Via Rail Subsidies Opposed

Human Action to Limit Taxes
by Paul Geddes & Morley Evans
March 1982

In September, the Progressive Conservative Party of Canada sent out a roving task force to gather people's reactions to the Via Rail cutbacks to the Via Rail cutbacks announced by the federal government. Vancouver's chapter of Human Action presented the following brief to the task force. We're sure you will find it interesting.

"Free enterprise" is a phrase which describes an economic system of free men who voluntarily exchange property that they own for mutual benefit. A mechanism called "the market" reflects the desires of consumers and signals entrepreneurs (motivated by their own self-interest) to satisfy those desires with the most efficient use of resources.

"Free enterprise" does not describe an economic system in which certain goods and services are paid for with tax money because those that benefit are unwilling to bear the full cost.

"Free enterprise" does not describe an economic system which perpetuates outmoded services no longer wanted by consumers even when sold at greatly-discounted prices.

"Free enterprise" does not describe an economic system which frustrates change, growth, and misdirects and wastes scarce resources.

In other words, "free enterprise" does not describe the system Canadians find themselves burdened with today.

One example of a wasteful subsidy that interferes with free enterprise is Via Rail. Almost a billion dollars of Canadian taxpayers' money was spent in 1979-80 to finance a service which benefited few people. Last year [1980], Via Rail required $3 in subsidies for every $1 they collected from passengers. By what right do users of Via Rail command the rest of us to pay three-quarters of their transportation costs?

Because Canada is a country whose government supports numerous groups with money taken from taxpayers, a large outcry is to be expected from these special interests living off the avails of government when cutbacks are made. We are certain the time at these hearings has largely been monopolized by such complainers.

Your time will also have been taken by utopians who have a grand dream of how they would like the world to be. These utopians wish to gain the favour of you politicians, so they can bypass the dictates of the market, impose their schemes on the consumer and force him to pay, to boot. Let's examine a few of the arguments advanced by the complainers and the utopians.

First, they believe that because passenger railroad service has great historical significance in Canada, we would somehow be "less Canadian" without it. What rubbish! Do they also suggest we use taxpayers' money and the power of the state to force us back to horse and buggy?

Second, some believe that because we subsidize other modes of transportation we should subsidize Via Rail as well. There is much debate today about how large the relative subsidy for rail passengers is. In any case, it is clear that the subsidy per passenger-mile for rail services is inordinately high compared with other modes of transport. But this is beside the point. A person shouldn't be forced to hammer his left big toe today because he banged his right big toe yesterday. We should be moving toward no subsidy for all modes. All subsidies hurt. They interfere with purchases that consumers make willingly.

Third, it has been proposed that Canadians need passenger service regardless of cost. This is simply ridiculous. Rail passenger service is a money-loser because consumers don't want it. They have consistently demonstrated by their choices freely made that they prefer other more convenient or faster modes of transport. They were not attracted to rail even when the offered price was so low that the operation lost money.

The government must stay out of the way, and if Via Rail is unable to make ends meet, it must be allowed to pass out of existence. Rail passenger service will be replaced when new forms of mass transit can offer consumers more of what they want -- presumably better service, shorter travel time, more safety and less cost. These new forms must be built risking private capital without the use of the coercive agents of taxation, monopoly and expropriation.

Finally, it is very unwise for a "free enterprise" party to attack the government for finally doing something right. On an occasion when the Liberal Minister of Transportation experiences a lucid moment and decides that enough tax money has been wasted on a white elephant like Via Rail, we should applaud him. We should jump for joy and encourage Mr. Pepin to start cleaning up other areas as well. Unfortunately, ... the federal PC party has only served to confuse this man -- and everyone else too.

By criticizing Mr. Pepin and pandering to special interests and a few misguided ideologues who believe in free lunches, you may win their support for a time -- but the people of this country are not stupid. They know the Party is just playing politics with this issue. Rather than trying to muddy ideological waters which are already none too clear, the Party should be forthright and honest about the need for less government, lower taxes and fewer subsidies for money losers. Don't hold hearings across Canada about Via Rail cuts. Praise them. Instead, hold hearings about Mr. Pepin's latest venture -- to further extend the airline monopolies in Canada to benefit existing carriers at the expense of the consumer.

There is no shortage of things to criticize about the Trudeau government. Why waste time and your supporters' money being critical of the things they do right? The Progressive Conservative Party of Canada only hurts itself and its own constituency of freedom-loving people with these hearings.

Your party's constituency consists of those Canadians sick of paying 50% of their hard-earned income to government for it to waste on giveaway programs like Via Rail. To unite this constituency into a body of support, able to elect and keep you in power, the Party must learn to forego any temporary advantage gained from politically-motivated grandstanding, such as these hearings, for the long-term benefits to be gained from the construction of a coherent platform consistent with the principles of freedom.