The Greatest Transformation - A Response by Eric Aarons

above: A recent book by Eric Aarons - exploring the clash between Karl Marx and Friedrich Hayek.

In the following article former Communist Party of Australia leader Eric Aarons responds to our earlier article by Shayn McCallum.  (Shayn's article can be found here:  )  Aarons critiques 'social market' approaches to change, positing global warming and other environmental challenges as the most important issues facing humanity. While recognising the necessary role of some markets, Aarons proposes an egalitarian services-based economy, and an economy which goes beyond the treadmill of over-work and over-consumption.  DEBATE WECOME!!!

nb also:  In addition to our article here, a very detailed review of Aarons' larger, more academically-inclined book on the same theme of Hayek and Marx can be found here - where we welcome debate!!!:

SEE: http://hayekversusmarx.blogspot.com.au/2011/07/responding-to-eric-aarons-hayek-versus.html

Finally:  Our Facebook group can be found at the following URL - where we welcome free-ranging progressive debate and promote new posts at the blog!  New members welcome! 

See: http://www.facebook.com/groups/58243419565/

Eric Aarons, Sep 22, 2012

This article is a response to Shayn McCallum’s article ‘State and Market – a Democratic Socialist Approach’ that appeared on a Tristan Ewins’ website. I do so because the concerns it deals with are close to my own – that is, seeking to formulate  a substantive definition of what currently  active people of the left should do or ‘stand for’.

My response is not intended as a polemic, though it is forthright and direct because I assume that neither Shayn nor I wants to smarm over difficulties or differences. I therefore begin with the title of his piece stated above. 

Shayn poses ‘a mixed economy’ as one reasonable answer to the question posed by his title ‘State and Market’. But that term, which I also use, can’t take us very far or generate enthusiasm unless the nature of the mix is further clarified. I also use the term, sometimes with the proviso that the ‘mix’ must be devoid of the extremes evident in the continuing practices of capitalism and the type of socialism that came to prevail in the Soviet Union or Maoist China and blackened the very term.

But I believe that ‘mixed economy’ is not made adequate by adding the word democratic, or the phrase ‘devoid of extremes’. Similar problems arise with ‘economic democracy’. I agree that ‘The Social Market’, as devised by its founders and analysed by Australia’s Hugh V. Emy,  Professor of Politics at Monash University, poses little danger to the existing system, or possesses any significant transformative power.

Thus we seem to agree that no expression has yet been found that contains the emotional and intellectual force possessed in the past by the ‘left’, and backed by the capacity to enthuse people into action by concretising general aims in specific strugggles.  Shayn points out that much of social democratic (in Australia, particularly Labor Party) discourse is ‘excessively tenuous, somewhat vacuous’ and limits its criticism of [neo] liberalism to the details rather than its over-arching vision.’ That comment, I believe, is justified, but loses much of its force when Shayn himself fails to outline what the content of an effective critique of that vision would be.

I don’t feel lacking in that area, having written three books on the subject, the last being Hayek versus Marx (2009).  The publishers insisted on that title because it was part of a planned series (mine came out as the 180^th  work in      that series). But I eventually persuaded them to add the subtitle: And today’s challenges, the significance of which for discussions like the present one I explore later.

But I think it is essential to appreciate the vast difference between the retail markets that we visit almost every day, and the financial markets that played a crucial role in generating the Great Financial Crisis of 2008, to the present time, when it threatens to break out with even greater force at any moment in Europe.                     

The necessity of some markets

As Shayn clearly recognises, markets existed to one degree or another in practically every society later than the stone age. (For instance, the Conquistadores found extensive markets in some of the countries of what is now called Latin America). But Shayn neither distinguishes between different kinds of market, nor explains the reasons for the universal existence of some of them.

