Tag: Economics

#174 Patriotism or pride in Treasury’s economic policy proposal for transport

PARIS, FRANCE: Landscapes are tied to transportation systems, infrastructure and services. Does the long distance train not pride itself on the sights seen through the glass pane? Do passengers admire the ingenuity behind structures sculpted by the human mind? Where will the value of mobility reflect its social, cultural, economic and physiological effects be embodied in the conversation? Impacts and interactions which Gross Domestic Product alone can not capture, or reflect.

A rant

We need policy agents who are keen to get into the genuine and tactile side of transport policy implementation: nothing pretentious. This is the first call. However, there are numerous policy actors in the National Department of Transport who are active, robust and rather intensely endowed with crucial insights and expertise. Many of which tend to be relegated into the abyss of underreported progress, attempts, successes, challenges and failures. Hearing more about the heroes who actually navigate the highways, streetscapes and settlements, bending strategic frameworks to reflect public interests is much more important today than before. Public policies, especially in transport are desperately in need of debate and interrogation outside of the echo chamber or red-tape bureaucracies at the underbelly of transport behemoth. Yet, the first policy proposal which takes a peculiar and shines light directly towards transport economic regulation seems to have gone without rigorous analysis by transport officials, as it emerged from National Treasury’s Economic Policy division. This is a serious problem.

The mobility and access imperative

Transport economic policy is a prerequisite for many of the targets and policy positions proposed— but the same could be said about land-use, skills and industry. It is this reinforcing loop which the policy proposal just did not tap in to as rigorously as I’d appreciate. When submitting the brief comments, a number of issues were reserved largely due to a need for deeper analysis, which may add value. In the thought process, a few of these questions, points or hypotheses (policy positions) came up: 

How long will it take for ministries to let the public relations go and lean into the rigour of strategic interventions and policy prioritisation?

There is no transport economic regulation without deeply reforming the private and public passenger transport ownership, labour, service, industry and systems markets.

There is no transport economic regulation without intervening on the freight transport sector’s industrial, labour, and market practice regulation.

There is no economic policy without transport and logistics systems serving as feeders and distributors of talent, capital, and development. 

We’re in a country where the passenger rail experience in 2019 is no different from the narrative described in the 1950’s. When I read this policy position, it made sense but lacked a degree of sentimentality and a connection to the human elements associated with making economic policies work. For example, we’re still pivoted toward domestic production measures to propose an economic position. 

Comments to National Treasury’s policy proposal

  1. Effective economic regulation for transport industries is dependent on the appropriate measurement instruments and metrices. The use of a single market share variable, such as million tons, dilutes our propensity to observe scale economies, and other dynamics. While electricity can be observed in Kilo Watt Hours, which is an activity unit measure, the transportation product is measured in ton-kilometres, and passenger kilometres. Using the appropriate measurement units reveals two things in the freight sector: (a) ton-km market shares are different from ton only market shares between road and rail; and (b) policy priorities from various public outputs are neglected in the policy proposal[1].
  2. Efficient interamodality and intramodality facilitates economic competitiveness if each mode is utilised within its competitive advantage with respect to the value and nature of the consignment or passengers. The policy proposal hinges on “road-to-rail” and pricing road freight appropriately; however, it is equally important to account for the economic benefit of the product each mode produces. A similar case was made for the Gautrain through its economic assessment by KPMG. Furthermore, a prerequisite for efficient inter and intramodality is the modal interchange facility as a source of energy savings and cost reductions (Havenga, et al., 2012). Gauteng’s most recent call for proposals for a network “truck-stops” combined with the logistics hubs emerging in conjunction with Special Economic Zones (i.e. Tambo Springs, Dube Trade Port, Musina-Makhado etc.) are one side of the coin. The passenger market is also dependent on the utilisation and location of public transport facilities[2], with respect to their impact on the networks they are part of[3].
  3. The role of the economic regulator should largely be a function of the economic policy positions outlined in the various intuitional agendas of public entities. However, the policy proposal makes mention of the information and technology benefits, it does not account for the information economics that require regulation as well. Various organisations, entities and applications exist and their economic regulation is essentially part and parcel of the future of public policy. This is the core risk for the longevity of mobility as a service and commercial transport applications. The policy position does not reflect this issue in it’s true form. 

[1] In the passenger transport sphere, these include the National Taxi Task Team’s recommendations; the arguments defining the current transport economy in the De Villiers Report; the most recent policy position from the Department of Energy in terms of Shifting Cargo from Road to Rail, and the saturation of the road freight market against the backdrop of a need for Secure Roadside Stations. 

[2] See a paper on the Gautrain’s impact on property development in other work (Mushongahande, et al., 2014).

[3][3] In the minibus taxi case, one study attempts to learn from the rapid responsiveness of these operators to changes in travel demand (Neumann, et al., 2015).

*Thank you for getting through this one. It is partly what was submitted as a comment to the ‘towards an economic policy’ report.