Balance Research, Melbourne |
THE CHAIRMAN: Thanks very much, Michael. And your promise to help us think ahead and look at that future focus was very much there. The concept of energy prices rising at a great rate, and the term you used, "the relentless growth" of the world economy which is something were are not always so ready for. I know in the area of exports we often talk of trying to double the amount of exports, and I am fond of saying that I hope we do, but I don't know how we're going to get them there.
But that does highlight the resource issue, and also the issue of where are the governments' and industry's respective roles and what the options are that they can do.
We've probably got time for a question or two.
MICHAEL ISAACHSEN: I would love to!
ANDREW RANKINE: The ATA has been very successful in lobbying governments to make sure that the road network, and the need to spend a lot of money on it, continues to roll on. At this stage of the game, most rail operations, being still in government hands [so unable to make pressure]. How do we change that balance?
MICHAEL ISAACHSEN: By the pressure not coming from the railway industry, particularly the government-owned operators, but from the community saying that they don't want to see the road traffic growing for ever, and becoming political. And the the government will have to say "well, how can we look at this?" I agree with you, the rail operators that are government-owned aren't going to say anything. I think that the [new] private operators have already said a few things and I think it has made a slight difference.
VOICE: No doubt about that!
MICHAEL ISAACHSEN: That trend will almost certainly continue.
MICHAEL ISAACHSEN: He's got three reports on his desk. They all say the same thing.
ALEX FERGUSON: Do you have any insight (or do you, Paul, sitting in that department have any) as to where that debate's likely to go?
MICHAEL ISAACHSEN: All three of the reports (the Parliamentary report, the Productivity Commission report and the Prime Minister's Committee report) are all calling for that sort of investment as a once-off, with Federal money being spent to catch up. Of course I couldn't argue against that but I think it's very unlikely that the Federal Government will come up with that sort of money. They will say that the responsibility for transport is a State issue (which it is) and the federal Government may perhaps dream up some kind of incentive scheme to encourage the States to go ahead and trade-off ... to make road funds into transport funds and then say well you spend them on whatever's most efficient. And if you do, we'll give you a little bonus. I don't think the Federal Government is going to go much beyond that.
MICHAEL ISAACHSEN: I think there is a division within the community, even within one individual ... I like driving my car, too, but I don't like you driving your car past my house!
MICHAEL ISAACHSEN: There are various kinds of demand reduction, but unless the demand reduction is such that there is zero growth, you'll still get to four times one day: it might make it twenty years later.
VOICE: It may turn out to be a hundred years away.
MICHAEL ISAACHSEN: Well, that's what I think: seventy to a hundred years.
VOICE: There are two issues here. On the interstate transport link, what is the consideration of moving freight by sea, as an even more energy efficient mode?
MICHAEL ISAACHSEN: absolutely. Because I see that if the road gets priced out of it by the various factors coming into play and it goes onto rail, rail will have to have quite a substantial expansion of its interstate links and there's certainly room for quite a bit of that traffic to go by sea if the shipper will stand the additional delay and should reap a price benefit.
VOICE: The other issue is the actual energy limitation. I mean the whole thing, a lot of the vision for the future is predicated on oil going up in price therefore cost of energy, cost of movement will also go up. but who says that that's the final outcome? That may just be an intermediate step. Maybe there might be a hump for the next fifty years: maybe we might find something else that turns out to be more energy efficient. In that case a lot of the energy-related demands don't actually become the drivers of change.
MICHAEL ISAACHSEN: Of course, if there turns out to be some new source of transportable energy that can be used in a road vehicle that becomes available, that changes the dynamics of it somewhat. But the energy and pollution are not the only reasons for wanting to see this change.
If the energy price does not skyrocket, it will change the quantum of this effect but it won't change the overall push to avoid new lanes after new lanes.
VOICE: So the change would then be predicated on congestion?
MICHAEL ISAACHSEN: No. The pressure for change is predicated on resource use. And the resources are not only the fuel but the "community resource", that resource which is used up when you pollute my neighbourhood with noise or danger. Those are community resources and their prices, we don't know what they're worth, but they're not worth zero.
There's a whole heap of resources that get used up by all kinds of industrial activities. But here we're faced with two [activities] that do the same job, but one uses a lot more [resources] than the other. If the price of energy doesn't go up the other resource uses are still there.
One of the things that has come through over and over again in all the papers is the extent to which transport, logistics and intermodal issues are not just isolated: they are integrated as part of our society and economy and it's very difficult to separate them. Whether it's related to energy and resource use, to the environment, to community perceptions, noise, whatever, they all have a fundamental impact on what actually occurs.
Listening to that last debate, I kept wondering that if our energy prices do increase to that extent, whether we'll start having all the consultants who have been telling us about "just-in-time" and how good it is now telling us how warehousing is a really great option, with low emissions and doesn't destroy the environment.
FRIDAY 5 NOVEMBER 1999 at 1.30 p.m.
A questioner (JOHN?) asked, among other things, about the role of governments in the transport chain.
PHIL ROSSER (Sydney Ports Corp) made a brief reply, then ...
MI: I think that as governments are very involved in the infrastructure of the actual transport, be it road or rail, they've got a responsibility now, and even more so in the future, to very carefully investigate the balance between road and rail. Obviously there are plenty of tasks that will always need to go by road, but there are tasks that are going by road that could be going intermodally, except that the rail leg of it is either not made available or is only available at a price which doesn't add up.
Governments are beginning to express an interest in changing the balance, so that the road traffic doesn't grow so much in future as it looks like, but they're not really doing anything positive towards this, just a bit of talking.
I think there are avenues by which government could begin to make the path easier for rail operators in terms of the costs they face vis-a-vis the costs that road operators face. The price of those inputs to the rail operation is high enough that only certain classes of transport task can go by rail, but that barrier could come down quite a bit if the government decided that it was going to save money in the long run by not having to build more and more roads and expand the capacity of roads, and put a bit of that money into helping rail operators (and I don't mean government rail operators, I mean all rail operators) to bring the intermodal transfer point closer to the shipper.