Tuesday 14 December 2010

Is the Washington Times completely wrong on toll roads?

The Washington Times editorial on 10 December is damning of the Virginian Governor’s policy on using private finance and tolls to improve Virginia’s highway infrastructure. It is easy to dismiss this as a kneejerk reaction to tolls, which advocates of tolling often observe. Some are suspicious that private finance can lead to corruption, and that users can be ripped off.

However, is there some truth behind what the newspaper is saying that those in the tolling/PPP sector need to take on board?

The editorial implies that because Governor O’Donnell announced his plans in the presence of various engineers, investors and consultants involved in the sector, that this was somehow suspicious as such firms will make money from the plans. It would be if there were not open competitive tendering and strict auditing of such procedures. Actually if the private sector was largely set free to initiate and build routes itself, there shouldn’t be a problem, but this is neither the plan, nor what the Washington Times endorses. Transparency is important and I would hope the Governor would ensure that is the case, and the state legislatures should also expect it. The phrase public/private partnership should not be a euphemism for dodgy deals. What is important is for the role of the private sector to be clear and open.

My key criticism is in the establishment of a state infrastructure bank, which implies that road projects can’t be financed by private sector investment at all (which raises the real question as to whether the projects are worthwhile in the first place). If projects are worthwhile they should be attractive to the private sector in raising their own finance and for the costs to be recovered over the long term. There is a separate value in setting up an independent funding body to bypass politically motivated roads funding decisions, but that isn’t the matter here. It should be what Virginia pursues, as it is international best practice.

However, the editorial criticism of the lease of HOT lanes is less well founded. Converting a shoulder into a lane is cheap, but the operation of HOT lanes provides a choice for motorists. The only criticism I would have is that ultimately additional capacity should be added, financed by the lanes, if viable. Finally transponders and camera systems will not track drivers’ every move. Use of a single lane is hardly an infringement on privacy. HOT lanes are a step in the right direction.

Tolling is a market oriented concept, because it is about user pays. Charging for usage of a piece of infrastructure is hardly big government oriented. The claim in the editorial that it is a tax hike is preposterous, as it is only right that those who use highways pay for them. Finally to claim that expanding highway lanes is the only true solution to congestion is part of the point. Basic economics tells you that eventually pricing needs to be combined with infrastructure construction. It would be a significant breakthrough if the Washington Times understood that the value of HOT lanes is in exposing motorists to the laws of supply /demand related to roads, but are only a first step towards moving towards full network road pricing.

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