Stop comparing Australia's EV uptake with Norway's

 

REVAi electric vehicles in Oslo, Norway, in 2010. Photo by Mic via Flickr [CC BY 2.0]

Numerous lobby groups, transport journalists, academics, and even political satirists have argued that Australia should follow Norway's example in encouraging the take-up of electric vehicles. 

But even the Secretary General of the Norwegian Electric Vehicle Association admits it would be difficult for other countries to emulate Norway's approach:

Despite the success of Norway’s methods, she doesn’t believe other countries can replicate it like-for-like because their circumstances will be different.

From an Australian perspective, Norway's uptake of electric vehicles is similar to Switzerland's uptake of broadband: a geographically small country with a small population able to quickly take advantage of local particularities - what I have referred to in the past as "varieties of particularism" - which include:

the unique social, political, economic, technological and geographical peculiarities that exist at the nexus of government, business and... technolog[y].

My concept is derived from what Thomas P. Hughes referred to as regional "cultures" in his work Networks of Power: Electrification in Western Society, 1880-1930, which looked at how different regional characteristics led to different systems for generating electricity.

Nevertheless, it is difficult to have a point of view that differs from what I reluctantly refer to as "green-left ideology" about EV policy at the moment, especially when it comes to comparing infrastructure policy with other jurisdictions. I suspect there are powerful industry groups encouraging these approaches, too. But for the green-left, at least, aspiration trumps evidence in all things except tradition and religion, it would seem. 

Nonetheless, there is much more to the EV story.

The front page of The Sydney Morning Herald on 12th May 2021 quotes NSW Planning Minister Rob Stokes, warning:

Although [electric vehicles] are powered by more efficient and sustainable power sources, they are still cars. Painting them green does not change that reality.

Stokes also mentioned that heavier and more "torquey" EVs could potentially release more non-exhaust particulate emissions than conventional vehicles. This issue has been identified by the OECD as an increasingly important public health policy issue as the number of vehicles in cities (of all types) continues to rise.

I am not suggesting that EVs are as polluting as conventional vehicles - far from it. But in addition to particulate emissions, overall emissions depend on how the electricity is generated. 

The majority of Norway's electricity is generated from hydropower (93.4%) with the remainder generated by wind and thermal power. Whereas coal accounts for 75% of Australia's electricity generation, with gas at 16% and the remaining 7% provided by hydro and wind power.

Further, Norway is much smaller than Australia and much wealthier on a per capita basis. Canada provides a much better "fit" in terms of the "most similar" method of comparison on geographical, cultural, and political grounds. The table below indicates the differences between all three countries on these measures:

Comparison of Norway, Australia and Canada. Data sources below.

Australia and Canada are similar on the most basic demographic statistics, and Norway is no bigger or more densely populated than greater Sydney but it is substantially wealthier with greater access to Europe's EV market. 

Canada has its own EV manufacturing industry and is not subject to the same restrictions that Norway is likely to face in the near future if Europe's EV market contracts. On the other hand, Australia has an issue with supply and consumer choice in EVs which is likely to be exacerbated by important issues arising from the pandemic.

Can the less than 1% uptake of EVs in Australia and Canada be the result of a lack government incentives? Canada has introduced federal cash rebates to promote EV sales, yet the uptake in Canada is not expected to meet federal targets set for 2025. To argue that government incentives alone is the problem is to draw a long bow.

One of the major issues for the EV industry, especially in large, sparsely populated countries like Australia and Canada, is consumers' perceptions of EV's range. 

Research conducted by KPMG in Canada found that EV purchases were motivated primarily by environmental concerns and lower operating costs. While incentives for purchasing EVs were desirable, other concerns about the higher purchase cost, reliability of batteries, long charging times, and doubts about the ability to travel long distances and access to relevant charging infrastructure were the major reasons motorists were reluctant to purchase an EV. 

The Electric Vehicle Council of Australia arrived at similar findings to the Canadian experience. Of note is "range anxiety", with some 79% of consumers estimating the average range of EVs to be well under 400km. The EV Council suggests that ranges can vary from 260km to 650km. But this is significantly less than the ranges of most modern conventional vehicles.

Range anxiety is very real in Australia and Canada with both countries ranking in the top five longest national highways in the world. 

Most importantly, however, is that traffic congestion in Norway is still a major concern, with the supply of roads confirming the old adage that increasing the supply of roads leads to increasing demand. This issue alone more than justifies NSW Planning Minister Rob Stokes' concerns about EVs.

I am not against EVs and I have no interest in hindering their uptake. But comparing Australia with Norway is oversimplified, unjustified, and inherently lacking in rigour. If we were to take Canada as a more appropriate example, then there is much more than just policy at play.

Until "range anxiety" can be ameliorated by improvements in EV technology and EV-ready infrastructure (especially for fast recharging), then those who rely on long-distance car travel are unlikely to be persuaded to buy an EV.

The logical conclusion in the short run, then, is that government subsidisation is likely to benefit the relative few by contributing to traffic congestion at taxpayers' expense (and indeed without contributing to the fuel excise) until EV technology improves.

In Australia, EVs are not the panacea for greenhouse gas emissions and may actually contribute to them if EV charging increases demand on Australia's predominantly non-renewables electricity generation system.

To add insult to injury, subsidising EV ownership without incorporating an appropriate road user charge will only exacerbate the problem of traffic congestion. In this regard, Victoria is on the right track.

