Balance Research, Melbourne |
"the rail task will have to grow far more than now contemplated if it is to solve the road traffic problem." |
p e r s o n a l h i s t o r y
Michael Isaachsen studies the very long-term outlook for the
transport industry and the resources it uses.
Raised in Adelaide SA, Michael studied subjects in engineering,
economics and law and was in public administration for thirty
years. An early interest in transport has led him to devote much
of his life to the problem of excessive use of resources. At the
same time he has been involved in the development of industrial
history museums, currently the Melbourne Museum of Printing.
Through Balance Research, his unfunded, voluntary organisation,
he has made submissions to numerous government enquiries in the
area of transportation. His first submission dealt with the
Metropolitan Adelaide Transportation Study of 1966.
His work offers some challenging views of the future balance
between road and rail, and is centred on resource usage of
transport and total costs to all levels of the community.
Michael's submissions go to the point that for significant
improvement to the resource drain, rail will have to grow far
more than generally contemplated.
The total transport task in Australia and most other countries is expected to double in the next few decades. Depending on population and economic activity it will probably double again. Demand reduction from various causes is not likely to stop this eventual fourfold growth, but may delay it by some decades.
Four times today's traffic may arrive anywhere between fifty and one hundred years from now.
But the world - society - will not welcome four times the road traffic and will make it politically expedient for governments to use rail or other means of absorbing this growth in transport task.
The resources used by transport today and particularly in Australia are excessive and unsustainable. The energy, the land, the undesirable social effects are far greater than they need to be because of a market distortion which offers grossly underpriced inputs to users of the highway.
New means of transportation may well emerge in coming decades, but it seems unlikely that any new means will challenge rail for efficiently moving millions of people and millions of tonnes of goods.
So from where we stand today, I would have to say it will be rail which will save nations from the expected doubling and redoubling of their road traffic. And to achieve this, society (through its governments) will eventually do whatever is needed to send the right signals to the industry and its end users.
The right signals will lead infrastructure owners and operators alike to provide far more capacity and far better service than is currently imaginable.
Urban rail will again be a freight and passenger operation. Trams may run on rail tracks - and freight trains may ply the tram network, too.
Rail tracks serving country areas will once more carry a comprehensive passenger and freight service: their dimensioning will be based on total demand in the corridor, not rail's historic share.
Interstate tracks and highways will be regarded as such only where they actually cross a border. It will be recognised that traffic on any track can be on an interstate journey.
Highways will be improved for safety and efficiency but not usually for capacity. A corridor whose highway is congested will be relieved by having a railway improved or built.
The national government will not fund highways, nor railways. But they will offer incentive funding to States to provide resource- efficient solutions. They may also provide funding for States to 'undo' the ill-effects of past policies of any government including breaks of gauge and the former provision of unlimited free road-space. There may be a small program for interstate road and rail links within a certain distance of a border.
All transport users will compensate the communities through which they pass for their emissions and danger.
It all sounds ideal, doesn't it?
These outcomes will only become economically feasible for governments when they study the true and total cost of transport. And they will do so in response to societal pressures becoming politically irresistible.
Through these studies, they will expose transport-related resources used by all levels of government, all departments of government, and the wider community. And critically, they must separate marginal costs from average or network costs.
Parties will come forward to say that existing subsidies to one mode or the other are excessive, or illusory, or economically unsound, or essential to keep the earth spinning. Consideration will need to be given to claims about subsidies which exist, or should exist, for other modes, and to roads or railways which are not in competition but serving certain communities or certain traffics.
Decisions must be made, once the real levels of subsidy are revealed, about continuing levels of road and rail subsidy. There are arguments for reducing overall subsidies to all modes in the name of demand reduction.
In the case of road, reducing subsidy would involve multi-part road user charging on all vehicles and on most levels of the road hierarchy.
The opposite arguments are made about not suppressing demand or not increasing costs to industries and travellers.
Whatever that choice, governments will see the economic folly of allowing greater subsidy to a mode which uses more resources: inevitably they will at some stage equalise subsidies as between the modes. They may be equalised at lower levels, so maintaining parity with today's effective subsidies, or at a higher level, or at a level which will gradually rise.
