ROADING TAXATION

Evening Star, Issue 21255, 9 November 1932, Page 2

ROADING TAXATION

GENERAL COMMERCIALISATION AIMS ADDRESS BY HIGHWAYS ENGINEER That strong influences were working to bring about the general commercialisation of roads was stated by Mr A. .Tyndall (engineer to the Mam High,ways Board) in an address to the Otago Motor Club last night. In company with Mr Talbot (counties’ representative on the board), Mr Tyndall is pn a visit to Dunedin. Introducing the visitors, the club s president (Mr P. W. Breen) said he had welcomed the opportunity of showing their guests some of the roads in the province which were not receiving the attention they required. There icould be no doubt that many roads jwere being allowed to go to pieces simply because the necessary funds were not made available to the board. The present state of affairs could not be allowed to continue, unless, of course, the Government wanted to concentrate entirely on railways and do away with road transport altogether. He had no hesitation in _ saying that motorists .were quite satisfied with the work carried out by the board since its inception some years ago by Mr Coates. The board had really done wonders considering its resources. (Applause.) Mr Tyndall said he proposed to discuss the question whether reading .policy was heading for commercialisation, ;by which he meant _ “ was the trend towards the shouldering of the burden pf road finance by road users?”

“ Up to 1924,” he said, “ it can be said that the reading bill was for all practical purposes shared by the general taxpayer and the landowner. The user principle in the shape of toll gates had been introduced in some parts, notably Taranaki, but the amounts collected in this way from the user did not bulk very largely in the national reading account. As a result of the development of the motor the arterial roads, most of which paralleled the railways, commenced to suffer most rapid deterioration, and as by far the greater portion of the cost of the maintenance of those excessively-used roads was found by the landowner, _ the user once again had to come to his rescue. Broadly summarised in accordance with the distribution of the burden of costs, the stages in the history of road finance have been: General taxpayer paid all; landowner paid all; landowner and user shared; landowner and general taxpayer shared; landowner, general taxpayer, and user shared. MOTOR DEVELOPMENT. “ The arterial roads parallel to the railways suffered very severely from post-war motor development. Had nothing drastic been done they would have been completely destroyed, thus affecting all through traffic and a very substantial amount of rail feeder traffic which is in many cases bound to use the parallel road to get to the railway station. The proposition that the user should come to the rescue resulted in a scheme being prepared under which about 2,000 miles of the arterial roads, practically all of which had been built years before the introduction of the motor and before the building of the railways parallel to them, would be taken over by a national reading authority and financed as far as maintenance and future improvements were concerned entirely by the user. This scheme was not acceptable to the local authorities, as, while it would substantially relieve the local authorities as a whole, they claimed the relief would have been very inequitably distributed as between individual authorities. “ The next scheme which was submitted and actually adopted was that the user should be taxed and the proceeds handed to a national authority, called the Main Highways Board, to be distributed as subsidies to local authorities in respect , of maintenance and improvements to a system of arterial and major feeder roads amounting in all to about 6,000 miles. Provision was also made by statute for a minimum contribution by the general taxpayer to the funds of the Main Highways Board, the amounts being £35,000 per annum from the Consolidated Fund for maintenance and £200,000 per annum free of interest from the Public Works Loan Fund. The normal subsidy for maintenance was fixed by statute at 10s for i£l and for construction at £1 for £l. “ Here were have the three beneficiaries coming together to share the burden of the main roads—the general taxpayer, the landowner, and the user. ,The scheme commenced actual operation in 1924, and I think public opinion regards it as having been very successful to date in the results obtained. 'Drastic changes to the original proposals, however, have been made from .time to time. The tendency has been jto increase very substantially the share found by the user and decrease the shares found by the general taxpayer and the landowner. FUTURE POLICY INFLUENCES. “ The policy of the future no doubt |will bo influenced to some extent by ,the forces at work at the present moment,he continued. “ The three beneficiaries have their organisations and their spokesmen. “ The Treasury, on behalf of the general taxpayer, says he is overloaded and needs relief in every direction he can achieve it. The National Expenditure Commission has recommended the abolition of special highway accounts, and condemns the principle of earmarking taxation for special purposes. Most of the rural landowners are pressing either for partial derating or total derating .to be accomplished by the imposition of user taxation. The urban ratepayer is groaning under a crushing load of taxation, aggravated, he claims, by the motor vehicle. He will welcome relief from any source, and he feels that user taxation is about the only hope. “ The associations representing the user claim that the burden of user taxation has reached, if not already exceeded, the economic limit, and that the law of diminishing returns is in operation, They also insist most strongly

that user taxation shall be entirely spent on roads. The influences at work are manifest. Even the principle of earmarking user taxation is a signpost directing towards commercialisation. In addition to these influences we have a harassed Railways Department which can see only about one star to which it can hitch its wagon. It sincerely believes that it can successfully deal with road competition if only the cardinal principle of the user paying is applied fully to road transport, as it used to apply to railway transport. I leave to my hearers the role of prophet as to the outcome of it all.

