With the election on I thought I might have cursory look at some of the transport policies on offer. First up is the greens, who as expected deliver a broadly pro public transport and freight rail policy, and they ought to be congratulated for doing so. There’s probably no point in my ticking the boxes on the good bits, so I’m going to be a cynic and look at one part of their policy which worries me.
“24 – Public transport services to be provided under community service obligations where demand is too low for economically viable services”
Although it sounds nice, this idea is potentially very problematic. The first question we need ask is this: what do they mean by ‘economically viable’? If the greens are talking about economic viability in terms of private costs and benefits for individual transport operators, then I think their policy is fine – the problem is that it is simply a triviality. You just do not get full cost recovery on public transport services in Australia, which is why it costs the government money.
The real issue is that the policy is only meaningful if it discusses net social benefits. That’s why a serious analysis of the economic viability in transport projects deals with the social costs and benefits, rather than merely the private costs and benefits. If the social benefits outweigh social costs, that’s good – but you need to know if the money would be better spent elsewhere. The issue of opportunity cost is important, as the question needs to be asked: why advocate services in low demand areas when high demand areas might better use that money? The opportunity cost is more or less the cost of capital. Having both the costs and benefits, as well as the cost of capital, a basic net present value can be calculated. By doing a cost benefit analysis (which is admittedly fraught with potential problems), at least some insights can be gained into the merits of a particular proposal. Suggesting that a rational assessment of all the costs and benefits should be ignored is very worrying indeed.
All in all I think the problem probably comes down to the idea that public transport should be some kind of welfare, an idea which is very dangerous. These sorts of ideas lead to messes like the Melbourne bus system, which has a plethora of infrequent, unconnected and generally useless routes running through the backstreets all so a couple of people can catch a bus from their front door to the shops on a Thursday afternoon. That is not how to run an efficient public transport system, which demands the ability to move large numbers of people quickly and efficiently. Don’t get me wrong, I strongly believe that society has a responsibility to help the needy, it’s just that the welfare system is a far more efficient way of doing it.
An interesting character known as Riccardo discusses sort of thing a lot – check out the blog.
*** I should also divulge that I am actually a paid up member of the party