The foremost of these concerns has to do with what most of us perforce do every day, in response to the natural evolution of the division of labour. This compels us to engage in exchanges, usually of money from our wages, to obtain the mix of different commodities we need to live. These range from foodstuffs to transport, liquor, haircuts, entertainment and other items. One doesn’t need a vivid imagination to envision the difficulties, not to speak of the public outrage, that would result from any attempt  to plan and institute an alternative, for example, one of state allocation of the same  items or meals for all irrespective of the work they may, or may not have contributed in Mao’s ill-fated Chinese rural communes, while in competitive marketts, it is equals that are generally exchanged.      

 (I don’t think it necessary to pursue the many further variations that arise in areas such as whitegoods, TVs, computers, houses or cars, where the state may step in with requirements for performance standards, health requirements and the like.)

The Social Market

I agree with Shayn that the term ‘social market’ doesn’t take us very far. Its origin and meaning was well analysed by Australian academic Hugh Emy as the vision of some genuinely liberal-minded post-war German theorists, couched in moral as well as economic terms. It centred on the idea of ‘co-determination’ by owners and workers in businesses but ruled out any interference with ownership relations. It had some progressive content, but was by no means a transformative development.

Shayn rather airily dismisses cultural issues and contests, defining them as though they were lightweight compared with a physical presence or direct economic content. Without trying here to cover the full scope of culture, political activists need to realise that morals, values and attitudes, among other features of human behaviour and consciousness, are sources of action or passivity, which are surely of central importance in politics.

Without entering the field of values, for instance, I see little chance of constructing an effective critique of the neo-liberal vision which at present still holds (now less securely) a hegemonic position, or defining an effective social democratic one. Shayn instead speaks of confronting the ‘questions of class power’, that he then nominates in purely economic terms as ‘redistribution or the provision of social goods and services’.                                   

I am far from dismissing the importance of this for a segment of the population of our country, a similar proportion of other economically developed countries, and massive numbers in the undeveloped. But I am convinced it is the wrong direction, at this particular juncture, in which to look for a liberating, emancipatory, transformative orientation.

Today’s  main  challenges                                                                                                                 

The general social conditions and forms of economic restructuring that would be involved in meeting those challenges, the first of which is Global warming, requires sober calculation, including of the time frame. Solutions need to be, or clearly becoming, politically possible within two or three decades, or the problem could take a disastrous turn, for example by the melting of the tundra in Siberia, Greenland and elsewhere which would release huge quantities of now frozen methane – an even greater ‘greenhouse effective’ gas than carbon dioxide.

 ‘Politically possible’ means that to be democratically effected there has to be near enough to majority support for the measures involved type. There are already in existence more than needed of what I call ‘if only’ plans  – ones that pose preconditions having little chance of being realised, and which in any case are inadequately campaigned for.

Global Warming occurs today mainly because we are burning increasing quantities of fossil fuels (coal, oil and gas) to generate our ever-increasing energy requirements. The burning  process produces carbon dioxide gas which has the physical property of acting like a greenhouse – that is, a kind of‘house’ device, usually made of glass that lets in the sun’s rays, or is internally heated to cultivate plants that need heat to grow, but doesn’t let the heated air inside escape. Carbon dioxide and other gases, in the quantities now being generated by burning, mix uniformly in the global atmosphere from whatever country they come, warming the world, from frozen poles and glaciered areas to the tropics, causing the escalating number of weather extremes we all see on TV or ourselves experience, and raising ocean levels by melting ice.

 Earth’s resources are not infinite

The related major challenge of our times is first of all the growing threat to the sustainability of the supply base for all this burning of fossil fuels.  It is clear that oil will soon run out, while coal and gas won’t last forever. Water is becoming scarce in many places, and large quantities of underground water are being polluted by the fracking of coal and shale beds to produce gas. ‘Rare-earth’ elements, essential for many sophisticated electronic apps are scarce. Phosphorus, one of our main fertilisers (and an essential component of DNA) is in short supply, as is potash.

Fish are becoming scarcer, and some of its best food species are on the verge of extinction, while ever-larger trawlers are built to pursue others still existing. New agricultural land is scarcely to be found and the productivity of large areas is being reduced by overuse and  more extreme weather events.