But all this effort and expense will come to very little if governments and the industry fail in one respect: to develop the necessary attitudes. To ensure a community-wide uptake of sustainable transport, they will need to provide effective and long-term education on transport issues. Without that, transport users will just tighten their belts, pay the extra costs, and keep on driving.
THE ROLE OF RAIL
What is the role of rail? In the long term, the role of rail is to enable a slowing of the rate of growth of road traffic. To achieve this, rail will again become the main and natural form of passenger and freight transport for both short and long distances, with road as a handy back-up.
Planning of transportation - strategic planning - will not in the end be about profits, nor services for those who have no car. Those are but steps along the way. The strategy behind transport, whether privatisations and franchises or government services, will be to limit the demand for new road capacity and the various effects which follow it.
That's what society will require of their governments: plan the railways to control road growth, first and foremost.
Dearer inputs to road traffic are on the way: there's plenty of evidence of that. Will travellers and shippers change to rail, or merely rework their budgets and pay the extra cost? They will change if rail is ready and waiting.
FOUR TIMES THE TRAFFIC
Let us look ahead many decades to the time when the nation's total task for general transport reaches four times its present volume. Excluded from this consideration are the specialised, largely non-contestable tasks of transporting mine outputs.
With today's enlightened governments beginning to recognise the importance of rail, many in the industry now seem to expect that rail will manage to retain its share of the growing task, in percentage terms. Accordingly, in 50, 80 or 100 years, rail traffic could rise to four times its present level. Of course in some domains it may exceed this while continuing to drop in others.
And if rail exactly maintains its share, the total road task will also reach four times today's level.
Such a large road sector will be a problem for society. There is already some public and political awareness of the looming problem. There is a general perception that rail will be part of the solution, but no perception of just how much rail must grow to prevent that blowout in overall transport resource usage.
It seems likely that there may be no new policies until the wider public gets the scent of the problem. Then it will become a major issue and a political imperative.
At the present time, the balance of political forces are still tending towards new highways and cheaper inputs for road users. But people, when asked, firmly reject a future with four times the road traffic, even 100 years out.
BALANCE RESEARCH
At Balance Research, I am pondering the various options for governments when this issue of road traffic turns political, and how the transport industry will be affected and might react.
If society wants a different outcome, such as a lower (or zero) road traffic growth, rail would have to grow far more than is currently contemplated. This could be achieved by a combination of pricing signals and attitude changes.
Of course it would be ideal if governments would act to reduce the growth of road traffic before it becomes political. We've all been waiting for that.
Balance Research is developing what it calls the Inter Government Transport Strategy, intended to be put before the three levels of government. It includes a research strategy, some possible financial strategies and transport improvements and a public education plan.
SUBSIDY DEBATES
A number of commentators including the Productivity Commission's interim report urge us to steer clear of government funding for railways, arguing against making subsidies to rail which would counterbalance those to road, with the exception of some 'catch- up' investment in interstate tracks.
I would have to say that such an approach would lead to continued production of new highways "on demand", which would continue to be offered free of direct usage charges to all comers.
This leads to a brief mention of the cost, to governments and the community, of transport activity and the revenues to governments from fees and fuel taxes.
The total fees and taxes do indeed exceed the total of Federal and State outlays on road building and maintenance by a healthy margin. Much is made of this by persons who wish governments to continue along the present path.
But when you add in all the other costs now being revealed it becomes certain that the balance truly falls the other way. Adding in any kind of return on the stock of road assets would make an even greater shortfall in road revenues. This is at its clearest if marginal costs are examined.
The marginal cost of a new tranche of task going to rail rather than road relieves the community of substantial resource drains, both cash and non-cash. This is a critical fact to be made more widely known.
Governments can access at least some of these savings and return them to the pool of available transport funds.
Possible mechanisms for subsidy equalisation would include many variables. Probably the States would make the payments, with some funds originating from the Federal government as "Transport Funds" instead of "Highway Funds". A trade-off would be required between capital outlays and present values of operating expenses: a highway capacity program's capital cost may be avoided by augmented operations of a railway service.
To make this work, the three levels of government would need to work together.
