State governments of both persuasions in
Victoria and NSW now have egg all over their faces over various
disastrous toll-road deals, but the man who helped trigger the boom
with infrastructure bonds in the early 1990s was warning about looming
problems four years ago. In a speech back in September 2002 to the IRF
and ARF Asia Pacific Roads Conference, former Prime Minister Paul
Keating said the following:

Our priority has to be an efficient and competitive
economy, but that is not necessarily the same thing as simply moving
public sector monopolies to the private sector.

Tunnels and
motorways are currently being designed to minimise the financial risk
to private investors. They are not being designed for optimal transport
or flow efficiency. The traffic flow, route choices and mode of
construction inherent in these undertakings are, I believe, seriously
compromising traffic flow, road amenity and community standards as to
construction and design.

Not one of these projects does not lead
to incongruous road closures and traffic pressure designed to funnel
traffic through projects in ways that minimise risk to investors. Road
and traffic authorities became caught up in the developers’ and
financiers’ schemes; indeed they are too often conscripted as the lead
agents or surrogate promoters of the schemes. Once a developer and a
financier have a road and traffic authority on the hook, that authority
becomes their Trojan horse into government.

In the long run the
public and the transport operators pay the price for these compromises.
And of course the major compromise is price. The operating costs of
these projects are driven up by the fact that it is not the
Commonwealth or the State financing them. Developers, their investors
and financiers require somewhere between 200 and 400 basis points of
extra financing costs than that which would obtain from Government.

A
man ahead of his time! If only Keating’s great mate Bob Carr had
listened rather than do a pile of deals that lined the pockets of his
current employer, Macquarie Bank.

Peter Fray

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