Much more information is readily available, but is not acted upon. Nor are either the dangers, or the transformational possibilities flowing from victory in the struggle to overcome them sufficiently taken on board by the left including, regrettably, the trade unions.

The scale of all this

Geology Professor Mike Sandiford of Melbourne University gives us a striking  measure of this scale:

Rivers and glaciers have moved about 10 billion tons of sediment from mountain to sea each year on average over geological time. Each year humans mine about 7 billion tons of coal and 2.3 billion tons of iron ore. We shift about the same amount again of overburden to access these resources, along with construction aggregate and other excavations. In short we are now one of the main agents shaping the earth’s surface. (Sydney Morning Herald, May 23, 2011)

The course of solving it will not only help to change the present unfavourable-to-the-left balance of political forces. It will provide us, and especially succeeding generations, with clues about the best course to further economic and cultural steps.

                                   *                       *                      * 

Inverting the meaning of Karl Polanyi’s striking title to his famous book The Great Transformation which he used with the subtitle The Political and Economic Origin of Our Time, I have called success in meeting fully the present challenges The Greatest Transformation.

This may seem exaggerated, but consider the fact that for the first time ever in history, all countries and cultures will eventually have to become involved, and that the vast majority of people will then have to be guided by the principle that excesses in resource consumption must be avoided.

Some may be alarmed at this and consider it to be going backwards. But I hold that it is true progress, liberating us from toils of consumerism which daily (and nightly) consume the time and energy of a growing proportion of the world’s population, while also keeping a large proportion of humanity in wretched poverty or on the brink of starvation.             

Transformation, emancipation

Those on the political right, centred on the ideology of neo-liberalism, and their rabble-rousing foot soldiers, simply deny what is there to be seen and experienced. Maybe they simply fear change as such, perhaps believing that what now exists is the pinnacle of possible human existence, as Frances Fukuyama once asserted, but now, to his credit, has changed his tune.

Even those on the left, the core of which are the social democrats, and the Greens (who are to the left of them on some issues), aspire to something better and more constructive for the future, but have yet to develop a sufficiently coherent social philosophy.

And I am concerned that Shayn gives so little attention to these issues. Could it be that he holds the view common among a small section of the left, that no substantial progress can be made in any social field until the economic base on which it has arisen is first transformed? Such views have dogged the socialist cause almost from its beginnings, with Eduard Bernstein, for one, struggling with it through most of his life.

Of course, no one political strategy could meet every different set of conditions; but my judgment is that the issues stated above are tailor-made for a strategy of resolving pressing major issues, not instead of (perhaps) more basic ones, but rather as an essential step on the way to actually doing so.

Consumption is essential up to the point of sufficiency (which of course cannot be too narrowly defined) but taken beyond that to the very aim of life is a view and practice that is far from liberating. It binds a majority of people in the economically developed countries to a daily (and often nightly) treadmill that is now restricting rather than helping to extend our development as human beings.

Friedrich Hayek, who developed neo-liberal philosophy to its present (though declining) predominance, helped elevate consumerism to its present peak above more worthy and humanly satisfying aims by denouncing those who rejected his view ‘that the great ideal of the unity of mankind should in the last resort depend on the relations between the parts being governed by the striving for the better satisfaction of their material needs.’ (LLL2, 111)

He followed that up by denigrating working people with the assertion that ‘their intuitive craving for a more humane and personal morals corresponding to their inherited instincts is quite likely to destroy the Open Society [capitalism].’ (LLL2, 146).

Let us wear this as a badge of honour.                                               

Human development       

One aspect of switching our view of progress from more material goods to greater human development is to expand and deepen our relationships with other human beings, family and otherwise. This activity is both pleasurable and emancipatory, cultivating our human sensibilities whose possibilities are inexhaustible, as are the possible accomplishments of our reason.  

Furthermore, caring occupations require increased human participation, as do educational, and health services, and individual and collective cultural and artistic pursuits, while engineering and related developments to create more material commodities often cut employment, though capturing sufficiently more of the sun’s heat and electronic rays to replace burning for energy will keep the need for engineering and related activities, including science, fully employed indefinitely into the future.

