TRAC Applauds Minister For Ignoring Treasury Advice
TRAC applauds the Minister of Rail, Winston Peters for standing up to Treasury's blinkered anti-rail view. Treasury appears to be colluding with the road transport industry in some theoretical belief that road transport is cheap, and, therefore, good for the New Zealand economy.
Gareth Dennis, a UK rail engineer and rail advocate says in his book, 'How the Railways Will Fix the Future', '…two strips steel rail, - remain our most powerful yet under utilised tool for societal transformation.' Dennis goes on to say, that there are achievable goals of increasing rail's share of passenger transport to 25% and freight to 40%.
TRAC national coordinator, Niall Robertson says, 'Currently, the so-called cheap road transport vehicles weighing over 3.5 tonnes which cause 93% of all road damage pay just 14% of the cost of building and maintaining roads, and get boosts of $4b for pothole repairs and $5b for resurfacing work'. Robertson adds that most Roads of National Significance have benefit cost ratios of about 21c which is very low. Robertson says, 'This is technically a significant loss in transport investment'.
TRAC chair, Guy Wellwood feels that Treasury has a myopic, short term view of what is economically good for the country and just look at what is cheap in the short term with little thought for the long term value to the economy. Wellwood says, 'There was a time when New Zealand needed to change its economy to a liberal free market one, but things have changed in the last forty years'.
Robertson says, 'We now have an economic system that frets about the 'fiscal deficit', but this is to the detriment of the infrastructure and social deficits which are chronically ignored.' Robertson adds that this short term approach has meant that New Zealand's productivity is continuing to go backwards and wages and salaries are getting lower by world standards'.
Wellwood says New Zealand needs to lift its game. He says, 'Rail infrastructure is cheaper than roading infrastructure and a railway from Levin directly to Marton via Foxton and Greatfod would cost $950m with a BCA of $1.57, which compares with the Otaki to north of Levin motorway at a cost of $1.5b with a BCA of just 21c!'
Rail should be moving 40% of the freight task, but is doing barely 10% currently. That is fine for treasury as KiwiRail in their trimmed down form offer the Treasury a reasonable return as an SOE, but Robertson says, 'There needs to be a rethink of land transport funding, starting with the removal of the below wheel infrastructure from KiwiRail and that part of the industry be funded through the National Land Transport Fund (NLTF), then offering open access to other railway organisations to offer services that KiwiRail can't or won't offer such as a line to Gisborne'. There is a list of bouquets for rail which are brickbats for road transport that will incentivise motorists to prefer more funding to go to rail and these include; road safety, road congestion, road damage, CO2 emissions, road particulate matter from tyres, brakes and road dust that pollute the air, waterways and oceans, small land footprint as rail can move people and freight using a lot less land, improved green credentials with our trading partners and the fact the 30% of the population require public transport as they are young, elderly, disabled or on low incomes'.
Gareth Dennis who regularly speaks on sustainable transport matters, skills and strategy, as well as more specialist engineering subjects and makes a compelling case that railways, 'are capable of carrying tens of thousands of people per hour or tens of millions of tonnes of freight per year on just two strips steel rail'. Robertson adds, 'More road safety, less congestion, smaller road bills, less pollution, better land utilisation, greater green standing with our trading partners and more transport equity and connectivity'.
Dennis says, 'Rail is both the past and the future of mass transit. Anyone who suggests otherwise probably doesn't have your best interests at heart'. Dennis also says that we need to,'…counter those generous party donations from the roading lobbies and the trucking companies and put pressure on the Treasury away from short-termism in financial planning'.
