Thursday, April 26, 2007

Helen's ten-cent totem tax

Government floats idea of another ten-cent petrol tax to pay for electrification of Auckland's rail for the several dozen people who use it. Dick Hubbard says "make it 60c!" Barry bloody Curtis says it's "obvious." Sue Bradford says, "Bring it on!" John Key says, "Um, ah, ask me later," and he left to talk to his press agent.

North Shore's mayor George Wood was the only politician to talk sense, predicting "dire consequences" should anyone be stupid enough to make already high petrol prices even higher. Liberty Scott, who knows about these things, calls it "really stupid," but he always language that's far too mild for the circumstances. You should read his full analysis of this fatuous stupidity.
This idea is going ahead despite official advice [he says], because Helen Clark wants to electrify Auckland rail – it’s like a toy, a big expensive toy she wants to leave for Auckland and be remembered for it... This is about totems – Helen Clark and Michael Cullen are building a electric network of totem poles in Auckland, paid for by a stupid tax that is probably going to be paid for by all petrol motorists, but not paid for at all by around 15% of Auckland motorists who don’t use petrol.
"By the way," he concludes, "you already pay a 0.66c a litre tax to every territorial authority in the country (it's the same for them all making it easy to distribute), you might ask Auckland City Council and all of the others whether they spend their share on transport?" What do you think?

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4 Comments:

Blogger Matt B said...

Another coffee-chocking moment today. Third this month I think. A new tax to develop Auckland's infrastructure. Ok. Then the Greens want to use a third of it to change the source energy for an existing system that nobody uses.

Quite apart from the economic stupidity of the idea, I question the environmental benefits. Could all the money going to trains not be better spent relieving congestion and, therefore, total pollution emitted? Its an empirical question which the Greens must surely ask if they are interested in the environment.

But they're not, or at least Bradford isn't. This is about about suppressing individual freedom.

4/26/2007 05:54:00 pm  
Anonymous Anonymous said...

Hmm the ARC running petrol prices. Wonder if they will have the same impact as on house prices

4/26/2007 05:55:00 pm  
Anonymous Anonymous said...

If you think carefully about it, it is actually likely to mean that everyone outside Auckland will pay more for fuel rahter than Auckland going up 10c. Here's the logic

1 - Auckland is the most competitive fuel market because it is the biggest. All the oilcos are investing 10s of millions of dollars there in their sites. They will want a return on that investment and so will act to defend those investments. Look how much money BP has put into Drury - it is a massive investment and a highway site so vulnerable to where the boundary might be with a lot of transit traffic. Do you think they are going to sit by and watch business drop away if Mobil Mercer is not charging 10c Auckland tax? Of course not.

2 - The reality is that the market is price driven like few others and petrol prices tend to settle to the lowest price in the market because people will (stupidly) drive miles to save a couple of cents. You already have Pak n Save offering 10-20c at times off per litre through cross subsidy and teh response with similar discount schemes, and Gull price promotions.

If BP Drury think they are going to lose business due to the 10c tax they are going try and retain customers by cutting prices to a competitive level. This will likely ripple up through the whole market as others match or outdo, and is not just localised to a single station, so prices outside Auckland or on the fringes can influence the inner city prices because people commute.

3 - So if you own a national chain of service stations, you will probably try and be as competitive as you can on price to safeguard your most important and asset rich market (Auckland), but you need to make money somewhere and so you will look to extract as much as they can from elsewhere by moving non Auckland prices up just like Pak n Save subsidises its discounts through its food lines.

What it also means is that the Gvot is effectively deciding winners and losers. If you are on one side of the boundary you will make money (Mobil Mercer?)and it will likely kill stations on the other side (BP Drury?) no matter how good a businessman you are and with no regard for the investment you have made in good faith.

It appears they may only put this on petrol, If they try to do it on diesel you can kiss goodbye to any trucker filling in Auckland which will probably take a third or half of some sites' volumes. So more jobs gone and investment dollars torn up.

There may also be a nice side business appearing with mini tankers filling in the Waikato and dispensing from the side of the road in Sth Auckland.

And of course if the market works as I predict, no doubt the Govt will cry foul and there will probably be a new price control bureaucracy.

Insider

4/26/2007 08:45:00 pm  
Anonymous Anonymous said...

bogota has an excellent public bus system with reserved lanes. it makes you realise that the best thing would be to rip up the lines and put buses on. think of how many more people would take the bus from howick if it had its own dedicated lane.

bogota also has an exceptionally good art museum founded by botero. highly recommended. i will publish his alternative mona lisa soon.
sagenz

4/29/2007 07:57:00 am  

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