Frequently asked questions.
As a city resident, I wonder what you are trying
to prove. Public transport is too expensive now. Do you think we
should pay double? No way!
Are your figures correct? In one place you give
the figure of $832 million and another it is $1.4
billion.
What about the subsidy to VicRail of $476
million in those figures? Isn't that a subsidy to country
people?
What was the result of your submissions to the Committee for Economic Development and the Infrastructure Planning Council?
Country people are always whingeing about
something. Isn't this just another case of knocking the city
because you can't compete against better farmers in overseas
countries? If your ideas were put into practise, thousands of
city people would lose their jobs.
The metropolitan area pays far more taxes than
the country. We are just getting our own money back.
What about all the subsidies paid in the
country? It costs more to educate kids in the country for one
example.
I live in the country and I am happy to see
Melbourne grow and prosper. We need a big city to attract world
famous artists and big sporting events like the Grand Prix, which
puts Australia on the map. I could go on.
You keep attacking Melbourne. What about the
other capital cities?
You were a Member of Parliament for over 30
years. Why has it taken so long to raise this issue, if it is
true?
I have spent an hour reading much on your website. I am impressed! I am in so much agreement with what you are saying about the disservice to country people and the very bad lack of balance between country and city. Also my belief that the taxpayer should not be responsible for the services to city people e.g. commuting services. What benefit is it to us as country people? None!
The media in my view need to be made more accountable for their actions on many fronts and yes they do influence thinking in this country and not always for the betterment of those who live in this land I suggest. We see it every day.
As a city resident, I wonder what
you are trying to prove. Public transport is too expensive now.
Do you think we should pay double? No way!
Answer.
I am saying that National Competition Policy (NCP)
should be applied to the city and country alike. NCP says that subsidies lead to distortion in the economy and cause the mis-allocation of financial resources.
It acknowledges that there are Community Service
Obligations, which may require cross subsidisation but any
subsidy should be clearly stated and justified. If the government believes that it has a Community Service Obligation to provide public transport for metropolitan people at half price, it should say so and give its reasons.
Public authorities are expected to adopt "World's Best Practice" so it seems reasonable to quote what is done in other cities. Toronto demonstrates that it
can run an efficient public transport system without being a massive burden on taxpayers. It is a dynamic, prosperous city so why cannot Melbourne do the same?
If there is a logical explanation why Melbourne
people with an average household income $10,000 per annum higher than the average household income in the country should receive a subsidy equivalent to $424.00 per head per annum, we are entitled to hear it.
Are your figures correct? In one
place you give the figure of $832 million and another it is $1.4 billion.
Answer.
The figures are taken from the Victorian Auditor
General's Reports on Ministerial Portfolios of 1999-2000 and
2000-2001 respectively. The report for 2000-2001 states that
improved accounting procedures give a more accurate picture but
they may also indicate that the real costs may have been
concealed in the past. It remains to be seen whether the
accounting procedures are accurate even now.
What about the subsidy to VicRail
of $476 million in those figures? Isn't that a subsidy to country people?
Answer.
There may well be some element of subsidy to those
parts of the State that are served by V/line services. It may be also that more city people use V/line services than country people do. Those are points that need to be sorted out. The question I am asking at the moment is why are the principles of National Competition Policy not being applied to public transport. Even before all Australian governments agreed to NCP, subsidies for water and sewerage services to Victorian country towns were abolished. Now those authorities pay a dividend to the
State government. Why are the same principles not applied to public transport in the city? On what moral, ethical or economic grounds can it be more important to subsidise public transport in the city than drinking water in the country?
A survey may show that more Melbourne people
use VicRail than country people. It probably includes the costs associated with the interstate services, for example, which carry a high percentage of city people.
What was the result of your submission to the Committee for Economic Development?
Answer.
Exactly as I expected. There was nothing in the Committee's Report to suggest it had even been read. The Committee stated that the Department of Infrastructure had given evidence that the cost to the government of subsidies for public transport in Victoria was $720 million. There was no attempt to explain why this figure differed so much from the Auditor General's figure of one year earlier of $1.8 billion. Was the Auditor General wrong or did the government save $1.1 billion in 12 months - and not tell anyone? The State Budget does not reflect any such saving. Nor did the Committee attempt to explain why booming, prosperous metropolitan Melbourne needs a subsidy of $720 million or how this subsidy affects the economic well being of non metropolitan Victoria or why subsidies in the country distort the economy but not subsidies in the city.
The Report of the Infrastructure Planning Council also ignored the fundamental issues that are destroying country Victoria. Apart from dropping the word "country" several times to reassure us that they were aware of our existence, there was no attempt whatsoever to deal with these facts. Both bodies are protected by the knowledge that the metropolitan media will not be critical because it has a vested interest in promoting the growth of the central business district.