Local Governments seem to be the most adversely affected by the shifts from rail to road. Their revenue base does not enable them to mend the roads being damaged by trucks. And nor would it enable them to contribute greatly to the cost of railway facilities or operations. Their most valuable contribution may well be to coordinate the change back to rail at the local level, the level of individual travellers and businesses.
Subsidy Equalisation Payments could go to infrastructure owners, railway operators or perhaps to the end users who choose rail when they could have used road. These arrangements might or might not result in lower prices: better services may be more important to some users.
One particular scheme which might be considered I have called Sunk Cost Pricing. The money spent on a highway and committed for its maintenance could be called a 'sunk cost'. So governments could sink some funding into improving or building a railway and paying for an agreed basic level of operation for passenger and general freight services and make a net saving. The users of these would pay only the marginal cost of their usage: their revenues would cover the cost of increasing the service when needed.
THE GREATEST CHALLENGES
The greatest increases in road traffic, in absolute terms, will be in metro areas. Growth in metro freight tasks and non-CBD- oriented personal travel will be very large because these are already the largest domains (other than those mine-output flows excluded from this study).
URBAN FREIGHT GROWTH AND STRATEGY
The greatest part of the national freight task, I understand, is intra-urban trips and the urban ends of longer trips. Rail's share of these is possibly less than one percent.
Developing policies enabling rail to absorb the growth of this traffic will be a challenge, but society will ultimately require their governments to find a way.
It is great to see the beginning of rail services between ports and "inland ports". And of course there has always been some quantity of country-to-metro movements in each city, largely bulk items. These however represent a small fraction of the total cross-town movement of goods.
You can see enormous quantities of goods on suburban roads, of a nature that could not really be so urgent, that could in due course be moved by rail. Think of waste materials, petroleum products, building materials, regular loads of industrial and retail goods, empty containers, containers to and from ports and rail and farm products and you've thought of more than half the heavy traffic already. Much of this could be containerised if it's not already.
There is of course a high demand for JIT services. This is often quoted as a reason why metro rail will not break into the industrial market.
Some of this JIT and its need for instant cross-metro delivery may well be justified regardless of the cost of the transport component. But there is I feel a 'JIT culture' largely predicated on low input costs to road. Some JIT demand will evaporate when road costs eventually rise faster than rail, but only if rail is ready to provide an appropriate service at the critical moment in the life of each customer.
Cross-town overnight intermodal services and siding-to-siding services, at the right price, will replace some of this previous JIT task.
It is my observation that overnight carriage of containerised loads from suburbs to or from all kinds of transport terminals (including rail, sea and air), container depots, major factories, and indeed between suburbs, will eventually become feasible and meet the needs of many industries.
If these overnight services are successful, some same-day services could be provided, subject to capacity of the tracks and ability of these services to move at the same speed as passenger traffic.
The loss of suburban rail freight was an accident of history - bad timing, not the unsuitability of rail, as such. If forklifts, pallets and containers had come to local movement of goods twenty years earlier then many suburban freight stations would possibly still be working today.
URBAN TRACK CONFLICTS
What does this mean for Urban Rail? It means that freight movements will need to go wherever there is industry. Most lines will then be joint passenger and freight.
Some people don't want to hear this, quite understandably. Especially urban passenger operators! Capacity and conflicts will perhaps be a problem at first, and may really test the balance between planning for relieving roads and planning for profitable railways.
But future governments, on behalf of the whole community, will need to limit road traffic growth and will require these urban freight services to succeed. When they receive a clear view of the long-term options, they will invest to provide extra capacity on rail and, fortunately, this will usually be cheaper than increased highway capacity.
Public Intermodal freight stations will then be found within a few kilometres of any industrial location in the metropolis, with as many as possible located within such zones. And the larger industries will once again be rail-connected.
Value-adding logistics operators will receive wagon-loads and container loads of products every evening from a number of producers and marshal them into trains for a number of buyers. A major user of various products, now receiving them in many road trips per day, will receive one trainload per day early in the morning.
Road trips will of course still be used when goods could not be ordered in time, for example. But they will by then know the true and total cost of road service because pricing signals will tell them.
