Should Rail Be Subsidised So Heavily?

Readers will be aware of the concerns I have about Government support for Kiwirail and the level os subsidisation of the Wellington urban rail network.  I was therefore interested in the following quote from the current edition of The Economist which I read on the ferry yesterday afternoon.  This suggests that this is not only a New Zealand problem.

But it is faar from clear that trains deserve the state supprt they get.  Rail journeys account for just 6% of total travel (roads for 84%), but subsidising rail consumes around 20% of the [UK] government’s GBP21 billion transsport budget.  Using an average price for road-building over the past decade, the GBP9 billion spent on the west-coast railway line could had added to around 450 miles of motorway – roughly the length of the M1, M3 and M4 combined.

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3 Responses to “Should Rail Be Subsidised So Heavily?”

  1. Owen McShane Says:

    This imbalance is largely caused by a mythology which focuses on the efficiency of the transport system/vehicle rather than the efficiency to the rider or the freight that uses the system.

    If trains were truly more efficient that trucks all freight would move by rail.

    And if trains were truly more efficient that cars all passengers would ride in trains.

    Recent studies show that the best thing to do with the inter city rail in the UK would be tear up the rail lines and convert them to bus and truck only road beds.

  2. Tony Says:

    One only gets occasional glimpses of the level of subsidy needed to maintain passenger rail services.

    The 29th of December NZ Herald article about the renewal of the rail operator contract for Auckland:
    The rail contract will cost the authority’s funders – the Auckland Regional Council and the government – $66.5 million this financial year. Fares are expected to raise about $19 million . . .

    Given this is just to operate the trains (i.e. capital investment rail improvements including the planned $1 Billion for electrification of Auckland’s network is extra) the overall likely subsidy level could easily reach 80% !!

    Wellington passenger rail services are similarly thirsty for tax/rate payer dollars. Their 1994 “Wellington Commuter Rail Network Business Case” that forms the basis for the current rail expansion assumes they only pay 37% with the balance ($1.3B) being subsidy !!! This excludes the depreciation costs for the new trains which they also decided not to fund. It has also always puzzled me why the Greater Wellington Regional Council has a stated policy that passenger fares must pay at least 50% of the total costs when their decisions mean this policy cannot be followed.

    So all-in-all, New Zealand is probably roughly in line with the UK in subsidising passenger rail to perhaps 80% of the true costs:(

  3. Tony Says:

    A clarification to my earlier post.

    The Wellington Rail paragraph should have read:

    Wellington passenger rail services are similarly thirsty for tax/rate payer dollars. Their 1994 “Wellington Commuter Rail Network Business Case” that forms the basis for the current rail expansion assumes rail passengers only pay 37% of the true trip cost with the balance ($1.3B) being subsidy !!!

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