Cutting jobs at DOC and charging tourists more to walk tracks are separate issues

Duncan Garner has posed the question of whether we should charge tourists more to use DOC trails to save the 100 Kiwi jobs the government is cutting at DOC

Now this conflates two separate issues:

  • If it is efficient to price discriminate and charge tourists more to use DOC tracks, why aren’t we doing it already?
  • Are the jobs necessary to provide the desired level of service from DOC?

Charging tourists more

The first issue implies that the government is leaving money on the table. If it is, then maybe this should be looked at. There may however be valid reasons why the government hasn’t. A basic requirement for price discrimination is that arbitrage isn’t possible. It’s entirely possible that if this pricing structure was implemented people would just get around as locals would find ways to buy tickets (or whatever one does when they book a tramp on a doc track) and pass them onto foreigners at a profit. I don’t know about you but I personally feel a little uncomfortable with the idea of DOC staff checking passports on the trails. It’s also possible that tourists would resent the price discrimination and be put off, which would have the opposite effect.

But, if the reasons to not do it don’t stack up (i.e. it would be profitable), the government should be doing it independent of whether or not it cuts 140 jobs….

Trimming the fat at DOC

The second issue is whether it was efficient for these people to be employed at DOC. I.e. Is DOC “carrying too much fat”/would we be better off with these people serving some other role in the economy? This leads on the next question of analysing whether the social costs of firing them (unemployment/retraining etc..) outweigh any efficiency benefit.

And that is something which I can’t personally answer due to a lack of information. But I would note that if there is an issue of the structure of the hierarchy leading to “too many chiefs”, cutting staff isn’t really going to have much of an impact on service – and it should be taken into account. If this is the factual situation we are in, then the government keeping them employed is a form of welfare, which should be taken into account when analysing the social costs of firing them.

  • JC

    Some of the answers I don’t know are who benefits most directly from DOC’s activities.. obviously DOC staff do as they are employed and paid a salary, tourists do but they already pay simply by being here and spending money and indirectly adding to the tax take that helps pay for DOC, many tourism organisations directly benefit.. are they supporting DOC?

    Many DOC activities seem to me to be ideal public/private ventures.. does it maximise these?.. if not, why not.

    A track is a track is a track whether designed, built and maintained by DOC staff, a private contractor or a work scheme.. which is the most efficient taking into account DOC will have a salary multiplier of about 2.5?