THE PUBLIC FINANCE DEBATES: “It’s time…New Zealand extended charging for public...
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Transcript of THE PUBLIC FINANCE DEBATES: “It’s time…New Zealand extended charging for public...
THE PUBLIC FINANCE DEBATES:
“It’s time…New Zealand extended charging for public
infrastructure”
Opponent:
Peter Conway
Key Points• Keep the ‘public’ dimension• Equity issues • Implementation Risks • Mitigation• Alternatives
The VUW-GEN Public Finance Debates November 12, 2013
Keep the ‘public’ dimension
• Infrastructure underpins economic, social and environmental development
• Relative benefits to individuals vary with single and multiple dimensions of infrastructure
• Charging undermines the rationale for ‘public infrastructure’
• High degree non-excludability, non-rivalry
The VUW-GEN Public Finance Debates November 12, 2013
Charging Options
• Tolls• Road pricing• Area charging• Cordon charging• Network charge• Toll lanes• Fuel taxes• High occupancy
vehicle lanes
• Road user charges• Parking charges• Rates• Targeted rates• Development
contributions• Carbon taxes
The VUW-GEN Public Finance Debates November 12, 2013
Equity• User pays implies consideration of
homogeneity of users• Vertical, horizontal…..context• Wealth and income inequality a major
issue• 63-77% earn less than ‘average’ wage• New Zealand’s household income
inequality is in the top third of the OECDThe VUW-GEN Public Finance Debates
November 12, 2013
Equity Concerns• High levels of vehicle ownership• Already hypothecated charges - fuel
excise, registration, licensing fees, road user charges
• Tolls regressive• Lead to social exclusion• Dispersion leads to less viability for
public transportThe VUW-GEN Public Finance Debates
November 12, 2013
Equity concerns…• Spatial mismatch – employment
centres/homes as commuter costs rise• Depends where ‘poor’ people live and
work relative to cordon• Net benefit to ‘wealthier’ drivers in one
case 27 times those from poorest quartile because of relative value of time
The VUW-GEN Public Finance Debates November 12, 2013
Risks• Geological• Finance• Use• Sunk costs• All suggest Government better placed to
cope with risk, spread across many assets and long period
The VUW-GEN Public Finance Debates November 12, 2013
Implementation Risks• Evidence of heroic assumptions
(BrisConnections) and ‘biased analysis’• Cross City Tunnel Sydney • Life cycle issues, implementation and
transaction costs • Risk transfer, subsidies, renegotiation
The VUW-GEN Public Finance Debates November 12, 2013
Northern Gateway• Built 10 years earlier because borrowed
$158 million based on anticipated toll revenue.
• Prices rises in March 2012 were described by NZTA as ‘regrettable”.
• Transaction costs and write offs.
The VUW-GEN Public Finance Debates November 12, 2013
Mitigation• Free quota, discounts, peak time only• Cars with 3 or more people exempt• Segmentation (community travel passes
as in community health cards), special category exemptions
• Alternative roads• Improved public transport options• Many different charging methods• Targeted revenue redistribution
The VUW-GEN Public Finance Debates November 12, 2013
Alternatives• Government – cost of capital lower• Development Funds • Small additional time bound progressive
tax • Other taxes – CGT, land tax• If low public benefit then don’t do it• Other drivers – housing, environment,
climate change, density vs sprawlThe VUW-GEN Public Finance Debates
November 12, 2013
Congestion Options• Exclusive lanes for public transport• Real time public transport lanes• Parking restrictions• More public transport• Cycling, walking
The VUW-GEN Public Finance Debates November 12, 2013
Conclusion• Public economic development goods
best to be publicly funded• Equity issues and social exclusion• Risks• Other options available – funding and
congestion• If additional charging then use more
equitable optionsThe VUW-GEN Public Finance Debates
November 12, 2013