ROAD v. RAIL COMPETITION,

“ From the point of view of the Government, the most serious immediate problem in connection with ’ transport is the railway deficit, now approaching £1,500,000 per annum. The simple fact is that the Railways Department wants its traffic back, and it is quite entitled to claim that competitive transport should bo put on the same basis as railway transport used to be. It considers that competitive road transport is not paying its fair share of reading costs, and it hopes that if the competitive road transport is made to pay the full reading costs the impost will be so heavy that the traffic will be forced back to the rail. In other words, the railways urge road commercialisation, but is it general road commercialisation they really want, or just commercialisation of competitive roads? If it is general road commercialisation, then the traffic on 43,000 miles of railway feeder roads would be severely _ restricted, and it cannot be conceived that the repercussion from the Railways Department’s point of view would be satisfactory. Nor is the traffic on these 43,000 miles of road the cause of the railway deficit. I will presume, therefore, for the moment that commercialisation of the competitive road is really the aim of the railways. “ There are only 3,000 miles of railway being operated in New Zealand, and therefore the mileage of road which is effectively competitive cannot be more than 3,000. It is a fact, however, that this competitive system, although of limited length, carries by far tho greatest percentage of total rural traffic, and, indeed, I estimate it carries 50 per cent, of the total motor traffic of the dominion, urban included. This figure corresponds very closely with the experience m other countries where agricultural and pastoral industries are a dominant factor. The total cost of operating tho motor traffic on tho competitive roads is, therefore, about £14,000,000 per annum. Is it any wonder that the effect is felt by the railways ? - “ Now, let us apply the principle of commerciaiism to this system. It is claimed the road user should pay the whole annual cost of the road upon which he runs. What is the annual cost of this system? I estimate it at £1,000,000. To enable you to judge for yourselves whether this allowance is reasonably adequate, may I mention that the Transport Department’s estimate of the rural road bill for 1930-31 is £4,250,000 for about 46,000 miles of rural road. I am charging about one-quarter of that bill to a mere 3,000 miles of road, a length which is pne-tenth only or tho total surfaced mileage or one-fifteenth of the total formed mileage. As a matter of fact, probably one-fifth of this charge of £1,000,000 should be deducted to cover the cost of serving non-competi-tive traffic which uses the competitive roads as feeder roads to get to the railway stations. It is interesting to point out, therefore, that of the total annual road and street bill of about £6,400,000 only about one-eighth, or 121 per cent., is devoted to serving competitive road transport. “ Manifestly tho expenditure on roads as a whole is of much greater benefit to the railways than detriment. The real difficulty is the £14,000,000 a year spent in running vehicles on the competitive roads, and this situation, whether good or bad, in the interests tho community as a whole is a triumph for private enterprise. NON-PAYING BRANCH ROADS. “The possibility of application of commercialisation to the whole reading system depends entirely on the extent of motor traffic,” said the speaker. “ It would be manifestly a joke to propose the principle for application in Russia, where there are 1,864,109 miles of roads and only 57,640 motor vehicles, ol which only 2,610 are passenger cars, the same number as is probably to be found in the town of Wanganui. If general commercialisation is to be faced —and there are strong forces working in this direction—the operators of tho road transport system (including the roads themselves) should be endowed with the privilege possessed by the Rail ways Department of closing non-paying branch roads. There are thousands of miles of metalled road in this country the earning capacity of which when tested by the traffic measuring stiik is insufficient to pay axle grease. In tho event of complete commercialisation many of those roads would in all fairness have to be closed. The necessary alternative to keep them open would bo a subsidy from the landowner, a duplicate of recent railway policy, and an immediate departure from the principle that the user should pay all costs “ There is another point which requires to bo made. Throughout this discussion the user has been regarded as identical with the motorist, but he is not by any means tho sole user of the road and street system, the cost of which is termed tho annual road bill. In urban areas, for purposes other than vehicular traffic, large capital and annual expenditures have been incurred in the provision of footpaths, street lighting, and unduly wide paved streets Again, on all roads and strlets there is still some horse vehicular traffic. In the event of general commercialisation no user, whether pedestrian or owner of a horse vehicle, should he exempted from user taxation. Should the additional expenditure involved in paving a residential street 40ft wide when tho whole of the traffic can be carried indefinitely on an 18ft paved surface be a charge against the vehicle user? The danger of general commercialisation is tho possibility of ‘ killing the goose that lays the golden egg.’ ” Mr Tyndall was thanked for his address.