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


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


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 OECD


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 transport


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


Risks

• Geological

• Finance

• Use

• Sunk costs

• All suggest Government better placed to cope with risk, spread across many assets and long period


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


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.


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


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 sprawl


Congestion Options

• Exclusive lanes for public transport

• Real time public transport lanes

• Parking restrictions

• More public transport

• Cycling, walking


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 options


THE PUBLIC FINANCE DEBATES: “It’s time…New Zealand extended charging for public...

Documents

Transcript of THE PUBLIC FINANCE DEBATES: “It’s time…New Zealand extended charging for public...