“Award for Ross Gittins,” The Sydney Morning Herald, March 15, 1991, p. 2.
The Sydney Morning Herald’s Economics Editor, Mr Ross Gittins, has won this year’s C.R. Kelly Award, given to the author of an article that best advances the case for a competitive market economy in Australia.
Mr Gittins’s article, “Why we must roll back the tyranny of distance,” published last May [reproduced below], was selected from 14 entries. It examined the excessive costs of monopolistic practices, unnecessary regulation in the transport system and the vested interests in maintaining these structures.
The award honours Mr C. R. (Bert) Kelly, a former Federal Cabinet minister and Member for Wakefield during the 1960s, regarded as a pioneer advocate of a competitive market economy in modern Australian politics.
Mr Gittins was in Canberra last night to receive his $1,500 prize.
Ross Gittins, “Why we must roll back the tyranny of distance,” The Sydney Morning Herald, May 23, 1990, p. 13.
You can say what you like about Geoffrey Blainey, but I reckon any man who can uncover “the tyranny of distance” can’t be all bad. As is my custom, I discovered Blainey’s book about 20 years after the rest of the populace.
(Actually, I read it while lounging on a beach at the French Riviera. It may have been odd reading for such a sophisticated location, but it was my kind of beach. All those boardwalks, deck chairs and umbrellas meant I could “lie on the beach” without ever coming in direct contact with sand, sun or water. Regrettably, regular visits to the Riviera are not my custom.)
Blainey opened our eyes to the remarkable way distance has shaped Australia. For us, the tyranny of distance has two dimensions: we’re a long way from anywhere else, and we’re holed up in cities scattered around the edge of a vast continent.
Transport is important for any country, but for us it should be an obsession. If ever a country needed an efficient system of transport, we’re it.
We need every mode of transport — air, sea, rail, road — in tiptop condition, so that we can make optimal use of all the choices available; so that our horses go on the right courses.
Yet the truth is that each mode is plagued by major inefficiencies. The organised robbery that is the two-airlines policy needs no elaboration.
Similarly, the costliness of our coastal shipping — compounded by the inefficiency of our waterfront and ports — has had a lot of attention lately. It’s got to the point where it can be cheaper to buy goods brought in from other countries than goods brought from other parts of Australia.
And a major reason why we do so little to raise the value of our mineral commodities before exporting them is the cost of shipping them around Australia for further processing.
Now rail. Our five railways systems are poorly co-ordinated, rundown and rife with overmanning and crazy work practices. Their productivity is roughly half that of railways overseas. Their deficit is about $1.8 billion a year.
That brings us to road transport. In one sense, road freight in Australia is highly efficient. The big freight companies run very tight ships. In fact, they exploit the oversupply of men wanting to lead what they initially imagine to be the romantic life of a self-employed interstate truck driver.
The trouble is that the road transport industry enjoys a hidden road subsidy running to more than $1.5 billion a year. That’s the extent to which the cost of the road damage done by heavy vehicles exceeds the fuel excise and registration fees they pay.
So, from that point of view, road transport is inefficient, too.
Why such a mess in our transportation? Why so much inefficiency wherever you turn? Mainly because, in different ways, each mode is protected from competition.
Preventing competition from third parties is the whole point of the two-airline policy. Even when that policy expires later this year, domestic airlines still will be protected from competition with international airlines.
The ships plying our coast have have grown ever more costly because the Federal Government’s policy of “sabotage” restricts the coastal trade to Australian-flag vessels.
As for railways, the State Governments give them special protection: over half the freight carried by rail has been subject to monopoly provisions preventing its carriage by road.
Looking across the transport modes, the picture is clear. Lack of competition breeds inefficiency and excessive costs; as businessman seek to cut their transport costs, freight migrates to one mode that is technically efficient and heavily subsidised: road.
To avoid high domestic air fares, more people travel by road coach. Apart from heavy bulk commodities, coastal shipping has lost most of its cargo to land transport. And the railways have lost most of their general cargo to road, Coal, minerals and grain account for almost two-thirds of the rail system’s freight tonne kilometres.