The Services Society

Largely unnoticed and unremarked till recently is the fact that provision of services rather than material consumption commodities is by far the largest part of the economies of the developed countries.    

Last year, two Reserve Bank economic analysts, Ellis Connolly and Christine Lewis, quantified the changes in Australia. Titled Structural Changes in the Australian Economy, it showed that 80 per cent of the total value produced in our country came from the service sector, and embraced 85 per cent of the total workforce. The remaining 20 per cent of value was produced by agriculture, manufacturing and mining which employed the remaining 15 per cent of the workforce.

I queried them about the inclusion of ‘construction’ (for instance, construction of massive office blocks) and they replied that they did so because it is listed in the Australia and New Zealand Standard Industrial Classification (ANZSIC).  However, they did agree that there is no clear distinctions between industries that are ‘services’ and those that are ‘non-services’.

As a lay-person in this area I would estimate that a more realistic figure might be about two thirds services. But that figure, and the fact that only 15 per cent of the workforce, in manufacturing, mining and agriculture, produces no more than 20 per cent of all value indicates a major restructuring of society is already under way, I believe with great significance for proceeding to ‘the greatest transformation’ that humanity must accomplish before the end of this century. And building on a spontaneous/evolutionary development is generally far easier to accomplish than trying to create something so radically different that people may be more reluctant to embrace it, while it can also be more subject to violent reversal.                                                             

Consumption goods cannot be distributed equally because people and families are different, have different responsibilities, different incomes and different tastes, Services, however, from electricity, water and sewerage supplies, health and education and transport and communication services … are equally essential to everybody, indeed possess an egalitarian aspect that is desirable, but     rare in present society. This fact is expressed in the so far unsuccessful attempt to globalize and privatise trade in services through GATS (General Agreement on Trade in Services), leaving most services still locally supplied, with a major portion still in state hands.

The Australia Institute conducted surveys that revealed a majority would prefer better services over tax cuts. When asked which election promise was more likely to win their vote, 56 per cent of those surveyed chose better services to increased living standards compared to 44 per cent who said that tax cuts would sway their vote. Of all those surveyed, 63 per cent wanted services to benefit Australians equally.

As well as treasuring this egalitarian factor, we should remind ourselves e forget conditions of work have an effect on ways of thinking, ‘big industry’ significantly generating trade unionism and to a certain extent socialist thinking. This is not to suggest that trade union and socialist sentiment cannot arise among workers in, for example, caring activitie, only that they may have to be approached in a rather different way, as do workers in country areas compared with the city. The conclusion should be that understanding the ways of thinking of differently placed, differently formed, differently parented and differently educated people, is not simply the product of class economic relations.

Taken generally, we need to realise that politics is an art rather than a science where ‘theory’ alone is adequate to decide on policy and practical activity. Or, put somewhat differently, the common view in left, right, and to some extent in neutral or various other circles, that property or other economic relations have to come first – that these, often called material relations, must change before any significant society-wide alternatives can occur.

My contention is that in the concrete conditions of global warming and threats to planetary resource provision, tackling these problems should be the priority, and that succeeding in the endeavour to overcome them will do more than any other available way in which to clarify what economic changes can politically then be made.                       

Which way forwards in response to climate change?

nb: the article focuses primarily on the Australian context: but the arguments and issues are relevant for a truly global audience...

By Tristan Ewins

Towards the conclusion of 2009 perhaps one of the most significant events of that decade was the failure of the Copenhagen conference on climate change to authorise a comprehensive and binding response to the climate crisis.

Given the virtually universal consensus across the entire body of global scientific opinion, with regards to the reality of human-induced climate change, resistance to action must be seen as being harder and harder to justify.

Apart from the threat of rising sea levels, other effects of continued global warming could include damage to eco-systems and biodiversity. Acidification of oceans may result in extinction of many species - with the consequences of the disruption to the food chain ultimately flowing to humans. And with extremes of weather, life for many would become more uncomfortable.

