Monday 17 October 2011

Selection of articles on toll road privatisation, all in opposition!

Several articles that have drawn my attention:

Minnesota law review gets political on privatisation

According to the Newspaper
, the Minnesota Law Review published a critique by Julie A. Roin that argued such deals have more in common with the medieval practice of tax farming than true privatization.

She apparently cites the case of leasing Chicago's parking meters as somehow being enough evidence for the conclusion: Roin wrote. "The upfront payments received by jurisdictions entering into privatization agreements... are, at best, the present value of what would have been future tax (fee) revenue. Rather than true privatization transactions, it is more accurate to describe these deals as loans repayable out of future governmental revenues."

This isn't law, it isn't even sound economics, it is politics. Selling or leasing an asset is just that - a trade of value for value. She advocates new laws to control the prices paid, but quite why there should be laws to govern government decisions on asset sales or purchases is unclear.

Roin suggested better legislation would protect future taxpayers by forcing any such deals to escrow funds equal to the amount of taxes or fees that would have been generated by the leased asset. These funds would be released year-by-year so that the present generation would not be borrowing from a future generation. Roin argued that without some limitation, such deals would grow more intrusive.

However, would she argue that taxpayers be protected by requiring politicians to spend their money in ways that would always generate greater value than if taxpayers had the money themselves?  Would she argue a similar test for when governments buy assets?  Would she argue that governments borrowing always identify how they will generate net revenue to repay debt?  No.  Perhaps she should stick to law, and not politically motivated attempts at regulating economic policy of governments?

Ohio Turnpike privatisation

Debate on the proposed leasing out of the Ohio Turnpike is heating up.

Marilou Johanek in the Toledo Blade claims that a private owner might "mean cutting corners on maintenance to save money, or raising tolls to pad company profits? What safeguards would guarantee protection of the public against unscrupulous vendors?".  What happens now with road maintenance?  Don't untolled roads in many places face this?  The safeguard on tolls is to restrict increases to inflation, and for people to consider diverting to other routes.   Yes there should be debate on ensuring maintenance standards can be reached, and tolls not increased beyond certain limits.

Various State Representatives from the Democrat Party, according to the Toledo Blade, claim that "the long-term lease would amount to selling off a public asset paid for over decades by taxpayers, and could lead to a loss of turnpike-related jobs and an increase in toll fees."  Well yes it would be a sale, but it would amount to avoiding debt that taxpayers would have to pay too.  The loss of jobs may occur if it is not efficiently run, but that does not mean it shouldn't happen.   Should taxpayers run a toll road as an employment programme? 

Ohio Democratic Congressman Tim Ryan said, according to WKSU, "The road probably won’t get taken care of,"..."And I feel like that’s really a tax on business, as we’re trying to develop and make Ohio competitive. If you say, ‘Hey, if you’re using the turnpike, at the end of the day, you’re going to be paying double the tolls.’ That’s really an anti-business move quite frankly".   He is uninterested in evidence of privately owned toll roads elsewhere which are well maintained.  Double the tolls would be a concern, but what evidence is there that this will happen?

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