In this paper the problems associated with subsidising Australian non-urban rail services are revisited by evaluating the macro-economic impacts of a change in policy that would eliminate railway deficits. The paper supposes that around $A800 million ($1986/87) or two thirds of the current railway deficit is directly attributed to the operation of inefficient services which, if the subsidies were eliminated, would be closed down by any reasonable management. Such a policy would produce significant expenditure savings for the railway-owning governments and leave the community with much smaller but commercially viable railways. However, such a policy could also have far-reaching consequences affecting almost every aspect of the Australian economy, from increasing transport costs to changing wage rates. In the past, the decision-makers have been reluctant to alter the status quo, because they have not had access to the sort of tools that might provide some guide to the ripple-effects such a policy change (shock) would have on the community and on particular interests. Computerised General Equilibrium modelling provides one mechanism that goes some way to servicing these ends. The Australian-based, multi-sectorial, ORANI model demonstrates how several policy scenarios for the abolition of railway subsidies can be explored by simulating shocks to the economy. The results, in percentage change form, show the induced deviations from an initial state of (assumed) equilibrium. They illustrate the range of economic benefits that could accrue from the abolition of railway subsidies and identify those interests most likely to benefit or lose from such a policy choice. (Author/TRRL)

  • Availability:
  • Corporate Authors:

    Bath University, England

    Claverton Down
    Bath BA2 7AY,   England 
  • Authors:
    • MICHAEL, E
    • Rimmer, M
  • Publication Date: 1990


  • Undetermined

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Filing Info

  • Accession Number: 00617549
  • Record Type: Publication
  • Source Agency: Transport and Road Research Laboratory (TRRL)
  • Files: ITRD, TRIS
  • Created Date: Nov 30 1991 12:00AM