But while some from the conservative Opposition in Australia saw the failure of Copenhagen as a vindication of sorts, the potential consequences of this failure are such that none should be seeking to milk these developments for opportunistic political gain.

In Australia, with regards to the environment, the Rudd Labor is besieged on both sides.
Bipartisan support between the government and the Coalition Opposition for an Emissions Trading Scheme (ETS) in Australia has collapsed after the relatively liberal Opposition Leader, Malcolm Turnbull, was usurped by arch-Conservative, Tony Abbott.

Now, while the Australian Greens deplore the government’s target to reduce greenhouse emissions to somewhere between 5 per cent and 25 per cent of 2000 levels saying it is vague and insufficient, the conservative Coalition is generating fear about what their leader Tony Abbott derides as “Labor’s great big tax”.

But what is the proposed ETS anyway?

“In a nutshell”, the Emissions Trading Scheme advocated by the Australian Labor government comprises a “cap and trade” system whereby polluters are provided with a limit on greenhouse emissions. After this “cap”, polluters need to invest in emissions permits if they are to continue such activity. A market is effectively created: usually whereby polluters must buy permits from economic actors whose activity is not so intensive in carbon emissions.

Importantly, Labor claims the ETS does not comprise a tax in the commonly-accepted sense of the word. For the government this is important: as it is official Labor policy not to increase tax as a proportion of Gross Domestic Product (GDP).

Given the need for investment in social services, welfare and infrastructure, critics may well point to the short-
sightedness of this policy. But advocates of the Labor ETS might believe it is a way to potentially “have one’s cake and eat it too”. Although after corporate compensation - and compensation for those on low and middle incomes - there is not much left over.

Ultimately, though, the proposed ETS would still comprise a system of “sticks and carrots”: impositions upon business and consumers to pressure them into changing their habits when it comes to investments and the purchasing of goods and services.

Achieving real change obviously cannot come without a cost. The question is who pays for reform and how.
Conservative Opposition leader, Tony Abbott has been quick to deride Labor’s ETS plans and the financial pain which will follow for many Australians. He has claimed that 50 per cent of middle class households will be worse off. In contrast, the government is claiming that 2.9 million low income Australian households will actually be better off as a consequence of the built-in compensatory mechanisms.

I will address this in greater detail further on in this essay.

Instead of an ETS or carbon tax Abbott has been spruiking the benefits of a more “direct” approach to reducing carbon emissions. The question hanging over such proclamations, however, is the same. Again: change cannot come about without cost: and someone will have to pay for “direct” change: or else perhaps there will be no change at all …

That said: there is a variation on the theme of “direct action” on climate that may have merit: although the author seriously doubts this approach would appeal to the Conservatives and neo-liberals - with their fetish for ever smaller government “no matter what”. I will also consider this later.

Into this “mix” we need to consider the human impact of action on climate change.

For all parties involved there was a concern with any ETS that it could have a negative impact on industry and jobs. As a consequence of cheap coal, benefits have historically “flowed on” to other export industries, and import-competing industries. With an increased cost for power, though, the reverse impact of this would flow on through the entire economy.

In response to this and other issues surrounding the competitiveness of Australian industry, the Australian government has included as part of the proposed ETS an “Emissions-Intensive Trade-Exposed Industry Assistance” (EITEIA) package.

The aims of this scheme are manyfold.

To begin with, the scheme aims to reduce the risks of investors simply relocating offshore to countries with more “carbon friendly” conditions. If the only impact of any ETS is that carbon intensive industries simply move offshore then obviously nothing is achieved.

Second, the program is aimed at enterprises which are “trade exposed”.

One test of this is if such enterprises “[demonstrate a] lack of capacity to pass through costs due to the potential for international competition.”

Under Malcolm Turnbull’s leadership, the Coalition had also secured through negotiation broader compensation for industries affected by the proposed ETS. Among these were coal-fired electricity generation and agriculture.

