Mike in TO
Senior Member
Infrastructure problems? Investors can pave the way
DEREK DeCLOET
Globe & Mail
November 24, 2007
Few great economic ideas ever seem to come from France. Its growth is languid. It has the highest unemployment rate in the G7 except for Germany. Raw-meat capitalists have little to learn from a nation of union lovers, subsidy-dependent farmers and cheese eaters. Until they get on the Autoroute system, that is, a 12,000-kilometre network of freeways via which you can zip around the country, legally, at 130 km/h. It's not cheap, and the six-hour jaunt from Paris to Aix-en-Provence, lovely though it is, can quickly empty your wallet of euros. In the land of liberté, égalité, fraternité, the user's the one who pays.
Toll highways are big business in France. One of the largest operators, Vinci SA, last year raked in €4-billion ($5.9-billion) in revenue from running French toll roads, bridges, parking lots, airports and tunnels. It just took over full control of Autoroutes du Sud de la France, a highway network in the south in which the French government had been a partner. No one is overly fussed by this. You want great highways? Send the bill to the drivers, the French say. That's how a mature, grown-up country does it.
Here's how an immature country does it. The provinces bitch at the feds. The mayors complain to the provinces and the feds. The federal finance minister squawks back at the mayors, accuses them of whining and declares that he's "not in the pothole business." Everyone bickers while the roads crumble. That's the way we do it in Canada.
This week, the Federation of Canadian Municipalities scored a few headlines with an alarmist report on the state of roads, water pipes and other plumbing local governments take care of. The report's subtitle ("The coming collapse of Canada's municipal infrastructure") tells you all you need to know. The pleas of poverty begin on page 2 with claims of a $123-billion infrastructure "deficit" - the amount the municipalities need to fix things up. About $45-billion of this is for roads and transit.
The huge numbers are designed to grab attention. If you borrowed $123-billion at 6 per cent, the interest alone would equal $224 for every man, woman and child in Canada, every year. The municipalities' answer is (surprise) to get Ottawa to pay, since it's the one sitting on a monster surplus. The feds' vaunted $33-billion infrastructure plan isn't enough to satisfy them. You wonder what would.
David Miller, the mayor of Toronto, wants a penny of the GST. Now there's every politician's fantasy: Someone else collects the tax while you get to spend the money. Keep dreaming, David. Toronto has a particular grievance in that it owns a very old and very expensive elevated highway, the Gardiner Expressway, the major route into downtown. Traffic figures suggest about 90,000 people use it to get into the city on an average day, with maybe another 30,000 using Lake Shore Boulevard that runs underneath it. Charge $3 a pop, you're talking $130-million in annual revenue. Call it $90-million if you wish to be conservative. Will the city do it? Uh, no, because people would just clog up other city streets to get downtown, says the mayor's spokesman. Oh, really. Which ones?
Real cities find a way around these objections. London has a congestion charge. Singapore has had electronic tolls for nearly a decade. Oslo does it. Stockholm is doing it, too. In the U.S., you'll find tolls all over the Interstate system. You can put tolls on public roads or you can use them to entice private pension money - and there is a ton of it - to build new roads for you and fill that so-called "infrastructure deficit." All it takes is some imagination. But attempts to bring in user-pay are inevitably politicized. Highway 407, which runs north of Toronto, is a great highway (it was privatized too cheaply by the previous provincial Tory government). Users like it; the number of daily trips is up 20 per cent in four years. Yet when the Liberals took office four years ago, the first thing they did was launch a legal fight against the 407's owners to try to force them to roll back fees (it didn't work). Before that, Bernard Lord got elected premier of New Brunswick in part on the strength of a promise to abolish tolls on a stretch of the Trans-Canada Highway that had been built in a public-private partnership.
It's fair to ask, if the public needs the roads, and no level of government wants to fund the roads, yet institutional investors with billions are willing to build the roads, why politicians won't just let them. So Ottawa's not "in the pothole business?" Fine. But somebody's got to be. This is not a radical concept: Use private money, and make the user pay.