URBAN PASSENGER SERVICES
And for personal travel, perhaps 80% of trips never go near the CBD. By the time the fourfold increase arrives, and if road capacity has not been increased to match, cross-town railways will have been provided between radial lines in many Australian cities. Gaps in radial routes will probably be filled in.
Provided that such increased access is accompanied by appropriate improvements in operations of rail and connecting services, governments should be able to absorb most of the increased load without new highway capacity.
When I say "governments should be able" I am of course implying that the choice of mode would not in the final analysis be left to the market and the companies concerned. Rail companies are not in a free market as long as road space is provided with no direct charge, and there are no charges for societal damage.
Travellers must eventually come to be confident that transit will meet their needs. This will require longitudinal education programs and many years of satisfied usage of the improved system which must reach, by one means or another, into every residential and industrial neighbourhood.
This implies, of course, a vast increase in bus services. Bus operational hours would need to match those of trains. Smart Buses, a blend of bus and taxi, would probably cover some of this.
To meet the needs of many travellers for a car for carrying goods, innovative solutions would be needed. These might include shoppers' parcel services and commercial travellers' sample-kit service, for instance.
I expect there would be at least two million families in this country who have a car only because they need it. They really would prefer to be without a car, but in present circumstances of transportation they cannot avoid it. And there would be as many again who, while they would always choose to have a car, would be happy to use a bus and train if it was a delightful experience to do so.
And then there are those who use transit but are saving up for a car because transit is not giving them what they want. And finally I'm sure there are those who use transit and are quite satisfied.
THE LIST OF KILLER REASONS
An interesting study could be made of all the factors which make users of transit say to themselves "I wouldn't use this service if I had any other way". In my everyday travels around Melbourne and Sydney's systems I regret to inform you that there is an endless list of things that would turn you right off.
Trains running a few minutes late is not, usually, one of them. You can get used to mild delays. There are many reasons, often outside the company's control. People can accept that. But trains leaving a station before their advertised time - that's another thing. That's too much like a breach of faith. Yet I often find that managers don't believe it happens or that it's important.
But communications are the greatest weakness. Information is not always delivered to travellers in a timely, accurate and meaningful way, or at all. This is often because railway staff themselves are not informed. Someone 'up there' must know that there is a problem, but has not been instructed in the importance of passing this information.
Provision of alternative transport during track closures or breakdowns is often problematic. Although a lot of effort goes into planning for these, it has been my observation that travellers are often in the dark and staff may be too. Bus drivers not knowing the route and where to stop is all too frequent, for example. Perhaps more managers should be on the ground at these times, and in the bus.
Other problems include unsatisfactory interchange arrangements, and anomalies or inflexibility in ticketing.
In the scheme of things, these are minor problems, requiring training and motivation, or managerial effort. But their potential to keep cars on the road must not be ignored!
RAIL RELIEF FOR HIGHWAYS
It would be possible to provide relief for an overloaded highway by funding improvements to a railway in the same corridor.
Of course, highways will continue to need improvement in the future. But the fear in some quarters is that in busy and growing corridors, over the decades, we will need to add new lanes after new lanes, and new freeway after new freeway.
To avoid this, capacity shortfalls in those corridors could be addressed by adding capacity to a railway, or building a railway, while the highway is improved in terms of condition and geometry but not capacity. This strategy will lead to a net improvement in transport accident rates because a smaller proportion of the total task will be using the highway and that highway will be to a better standard.
The remaining level of congestion on the highway will depend on the quality of rail services. With mediocre service, travellers will still prefer to drive and will keep off the highway only because of congestion. If the rail service is fast, frequent and reliable and with good connections, road congestion will be less.
GEELONG HIGHWAY EXAMPLE
Just as an example, consider the contentious highway between Melbourne and Geelong. Much of it is two lanes each way. It is somewhat run down and the traffic load is excessive for the layout. It was in the news because the Federal Government was taking too long to decide to support its upgrading. The project is now proceeding.
The Victorian and Commonwealth governments are each spending over $100 M to bring it up to today's standard and increase its capacity by one lane each way. The extra lanes account for around $100 M, I understand.