For NSW, Transport Minister Andrew Constance is in a difficult position and must deal with the EV lobby while also fitting in with Planning Minister Stokes' and NSW Treasurer Dominic Perrottet's plans to introduce a distance-based tax on EVs.

Politics will decide the outcome and it will not be neat and tidy. In the meantime, looking to Norway is unlikely to address the real reasons behind Australia's slow uptake of EVs. 

Data Sources

Australian Statistics: 

Australian Bureau of Statistics (2020). Motor Vehicle Census, Australia. See: https://www.abs.gov.au/statistics/industry/tourism-and-transport/motor-vehicle-census-australia/latest-release.

Schmidt, B. (2020). How many electric cars are there in Australia, and where are they? The Driven. See: https://thedriven.io/2020/12/23/how-many-electric-cars-are-there-in-australia-and-where-are-they/.

Canadian Statistics:

Electric Autonomy (2021). New Canadian EV sales figures from Statistics Canada show strong recovery in Q3 2020, following sharp lockdown dip. See: https://electricautonomy.ca/2021/02/11/canadian-ev-sales-data-q3-2020/.

Statistics Canada (2020). Automotive Statistics. See: https://www.statcan.gc.ca/eng/topics-start/automotive.

Statistics Canada (2021). Zero-emission vehicles in Canada, third quarter of 2020. See: https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2021012-eng.htm.

Norwegian Statistics:

Statistics Norway (2021). Registered Vehicles. See: https://www.ssb.no/en/transport-og-reiseliv/landtransport/statistikk/bilparken

Canberra's Transport Conundrum: Either Way, You Pay!

Dr Michael de Percy, University of Canberra (Photo: ABC News, Matt Roberts).

 

Recently, I spoke with Tom Maddocks from ABC News Canberra about transport policy and the impact of light rail, buses, and road usage in the ACT. Although light rail is yet to make an impact on car usage, I am of the view that any infrastructure is better than no infrastructure, and a mix of transport modes, supported by appropriate pricing and charging mechanisms, is key to transport policy success.

Although I live in Gunning these days, I have had personal experience of public transport in Canberra over the last 20 years. It is great if you live near one of the major routes, but there are many pockets of under-served areas where a trip in one's car can take 10-15 minutes, whereas a bus, assuming the route is served regularly, can take up to one hour to travel as little as 10km.

One of the major problems I see with Canberra's light rail is the decision to recover costs through fares. This meant that light rail replaced what was already a well-served bus route into the city, with buses running every 15 minutes and taking about the same time as the current light rail network. Rather than redeploying the buses to under-served areas, however, the bus routes and timetables were amended, resulting, in many cases, in even longer trips than beforehand.

When writing about my "Canberra transport nightmare" in 2014 after attempting to get to the ANU campus from Palmerston (near Gungahlin), I had hoped that the redeployment of buses would bring more services to Palmerston. Instead, the redesigned bus timetable made my trips to the University of Canberra even longer.

When I first moved to Palmerston, I could catch the bus and arrive at the UC Bruce Campus within 30 minutes. Although there was a period of over one hour where no services ran, I could plan my day around it. Years later, the route was changed to bring the buses into Gungahlin, so each trip I went from Palmerston to Gungahlin then back past Palmerston to get to UC, and then up to a 1km walk to reach my office. It was far from ideal and it was easier to drive my car.

Judging from the many responses to the recent ABC article, the introduction of light rail has not improved things, and in many cases, has made things worse.

Part of the problem is that, much like government-led telecommunications, each mode is treated separately and by different parts of the bureaucracy. To be sure, the next stage of light rail from Civic to Woden will no doubt encourage more people to leave their cars at home, but the policy approach seems focused on light rail as the panacea, rather than just one part of an overall system.

Road user charging and pricing, parking fees, congestion charging, and improved rules and infrastructure for "active travel" and other incentives to change our behaviours in relation to car use is essential to ensure the sustainability benefits of public transport can be realised. But to introduce such policies is fraught with short-term political risk. 

Even the introduction of light rail, decades in the making in the ACT, saw the ACT Liberals attacking a project that had the backing of the Liberal-led federal government through Joe Hockey's under-rated "asset recycling" policy. Imagine the political scare campaign that could be mounted against increased parking fees or congestion charging in the CBD?

Infrastructure policy is a major problem for countries like Australia, Canada, and the United States, where car use has been the norm beginning in the 1920s, and increasing in Australia since the 1950s. These are long-ingrained behaviours that are difficult to change.

Compare Australia's major cities with place like Hong Kong, Shanghai, Singapore, and the difference in the quality and extent of infrastructure is astounding. Of course, politics and private property rights in China are very different to here. My point is though, that infrastructure and road user and congestion charging cna make a big difference in car-use behaviours.

In Australia, we have the worst of both worlds: governments reluctant to tackle the hard work of building infrastructure and seeing it as an investment in productivity (rather than something to be recouped through the ticket box), and a voting public unwilling to pay for road use and increased parking costs.

Which brings me to the need for leadership in building infrastructure, or, better yet, the establishment of an independent body that is one level removed from day-to-day politics - something like the Reserve Bank Board - to enable investment in infrastructure that is not at the whim of short-term political moods.

In the meantime, the most efficient method of dealing with traffic congestion and commuting times is for for people who use public transport to put up with long commuting times, and for drivers to sit in patiently in traffic. Neither choice is ideal, but try to convince people they should pay for road use or that governments should fund transport infrastructure through debt and public-private partnerships and see how that goes down.

