Transport tangle deepens with channel deepening

Economist Kenneth Davidson observes that quality of life and environmental sustainability are now the major contributors to economic growth. Whether a city is situated on a port or not now has little to do with its competitiveness. The value is added where the containers are packed and unpacked, observes Mr. Davidson. We certainly aren't going to move away just because a few containers might arrive by train rather than by ship are we - Read on!   

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Transport shifts the broadband equation

Kenneth Davidson
April 10, 2007

The Age

MELBOURNE can no longer claim to be the world's most liveable city. It has slipped down to No. 17 in the rankings, according to Mercer Human Resources Consulting, and into the second rank after Vancouver, according to the Economist Intelligence Unit.

Both firms specialise in providing businesses with strategic information to guide investment decisions. Liveability has assumed prime importance in determining the competitive strengths of cities.

Quality of life and environmental sustainability, rather than location or low taxes, are now the major contributors to economic growth by making a city more attractive to investors and professionals.

Apart from gold, and the built and cultural environment it sustained up until the 1990s, Victoria's key competitive strength has always been its central location in terms of the bulk of the population in the triangle bounded by Sydney/Newcastle, Hobart and Adelaide. This made Melbourne the centre of manufacturing and the home of the Federal Government until the last of the departments shifted to Canberra in the 1960s.

Now that the cost of communications is rapidly falling towards zero with the introduction of new information technologies, and transport costs have become less and less important with the revolution brought about by containerisation, there is little reason for most kinds of production to be undertaken in any particular location.

Given the critical importance of high-speed broadband to both business and leisure activities, the Victorian Government should look at innovative ways of breaking the regulatory impasse between Telstra, the Government and the Australian Competition and Consumer Commission. The only thing stopping Telstra investing in fibre-to-the-node is the fear that, in the name of competition, Telstra will be required to make the network available to its competitors.

As I understand it, state governments are not bound by rulings of the ACCC.

Providing Communications Minister Helen Coonan doesn't act first to break the impasse by easing the regulatory environment to guarantee Telstra a reasonable return on the fibre-to-the-node investment, it shouldn't be beyond the wit of lawyers working on behalf of the Victorian Government to come to an arrangement whereby the Government assumed ownership of fibre-to-the-node in Victoria and Telstra assumed responsibility for raising the estimated billion dollars cost of the investment and established, in partnership with the owner, an interconnect price that returned a reasonable return on the investment.

Containerisation is based on a very simple idea: to move trailer-size loads of goods seamlessly among trucks, trains and ships without the expense of breaking bulk. So goods going from Bangkok (which is not a port) to Dallas (also not a port) are arranged by shippers in one seamless exercise.

As a result not much of the value of the transaction attaches to the ports through which the container transits. The cost of moving high-value non-perishable goods around the world from factory to warehouse is about 1 per cent of the goods, compared with 10 to 20 per cent of the same retail value before containerisation.

This suggests that whether a city is situated on a port or not now has little to do with its competitiveness. The value is added where the containers are packed and unpacked.

For Melbourne it opens up the question of whether the estimated $800 million cost of the Port of Melbourne channel-deepening could be better spent improving the social and economic infrastructure of the city.

If the business is here, the containers will arrive. Does it really matter if larger container ships have to reschedule their loads so they don't arrive in Melbourne fully laden or the containers come via Sydney, Portland or Westernport or the Port of Melbourne loses the through-container-traffic to Adelaide or Brisbane?

The impact on the environment of Port Phillip is critically important. A sensible evaluation of the economics of the alternative to channel-deepening might suggest that the environmental risk is unnecessary.

Of more immediate concern is the projected increase in containers travelling across Melbourne.

According to a study by the Bureau of Transport and Regional Economics, articulated truck traffic across Melbourne is expected to increase 106 per cent between 2002 and 2020, based on existing trends.

Melbourne University transport planner Paul Mees says the freight carried by larger trucks tends to be bulk loads, following predictable routes — notably to and from the port and interstate highways — creating a significant potential for modal shift to an improved rail-freight system.

Given that liveability should be the priority, to get containers off the streets and on to rail should be a higher priority than channel-deepening.

Further evidence that Melbourne 2030 has been downgraded from a planning to an "aspirational" document, the aim to lift the share of containers shifted to and from the Port of Melbourne by rail has been sidelined.

According to Mees, Sydney has plans to increase to 40 per cent the share of freight carried to and from ports by 2011. While Sydney is closing down docks without rail access and establishing intermodal freight centres in key suburban areas, Melbourne's main freight terminal at Webb Dock has no rail access, nor has the planned wholesale market at Epping.

By getting freight off road and on to rail, most of the justification for building more tollways (to get traffic off arterial and suburban roads) disappears.

The only justification for the $2 billion East-West tunnel link between the Eastern Freeway and the Tullamarine Freeway is to take trucks away from the city.

It is of no value to the bulk of commuters trying to get off the freeway and into the city through the peak gridlock in the approach to Hoddle Street.

 



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