Transport's role in keeping Europe competitive
Speech from Vice-President Siim Kallas Commissioner for transport at the Centre for European Policy Studies Brussels, 30 September 2011
Back in the late 1950s when Europe was setting up its common policies, transport was seen as key to fulfilling three freedoms of the future common market: the free movement of persons, services and goods. Later on, when we started the wider push towards a European single market, transport was singled out as an essential driver of economic growth. A lot of progress was made.
Then, 30 years or so later, the view began to prevail that nothing more needed to be done. Politicians and citizens almost took transport for granted. And the cash started to dry up.
We watched investments in inland transport enter a trend of steady decline. In 1975, they stood at 1.5% of GDP. By 2008, they had fallen below 0.8% — a record low.
Now, fortunately, transport has regained its rightful place on Europe's political agenda as a primary enabler of jobs and growth. We are backing that up with some hard cash.
Let's look at the funding proposed by the Commission for the next budget period, 2014 to 2020 – the Connecting Europe Facility. This will accelerate infrastructure development in energy, transport and information technology, to strengthen the backbone of the internal market.
And transport is due to be a major beneficiary: 21.7 billion euros, plus another 10 billion euros for transport projects in the Cohesion Fund. Although still a fraction of our overall financing needs, that is four times more money than now. It confirms the wide political acceptance of transport's importance for Europe.
We are putting money where there is clear 'value added': by creating jobs and boosting economic growth based on the more efficient use of resources. This also shows real value for money for the EU taxpayer.
Transport is just as important to the European economy and to the single market today as it was in the 1950s. Our transport industry employs around 10 million people, accounting for 4.5% of total employment in the EU and about the same percentage of GDP.
It is a sector where Europe remains a global leader, at a time when we are losing out competitively in other areas. We can truly boast some world-class manufacturers – Siemens and Alstom in high-speed trains, for example, Rolls-Royce in engine manufacture and also Wärtsilä, which powers every third ship on the seas.
Or the European aircraft industry: Airbus, which makes the world's largest passenger airliner, the A380, also known as 'Superjumbo'. Just a few months ago at the Paris Air Show, Airbus swept the board with a surge of new orders worth many billions of euros to European business. The list of successes goes on.
But how can we measure competitiveness? In short: by punctuality, quality and price of transport services. It's no coincidence that our research shows that these are also the three most important factors – and in that order, by the way – for passengers when they select a mode of transport.
Punctuality is the most important and is what people expect from transport. But it is greatly affected by the chaotic functioning of a railway network, for example, and particularly by congestion.
Congestion is one of the worst problems, especially on the roads and in the skies. It costs Europe about 1% of its GDP every year. Many of our cities are smoggy and smelly and our skies are saturated, causing heavy amounts of carbon and other unwelcome emissions. On prices, the major factor is the cost of fuel.
We are highly dependent on fossil fuel - too much so, when imports come increasingly from unstable parts of the world. Oil is likely to become scarcer in the years to come, demand remains strong and markets as volatile as ever. If world oil prices jump by 30 percent, that obviously has a huge impact on transport's competitiveness.
This is why we are looking into innovative (and cleaner) alternatives to fossil fuels and investing in research to develop new sources of energy. Today's new aircraft already burn 70 percent less fuel per seat than the early jets. With the help of research, we can expect more improvements in fuel efficiency in the coming decades.