pick from these studies and ignore any caveats the authors might have included.

    Until I see the study I will remain unconvinced that a 20% increase in RUCs was needed. Anyway, isn’t a 75% increase in RUCs needed to match the hypothecation of the petrol tax? Maybe that’s what Annette means – the 10% increase in the weight/distance component plus a 75% increase in the distance component.

    I know the construction price index has increased by more than 30% since 1999 but that followed a fall in the CrPI after the asian financial crisis, so I don’t know what the change has been since 1989. Maybe a further 10% increase is justified to cover cost increases. Equally, RUCs were not reduced after the asian financial crisis so maybe they were being overcharged 10% to begin with. It could all be rather a moot point anyway when you look at the engineering knowledge about various causes of road damage. Engineers don’t understand the interactions between dynamic loads and environmental factors well enough to be able to assign costs between trucks and cars with 100% precision. A +/-5% error margin in the amount truckies should be paying for road damage is the best the experts can come up with. (FHwA Highway Cost Analysis Study)
    http://www.fhwa.dot.gov/policy/hcas/final/index.htm
    [Yes it is a pretty good cure for insomnia and, yes, it is 11 years old, but thats the Bush administration for you.]
    Any politician who argues otherwise is pushing their own agenda – King or Friedlander as the case may be.

    One thing I do know is that air suspension dramaticly reduces road damage (OECD DIVINE study) and that two-thirds of new trucks sold last year were fitted with it. I think it may be standard when ABS is specified and insurance companies seem to be encouraging the use of ABS. Assuming the OECDs lower estimate of 20% less damage on smooth roads that uptake of airsuspension could very well have offset a 10% increase in maintenance costs over the last several years.

    Until either the Minister or the RTF release the study we will never know what the extra 10% was justified by, or even if it was a core recommendation.

    Mind you, there is one concealed problem with our roads and bridges that the government might finally have woken up to. We have enjoyed a maintenance holiday over the last dozen years. By a fortunate set of coincidences a major bridge replacement program was begun when the petrol tax was introduced in the 1920s. Almost half of our current length of highway bridges was constructed between then and the outbreak of war. The remainder were mostly constructed in the two decades after the petrol tax was hypothecated in the mid 50s. That same period also saw two-thirds of our highway kms sealed for the first time. Three-quarters of local road sealing and bridge building occured during the same period. Since the design life of these pre-Napier quake ferro-cement bridges was 75 years (100 years was considered an extravagant waste of precious resources) we are now running into a period of a couple of decades of extensive and expensive bridge renewals. To add to this the design life of traffic pavements is generally 35-60 years depending on the type of subsoil. So we are also running into a period of needing to rebuild a huge amount of roads and highways from the ground up. That is one reason Transit has been fighting to limit the Auckland-centric funding arrangement to the ten year timeframe stated by the government when the regionally ollocated petrol tax was introduced. That will allow the pavement rehabilitations to be replaced with realignments where on black routes thus making a major step to belatedly act on the recommendations of the National Road Safety Committee. When this rebuilding phase becomes unavoidable you can bet that whoever is in government will be pushing the “truck damage” line for all its worth to get public support to slug heavy vehicles. There has already been a dry run of this tactic with regional funding for the “wall of wood”. Most of the roads being rebuilt to cater for these logging trucks were built prior to the first cut of plantation forests and weren’t expected to survive beyond a second cut harvest. The original logic was that the mileage tax collected during the second cut harvest would pay for the reconstruction. So the work that’s being done now is premature and being done mainly to influence ill-informed or misinformed voters.Although pavements do disintegrate at an exponential rate so I might be wrong, it might be engineers who are pushing this solution, but if they are then there are politicians hiding them from view.

  34. trucker 34

    Kevyn,

    Tony was certainly “a” Minister of Works under Muldoon, but not the only one as far as I can recall. I have no knowledge as to whether he was the Chairman of the National Roads Board under Norm Kirk, but I would doubt it.

    The current backlog in infrastructure spending has been perpetuated by many governments, both National and Labour, over many years.

    The current Government has done the best of any in recent times to address this.

    The same underspending has been mirrored in Public Transport also, as well as in many other areas of infrastructure which have been under-funded for many years. As a nation we have failed to invest in the infrastructural future of our country.

  35. Ari 35

    Petrol vehicles do not subsidise trucks. Both pay their amounts to the government, and have done for years. In fact the RTF has argued, without rebuttal, that the amount paid has been too much.

    What about the claim that trucks cause disproportionate damage to the road compared to their RUC? Because I’d generally say that paying less than you cost someone who is responsible for maintaining something you’re damaging is a subsidy.

    I’d also like to point out that the promise was that a bill would be introduced to allow them to give warning on RUCs- that has been done. Unfortunately the bill is held up by other important legislation so you didn’t get any warning this time. I’m not sure you can exactly call that a broken promise- disappointment perhaps.

  36. trucker 36

    Ari,

    The claim that trucks do disproportionate damage is one trotted out, and justified by the Booze Allen report, which has since been discredited. RUC for trucks is calculated on the basis (simply) that a car is one, and a truck incurs damage to a power of 4 of the car figure, and this increases as the weight increases. Note that is a “power” of 4 , not “times” 4.

    There is no doubt that trucks to more damage to roads than cars, and they pay for it accordingly. In our industry’s view we overpay. That was the basis that the Minister promised to review RUC and failed to do so.

    The promise that warning would be given was not kept. The Minister did progress some changes we were told, but they were never delivered. Saying that we started on something is not the same as finishing it. I call it a broken promise however you look at it.

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