Service levels will of course improve with the added capacity. But after a few years it's most likely that there will be pressure for a further lane to be added due to the reappearance of congestion. Already, new regional highways are being proposed to feed into it.
As an alternative to spending $100 M every ten years or so for increased highway capacity, governments could collaborate on providing intermodal links between the two cities. For a start, much of the goods are going to/from the Port of Melbourne or the long-distance rail facility near the Port. These could be handled at an intermodal site in Geelong and possibly provide timings about the same as direct road, but obviously in a "lumpy" fashion, a few times a day.
Other heavy traffic between the two cities could also be handled intermodally but in this case there would be a timing penalty. So it would become an experiment in measuring elasticity of demand for direct service and time-saving. But at the right price, some shippers would decide to accept a slower service so long as it is reliable.
For others, no cost savings, not even free service, would lead them to accept a slower schedule. But it will be essential for them that these long-term rail improvements succeed in syphoning a lot of traffic off the road.
An improvement to the passenger train service, already quite good, would also be needed.
CONCLUSION FROM EXAMPLE
It is the opinion of Balance Research that it is not feasible for the community to be adding capacity to highways whenever they become congested. It really is necessary to allow roads to congest and provide railways to absorb the peaks and overall growth. The community in 100 years will not thank us if roads like this one are allowed to grow to, say, five lanes each way, along with the needed extra capacity on local roads at each end.
Eventual addition of an extra track together with up-to-date trains and intermodal freight will have the same benefit for less capital cost, less land, less trauma and less pollution.
Highway improvements would still be needed, but they could then concentrate on upgrading to better geometry for safer operation rather than expanding capacity.
THE ARITHMETIC OF GROWTH
The arithmetic of growth is a way of seeing just how much the rail system might need to grow if it is to fulfil its role. For the sake of the exercise, we take zero road growth as the target outcome to be maintained to the year when total task has reached four times today's level.
Let us assume that this year, in a corridor of interest, the total transport task is one hundred units, of which rail has a certain percentage and road the rest. By the time the total task has doubled and redoubled, there will be four hundred units. The road share cannot increase, so rail has the four hundred less the original, constant road number.
For example if rail has 25 now, and road 75 units, then in that future year road will still have 75 and rail will have 325, which represents a thirteen-fold increase. On a corridor where rail now has just 10%, or 10 units, it will have to grow to 31 times its present traffic to achieve a 'zero road growth' outcome. Where a corridor has no rail at present, take a look at the road traffic. Imagine all that traffic on the rail. Then multiply it by three. That's the theoretical rail load when the total corridor task has reached four times.
SHORT LINE OPERATIONS
A railway operator in receipt of assistance from governments to take part in controlling road traffic growth should perhaps be under some obligation to provide certain fundamental services to all comers. This might be called a Universal Service Obligation.
The effect of this would be to assure companies wishing to operate a short-line service that they would be able to interchange their loads with the USO operator at wholesale rates. The accounting for this would need to be 'seamless', and certain standards of service would be obligatory.
Another duty of the operator who holds the USO franchise for any line would be to handle single wagon loads, and perhaps smaller loads, to or from any person or company.
Any additional costs to the USO operator would be met in part from a USO levy on operators in the same corridor who did not wish to provide that service. This would be similar to the USO provisions of the Telecommunications Act (Australia).
EFFICIENCY IMPROVEMENTS - ARE THEY AN ILLUSION?
A railway's efficiency improvement seems to come from two main sources. Firstly there are ways of increasing productivity of labour and of equipment.
Secondly the bottom line can be improved by ceasing to handle tasks on which the return, after these improvements, cannot be brought into the black.
A probable reason for this is price pressure from road competition. Many would then say that this is a task better suited to road. But from the national account point of view, those tasks are now using more resources, albeit unpaid, on the highway. It would save resources, and possibly government funds, if the company were 'induced' to handle such traffic.
CONCLUSION
The long-term outlook for controlling road traffic growth with railways is excellent. Road input prices, especially energy, will favour this. Government signals to track owners, operators and the travellers will almost ensure its success. Yet failure to take care of how the traveller feels will perhaps make the traveller accept the higher cost of motoring and bring on the day of four times the present road traffic.