For a country with a chronic balance-of-payments problem, all this expensive inefficiency makes no sense. But the inexorable drift to road creates many other problems, of which we’ve become acutely aware in recent days. All the extra road freight and coach traffic causes more accidents and fatalities. We get upset and demand more spending on dual-carriageways. After all, we’re paying enough in petrol taxes. But our Governments are heavily stretched paying to repair the damage being done by all the heavy vehicles.
Apart from the problems of people living near airports, road is the transport mode which generates most noise and air pollution.
Road is the least fuel-efficient mode. And it emits most greenhouse gasses.
Clearly, something needs to be done. For economic, social and environmental reasons, the mess needs to be sorted out. Basically, we need to get rid of all the artificial factors forcing freight on to our roads. To limit the social and environmental costs, we should have no more freight on the roads than is economically justified.
Governments have begun working on the problem. Domestic aviation is to be deregulated — sort of. Coastal shipping and the waterfront are to be paid huge bribes of taxpayers’ money to raise their productivity over the next three years.
But as yet, nothing’s been done about rail and road. The Hawke Government has not decided how to dismantle the great rats’ nest of inefficiency, protection and subsidy. The position is so inherently complex as to provide each player with a seemingly impressive excuse for resisting reform.
Right now, the Government faces a stand-off which is as typically Australian as it is Mexican.
Thanks to the attention the matter received during the election campaign, the Government is under considerable political pressure to get results on the waterfront and in coastal shipping.
But already, that crowd is making its excuses to the Government, which is retailing those excuses through the media: why is everyone coming on heavy with us? What kind of delusion is it to imagine that the waterfront and coastal shipping is the be-all and end-all of micro-economic reform? If we were perfectly efficient, the difference that would make to the national economy would be tiny. The inefficiencies in rail are infinitely greater than any sins of ours.
OK, you may have a point. Why don’t we move in on rail? Let’s find a way to force the States to remove the monopolies which shelter so much overmanning and inefficiency. Let’s make the railways pay their way.
I can tell you now the reaction from the railways and their unions: What? You must be crazy! You’d take away our subsidy, but leave the road industry’s untouched? Our problem isn’t work practices; it’s the dilapidated state of our track and rolling stock. We’d never be able to compete with road. Huge increase in road freight traffic would cause pollution to escalate and road deaths to skyrocket. The social costs would be unthinkable.
OK, you may have a point. Why don’t we go straight to the heart of the problem: road. Let’s override the States and impose a proper weight-distance tax on heavy vehicles which recovers the cost of the road damage they do.
You can imagine the reaction from the transport companies, not to mention the roadblock-happy truckies: Why pick on us? We’re the one efficient transport mode the country’s got. What about all the inefficiency of the railways, their monopolies and taxpayer-funded deficits? Can you imagine what this impost would do to the cost of road freight? How’s that going to help the balance of payments? What would it do to inflation? We’d all of us go broke.
Dear reader, you see the point I’m driving at. The only feasible way to break this impasse is to work on all fronts. All the anti-competitive measures have to be withdrawn, not just some. All the subsidies — explicit and hidden — have to be rolled back together.
We have to tell the wharfies and seamen to stop whingeing and get on with it, because land transport’s next on the block. We need a package of measures which sorts out road and rail simultaneously, to minimise the inevitable arguments.
We need to phase in a tax on heavy vehicles at the same time as we phase out the railways deficits which allow crazy work practices to roll on forever.
We need to put pressure on the railways — and give a quid pro quo to road transport — by removing their monopolies over the carriage of certain commodities.
But, provided the railways come to the party on increased productivity, we do need to give them big bucks to bring their main lines up to 21st century standard. The obvious problem with all this, of course, is that “we” really means seven Governments, who can never agree on anything.
I fear that the tyranny of distance will blight our lives for some time yet.
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