Road Pricing and Provision: Solving public policy challenges

Photo © Depositphotos.com/toxawww 

Today I delivered a presentation to the ACT Economic Society of Australia at the Griffin Centre in Canberra. The slides from my presentation are available below:

Road Pricing and Provision: Solving public policy challenges from University of Canberra

The Politics of Road Reform: The challenges ahead for road pricing and provision

The Politics of Road Reform: The challenges ahead for road pricing and provision from University of Canberra

Our book, De Percy, M. and Wanna, J. (2018). Road Pricing and Provision: Changed Traffic Conditions Ahead. Canberra: ANU Press, was officially launched by Chartered Institute of Logistics and Transport Australia (CILTA) Fellow and Director-General of Transport Canberra and City Services Emma Thomas at a CILTA event held in Canberra today.

At the launch, I gave a presentation on the politics of road reform, looking at the challenges ahead for a road pricing regime that will hopefully replace the existing motor vehicle registration charges and fuel excise. Such changes are viewed as inevitable in the developed world, where fuel efficiency and the advent of electric and autonomous vehicles are impacting upon road-related revenues and where traditional approaches to road use and provision are unsustainable.

My view is that a road pricing system in Australia will need to be introduced in conjunction with GST reform to replace the existing state-based revenue streams. This is necessary from a variety of perspectives, including broad revenue reform, to reduce congestion, and to reflect more accurately motorists' use of the road network.

An objective look at the facts and figures will lead the independent observer to the view that a 'do-nothing' approach will impact upon productivity and ultimately the standard of living. An integrated transport pricing system will remove the existing cross-subsidisation and create a more transparent, market-based system. But leadership from the federal government will be a major factor in any reform initiative.

It is not about if, but when we should act. While commuter attitudes are one hurdle, anyone who has driven in peak hour traffic in Sydney or Melbourne will know that the present system is unsustainable. But the broader issue of GST reform will be challenging. Any system change will require bipartisanship and a broad federal-state mandate for action.

Who will act first? Any road reform initiative will provide numerous opportunities for political scare campaigns. But can we afford another 'GST birthday cake'? It is worth reflecting upon this the next time you are stuck in traffic.

The University of Canberra's press release on the event is available here.

Photo by Alex Proimos from Sydney, Australia (Sydney City Traffic) [CC BY 2.0] via Wikimedia.

Book Launch and Presentation: Road Pricing and Provision: Changed Traffic Conditions Ahead: Tuesday 4th September 2018

Road Pricing and Provision [ANU Press] CC By-NC-ND 4.0 

The launch of our book, Road Pricing and Provision: Changed traffic conditions ahead, will be in Canberra on Tuesday 4th September, followed by my presentation: https://t.co/UWDpOBN81m

— Michael de Percy (@madepercy) August 17, 2018

On Tuesday 4th September 2018, our book will be launched and I will be giving a presentation entitled: Road Pricing and provision: Where are we now and how did we get here?

To register for the event, please visit the registration page.

The electronic version of the book is available for free download at ANU Press.

Road Pricing and Provision: Book Published Today

CC By-NC-ND 4.0 [ANU Press]

Will future Australians have access to efficient and sustainable transport infrastructure? ‘Road Pricing in Australia’ presents some of the latest thinking on road pricing and provision to advance crucial road reform agenda. Purchase or download from https://t.co/OAClWE2ZBp pic.twitter.com/Z5bgVxiS4H

— ANU Press (@ANU_Press) July 26, 2018

Today my ANZSOG book (edited with Professor John Wanna) was published by ANU Press.

The book can be downloaded for free here: https://press.anu.edu.au/publications/series/australia-and-new-zealand-school-government-anzsog/road-pricing-and-provision.

Abstract

Road pricing is not a new concept—toll roads have existed in Australia since Governor Macquarie established one from Sydney to Parramatta in 1811—and distance-based charging schemes have been trialled and implemented with varying success overseas.

But how would full market reform of roads look in a federation like Australia? In its responses to the 2016 Australian Infrastructure Plan and the 2015 Competition Policy Review, the Australian Government explicitly supported investigating cost-reflective road pricing as a long-term reform option, and has committed to establishing a study chaired by an eminent Australian to look into the potential impacts of road pricing reform on road users. The challenges we face in this space are manifold and complex, and we still have a long road ahead of us. However, with advocacy for reform coming from interest groups as diverse as governments, private transport companies, peak industry bodies, policy think tanks and state motoring clubs, there is now more support than ever before for changing the way we provide for and fund our roads.

This book seeks to advance the road reform agenda by presenting some of the latest thinking on road pricing and provision from a variety of disciplinary approaches—researchers, economists and public sector leaders. It stresses the need for reform to ensure Australians can enjoy the benefits of efficient and sustainable transport infrastructure as our population and major metropolitan cities continue to grow. Traffic congestion is avoidable, but we must act soon. The works presented here all point to the need for change—the expertise and the technology are available, and the various reform options have been mapped out in some detail. It is time for the policy debate to shift to how, rather than if, road reform should progress.

Coming Soon: Road Pricing and Provision (Book)

Traffic congestion will only get worse and road pricing is inevitable.
Photo © Depositphotos.com/toxawww 

While it will not be everyone's cup of tea, roads are the least reformed infrastructure sector in Australia, and some form of road user charges are inevitable. I hope that my forthcoming book (edited with Professor John Wanna), Road Pricing: Changed Traffic Conditions Ahead, will go some way to explaining the need for urgency in road reform.

Michael de Percy and John Wanna (eds).