Country people are always
whingeing about something. Isn't this just another case of
knocking the city because you can't compete against better
farmers in overseas countries? If your ideas were put into
practise, thousands of city people would lose their jobs.
Answer.
It is about time you caught up with globalisation,
which is not the brain child of country people - it is the
government and economists that tell us there has to be a
"level playing field" in international trade. With
barely 2% of world trade, Australia is trying to lead by example.
We are trying to have hidden subsidies for agricultural products
eliminated in other countries yet we tolerate a system that
provides a subsidy averaging $424.00 per head to the people of
Melbourne.
It may well have a Community Service Obligation
component that justifies a subsidy but, if so, the public is
entitled to know. It would be quite ridiculous to argue that,
because Melbourne's public transport has some element of CSO,
that its entire losses should be borne by the taxpayers. The
portion of the costs that can be shown to represent a CSO should
be subsidised but no more than that.
The metropolitan area pays far
more taxes than the country. We are just getting our own money
back.
Answer.
If governments should spend money where they get it
from, why bother to collect it in the first place? The more
generally accepted view is that governments should collect taxes
from those who can afford to pay and spend where there is the
greatest need. But that is beside the point. The fact is that
National Competition Policy states that subsidies should only be
paid to fulfill a Community Service Obligation. It further states
that any such payment should be clearly stated and justified.
In the Budget papers, the Treasurer indicates that
the payments will in future be defined as "purchase of
services" but the Auditor General still calls it a
subsidy.
What about all the subsidies paid
in the country? It costs more to educate kids in the country for
one example.
Answer
That may be true or it may not. There needs to be a
definition of a "subsidy". Additional costs arise as a
consequence of space and distance, which is part of the privilege
of living in a big country. Even people who live in Melbourne
also live in a big country. The cost of providing basic services
should not be considered a subsidy. Just as everyone should share
the cost of defending the country, so everyone must share in
providing the infrastructure needed to maintain it. The loss of
population in the country is increasing the per capita cost of
providing basic services.
People cause the problems in the city. It is not
logical to claim all the advantages of economies of scale but not
accept the costs of overcrowding. Increasing population adds
demand for ever more expensive infrastructure.
National Competition Policy requires subsidies to
be clearly stated and justified. Until that is done, there cannot
be a rational discussion of the question.
I live in the country and I am
happy to see Melbourne grow and prosper. We need a big city to
attract world famous artists and big sporting events like the
Grand Prix, which puts Australia on the map. I could go on.
Answer.
Melbourne is not going to suddenly shrink if its
citizens are required to pay for the city's infrastructure
like other cities do. In any event, Adelaide was happily hosting
the Grand Prix before Melbourne hijacked it.
However, if this is the justification for paying
this subsidy, why is it being kept so quiet? Remember, a city politician told us to stop whingeing and move to the city if we
cannot make a go of it in the country.
You keep attacking Melbourne. What
about the other capital cities?
Answer.
It is probable that there is a similar situation in
other capitals. If not, then Melbourne has an unfair advantage.
It seems fairly obvious that, over the years, the New South Wales
government spent a vast amount on very expensive roads around
Sydney and neglected its country highways. After several
horrendous bus crashes, the Commonwealth stepped in and did the
work the NSW government neglected to do.
You were a Member of Parliament for
over 30 years. Why has it taken so long to raise this issue, if
it is true?
Answer.
There are numerous references in Hansard that can
be checked of my attempts to draw attention to what was going on.
In 1974, before computers were available to assist, I prepared a
graph showing how the distribution of road funds around the State
were changing. After some time, I was able to persuade the
government to have the same figures put into the form of a graph
by the Country Roads Board and reproduced in Hansard. This was
the first time anything of this nature was authorised. I
circulated this widely to Local Councils and country newspapers
but nobody seemed to understand the significance of the figures.
Click here to see this graph.
I have spent an hour reading much on your website. I am impressed! I am in so much agreement with what you are saying about the disservice to country people and the very bad lack of balance between country and city. Also my belief that the taxpayer should not be responsible for the services to city people e.g. commuting services. What benefit is it to us as country people? None!
The media in my view need to be made more accountable for their actions on many fronts and yes they do influence thinking in this country and not always for the betterment of those who live in this land I suggest. We see it every day.
Answer
This must be by far the largest subsidy paid by any government in Australia, (if it isn't, then we are in even greater trouble) but no one wants to know about it. People think that we have "watchdogs" to prevent exploitation, such as the Australian Competition and Consumer Commission and the National Competition Council. Neither of them will touch it but, significantly, neither do they try to defend it.
What they say is that they will crack down on private citizens that exploit the community but governments are free to exploit country people with impunity.
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