There are many who feel compensation goes too far. In March 2009 the Australian movement Friends of the Earth (FOE) condemned the inclusion of the EITEIA in the Carbon Pollution Reduction Scheme (CPRS) package.

FOE’s aim for the energy industry of “100 per cent renewable [energy] by 2020" seems especially ambitious. Nonetheless, the massive aid commitment for coal-fired energy providers - in the face of blackmail by those interests threatening continuity in energy supply - seems misplaced.

Properly such threats ought to have been stared down. Should these threats have come to fruition then, as Ken Davidson argues - in the case of Victoria: “the State Government has emergency powers that allow it to take over and run the assets.”

But worthy of closer consideration is FOE’s demand for “sector-by-sector transition plans for affected workers and communities”.

What, then, is the way forward?

Proposals for “transition plans” are refreshing, comprising a call for more direct government intervention than usually acceptable under the neo-liberal consensus that one way or the other everything must be “left to markets”. Indeed: the psychology behind such thinking - including the stigma associated with tax reform - is partly the reason why the ETS has been promoted without greater consideration of alternatives such as a
simpler carbon tax.

Active industry policy must be applied to create new jobs (especially in affected regions), maintain good incomes and income support (including during the transition process), while also supporting re-skilling - at no expense to affected workers.

At this point, therefore, it might also be appropriate to consider another interpretation of “direct” action on climate change.

Instead of only “sticks and carrots” being applied to “prod” markets into reform, the alternative could be massive and direct public investment to renewable energy and sustainability.


In the Australian e-journal On Line Opinion, social commentator Leigh Ewbank proclaimed that: “A new nation-building project on the scale of the Snowy Mountains Scheme is needed.” Here, Ewbank was correct in observing that “our windy southern coast; our vast deserts; and our rich geothermal resources, are untapped”. Utilising these natural assets - with public investment in sustainable energy infrastructure - could be instrumental in the creation of “a renewable electricity grid”.

This program could also include micro-energy reforms: making the inclusion of solar panels and micro wind turbines compulsory for new constructions - supported with generous government subsidy for those on lower incomes. Also integral in this process could be extensive “Green building” regulations, so our homes and workplaces are “resource-efficient throughout a building's life-cycle”.

These and other measures could gradually ween Australia away from dependence upon coal between now and 2020.

Importantly, tax, social wage and welfare reform would have to be enacted to prevent the costs of such change “flowing on” to more vulnerable groups and individuals.

Progressive tax reform - combined with a progressively structured ETS (made possible through compensatory payments) - is also critical given that the debt from massive public investment in renewables would need to be serviced in as fair a manner as is possible.

If the Australian government does go ahead with some form of ETS, it must be so structured as to have a more progressive impact on wealth and income distribution, and access to necessities including energy.

Towards the end of 2009, Lindsay Tanner, the Australian Finance Minister, affirmed that “low-income households will be hit around $420 annually under the scheme but will be compensated on average by $610 per year”.

The question here is why the government is not using this opportunity to do more in the interests of distributive justice.

Given that the broader tax system in Australia is in need of radical reform for purposes of distributive justice, an ETS - while not a tax - could be levied at a higher rate. By this we infer regulation ensuring a higher rate for carbon permits issued by the Federal government - and also central regulation of permit values thereafter. This is an alternative to the wild speculation some suppose might otherwise follow with the scheme’s implementation.

If accompanied by greater compensation for those on low and middle incomes (especially lower incomes), though, such reform (as advocated in this article) would comprise a “step forward” for fairness.

As Ken Davidson, writing for The Age, has noted also, if emissions permits are too cheap then there will be no incentive for corporations to make “higher cost investments” anyway.

While Davidson rejects the prospect of an ETS altogether - and a carbon tax would be more simple and potentially less volatile - there are ways of improving the proposed system.
In the wake of Copenhagen international action is necessary

The failure of nations to arrive at a legally binding framework (via an international treaty) for emissions reduction at the Copenhagen conference shows a disturbing lack of resolve and good faith among what some call “the global community”.