There are two main reasons for a system of road pricing. First, funding the construction and maintenance of roads is based on projections with little usage data. We don't know how much motorists are prepared to pay for the use of roads, so we don't really know their value.

Second, motorists currently pay taxes, fuel excise (a quasi-user charge) and an access fee (motor vehicle registration) which is not based on road use. There is a form of cross-subsidisation where light road users are paying the same amount (proportionally) as heavy road users.

A system of road pricing provides market signals - we can discover the actual rather than the estimated demand for road usage. Although we pay an access fee, in effect, road users don't actually pay for how they use our roads.

Sure, we have tolls in major cities, and there is some form of road user charge for heavy vehicles, but this neither accurately reflects the extent of road usage nor the damage done to the roads by heavy vehicles.

Road pricing (what they are worth) and road user charging (what motorists will pay) are basically unknown quantities. Many motorists assume that road usage is free (after paying rego), but this is because there is no point-of-use cost to motorists.

Even the fuel excise, which motorists pay at the petrol bowser, is not clearly indicated on fuel receipts. Indeed, motorists with fuel-inefficient cars actually contribute more for their road use than those wealthy enough to afford the latest Tesla or hybrid vehicle. Poor people in general are paying more fuel excise than wealthy people do for the same amount of road use. And the fuel excise is not linked to road funding - it is, in effect, a tax that goes back into general revenue - it is not hypothecated funding.

Previously, the technology did not exist to accurately reflect individual motorists road usage. Those days are long gone. Yet roads remain inefficient, and political representatives are reluctant to tackle an issue that, based on the evidence, is the best way to signal demand, fund, and charge of road use. We do this for everything else: electricity, gas, water, telecommunications, and so on, but not roads.

The distortions in the market mean that it is cheaper to use trucks than it is to use rail for freight. But this is because the externalities - the hidden costs of road use - are not included in the price of road freight. It is interesting that the exact opposite was the case back in the 1950s before State-owned railways, as a result of a Privy Council decision, were forced on to a level playing field with trucks.

I have written about this problem for a few years now. Each time I have, someone has complained about the extra costs they will have to pay. The thing is, motorists are paying for it anyway, either in rego and fuel excise, or for every minute they sit in traffic.

This book is due to be released by ANU Press soon, and includes chapters from several transport policy experts. All are in favour of road reform and road pricing. But the biggest issue is the lack of political will, coupled with a lack of understanding by the average motorist.

I suspect road pricing will be like the introduction of the GST, which, along with the Y2K Bug, appeared like it was going to be the end the world. But the opposite was true. Our income taxes were reduced significantly, the price of many goods decreased after sales tax was removed, and now we consider the GST as part of our normal household expenditure and don't think twice about it.

Road pricing will be the same, but the trick is to convince others that the time has come. I hope this book goes some way to accelerating the implementation of road reform in Australia.

Road Reform

The majority of working Australians drive to and from work. AAP/Dan Himbrechts

Getting serious on roads reform is one way our political leaders can get back on track

Michael de Percy, University of Canberra

Structural economic reform is hardly the stuff of epic election campaigns. But tax reform, including some form of road user charging, is well overdue for Australia.

Road user charging will involve a shake-up of all road-related revenues and how we pay for and use our roads and transport infrastructure. This will require federal leadership and the agreement of the states and territories. The Commonwealth’s fuel excise and the states’ and territories’ car registration fees will be affected.

---

Further reading: Road user charging belongs on the political agenda as the best answer for congestion management

---

The road to reform

The Commonwealth’s fuel excise is obsolete. Despite the reintroduction of indexation, the fuel excise revenue base is steadily declining and will eventually disappear.

Fuel excise is obsolete because fuel-efficient and electric vehicles use less fuel. It is also unfair, because people who can afford the latest Tesla cars will pay nothing in fuel excise. And it does not signal market demand for, or go directly back into, building and maintaining transport infrastructure.

The contribution of fuel excise to road-related budget revenue is shrinking. (A$‘000s in 2015 prices) BITRE

Also, the fuel excise provides a perverse incentive by encouraging motorists with fuel-efficient cars to drive more. However, road user charging incentivises behavioural change that can help reduce traffic congestion.

The typical urban worker commutes for about one hour each work day, and time spent commuting is rising. The majority of working Australians drive to and from work. Australians are not getting any healthier, and longer commuting times are at least part of the problem.

---

Further reading: What’s equity got to do with health in a higher-density city?

---

If we do nothing, traffic congestion in capital cities is expected to cost A$53.3 billion by 2031 – or 290% more than it did in 2011.

Some argue that “peak car” will save the day. But per-capita car ownership figures mean nothing if the number of actual cars isn’t reduced. Driverless cars may even make things worse.

Why it’s been difficult to achieve

The reality is that roads are the “least reformed of all infrastructure sectors”. And roads, according to competition expert Ian Harper, are the:

… only example of an infrastructure asset, where the government owns the great bulk of the asset, funded through the tax system and given away for nothing.

So, why is road reform so hard?

Road pricing is long overdue and it’s happening elsewhere. But it’s as big as the GST, and it could prove to be just as unpalatable.

Truckies already pay for their use of the roads, and moves are afoot to increase the charges to more accurately cover the cost of the damage trucks do to the roads.

This is supported by the railways, which have effectively cross-subsidised trucks ever since the truckies stopped cross-subsidising them. But politicians are reluctant to tackle road pricing for private cars because motorists don’t like the idea.