The Minister of Rail appears to have a profound and insightful grasp of these flaws and has made a very nuanced decision in the interests of the New Zealand people to buy rail enabled ferries.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
a day ago
- RNZ News
Taxes will have to increase to cope with ageing population, government spending
The IRD has warned government spending needs to change or taxes will need to increase in the future. Photo: RNZ Inland Revenue is warning that unless what the government spends its money on changes, taxes will need to increase in the coming years to cope with an ageing population. It is currently seeking submissions on its latest long-term insights briefing. It notes that in the coming years, if the current settings are maintained, government spending as a proportion of the economy will rise. "A core driver of these fiscal pressures is that New Zealand's population is ageing." By 2060, a quarter of the population will be older than 65. "This means that the amount the government needs to spend on superannuation and health care will increase if the government maintains current policy settings. "In its last Long-term Fiscal Statement, the Treasury predicted that government expenditure will exceed government revenue by 13.3 percent of GDP by 2061 if the government takes no response to rising fiscal pressures," IRD said. That would mean either that existing taxes would need to be levied at a higher rate - such as higher levels of income tax or GST - or there would need to be new taxes implemented. It said New Zealand taxed a more limited set of capital gains than most other OECD countries. It could be possible to broaden that scope. "The absence of a general approach to taxing capital gains can provide an incentive for individuals to reduce their tax liability by undertaking activities that are not taxed rather than those that are taxed. "This can reduce government's ability to raise more revenue in a way that is progressive." It pointed to an estimate for a Tax Working Group report in 2019 that, if a capital gains tax took effect from the 2022 tax year, it would raise about $3 billion in the 2026 tax year. Revenue would increase over time. IRD said this was in line with revenue raised in other countries from capital gains taxes. "Revenue from capital gains could therefore make a meaningful contribution to addressing long-term fiscal challenges. "However [as noted above] the last Treasury LTFS projected an operating deficit of 13.3 percent of GDP by 2061 under current settings. "Therefore, even with more comprehensive taxation of capital gains other tax or expenditure measures would be needed in the longer term. "Therefore, Inland Revenue considers that it is also important to consider how to increase the flexibility of the tax system to changing revenue needs." It said capital gains taxes could also have relatively high compliance costs. Inland Revenue said GST was a substantial source of tax revenue. But if it were to be increased, there would be concerns about the effect on lower-income households. While wealthier households pay more GST overall, poorer households spend more of their money on GST. IRD said GST could be applied at a lower rate on some goods and services that were bought by lower-income households, or there could be assistance via the welfare system to help those households. "Several international and New Zealand-focused studies have shown that using cash transfers is a more cost-effective way to target assistance to lower-income groups compared to applying lower rates to certain goods and services. "Several countries have implemented permanent GST-offset schemes for this reason." The report used modelling of GST at 18 percent. It also considered how other taxes such as payroll tax, wealth tax, inheritance tax, land and property tax could be used to add further tax bases to the New Zealand system. But it said there were difficult trade-offs with each of these. "Payroll taxes provide a means of shifting the balance of taxation away from capital income and onto labour income, but they are likely to have some disadvantages relative to GST and income tax. "Wealth taxes are likely to impose higher distortionary costs than a broad-based income tax, and they face similar challenges to those that would make an idealised income tax that includes accrued capital gains impractical. "Inheritance taxes are likely to have similar distortionary costs to income taxes when people are intentional donors, but they will have much lower distortionary costs when people are unintentional donors. "Land taxes are widely seen as one of the least distortive taxes, and they impose fewer distortionary costs than property taxes or stamp duties. "However, they would have a significant impact on certain groups. As with any tax, providing preferential tax treatment to certain groups or in certain situations would tend to increase efficiency costs and reduce horizontal equity on some margins." IRD said this underscored the importance of income tax and GST being designed in a way that was as efficient and fair as possible while having the flexibility to adjust to changing revenue needs. "New Zealand faces difficult choices in designing a durable tax system in the face of long-term fiscal challenges. "In Inland Revenue's view, a priority for future work should be on how to make New Zealand's main bases of income tax and consumption tax more flexible to changing revenue needs over time." It said, with different personal and company tax rates there was an incentive for people to "shelter" their income in companies. "This incentive is likely to increase the wider gap between top personal tax rates and the company rate, however, in the context of rising fiscal pressures, a system that requires alignment of the company rate and top personal rate is unlikely to be a durable tax system." Economist Shamubeel Eaqub said IRD had a clear message that either tax rates would need to increase, or the tax base - or both. "There are some difficult choices to be had in the future, if spending choices don't change then our revenue choices have to. "And we can either tax more using the same instruments that we have on the same bases that we have or we can increase the bases, and there are no easy answers. "There are always trade-offs, there will be winners and losers. And we're going to have to make a considered decision of what we're going to do - no tax is easy. "No one likes paying tax. I think it's about finding the least disruptive system given the public services that we want." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