Among the most pertinent of issues was the failure of the developed world to provide the necessary compensation for poorer nations to continue development in an environmentally and socially sustainable fashion. Writing for the Sydney Morning Herald, Andrew Hewitt lamented that: “The promised $US100 billion a year by 2020, aimed at helping poor countries reduce their emissions and adapt to a changing climate, is less than half the amount needed.”

The quest to eradicate poverty, here, need not be abandoned as the price of sustainability. Technology transfer is of central importance, as is funding tied to the construction of sustainable infrastructure in developing countries.

In the same spirit, international co-operation in key areas of research, such as renewable energy, is critical. The world would do better pooling its research efforts rather than individual research units competing against each other - and quite likely not sharing their progress and their breakthroughs.

Here - in the wake of Copenhagen’s failure - there is nevertheless still the option of Australia “leading by example”. This applies to other countries in the developed world also: including the United States.

A good start for Australia would be a radical expansion of foreign aid: with Australian contributions being raised from approximately 0.32 per cent of GDP (2009 figures) to 1 per cent: significantly beyond the “UN benchmark” of 0.7 per cent.

For Australia’s part, Hewitt was also correct in observing: “We must … contribute our fair share of climate finance, based on our historical responsibility for emissions and our capacity to pay.”

This additional expansion could be tied exclusively to the development of environmentally sustainable infrastructure and industry, with funds devoted to Foreign Aid from Australia alone rising to significantly over AU$10 billion annually.

With Labor in power in Australia we have the right to expect better. But accountability of governments is only ever secured at the cost of eternal vigilance on the part of citizens. We must hold Labor accountable now, for the stakes are too high and the costs of failure too great.


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Also:  Leigh Ewbank's material was cited in this article: a plea for massive public investment in renewable energy infrastructure.    Leigh's blog focuses on environmentaland social issues - and can be found here:      Meanwhile: his contributions to On Line Opinion can be found here.

A Revolution in the Transport Economy

If you ask most Australians today what worries them most, chances are they will respond that the ever-spiralling cost-of-living is of prime concern. The rising cost of petrol, in particular, is one factor which flows on through the transport sector to impact upon the broader economy.

This tendency - felt worldwide - is worsened by tension in the Persian Gulf, and looming confrontation with Iran. In addition, there is the impact of rapidly developing economies like China and their insatiable thirst for oil.

Many commentators believe if we have not already reached “Peak Oil” we will do so soon. And as demand increasingly outstrips supply the crisis is set to worsen.

The aim of this paper is to consider the transport sector crisis: from the need for green and efficient alternatives, to the imperative of providing transitional transport supply infrastructure - as part of a “transport revolution”.

Transport economy in crisis

Considering the skyrocketing price of oil, it might reasonably be supposed that there is already sufficient incentive for governments worldwide to take decisive action and restructure their transport economies in favour of cost-effective and renewable solutions.

The Emissions Trading Scheme proposed by the Rudd Government - as applied to petrol - looked set to increase prices by as much as 10c a litre.

In response to criticism, the government signalled that it would be cutting petrol excise for three years so as to make the overall effect revenue neutral.

There is still, though, a strong case to transition beyond the kind of oil dependence we now have. Both for the environment and for sheer efficiency there is a case to be put for the public transport alternative - and for investment in electric and hybrid car technology.

Debate is now crucial: to spur Australian governments on to embrace reform and to restructure transport economies in favour of cost-effective, sustainable and renewable solutions.

The case for public transport

Public transport is a far more energy-efficient and is a less carbon-intensive alternative to petrol-driven vehicles. The Public Transport Users Association (PTUA) has surveyed the energy efficiency of public versus private transport. To break the figures down: an average petrol-run car will cost about 3.7 mega-joules (MJ) per passenger-kilometre (pkm). An electric train, however, operates at a rate of between 0.04 and 0.18 MJ pkm, making train transport as much as 92 times more energy efficient.