---

Further reading: Trucks are destroying our roads and not picking up the repair cost

---

There has at least been some movement. Urban Infrastructure Minister Paul Fletcher announced in 2016 that an eminent Australian will conduct a study into the impact of road user charging for light vehicles.

What reform did for Hawke and Howard

The recent Democracy100 event at Old Parliament House was held in response to mounting dismay at the state of today’s politics. Speaking at the event, former prime ministers Bob Hawke and John Howard recommended a bipartisan approach. Focusing on key reforms to “rejuvenate the economy”, like roads reform, would do the trick.

While that may sound uninspiring, Howard observed that public esteem for politicians “has fallen in a time when there’s not been major reform”.

Howard and Hawke are two of the top three longest-serving prime ministers in Australian history. Both are living proof that major reform agendas can win elections. Howard oversaw the introduction of the “never-ever” GST; Hawke set the stage by undoing protectionism and dragging Australia into a global market economy.

And what do we have to lose? It’s clear self-centred professional politics isn’t working.

Australians expect parliament to do the hard work of reform, instead of playing dress-up and acting for the cameras. And history shows voters reward that hard work with electoral success.

Michael de Percy, Senior Lecturer in Political Science, University of Canberra

This article was originally published on The Conversation. Read the original article.

Sovereign Risk? East West Link versus Adani

East West Link Protesters, 4 May 2014. Photo by Takver @Flickr CC BY-SA 2.0

Sovereign risk is where, for example, a business enters into a contract with a national government, and then the government changes its mind and ends the contract. Typically, governments would then pay compensation to the business to ameliorate the costs of responding to a government request, organising resources to meet the contract, and then losing the contract. This is very real sovereign risk and it happened in Victoria in 2015 when the East-West Link contract was cancelled. The costs to the Victorian Government soon began to mount.

But it didn't end there. Victorians had to pay even more. And there was the social cost of compulsorily acquiring homes, only to sell them back some time later to recoup costs.

If you were the business owner, you would expect compensation, and you might be wary of future contracts with government. Indeed, the Andrews Government's decision to end the contract received official complaints from the French and Spanish ambassadors.

If a government develops a reputation of being "risky", then future contracts will cost more, and compensation clauses will become heftier. This is sovereign risk and the ways that companies ameliorate that risk, just like the insurance industry would do.

Imagine you were the homeowner who did not want to leave, but were forced to do so, only to see your home later sold to someone else. Or else you saw an opportunity to use the properties for low-income housing, but instead these were auctioned off to cover the costs of compensation.

The point is, here we have all the hallmarks of sovereign risk and the political, financial, and social fallout that accompanies that risk.

But what about Adani's claim that Australia is gaining a reputation for an unacceptable level of sovereign risk? Is sovereign risk created when the government won't give you a loan of almost $1bn?

I don't think so.

Revenue Reform: Fuel Excise and Road Pricing: Guest Lecture at ANZSOG

Revenue Reform: Fuel Excise and Road Pricing from University of Canberra

©Depositphotos.com/@alexandragl

Day two back at work after long service leave and today I was back in the saddle.

The edited book on road pricing is now in its final stages and I am working on an academic paper on the impact of the 1954 Privy Council decision to remove the protection of state-owned railways.

Always enthusiastic students and the discussions could go on forever if we could only rid ourselves of timetables!

My comments in "The Guardian" today on road infrastructure and pricing

My comments on road pricing in WestConnex: bitter battles mark the road to Australia's urban future https://t.co/k6mMYPeySr

— Michael de Percy (@madepercy) April 5, 2017

Festival of Steam, Thirlmere, NSW, 5th March 2017

Locomotive 3642, built 1926. Preparing for the Thirlmere to Sydney trip, 5 March 2017.

I joined Transport Heritage NSW after a steam train came through Gunning last winter. We headed off this morning without umbrellas after looking at the 11% rain prediction on Google Weather. And then it began to pour.

By the time we got to Thirlmere, the rain had settled in. It was a bit of a walk from where we parked to the entrance. But we were lucky enough to buy reasonably priced umbrellas at the markets and, once I was sure my camera and my bag were all fine, the atmosphere of the festival started to work its magic on me.

The weather was a real downer. It was horrible. We wanted to visit the potter on the main stretch of the festival, but the footpath was a flowing creek that was impassable. Had the weather been fine, this would have been one of the best festivals I have been to in regional Australia. Hopefully next year it will be better, because I will be going back.

We had planned on driving to Picton for lunch, but the rain threw a spanner in the works. The festival was in full swing despite the rain, and we treated ourselves to a "Spartan Yiros", a Greek sandwich, from one of the many food stalls. It was delicious. Food included Korean, Turkish, Danish, and Asian, and there were stores selling model trains and clothes and all sorts of things.

There was a real vibe. Despite the rain, quite a few people turned out in their steam-punk finery. And the sound of steam engines and whistles amid old-timey music kept our spirits up as we headed towards the displays.

At the entrance, the Blues Preachers were playing. These guys didn't stop the whole time we were there and they were great. I love old-timey mountain music and they have the look and sound down pat. I bought two of their albums, Dead Catz Can Bounce and Dry So Long. The Blues Preachers completed a weekend of great music for us. We listened to it all the way home in the car.

As we entered the pavilion at Trainworks, we were greeted by a display of "steam train art". I bought a couple of postcards depicting steam trains in historical Australian settings. There were reasonably priced prints and some original oil paintings for sale. Check out www.steamtrainart.com.au if this style of art is your thing. I particularly liked the fly-fishing scenes.

