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Sun, 05-September-2010

Is transport a Public good or a Market product?
07 May 2004

Financial constraints and changing needs of society are affecting many countries' approach to transport supply and demand. A vision is necessary for the future.

In the modern world, budgetary considerations are the key factor of defining society needs, as is a phased approach to meet them. Low economic growth and financial constraints are just two factors to consider. Much of the optimism of the past years has been replaced by a rather gloomy realism.

Kalistratos Dionelis
The new era of the modern state leads to new definitions and to new questions. It is also a state of contradictions. On one hand we have the State in permanent pursuit of social targets and priorities. On the other, we have the State - Manager who knows that efforts are urgently needed to move its balance sheet from the red.

I believe policy makers recognise that social stability, economic growth, and environmental protection have to be endogenous parameters in the complex transport matrix which will have to prove its worth as does a well coordinated mechanism, serving the citizen's needs.

All these have to be seen not as a code of fixed principles but as a dynamic roadmap. Interpreting the term 'transport' in a simplistic and purely mechanistic way calls these fundamental principles into question. Policy shapers are never sure how to apply the transport instrument and to which direction. The situation becomes even more complicated when considering that this priority list changes dramatically when moving from one European region to another.

This is mainly the answer to the question of why policy guidelines prefer to tackle the transport area in a fragmented manner. Infrastructure, safety, intelligent transport systems, environmental requirements, taxation and charging policy, fair competition, congestion, are all important and vital parameters, but seen in a fragmented way.

Why? The reason is a simple one. We do not know how to deal with transport. What is 'transport'? Is it a public good or a market product? Or is it both? And if it is so, then where does 'transport' stops being a 'public good' and becomes a 'product'?

In aviation, maritime, rail, even in the professional road side (the sector of the heavy lorries) the answer is easy and immediate: in these domains, transport is a market product.

However, the road sector is a sector serving the needs of the citizens, so the issue becomes more complicated. The supply side is covered by the 'state' and the demand side is the 'citizen'. Unfortunately, in economic terms, both, 'state' and 'citizen' are not well-defined parameters. The link connecting the two entities is the tax system which is not always the most fair way to organise a modern State. In a rather simplified way, the society (also an economically undefined term) believes that the 'State' must spend ever more for the 'public good' while 'citizen' could and should always ask for more 'rights' and 'services'.

One of the peculiarities of the road transport sector is the fear of all the interested bodies to call the sector an 'industry'.

When addressing the road transport as an industry we already inject a realistic, market oriented, approach based on the balance of power between the concrete and defined terms 'supply' and 'demand'. The commercial aspect of the road industry does not necessarily contradict the state's priority to meet the citizen's concerns and requirements.

On the contrary, under the new market approach, the previously obscure and undefined political messages are now translated as clear and concrete socio-economic objectives. Terms like 'social development', 'sustainable transport', 'harmonised network', 'harmonious development', etc, stop being just qualitative messages and turn to become quantitative priorities of a State functioning as a modern manager, respecting the priorities of its citizens while translating them into real social market requirements.

It is a fact that, in the past, the terms 'public interest' and 'private capital' were, in broad terms, mutually exclusive. The cumbersome, inexperienced and tardy public procedures accompanied by the absence of a legal framework were never attractive to the private industry which faced the absence of any realistic possibility to manage efficiently the political, economic and financial risks.

In the following years the guiding principle of the legislative framework will be the opening up of the transport market. If no action is taken, there will be a permanent contradiction between society (demanding ever more mobility), the economy (working for more and more growth), public opinion (becoming increasingly intolerant of chronic delays) and environment (falling in a degradation spin).

ASECAP is the Brussels based organisation representing toll operating companies across Europe Published in World Highways, April 2004 (Interchange)

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