From an energy-conscious and environmental perspective the imperative of prioritising increased public transport patronage and improving infrastructure and services is undeniable.

But how affordable is public transport - considering the example of Melbourne - in the face of the current fare system?

Drawing on RACV figures, meanwhile, the PTUA compares the cost of running a used car to that of everyday public transport use: "… even used cars, already fully paid for and ‘running on the smell of an oily rag’ can cost over a thousand dollars more in annual registration and fuel than the most expensive Yearly Metcard." Here "annual running costs" are "$2,918".

In comparison, the PTUA has noted that (in regards to the Victorian example): "Metlink yearly tickets are $1,117 for zone 1, $748 for zone 2, or $1,722 for zones 1+2."

Despite the competitive cost of public transport, though, many still choose to use their cars as a matter of convenience. And also the above figures may appear deceptive if one considers that car transport can be relatively cost-efficient in comparison to public transport in the case of short trips. It is critical that such disincentives to the use of public transport are addressed.

As Royce Millar and Simon Mann have argued:

“Just one in 20 outer Melbournians take public transport to work. In the relatively transport-rich inner city, the figure is one in five. Citywide, just 9% of all trips are taken by bus, train or tram.”

Public transport infrastructure and rolling stock in Australia need to be upgraded to accommodate greater patronage, and to provide excellent and convenient service (including greater frequency) at competitive prices to all citizens.

The PTUA is launching a campaign on improving the regularity of public transport services to provide convenience for consumers. The campaign has been named Every 10 Minutes to Everywhere.

There is a particularly urgent need to expand transport networks into the urban fringe of major cities where services are often especially poor.

Indeed, compared internationally, there is much scope to improve the affordability of public transport in Australia’s cities. The PTUA notes, for instance, that the Canadian city of Vancouver enjoys fares of around half the cost of Melbourne's.

To conclude: the need to revolutionise the transport economy - to invest in public transport and rail freight - is undeniable. So also is the need for root and branch reform of Australian public transport fee structures.

Such are the environmental, equity and fiscal imperatives we face.

Transport from a different perspective: hybrid and electric car technology

Alongside the imperative to revolutionise the provision of public transport, there is the question of hybrid and electric car technology. Environmental and cost of living pressures are bringing to a head the need for such innovation.

Wikipedia notes that Plug-in Hybrid Electrical Vehicles (PHEV) are currently capable of about 100km a day on battery power alone - after which the car reverts to a petroleum motor. The working of the petroleum motor thereafter assists in recharging the vehicle battery. Notably 100km a day is more than most people require in their daily usage. But the hybrid system provides flexibility on long trips - when it is needed.

Research is ongoing, and Wikipedia also notes that:

“Advanced battery technology is under development, promising greater energy densities by both mass and volume, and battery life expectancy is expected to increase.”

Some researchers, however, feel that more work should be put into developing more efficient and “green” alternatives like “fuel-cell cars that can use sustainable sourced fuels, such as hydrogen”. Unfortunately, though, many suppose that hydrogen fuel cells will not provide a marketable alternative before 2025.

If PHEV vehicles are the best option available over the next 20 or so years, then the challenge is to make the technology affordable. Indeed, it is a basic “cost of living” issue essential to the transport framework of the entire economy.

One significant challenge here might be subsidisation and even socialisation of petrol supply during the transition period. The aim, in this instance, is to make private transport affordable for those on lower-incomes - who may not have the immediate means to “upgrade” to the new technology.

As part of this process, there is a key role for Australian government: to partner with other governments and automobile companies in furthering PHEV and hydrogen fuel cell research and development to make it affordable for all.

Other roles for government may also include driving the adoption of micro-renewable energy solutions - to complement the shift to a “green private transport economy”.

A revolution in transport infrastructure, including improved public transport, and the adoption of hybrid and electric vehicle technology - can provide better value and efficiency even while reducing greenhouse gas emissions.

We need to speak out and ensure our voices are heard so that decisive action is taken - now.

by Tristan Ewins