Locomotive 2705 at Thirlmere Station

The highlight of the trip was the steam train ride to Buxton. Locomotive 2705 did the honours to Buxton (about 9km away), and the trailing diesel electric brought us back. The carriages were period six seaters in all their faded glory.

It took about 40 minutes or so for the round trip, but nobody really noticed. Despite the rain, every train trip at the festival was sold out. Spectators lined the track all the way along the route to take photos and wave as the lucky passengers rolled on by.

Click play below to hear the 2705's steam whistle.

There were other steam engines on display, including a model train setup with fully functioning, small-scale (shoebox size) steam engines, work trucks, showbags and show rides for children, in addition to the permanent collection at Trainworks.

There were a handful of classic work vehicles on display

If you missed the festival but are interested in what is happening in this space, there is an online exhibition from Transport Heritage NSW, and don't forget the National Film and Sound Archive's Public Transport online collection.

If the weather had been good, this would easily have been the best festival in regional Australia. I hope the effort for next year's festival remains undiminished, as I intend to be there again.

But book your ticket for the Festival of Steam early if you want to take a ride on the steam train. And if you are an enthusiast, support a worthy heritage project and join Transport Heritage NSW.

Part of the permanent collection at Thirlmere

Taxi: Commonwealth Film Unit (1972)

The taxi industry has a long and proud history in Australia.

The taxi industry has a long and proud history in Australia. At the end of the Second World War, returned serviceman founded long-standing organisations such as RSL Cabs, and many "mum and dad" investors established businesses that have played an important role in Australian society since that time.

 

I have written elsewhere about the impact of the ride-sharing, and also about the compensation provided to taxi licence owners, resulting from changes to what has been a long-standing regulated monopoly.

The Conversation, August 24, 2016: Taxi driver compensation for Uber is unfair and poorly implemented: https://t.co/mlpTmclRZ7.

Sydney Morning Herald, July 9, 2015: Uber and the Taxi Industry http://t.co/xo00yfMoZI.

A major policy concern is that taxis provide an important community service, and despite the digging up and bandying about of the term "level playing field" in the recent point-to-point transport policy debate, taxis continue to fulfill a community service obligation (CSO) that ride-sharing organisations do not.

This week, the National Film and Sound Archive of Australia has released a series of historical films focused on public transport. The film above entitled Taxi depicts a day in the life of Jim McKenzie, a Perth taxi driver, in 1972.

The film highlights a number of major changes over the years. It is hard to imagine smoking in a cab and not using seat-belts or child restraints in the back seat! And who would think to take a taxi for a tour of the city or for a wedding procession in an Australian capital city?

But what hasn't changed is the community service role provided by taxis.

So next time you pay a few dollars less for a point-to-point transport trip, think about who pays for the CSOs that tend to fly under the radar. And these are not new obligations. Indeed, taxis have been providing a service for the less fortunate members of our community for decades.

The biggest issue not on the political agenda...

Road user charging belongs on the political agenda as the best answer for congestion management

Marion Terrill, Grattan Institute and Owain Emslie, Grattan Institute

Road user charging is probably the best idea we have to reduce congestion and to enable better decisions on road investment. Average travel speeds in our cities are decreasing, and congestion is only likely to worsen as our population continues to grow.

Urban Infrastructure Minister Paul Fletcher recently gave an important speech, albeit largely unnoticed, in which he made the case for a universal road user charging scheme. Charging people to drive has previously been the dream of transport and economic policy wonks – serving politicians tend to see the idea as political poison.

Fletcher trod gently, cautioning his Sydney Institute audience that “there is a lot of work to do” and that any move in this direction would be “a ten to 15-year journey”. It is still remarkable that a federal minister even took these first steps.

Singapore introduced the world’s first electronic road pricing system back in 1998 to manage traffic volumes in the city.

Jason Tester Guerrilla Futures/flickr, CC BY-ND

Fletcher warned of the potential impact of electric vehicles on fuel excise revenue, but automated vehicles represent an even bigger change.

The future of road use is made unclear by the looming arrival of these vehicles. Despite predictions that these could be the answer to traffic congestion, complications include the interaction of autonomous and traditional vehicles and the complexities of human behaviour.

Autonomous vehicles could even lead to greater congestion. The ease of travel in these vehicles might encourage travellers to take more trips as they reduce the time cost of being stuck in traffic by being able to read emails and stay connected while the car drives itself. Empty vehicles travelling to pick up goods and passengers could further clog roads.

Thus it is prudent to target road congestion now, especially when current strategies aren’t helping much. Building more road capacity or even improving public transport can’t solve congestion.

The best strategy is management of demand via a pricing mechanism that reflects the cost of the congestion caused by one more vehicle on the road. With prices that vary by location, time of day and distance travelled, such a scheme would encourage people to take non-essential trips at a different time, or not at all.

The European experience of road user charging has produced multiple economic and social benefits (Federation European Cyclists/flickr, CC BY)

The charge could be efficient, as the trips that are discouraged are those for which the congestion caused outweighs the benefit derived. And it would be fair: drivers adding to the delay faced by others pay more, while those who drive in non-congested areas or at non-peak times pay less.

The ability to observe road users’ willingness to pay for road space will also give a better signal to planners of where additional road capacity will be of value to the community.

Don’t treat it as a revenue raiser

So Fletcher deserves plaudits for raising the issue. But he got one important thing wrong: he said that the fuel excise tax funds road spending.