a day ago
- RNZ News
Taxes will have to increase in 2060 to cope with ageing population, government spending
The IRD has warned government spending needs to change or taxes will need to increase in the future. Photo: RNZ Inland Revenue is warning that unless what the government spends its money on changes, taxes will need to increase in the coming years to cope with an ageing population. It is currently seeking submissions on its latest long-term insights briefing. It notes that in the coming years, if the current settings are maintained, government spending as a proportion of the economy will rise. "A core driver of these fiscal pressures is that New Zealand's population is ageing." By 2060, a quarter of the population will be older than 65. "This means that the amount the government needs to spend on superannuation and health care will increase if the government maintains current policy settings. "In its last Long-term Fiscal Statement, the Treasury predicted that government expenditure will exceed government revenue by 13.3 percent of GDP by 2061 if the government takes no response to rising fiscal pressures," IRD said. That would mean either that existing taxes would need to be levied at a higher rate - such as higher levels of income tax or GST - or there would need to be new taxes implemented. It said New Zealand taxed a more limited set of capital gains than most other OECD countries. It could be possible to broaden that scope. "The absence of a general approach to taxing capital gains can provide an incentive for individuals to reduce their tax liability by undertaking activities that are not taxed rather than those that are taxed. "This can reduce government's ability to raise more revenue in a way that is progressive." It pointed to an estimate for a Tax Working Group report in 2019 that, if a capital gains tax took effect from the 2022 tax year, it would raise about $3 billion in the 2026 tax year. Revenue would increase over time. IRD said this was in line with revenue raised in other countries from capital gains taxes. "Revenue from capital gains could therefore make a meaningful contribution to addressing long-term fiscal challenges. "However [as noted above] the last Treasury LTFS projected an operating deficit of 13.3 percent of GDP by 2061 under current settings. "Therefore, even with more comprehensive taxation of capital gains other tax or expenditure measures would be needed in the longer term. "Therefore, Inland Revenue considers that it is also important to consider how to increase the flexibility of the tax system to changing revenue needs." It said capital gains taxes could also have relatively high compliance costs. Inland Revenue said GST was a substantial source of tax revenue. But if it were to be increased, there would be concerns about the effect on lower-income households. While wealthier households pay more GST overall, poorer households spend more of their money on GST. IRD said GST could be applied at a lower rate on some goods and services that were bought by lower-income households, or there could be assistance via the welfare system to help those households. "Several international and New Zealand-focused studies have shown that using cash transfers is a more cost-effective way to target assistance to lower-income groups compared to applying lower rates to certain goods and services. "Several countries have implemented permanent GST-offset schemes for this reason." The report used modelling of GST at 18 percent. It also considered how other taxes such as payroll tax, wealth tax, inheritance tax, land and property tax could be used to add further tax bases to the New Zealand system. But it said there were difficult trade-offs with each of these. "Payroll taxes provide a means of shifting the balance of taxation away from capital income and onto labour income, but they are likely to have some disadvantages relative to GST and income tax. "Wealth taxes are likely to impose higher distortionary costs than a broad-based income tax, and they face similar challenges to those that would make an idealised income tax that includes accrued capital gains impractical. "Inheritance taxes are likely to have similar distortionary costs to income taxes when people are intentional donors, but they will have much lower distortionary costs when people are unintentional donors. "Land taxes are widely seen as one of the least distortive taxes, and they impose fewer distortionary costs than property taxes or stamp duties. "However, they would have a significant impact on certain groups. As with any tax, providing preferential tax treatment to certain groups or in certain situations would tend to increase efficiency costs and reduce horizontal equity on some margins." IRD said this underscored the importance of income tax and GST being designed in a way that was as efficient and fair as possible while having the flexibility to adjust to changing revenue needs. "New Zealand faces difficult choices in designing a durable tax system in the face of long-term fiscal challenges. "In Inland Revenue's view, a priority for future work should be on how to make New Zealand's main bases of income tax and consumption tax more flexible to changing revenue needs over time." It said, with different personal and company tax rates there was an incentive for people to "shelter" their income in companies. "This incentive is likely to increase the wider gap between top personal tax rates and the company rate, however, in the context of rising fiscal pressures, a system that requires alignment of the company rate and top personal rate is unlikely to be a durable tax system." Economist Shamubeel Eaqub said IRD had a clear message that either tax rates would need to increase, or the tax base - or both. "There are some difficult choices to be had in the future, if spending choices don't change then our revenue choices have to. "And we can either tax more using the same instruments that we have on the same bases that we have or we can increase the bases, and there are no easy answers. "There are always trade-offs, there will be winners and losers. And we're going to have to make a considered decision of what we're going to do - no tax is easy. "No one likes paying tax. I think it's about finding the least disruptive system given the public services that we want." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
