Monday, July 31, 2006

Labour finally admits that subsidies are inefficient...

Did anyone else have trouble deciding whether they should laugh or cry as Michael Cullen, completely straight faced, explained that they would not be subsidizing the Overlander train service because subsidies were inefficient and a bad idea?  Why did no reporter ask him why it was completely inappropriate in this case, and yet so core to this Governements philosophy in so many other areas from the arts, Jim Anderton's business grants, Kiwibank, or most ironically: Air New Zealand. 

Of course the irony that the main internal air competition that sunk this route was provided by a company that received a subsidy that would have been sufficient for the Overlander to run for 150 years didn't seem to phase MC at all.  Chances are he was oblivious to it.

Of course that I agree with the decision in this case is actually irrelevant - if there are enough people up in arms about the demise of this route then there are enough to donate $1 a year to a foundation to do the subsidization.  If there are not enough people to care to that level then it is rightly scrapped.  Of course anyone who is surprized at the lack of patronage just needs to look at the problem that the journey takes 12 hours.  This is a pretty similar distance to the train we used from Koln (Cologne) to Berlin that took 4 hours 15 minutes.  The first - despite the view of the countryside is an ordeal; the second - a nice trip.  And you still get a pretty good view of the scenery despite travelling at up to 300 kph... 

I realise we probably don't have the population (including tourists) to justify the upgrading of our lines to the level that you can put an ICE train on it - but wouldn't even a trip of 6/7 hours make it one that you would consider?

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[EDIT] In an interesting article posted by Unlimited they also highlight the inefficiencies of Government subsidization in that case in the R&D market.  For those too lazy to read the whole article (which I recommend) and excerpt follows:

"
The survey responses reflect FRST’s conclusions: government R&D spending in CRIs, universities and State Owned Enterprises (SOEs) is not resulting in commercially valuable IP of any great consequence for New Zealand companies — especially SMEs. This situation reflects findings in the US and EU that universities and government-funded laboratories contribute less than 10% of the IP used by companies to produce and market innovative products."


1 comment:

burt said...

I think he didn't really admit subsidies were inefficient as such. I think he is really saying that the ditching of the train service is good for Air NZ. A vested interest the Govt need to protect. Such is life in a country rapidly heading toward communism.