DEREK DeCLOET
Globe & Mail
November 24, 2007
Few great economic ideas ever seem to come from France. Its growth is languid. It has the highest unemployment rate in the G7 except for Germany. Raw-meat capitalists have little to learn from a nation of union lovers, subsidy-dependent farmers and cheese eaters. Until they get on the Autoroute system, that is, a 12,000-kilometre network of freeways via which you can zip around the country, legally, at 130 km/h. It's not cheap, and the six-hour jaunt from Paris to Aix-en-Provence, lovely though it is, can quickly empty your wallet of euros. In the land of liberté, égalité, fraternité, the user's the one who pays.
Toll highways are big business in France. One of the largest operators, Vinci SA, last year raked in €4-billion ($5.9-billion) in revenue from running French toll roads, bridges, parking lots, airports and tunnels. It just took over full control of Autoroutes du Sud de la France, a highway network in the south in which the French government had been a partner. No one is overly fussed by this. You want great highways? Send the bill to the drivers, the French say. That's how a mature, grown-up country does it.
Here's how an immature country does it. The provinces bitch at the feds. The mayors complain to the provinces and the feds. The federal finance minister squawks back at the mayors, accuses them of whining and declares that he's "not in the pothole business." Everyone bickers while the roads crumble. That's the way we do it in Canada.
This week, the Federation of Canadian Municipalities scored a few headlines with an alarmist report on the state of roads, water pipes and other plumbing local governments take care of. The report's subtitle ("The coming collapse of Canada's municipal infrastructure") tells you all you need to know. The pleas of poverty begin on page 2 with claims of a $123-billion infrastructure "deficit" - the amount the municipalities need to fix things up. About $45-billion of this is for roads and transit.
The huge numbers are designed to grab attention. If you borrowed $123-billion at 6 per cent, the interest alone would equal $224 for every man, woman and child in Canada, every year. The municipalities' answer is (surprise) to get Ottawa to pay, since it's the one sitting on a monster surplus. The feds' vaunted $33-billion infrastructure plan isn't enough to satisfy them. You wonder what would.
David Miller, the mayor of Toronto, wants a penny of the GST. Now there's every politician's fantasy: Someone else collects the tax while you get to spend the money. Keep dreaming, David. Toronto has a particular grievance in that it owns a very old and very expensive elevated highway, the Gardiner Expressway, the major route into downtown. Traffic figures suggest about 90,000 people use it to get into the city on an average day, with maybe another 30,000 using Lake Shore Boulevard that runs underneath it. Charge $3 a pop, you're talking $130-million in annual revenue. Call it $90-million if you wish to be conservative. Will the city do it? Uh, no, because people would just clog up other city streets to get downtown, says the mayor's spokesman. Oh, really. Which ones?
Real cities find a way around these objections. London has a congestion charge. Singapore has had electronic tolls for nearly a decade. Oslo does it. Stockholm is doing it, too. In the U.S., you'll find tolls all over the Interstate system. You can put tolls on public roads or you can use them to entice private pension money - and there is a ton of it - to build new roads for you and fill that so-called "infrastructure deficit." All it takes is some imagination. But attempts to bring in user-pay are inevitably politicized. Highway 407, which runs north of Toronto, is a great highway (it was privatized too cheaply by the previous provincial Tory government). Users like it; the number of daily trips is up 20 per cent in four years. Yet when the Liberals took office four years ago, the first thing they did was launch a legal fight against the 407's owners to try to force them to roll back fees (it didn't work). Before that, Bernard Lord got elected premier of New Brunswick in part on the strength of a promise to abolish tolls on a stretch of the Trans-Canada Highway that had been built in a public-private partnership.
It's fair to ask, if the public needs the roads, and no level of government wants to fund the roads, yet institutional investors with billions are willing to build the roads, why politicians won't just let them. So Ottawa's not "in the pothole business?" Fine. But somebody's got to be. This is not a radical concept: Use private money, and make the user pay.