Pointing out that fuel excise receipts would fall with the advent of more fuel-efficient vehicles, and electric cars in particular, he argued for a road user charging scheme on the ground that it would raise revenue for road spending.

Linking fuel excise to road funding is a furphy and gets us onto the wrong track at the very start of the road-pricing journey. Fuel excise is merely one source of general government revenue and is not in any way hypothecated, meaning pledged by law to be spent on a specific purpose – in this case roads.

It is no more relevant to say that falling excise revenues will put road funding under pressure than it is to say this will put pressure on health spending or the age pension.

Furthermore, about 75% of road funding comes from state and local government revenue, while fuel excise is a federal tax. It is true that falling fuel excise receipts would add to the federal government’s deficit problems. But there is no reason why a loss of fuel excise revenue must be replaced by another charge on motorists, or why motorists alone should fund additional road spending.

Take care to avoid an inefficient, distorting tax

Paul Fletcher deserves kudos for putting road user charging on the table.

Stefan Postles/AAP

The government should take a holistic approach to repair its pressured budget. It should restrict the most wasteful spending, wherever it is, and introduce or increase the most efficient, fair and simple taxes. It is not helpful to limit our thinking to motorist-based taxes to solve that part of the budget problem caused by falling fuel excise receipts.

The other problem with introducing road user charging as a revenue raiser rather than a congestion reducer is that a scheme designed on those terms is likely to produce poor results.

If we approach the task asking how we can maximise revenue, we’ll end up with charges on the wrong roads, at the wrong times, priced to maximise financial return rather than optimise congestion. For example, we might charge heavily on major roads, just to increase revenue, when some targeted charges on minor roads might do more to reduce traffic. In short, we’ll have one more inefficient, distorting tax.

So kudos to the minister for opening the debate. Let’s talk about road user charging, but let’s talk about what it should really achieve.

If we start by asking the right questions, road user charging could be the best congestion management policy we’ve seen in Australia. It could improve the driving experience without the need for big spending on more road capacity, and make sure we get the most economic and social value from our roads.

Marion Terrill, Transport Program Director, Grattan Institute and Owain Emslie, Associate, Grattan Institute

This article was originally published on The Conversation. Read the original article.

Taxi driver compensation for Uber is unfair and poorly implemented

Taxi driver compensation for Uber is unfair and poorly implemented

Michael de Percy, University of Canberra

In all states that have legalised the ride-sharing app Uber, the response has been to offer compensation to taxi drivers. This is a typical move by governments that are liberalising long-standing, regulated monopolies. But the amount of compensation is far from fair and the process has been poorly implemented.

Victoria is the latest of the states and territories in allowing Uber to operate and its compensation package is the most generous.

There’s a A$2 levy on each ride (that will vary according to the operator), proposed to provide compensation in the order of $378 million. There is also a $75 million allocation from the levy for a fund for those hit hardest by the reforms.

By contrast, NSW announced a $1 levy per taxi or Uber ride. Some of the funding goes to taxi operators suffering severe financial hardship as a result of the regulatory changes. The total package for NSW is $250 million.

Taxi industry reform had to happen. But it has been driven by populist policy with state governments bowing to pressure from Uber’s disruptive approach. While states are providing compensation packages for taxi licence owners, the amounts pale in comparison to the investment value that has been lost.

In Sydney, average licence values peaked at about $425,000 in 2011, and have been in decline since. Licence owners can expect to receive $20,000 in compensation per licence, with multiple licence owners receiving a maximum of $40,000.

In Melbourne, recent market values were in the order of $150,000, down from around $500,000 in 2010-11. Victoria’s buy-back scheme will provide for a maximum of two licences with $100k offered for the first licence and $50,000 for the second licence.

Taxi licence owners have been mostly kept in the dark about taxi industry reform in Victoria. As late as August 19, taxi operators in Melbourne had no idea what would be in the reform package announced yesterday.

And Victoria’s comparatively generous package might make Sydney and Brisbane operators wonder why the differences in the compensation packages should be so dramatic.

Uber users may not be happy about the additional levies to fund compensation for the taxi industry, either.

But the bigger issue is that investor and voter confidence in state governments’ power to regulate effectively has been diminished for three main reasons.

First, Uber effectively broke the law and used its capital to force the end of the old monopoly, allegedly paying drivers’ fines while lobbying governments in unique ways.

Rather than encourage a proper transition strategy, even the Prime Minister applauded Uber for its “agile” business model. Uber made the policy, not the elected representatives.

Second, taxi operators have been bound by the rules of the regulated monopoly. They played by the rules established under the rule of law.

Uber didn’t, and, backed by popular sentiment, has cleverly manipulated the taxi industry. State governments continued to regulate taxis but were powerless to enforce their own laws where Uber was concerned.

Third, state governments have been slow to act and adequately transition the formerly regulated monopolies. Reform of the taxi industry was decades overdue. This has effectively destroyed the value created under the rules of the regulated monopoly. While consumers may be unconcerned, the taxi industry did not create itself – it was created as a regulated monopoly by state governments.

If we consider that Melbourne and Sydney alone are serviced by more than 8,000 taxi licences, once valued at up to $500,000 each, then significant investment value has been destroyed. Not by competition, but by a company that broke the law, by consumers who readily supported cheaper prices, and then by state governments that restructured the market by implementing rapid, populist policies.

Had state governments transitioned the taxi industry appropriately, then licence owners could have had adequate time to prepare. It is not their fault that state governments were slow to act.