a day ago
- RNZ News
Taxes will have to increase in 2060 to cope with aging population, government spending
The IRD has warned government spending needs to change or taxes will need to increase in the future. Photo: RNZ Inland Revenue is warning that unless what the government spends its money on changes, taxes will need to increase in the coming years to cope with an ageing population. It is currently seeking submissions on its latest long-term insights briefing. It notes that in the coming years, if the current settings are maintained, government spending as a proportion of the economy will rise. "A core driver of these fiscal pressures is that New Zealand's population is ageing." By 2060, a quarter of the population will be older than 65. "This means that the amount the government needs to spend on superannuation and health care will increase if the government maintains current policy settings. "In its last Long-term Fiscal Statement, the Treasury predicted that government expenditure will exceed government revenue by 13.3 percent of GDP by 2061 if the government takes no response to rising fiscal pressures," IRD said. That would mean either that existing taxes would need to be levied at a higher rate - such as higher levels of income tax or GST - or there would need to be new taxes implemented. It said New Zealand taxed a more limited set of capital gains than most other OECD countries. It could be possible to broaden that scope. "The absence of a general approach to taxing capital gains can provide an incentive for individuals to reduce their tax liability by undertaking activities that are not taxed rather than those that are taxed. "This can reduce government's ability to raise more revenue in a way that is progressive." It pointed to an estimate for a Tax Working Group report in 2019 that, if a capital gains tax took effect from the 2022 tax year, it would raise about $3 billion in the 2026 tax year. Revenue would increase over time. IRD said this was in line with revenue raised in other countries from capital gains taxes. "Revenue from capital gains could therefore make a meaningful contribution to addressing long-term fiscal challenges. "However [as noted above] the last Treasury LTFS projected an operating deficit of 13.3 percent of GDP by 2061 under current settings. "Therefore, even with more comprehensive taxation of capital gains other tax or expenditure measures would be needed in the longer term. "Therefore, Inland Revenue considers that it is also important to consider how to increase the flexibility of the tax system to changing revenue needs." It said capital gains taxes could also have relatively high compliance costs. Inland Revenue said GST was a substantial source of tax revenue. But if it were to be increased, there would be concerns about the effect on lower-income households. While wealthier households pay more GST overall, poorer households spend more of their money on GST. IRD said GST could be applied at a lower rate on some goods and services that were bought by lower-income households, or there could be assistance via the welfare system to help those households. "Several international and New Zealand-focused studies have shown that using cash transfers is a more cost-effective way to target assistance to lower-income groups compared to applying lower rates to certain goods and services. "Several countries have implemented permanent GST-offset schemes for this reason." The report used modelling of GST at 18 percent. It also considered how other taxes such as payroll tax, wealth tax, inheritance tax, land and property tax could be used to add further tax bases to the New Zealand system. But it said there were difficult trade-offs with each of these. "Payroll taxes provide a means of shifting the balance of taxation away from capital income and onto labour income, but they are likely to have some disadvantages relative to GST and income tax. "Wealth taxes are likely to impose higher distortionary costs than a broad-based income tax, and they face similar challenges to those that would make an idealised income tax that includes accrued capital gains impractical. "Inheritance taxes are likely to have similar distortionary costs to income taxes when people are intentional donors, but they will have much lower distortionary costs when people are unintentional donors. "Land taxes are widely seen as one of the least distortive taxes, and they impose fewer distortionary costs than property taxes or stamp duties. "However, they would have a significant impact on certain groups. As with any tax, providing preferential tax treatment to certain groups or in certain situations would tend to increase efficiency costs and reduce horizontal equity on some margins." IRD said this underscored the importance of income tax and GST being designed in a way that was as efficient and fair as possible while having the flexibility to adjust to changing revenue needs. "New Zealand faces difficult choices in designing a durable tax system in the face of long-term fiscal challenges. "In Inland Revenue's view, a priority for future work should be on how to make New Zealand's main bases of income tax and consumption tax more flexible to changing revenue needs over time." It said, with different personal and company tax rates there was an incentive for people to "shelter" their income in companies. "This incentive is likely to increase the wider gap between top personal tax rates and the company rate, however, in the context of rising fiscal pressures, a system that requires alignment of the company rate and top personal rate is unlikely to be a durable tax system." Economist Shamubeel Eaqub said IRD had a clear message that either tax rates would need to increase, or the tax base - or both. "There are some difficult choices to be had in the future, if spending choices don't change then our revenue choices have to. "And we can either tax more using the same instruments that we have on the same bases that we have or we can increase the bases, and there are no easy answers. "There are always trade-offs, there will be winners and losers. And we're going to have to make a considered decision of what we're going to do - no tax is easy. "No one likes paying tax. I think it's about finding the least disruptive system given the public services that we want." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
