National looks short of cash

John Armstrong’s commentary in the Herald this morning on borrowing to fund infrastructure combined with The Dog & Lemon’s call for the National Party to clarify its position on toll roads, paint a worrying picture for voters who are still shopping about.

Personally I think National can validly try to raise a debate about increasing debt to fund infrastructure. It’s like taking on debt to buy a house – OK if managed sensibly.  But it can’t legitimately run that debate if its debt increases are linked to tax cuts. (Of course Labour looks in danger of being caught in this conundrum too). And it’s also hard to justify if debt is used to buy assets that could rapidly decrease in value. Generally it’s not good advice to put your new car on the household mortgage, and likewise generally it’s not great advice to use national debt to fund roads just as we hit peak oil.  No doubt that’s why National is talking up public private partnerships in the area of roads. Which is what makes Dog & Lemon’s seven challenges so interesting. E.g.

National’s transport spokesman Maurice Williamson has stated publicly that National will repeal the “Greens amendment? that requires that whenever a toll road is built, the public must always have an alternative route available for free.Can National categorically promise that it will not sign a deal whereby existing roads are closed down or restricted in order to force motorists to use a nearby toll road?

Will National legislate to control the tolls on private roads, or will the private road operator be free to charge whatever the market will stand?
Faced with high fuel bills, many motorists are now looking to take public transport to work.Can National categorically promise that it will not sign a deal whereby public transport is effectively excluded or restricted from competing with a toll road?

National and Labour look determined to enter a road building bidding war this election.   The more tarmac the better.  No matter what people’s views are as to whether roads rather than public transport is the appropriate response to our transport needs there will remain a very real question about how it is going to be funded and whether that investment is a wise one for the people who are likely to pay – our kids.

8 Comments Posted

  1. Actually, if you’re going to borrow to buy a new car, it’s very good advice to put it on the mortgage rather than finance it separately from the house. Houses are such good security that your interest rate will be about half that than if you secured a loan against the car itself. If you can’t afford to service the loan on the car, then you shouldn’t secure it against the house, but then you shouldn’t be buying the car anyway.

  2. It seems to me to be fair and reasonable that where a toll road, highways or byways, is intended then a reasonable alternative must exist. This question comes up, from time to time, in our region, when pipe dreams of a road tunnel through the Rimutakas is mentioned.

    Should Transmission Gully ever get off the plans and into reality, I guess it could be tolled as the coastal route will continue to exist unless the oceans rise significantly.

  3. joy, That rule was introduced by the Land Transport Management Act 2003. The rules prior to that had been very simple
    1) no tollgates on State Highways
    2) tollgates on local authority roads or bridges must be authorised by the Governor General. That section of the Public Works Act was repealed in 1978 by an amendment to the Local Government Act. I’m not sure if right to erect tollgates was revoked or merely shifted to the LG Act.

    As an aside, special Acts weren’t needed to levy tolls on the Auckland abd Tauranga harbour bridges or the Lyttelton Tunnel but they were needed to create local authorities exempt from complying with the Local Government Loans Act.

  4. I was of the understanding that where a new road (perhaps a by-pass) is to be built using tolls as part-tpayment, then a reasonable, toll free alternative must be available. That is to say, I had been led to believe that this was a long standing ‘rule’ in a relevant transport or highways act.

  5. The Romans built a great network of roads long before anyone had heard of oil.

    We still use most of them.

    The roads in most of the cities in the world were built before anyone had heard of oil let alone the motor car.
    Why do you think they built them? For future generations?
    So why do you connect road building to oil supply. No one else has done so.

  6. Buses and bikes use the road too, and they work better on good roads (you know, like those ones we dont have in new zealand), though I think what the Greens are trying to get at is more to do with capacity than lack of need for roads themselves, after all, a bus with 30 people on it takes up significantly less capacity than 15 cars.

  7. An interesting post indeed.

    With regard to your comment
    >
    >>”generally it’s not great advice to use national debt to fund roads just as we hit peak oil”

    I am confused as to which general stated this, as this is the first time the proposition has been made, and there is still vast debate on whether or not we have passed the half way point on recoverable oil. What is certain is that some identified oil fields that were uneconomic at $99 per barrel (such as parts of the Athabasca Oil Sands in Canada) are very economically viable at $120 and above.

    Another area that we might debate is the comment
    >
    >>”No matter what people’s views are as to whether roads rather than public transport is the appropriate response to our transport needs”.

    This leads me to a quandary as to what is meant by public transport that doesn’t involve roads! Certainly the cost of extending the current rail network to every town, village and hamlet is way beyond the economic feasibility of New Zealand; as is the cost per passenger mile that would be incurred to operate such a network in a manner that eliminated the need for personal transport. The same, with nobs on (as we used to say when I was a kid), goes for air-transport; and of course sea transport has all the obvious limitations. What that leaves for public transport is some form of bus, I think.

    Of course, we could go really off the chart and make the roads themselves do the moving so no individual transport vehicle is required! Not simple, but with a combination of light and wind electricity, supported by substantial storage capability, such a system might be feasible. It would be interesting to get some engineers to look at it I suppose!

    Clearly though I’ve missed something in you thinking though oh wise one, so I look forward to your reply with stressed anticipation.

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