The biggest lesson of 20th Century economics is that it is hard to get anything right if prices are wrong. It is high time that lesson were applied to transport.

From the 1920s through the 1940s, economists pointed out the difficulties in running centrally planned economies. If prices do not emerge from the interplay of consumers and producers in markets, somebody has to set those prices. And if those prices are wrong, everything else starts going wrong.

If you do not know how much value consumers put on, say, getting a car, how could you ever decide how many factories should be devoted to making cars instead of trucks or tractors – let alone whether it would make sense to open another iron or chromium mine? The 20th Century command economies always got these things wrong, resulting in long queues for ghastly cars.

New Zealand has similar long and ghastly queues: at peak travel times, on the roads, where we do not use prices to ration access.

But that is only the most obvious problem. We also have all of the problems that any student of the old Soviet economies might expect. Without prices on road use, it is hard to tell how best to allocate funding. Should the next billion dollars go to better bus routes, light rail, or to add another lane of highway? Prices would help us make sure that we are not wasting billions of taxpayer dollars, year after year.

This week’s Government Policy Statement on Land Transport does some good by abolishing a few projects that looked to provide very little value for money. But it leaves the deeper problem unaddressed. There was a good case for petrol excise funding of the roads when administering Road User Charges across millions of petrol-powered vehicles was too difficult, and when congestion charging was even harder.

The world has moved on since then.

Funding transport through petrol excise hikes means that a poor family in the Far North driving a 1994 Toyota Emina subsidises richer Auckland commuters’ public transport. It is inequitable. And it is far less efficient than perfectly feasible alternatives.

But it is the kind of policy we get when we refuse to use prices. Could it be time to move transport into the 21st Century?