Uber has won, and there will be much rejoicing by consumers. But the way the transition has occurred verges on the unethical, and licence owners are footing the bill.

This is inherently unfair. In a regulated monopoly, the regulated players have little impact on the rules.

The damage done by populist policy and poor regulatory oversight in the taxi industry is a far cry from the slow, unnatural death of the Australian automotive manufacturing industry. In fact, automotive manufacturers are still protected by tariffs even though the industry is set to end very soon. It is obvious that the investors in the taxi industry lack the political clout of the automotive industry multinationals.

It is clear that multinationals can manipulate state governments by adopting Uber’s approach. All you need is plenty of money, a plan to introduce cheaper prices for consumers, and the boldness to flaunt the law. As we have seen, state governments will then roll over.

Let’s now hope that your retirement savings are not next in the way of unscheduled reform.

Michael de Percy, Senior Lecturer in Political Science, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Uber legal in Victoria, but "mum-and-dad" investors should be up in arms

Uber has been legalised in Victoria.

Today's announcement that Victoria will follow other states and territories in allowing Uber to operate may be good news for consumers. But taxi licence owners, many who are "mum-and-dad" investors, have had the value of their investments destroyed by populist policy and poor foresight by state governments.

NSW recently announced a $1 levy per taxi or Uber ride to fund compensation for taxi licence owners and those suffering severe financial hardship as a result of the regulatory changes. The total package for NSW is $250m.

Victoria's package is more generous, with a $2 levy proposed to provide compensation in the order of $378m for a buy-back scheme. There is also an allocation from the levy for $78m as part of a "fairness fund" for those hit hardest by the reforms.

The compensation funds represent a typical policy response to liberalising long-established regulated monopolies, but the amounts are far from "fair" and the process has been poorly implemented.

In Sydney, taxi licences peaked at about $425k in 2011, and have been in decline since. Licence owners can expect to receive $20k in compensation per licence, with multiple licence owners receiving a maximum of $40k.

In Melbourne, recent market values were in the order of $150k, down from around $500k in 2010-11. Victoria's buy-back scheme will provide for a maximum of two licences with $100k offered for the first licence and $50k for the second licence.

News media reports suggest that consumers are upset about the levy, especially in Victoria, which will add significantly to the cost of using taxi and Uber services. Consumers tend to be happy about moves by Uber to bring competition to the decades-old monopolies in each state. And while the taxi industry is one of the last regulated monopolies to be liberalised in Australia, the transition has been handled rather poorly by state governments.

Taxi licence owners have been mostly kept in the dark about taxi industry reform in Victoria. As late as 19 August, taxi operators in Melbourne had no idea what would be in the reform package announced today. And Victoria's comparatively generous package might make Sydney and Brisbane operators wonder why the differences in the compensation packages should be so dramatic.

Uber users are sure to be happy about the new competitive landscape, but there is more at risk than simply improving taxi prices and services. Investor and voter confidence in state governments' ability to regulate effectively has been diminished for three main reasons.

First, Uber has effectively broken the law and used its capital to force the end of the old monopoly, allegedly paying drivers fines while lobbying governments with media-grabbing publicity stunts. Rather than encourage a proper transition strategy, even the Prime Minister applauded Uber for its "agile" business model. Uber made the policy, not the elected representatives.

Second, taxi operators have been bound by the rules of the regulated monopoly. They played by the rules established under the rule of law. Uber didn't, and, backed by popular sentiment, have cleverly manipulated the taxi industry. State governments continued to regulate taxis but were powerless to enforce their own laws where Uber was concerned.

Third, state government have been slow to act and adequately transition the formerly regulated monopolies. Reform of the taxi industry was decades overdue. This has effectively destroyed the value created under the rules of the regulatory monopoly. While consumers may be unconcerned, the taxi industry did not create itself - it was created as a regulated monopoly by state governments.

If we consider that Melbourne an Sydney alone are serviced by over 8,000 taxi licences, once valued at up to $500k, then significant investment value has been destroyed. Not by competition, but by a company that broke the law, by consumers who readily supported cheaper prices, and then by state governments who restructured the market by implementing rapid, populist policies.

As it stands, "mum-and-dad" investors are paying the price so consumers can obtain cheaper fares. If the same was done to the Australian share market, the economic consequences would be disastrous.

Had state governments transitioned the taxi industry appropriately, then licence owners could have had adequate time to prepare. It is not their fault that state governments were slow to act.

Uber has won, and there will be much rejoicing by consumers. But the way the transition has occurred verges on the unethical, and licence owners are footing the bill. To make matters worse, some commentators are blaming the taxi industry.  This is inherently unfair. In a regulated monopoly, the regulated players have little impact on the rules.

But many "mum-and dad" investors may never trust governments again. And rightly so.

The damage done by populist policy and poor regulatory oversight in the taxi industry is a far cry from the slow, unnatural death of the Australian automotive manufacturing industry. In fact, automotive manufacturers are still protected by tariffs even though the industry is set to end very soon. It is obvious that the "mum and dad" investors in the taxi industry lack the political clout of the automotive industry multinationals.

The "fairness funds" are hardly fair compensation, and, as I have argued elsewhere, the cheaper prices will hardly be worth the cost. Mums and dads are paying for it now.

It is clear that multinationals can manipulate state governments by adopting Uber's approach. All you need is plenty of money, a plan to introduce cheaper prices for consumers, and the boldness to flaunt the law. As we have seen, state governments will then roll over.

Let us now hope that your retirement savings are not next in line.