I’ve been in Sydney most of this week attending the Australia’s Future Tax System – A Post-Henry Tax Review. It had some excellent speakers and was for me – not a taxation specialist – very informative. I particularly liked John Freebairn’s overview and a superb paper by Ben Smith which clarified my views on the resource super tax. My own contribution – joint with David Prentice – is on the road transport sector and is reproduced in draft format over the fold. Comments are very welcome as the paper is now being revised. All the papers from this meeting will be published in a forthcoming book. The opening address by Ken Henry was characteristically forthright but in my view terribly misrepresented in blogs, the press and by commentators such as Warwick McKibben and others. Henry was suggesting that economists get unreasonably cantankerous about second-order issues and, on climate change policy, I agree. I’ve got some more substantial comments on this issue that I will defer. I have much respect for Ken Henry and on how he operates the Commonwealth Treasury. He is a straightforward person with high intellectual honesty who has vast experience at dealing with government. He is also amazingly knowledgeable on tax issues – hardly surprising given his background.
After listening to Ben Smith I’ve changed my mind on the resource super tax. It is a tax grab but, if implemented as stated, will not harm exploration effort unless there is the assumption that imposing it raises future further sovereign risk issues. There is a slight interaction issue, detected by Professor Jack Mintz, that means a non-neutrality will arise if the resource tax is imposed with a company tax but this is easily sorted out by making up-front cost refunds accruing to the miners non-taxable. Otherwise the debate between governments and the miners is just a ‘cake-eating task’ – who gets what share of the cake? The industry is lying about the distortionary effects on exploration of the tax to protect the stake in their firms owned by shareholders. This might be justified – shareholder values will be diminished – but it is still a blatant distortion since exploration activity will not be inhibited.
The tax has neutral effects on exploration and the scale of the industry because its not really a tax but a 40% government shareholding in ventures with the government contributing 40% to costs as well as getting 40% of dividends. There are efficiency gains in cutting royalties by eliminating them but refunding to the states from the Commonwealth’s income share these royalties. I’ll refrain from correcting some misleading comments in earlier posts – that suggested non-neutrality with respect to exploration effort – and make a general mea culpa here. When I get the time I’ll insert links between these correcting comments and the earlier posts. Continue reading Post-Henry Tax Review
The Intelligent Access Program offers heavy vehicles improved access to a wider range of Australian roads – and the ability to carry increased loads – in exchange for the vehicles agreeing to carry on board telematic devices that describe where the vehicles are as well as their self-assessed load characteristics (mass, vehicle dimensions, suspension) that need [...]
The Sunday Age today presents a proposed ‘transport revolution’ for Melbourne prepared by Monash University’s Professor Graham Currie – a ‘transport expert’. The plan recognizes that expanding road supply is not a major sensible option in the face of Melbourne’s ballooning congestion problems and instead argues for creating a ‘road hierarchy’ that gives pedestrians, cars, motorists and public transport priority access to roads at different times of the day to improve travel times. To reduce congestion Professor Currie proposes to limit the building of new roads, create the above-mentioned priorities, reduce the speed limits allowed to cars in shopping strip areas during the day and by giving more priority to public transport by, among other things, removing on street parking. Continue reading Daft proposals for Melbourne’s transport woes
Again a retrieved post – thanks Christina. Continue reading Car speed & death
Another retrieved post-hacking post. A letter published in AFR on January 16. Continue reading Industry views on road user charges
David Prentice and I wrote this as a reader’s guide to the main ideas in our longer report for the Australian Future Tax System Review. It is published online by [...]
I gave a talk on this topic tonight at the Victorian Branch of the Economic Society of Australia, Transport Forum. The powerpoints are here. Met some top transport analysts and some prospering ex-students. A good evening and a great meal afterwards in China Town. I agree that I have pushed this area hard on the blog [...]
It is obvious that state governments in Australia are fearful of pricing road use. This is so even though it is almost universally acknowledged that such policies make sense in terms of generating efficiency gains through reduced congestion and more effective use of roads by heavy vehicles. The backlash that the Brumby Government received from its decision to price EastLink and the fact that the NSW Government refuses to even call the time-of-day pricing it has introduced on the Sydney Harbour Bridge ‘congestion pricing’ suggest a particular lack of spinal strength in our state politicians that will condition our road transport policy possibilities. Continue reading States, local government & transport sector pricing reforms.
I will be speaking in Melbourne on Transport Taxes and Congestion Pricing at the Transport Economics Forum at 5 PM Thursday 27 August – Reserve Bank Function Room. Continue reading Transport economics forum
In commenting on an earlier thread Paul H cited a graphic showing how the Chinese know what the short-run travel times are in a vast city like Beijing. It is apparently based on the (real time) travel times of 10,000 taxis in the city. It provides a guide to instantaneous marginal congestion costs based on information from GPS boxes [...]
One of the pretty results of road supply theory is that if you add extra links to a road network you can make everyone on the network worse off. Equivalently closing down links can improve all traffic flows. JB pointed me to this nice exposition. It is called the Braess paradox and its a well known [...]
Here is a seminar I gave at La Trobe University on road tax reform. Comments, questions, outrageously over-the-top praise and emphatic [...]
Mobile phones have revolutionised our lives. Analogous communication devices in vehicles can change and improve the way we travel. Economy-wide efficiencies can result from adopting these technologies. Continue reading Telematics and transport
Here are some libertarian ideas on privatising roads. Roads would be ‘privatised’ like ‘bubblegum’ and ‘beer’ according to the author. It is difficult to understand how network externality effects would be catered for or how the local monopoly aspects of having what would inevitably – given the subadditivity of the costs – one supplier connecting many nodes. I [...]
The system by which roads are provided in Australia is in a mess. Roads are funded from revenues collected from fuel excises in the most part by the Commonwealth which builds some roads. Most roads however are provided by local government (which gets funds from the Commonwealth, from local taxes and from parking fines) and by the states which again gets funds from the Commonwealth but which also collects vehicle registration fees, licence fees, speed fines and taxes on car insurance premiums. Continue reading Markets for Australian Roads?
The implementation plan for Kevin Rudd’s $43b already-announced broadband plan is now to begin. This is to now determine how the project will be built, financed and operated. I guess better-late-than-never. Ziggy Switkowski is rumored to be a candidate for the chief honcho position. I assume Ziggy’s enthusiastic endorsement of this project will help him if he is indeed seeking employment. Ziggy does believe that there are legitimate concerns in relation to the returns to taxpayers from their investment - normal commercial returns are unlikely but – and this sounds promising for the Rudd economic illiterates – Ziggy also believes that ‘nation building’, while a valid justification (!), is hard to quantify.’ Onya Ziggy. Continue reading Roads, broadband & Kevin Rudd
Much traffic congestion in urban areas is caused by cruising for a parking spot. Shoup (2005) suggested charging market-clearing prices for parking and leaving 15 per cent of parking spots vacant so that people can always park if they pay the requisite fee. Continue reading Congestion & efficient markets for parking spots
I have posted recently on congestion externalities and traffic accident externalities. I want to finish this series of posts with some comments on externalities associated with doing damage to roads. They are among the most interesting transport externalities in Australia and the basis for proposed reforms of the Australian road freight system. These reforms might eventually lead to changes in the way all road travel occurs in this country. Continue reading Road damage externalities
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