I might have abandoned Duncan Webb as my local MP but it’s good to know he’s finally got what he wanted and has “Hon” in front of his name. He is the Minister of SOE’s amongst other portfolios. Now that he has power, he has the chance to implement big reforming ideas. The Government could win huge pixie points by deciding to bury neo-liberal practices which are largely driven by Treasury.
Let’s start with RailCorp.
As Minister of SOE’s is Duncan committed to extending RailCorp so that we can all have access to rail transport as NZ citizens? At present the Corporation is required to pay a dividend to the Government. It’s within Duncan’s power for this to be taken to Cabinet for this to be dropped so that the Corporation can make rail transport available to us, the great unwashed. They could also drop “capital charges” but more about that later.
At present rail transport is so expensive only those visiting these shores with American dollars can afford to travel on it. Those of us of a certain age can remember what travelling on a train was like. Now it’s within Duncan’s power to change and get us back onto trains.
When I listened to the CE of RailCorp Peter Reedy last week, he could have been a private sector CE. Public interest is buried by words like “accountability” and “efficiency”. One key area is that if the government is going to move beyond “yap, yap”, on global warming they must provide affordable public transport access to us all. I’d willingly travel by train to other cities. Right now, I’d have to raise a mortgage to go far.
One dogma from Treasury is capital charges. This is a charge which public institutions have been meet for any government capital injection. This is where economists took over rational thinking in the 1980’s from accountants. I will explain with an example.
The government built new buildings at CDHB after the earthquakes. For every dollar invested the government charges 6%. There is no rationale for this charge. The government will be borrowing at below 2%. In the last year when CDHB was accountable to this city the capital charges for the Board were between $60m and $70m. Those funds came directly off supplying health services to this community. They ended up in a Treasury pot. We missed out on health services. Our local Labour MP’s in opposition had wrung their hands with concern at our Health services but when they became the Government they changed their tune and sang straight from the Treasury songbook.
Capital charges were brought in originally, I suspect, because of government departments overcapitalising historically. At the time of introduction of capital charges, I was working as an accountant in the public sector. It seemed a good idea to inject realistic financial discipline into the sector. However, that message has been understood and doesn’t need to be continued.
I suspect if capital charges were dropped with RailCorp, they could start thinking about supplying affordable rail fares for NZ families.
In an article about Warren Buffett in the New York Times last week https://www.nytimes.com/2023/05/02/opinion/warren-buffett-berkshire-hathaway-social-governance.html it was noted:
Corporate boards are now assembled like political platforms, with consummate attention to satisfying multiple interests. Berkshire chooses directors on the basis of “business savvy” and owner — not “stakeholder” — orientation. In short, Mr. Buffett remains a full-throated believer that boards exist to represent shareholders.
I think this paragraph highlights the vexed issue we have created with our SOE structures. The shareholders are us. We own the Railways. The SOE called RailCorp exists to serve us. Not Treasury.
Tell me I’m wrong Duncan. Have you got reasons why the public should not have access to affordable travel?
Here an example of what a train looks like in case people have forgotten.
Chris Kissling says
Submissions on plan change 14 contain well conceived suggestions for integrated transport that include rail solutions. Worth evaluating as housing intensification to be workable requires excellence in public transport. That is s prerequisite. A standalone public transport authority with a strict performance charter to hold it accountable is one way to develop systems with service reliability that meet changing patterns of demand. With intensification set by Central Government, there should be funds for the rail transport infrastructure needed to realise their policies on a similar basis as for road funding.
Patricia Smith says
New Zealand is a sovereign country and as such it issues it’s own currency. It doesn’t have to borrow anything. As it needs it it can issue it. As an aside what about turning Kiwi Bank into a state advances corporation that lends to first home buyers at 3% for the whole term of the loan. And the Reserve Bank should be taken.back under Government control and dream on Patricia dream on.
Gordon Macadam says
Public transport is outrageously expensive.
Christchurch in particular is not suited to it as being flat and shaped like a pancake our citizens travel everywhere.
Our obvious methods of transport are foot, cycle and car.
Aggregation of housing round services cover the first 2 and that leaves the car for the suburbs.
We need to change the car and the technology is here or imminent.
Electrification is advancing quickly but we need to shrink cars and electronically control them on the city roads. Some Chinese cities treat cars by computer as packets to be aggregated and directed.
Self driving cars are years away but there is an intermediate step available that we need to get on with.
The proposed congestion charge should be based on length of vehicle, under 4m free over charged by the centimetre.
We do not need to build more roads we need to use what we have more efficiently.
Sarah Van Der Burch says
Is Waka Kotahi also responsible for ‘capital charges’? It seems as though roads are considered a ‘public need’ and trains are considered a ‘nice to have but not a necessity.
Alan Jolliffe says
For whatever reason Capital Charges were bought in they are a major problem for all Govt Funded organisations. Universities, Health and others having to pay back to the Govt a fee for using capital. 6% does not sound like much but in capital intensive organisations it is a burdon we can do without and put the money to work providing better services.