NCPA - National Center for Policy Analysis

PRIVATE INFRASTRUCTURE BOOMING IN MOST PLACES, BUT NOT IN U.S.

August 20, 2007

America has been more hostile to free-market infrastructure than the rest of the world. In Europe, Australia, Canada and emerging markets such as Brazil, the private sector has jumped in to build new roads, bridges, tunnels and airports, says Investor's Business Daily.

Consider:

  • In the United States, the federal government provides much funding for repairs and new projects; when they are tapped out, state and local governments turn to the bond market.
  • With government debt soaring, though, public interest groups have pushed another option -- gas-tax hikes.
  • Further, opposition has derailed attempts to lease highways in Pennsylvania and New Jersey to private companies; Texas has put a two-year moratorium on building privately run toll roads.

Nevertheless, some states are beginning to implement private funding for infrastructure:

  • In 2005, Chicago sold a 99-year lease on the 8-mile Chicago Skyway road and toll bridge for $1.83 billion to a consortium led by Australia's Macquarie Group and Spain's Cintra.
  • Indiana cut a $3.8 billion toll-road deal with the same group in 2006.
  • Colorado recently agreed to lease a toll road to a private group led by Brisa, Portugal's largest highway operator.
  • New York is mulling private funding as a way to replace its Tappan Zee bridge, which spans the Hudson River.

However, despite this trend, privatization may not have won yet.  Consumers are more likely to go along with new "greenfield" projects that give them use of new bridges or roads, says John Foote, a senior fellow at Harvard's Kennedy School of Government. He says it's harder for the public to accept things like tolls on older highways.

Source: Reinhardt Krause, "Private Infrastructure Booming In Most Places, But Not In U.S.," Investor's Business Daily, August 17, 2007.

 

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