Robert MacCulloch
Matthew S. Abel Chair of Macroeconomics
University of Auckland
The Labour Party's announcement that its newly proposed $20 weekly public transport fare cap will cost $65 million is out by a factor of at least three times. The Opposition Leader's Transport Press Conference and Labour's webpage (https://www.labour.org.nz/farecap) state, "On average, people will save around $25 a week" from the cap, some more, some less, and "hundreds of thousands of people would benefit".
Census data from 2023 says 135,000 people use public buses, trains or ferries as their "main means of travel to work" (https://figure.nz/chart/x72mUPCCIJtePP5B). A weekly average saving of $25 per person for 52 weeks would cost the government $175 million. Should prices be slashed, demand for trips rises, increasing the subsidy to nearly $200 million. This estimate is conservative, since many people use public transport not associated with a commute to work.
Declaring that "hundreds of thousands of people" benefit and the saving is "on average $25 a week" does not add up to $65 million. It adds to at least three times that figure.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics.
7 comments:
Ah yes that math thing gets them again.
In some ways the new subsidy is a modest rise on the entire public transport subsidies
And someone has to carry the enormous administration cost. the subsidy will generate enormous resentment among those unable to exploit.
Great stuff! The benefits will outweigh the costs, but who cares about benefits!
Hardly surprising - the usual Labour Party economic and financial buffoons at work.
Not to worry - taxpayers are there for Labour to milk and debts are there to be borrowed.
What’s a few more billion dollars for future generations to carry?
Sounds like dyscalculia is ailment Chloe swarbrick, Barbara Edmonds and Hipkins share in equal measures. And delusions of grandeur.
Numbers adding up? Mere details. For labour.
Not till July 2027, and only if Te Pati Maori and the Greens join Labour in Government.
Many things will change before then.
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