2. I don’t know anyone in Australia who cannot afford a car of some kind. No doubt tariffs and income taxes make these more expensive than they need be.

3. The price of rail will not be determined by how much they can fleece off non car owners, but time saved in commuting. People already do this now and it is how new toll road pricing is estimated, by surveys and modelling these responses. That said, it works fairly well and the Lane Cove and Cross City Tunnel mishaps ignored such advice. It is the precise reason why some car owners use public transport now. This implies firms can raise prices only when they have built competing efficient networks, which would see downward price pressures.

4. Read the articles I gave you. Some of the outer suburbs bus companies were profit making ventures that received no subsidies at all. The intent is for them or newer, similarly efficient competitors to take over the old routes, inefficient companies and have mangement of the rolling stock. Pricing fares correctly would make people act more rationally with land use, which in turn impacts pollution and congestion.

5. If people have to spend $50 a day on transport, they may as well buy a second hand car - but I’ve seen refugees driving around in 10 year old cars. But there is no proof the prices will rise this much, but rather better routes would be maintained and the subsisised firms would be taken over by the unsubsidised firms.

Funnily enough, you’ve also said the same people who would use cars cannot afford them. At least one of your arguments is wrong. Or maybe both.

Part of the purpose of public transport is to provide transport options to those who can’t afford a car. A private monopoly running a heavy-rail service with complete freedom to set prices has no incentive to ensure that its services remain affordable to everyone - just to ensure that it is as profitable as possible. It may well determine that it can do this by concentrating on the higher end of the market as a form of luxury commuting, that charges $50 for ticket that currently costs $5. Suddenly you have a whole class of people who now have virtually no transport option at all, and certainly a large class of people who would go back to private vehicles, further clogging up the roads, causing accidents and generating pollution etc. etc.

It’s hard to see much benefit at all in having private monopolies provide such services.

1. Being able to set market prices is better than fixed prices.

2. This is not reliant on privatisation.

3. Privatisation is better, generally.

4. You seem to have fallen for a common fallacy - no competition equals market failure. A private monopoly is still generally better than a Government monopoly. Transport services compete with substitutes, even if there is no competition in one form of service.

If you want to discuss the limits of private transport, you have to accept the limitations set by planning and development regulations. The companies do not impose these on themselves.

Yes NPOV, you are correct about the GST, which is unfair as incomes rise, households spend more on food. It was basically a tax cut for the rich with no promised income tax cuts or compensation in welfare payments. The only fair way and the most efficient way was to tax everything.

The GST-exemption distorts the price of food relative to non-food items.

MONEY paid, usually by GOVERNMENT, to keep PRICES below what they would be in a free market, or to keep alive businesses that would otherwise go bust, or to make activities happen that otherwise would not take place. Subsidies can be a form of PROTECTIONISM by making domestic goods and SERVICES artificially competitive against IMPORTS. By distorting markets, they can impose large economic costs.

It is also GST-exempt, which acts pretty much as a subsidy relative to non-food items.

So are duty free goods subsidized?

Economic terms such subsidy has definitional parameters. I don’t think GST exemption would qualify as a subsidy.

Can you give an example of how you could set-up a workable system where by private competitors compete to offer heavy rail services through a city?

Reconsidering that commment, I’d say a firm should set up a complementary service to the large buses, such that smaller routes across suburbs are covered by the minibuses, and major commutes are by tram, train and large bus on arterial roads.

THe suburban bus services should switch to smaller buses, the kind used for disabled schools and similar, with a couple of the larger ones for peak hours

.

How do you know this would offer efficient use/cost of resources? You don’t know if for instance the firm is receiving large upfront discounts for owning a one model fleet. You don’t know if the cost of maintenance etc. is less than it is for running several models. You can’t reach your conclusion without more information.

I bought some milk last week. It was cheap and the Government didn’t subsidise it. The thought of fairness didn’t enter my head.

There is plenty of room for competition in transport, the mix of profitable and unprofitable firms shows this is true.

I don’t know and I don’t really care. What we do know is that public transport needs subsidies because of price setting. The subsidies keep some very poor practices going and the efficiency of mass transit less convincing. Just let them charge whatever they want. Again, I never said they need to be private. Just that they priced rationally. But there is a general argument for private ownership of businesses.

I agree Helen. Remove the price setting, get rid of the subsidies and give back to the people with tax cuts and welfare compensation.

“Because I’m having a hard time imagining it working in practice.”

So what? If something cannot survive without subsidies it is uneconomic. Mass transit isn’t intrinsically uneconomic, the stupid fare restrictions make it so, and the subsidies keep a lot of non-going concern firms alive. Note that a quarter of the firms in the fringe don’t take any subsidies. The subsidies keep their inefficient competitors going. The more efficient firms should control the rolling stock.

If private transport is inefficient too, remove the subsidies and let it change for the better. The degree of inefficiency PTUA claims is questionable and their proposed benefits from further subsidising public trasnport are very unreliable.

Running a service stupidly is no evidence that that service would be poor if run properly. THe suburban bus services should switch to smaller buses, the kind used for disabled schools and similar, with a couple of the larger ones for peak hours.

Privatised roads tackle the externality and cross subsidisation problems cited by PTUA.

Public transport/a mass transit system isn’t the problem. The problem is the firms cannot charge market prices.

Deregulating taxis, privatising roads, allowing buses and trains, ferries to charge market prices and giving back to people with lower taxes and Government user charges or upped welfare (cash) payments would be better.

“Do you have an example of a single city in the world that functions smoothly with no government-supported mass transit?”

Support the users, not the firms operating. Note that prices are more important than ownership. I would prefer private ownership for general reasons, but cutyrail and bus companies should be free to charge as they please but with no subsidies. Hey, they could be Government owned - the subsidies are bad and only need to exist due to price setting. Like I said, cut other taxes and up welfare payments to compensate. The better routes will get more support this way.

Do you have an example of a single city in the world that functions smoothly with no government-supported mass transit?

Read these. City based ventures (rail and bus) may only be subsidised by 62-74%, suburban fringe dwellers by up to 90%-100% (bus).

http://www.transport.nsw.gov.au/publications/IPART_CityRail-fares-06.pdf

http://www.transport.nsw.gov.au/publications//private_buses_report.pdf

But this is perhaps not fair on my part. Fares are set by a central authority. If companies could freely set fares, they could still compete with private transport and be entirely self funding.