Another foreign company throws hat in ring to build SA toll roads

Note the name of another company vying to build and profit off of our toll roads in Friday’s Express-News article: Australian based Macquarie 1604 Partnership.

Local group takes title to area’s own toll lanes
State commission is to throw in $7.5 million

by Patrick Driscoll

CORPUS CHRISTI — Ready or not, San Antonio is officially in the toll-road business.

Alamo Regional Mobility Authority officials wheedled the Texas Transportation Commission on Thursday to get title to their first toll roads.

The commission handed over toll projects planned for Interstate 35, Bandera Road and Wurzbach Parkway and promised to lend the mobility authority up to $7.5 million in gas tax funds to get started.

“We will take this very seriously and do a good job,” authority Chairman Bill Thornton told commissioners.

Just a few months ago, local and state officials were trading barbs over how to be partners with private firms that want to build and operate toll roads. At Thursday’s meeting, everybody spoke softly and smiled.

“I’m pleased that we finally have arrived,” Commissioner Hope Andrade said.

Thornton said he was, too.

“Thank you for the way we’re being managed in this,” he said.

But the love fest is a darkening nightmare to toll critics.

“It’s really unfortunate because the constituency clearly doesn’t want toll roads,” said North Side activist Dave Ramos. “It’s really a sad day for the taxpayer.”

Pro-toll officials disagree, saying Thursday that people across the state have warmed up to the idea of toll roads.

“It’s almost overnight. People have opened their eyes,” commission Chairman Ric Williamson said.

Meanwhile, with three projects, the mobility authority is juggling a larger package of toll roads than those in Austin. But they’re a lot further behind.

That’s because $439 million in public money and $397 million in potential toll-backed bonds doesn’t even cover half of the $2.2 billion construction job, which is supposed to happen over the next 25 years.

No other money is earmarked. And there’s no specific timetable.

“We’ve got to find a way to do that, or build it in stages,” said Tom Griebel, director of the mobility authority.

Plans call for toll lanes to be added to Interstate 35 from downtown to Schertz and on Bandera Road between loops 410 and 1604. Also, a tolled interchange would be built at Wurzbach Parkway and U.S. 281.

The Transportation Commission is expected to approve the $7.5 million loan to kick off the work when it meets next month.

In other action Thursday, commissioners approved a $1 million loan so the mobility authority can help evaluate proposals from private companies that want to take over the city’s most profitable toll roads.

The state still controls the proposed 47-mile system that investors are eyeing, though ownership could be passed on to the mobility authority. Toll lanes would be built on Loop 410 and U.S. 281 on the North Side.

Two private consortiums submitted proposals by Thursday’s deadline: the Cintra Zachry Partnership and the Macquarie 1604 Partnership.


Feast your eyes on this information about Macquarie 1604 Partnership. Like Cintra, they’re known for keeping contracts secret from the public and sticking it to the taxpayer! Link to article in Sydney Morning News or read text below.
Also, link to article in Queensland Newspapers or read text below.

Open secrets
October 31, 2005
The Sydney Morning Herald

The Cross City Tunnel scandal should lead to more public scrutiny of private infrastructure deals, writes Matthew Moore.
FROM the political train smash the Cross City Tunnel is fast resembling, one lesson is increasingly clear: the days of secret government contracts are doomed.

The fury of motorists and taxpayers who find Bob Carr’s tunnel a long way short of the “visionary plan” the former premier promoted, has shocked not only the politicians in Macquarie Street but the investment banks, construction companies, the legions of law firms and former premiers on the lookout for a slice of future deals called public-private partnerships, or PPPs.

Politicians on both sides have always instinctively resisted publishing details of their contracts with private companies, insisting they are full of commercial-in-confidence material that must be kept secret.

But with the debacle of the Cross City Tunnel deal dragging on, just about all the players in NSW seem to favour full disclosure of contracts.

A new business lobby group set up by the Tourism and Transport Forum to push for public-private partnerships, Infrastructure Partnerships Australia, says its members, which include companies in the Cross City Tunnel consortium, want all contracts to be public.

“We are in favour of disclosure,” said the group’s spokesman, Glenn Byres. “Disclosure serves everyone well … it tells the community why a project was done in a particular way.”

It’s the same with the Australian Council for Infrastructure Development, whose chief executive, Dennis O’Neill, has clearly sensed the dark public mood about the tunnel deal and says “transparent public scrutiny” is vital if public-private partnerships are to succeed.

Mark Bethwaite, chief executive of Australian Business Limited, is even more blunt: contracts such as the Cross City Tunnel should be on the public record.

The NSW Opposition Leader, Peter Debnam, has pledged that in any government he heads, contracts will be published as a matter of course.

It happens routinely in the US and New Zealand and it’s happening in Victoria under the Bracks Government. With Morris Iemma’s Government forced to support the release of more than 2000 pages of tunnel documents once deemed too sensitive for public eyes, it seems it’s even happening in NSW.

Such is the sudden enthusiasm for full disclosure, the Roads Minister, Joe Tripodi, ousted the head of his Roads and Traffic Authority, Paul Forward, on the dubious grounds he failed to sufficiently disclose a recent agreement which added 15 cents to the tunnel toll.

But this new openness has limits. Contracts for the new M7 motorway in Western Sydney remain secret, as do those for the Lane Cove tunnel.

And the contracts for one of Sydney’s most controversial PPPs, the Harbour Tunnel, are no closer to being revealed than they ever were. When asked if the public could now see what arrangements they have long been tied to by the Harbour Tunnel documents, Iemma could only respond with a forced laugh and a limp line: “It’s a long time ago.”

Tripodi offered a different explanation for refusing them, claiming that if he let them go there was “a real prospect … of a financial penalty for NSW taxpayers”. What he meant by that cryptic warning he did not say.

Secrecy though is just one part of the PPP debate ignited by the tunnel. More fundamental is the question whether they are good value for anyone other than the politicians and the bankers. At about $3.60 a trip, many motorists have branded the tunnel a rip-off.

The reason the price is so high is buried in the more than 2000 pages of documents in which the consortium reveals it has budgeted for a return of 16 per cent on its investment each year for the next 30 years.

That fat return means the toll must climb ahead of inflation for years and will be well over $8 a trip by the time the tunnel consortium hands the project over to Government in 2035.

The president of the Australian Institute of Project Management, David Dombkins, reckons it’s absurd that governments are doing such deals. It’s like buying a house on a credit card instead of a housing loan, he says.

Governments are attracted to PPPs because it means the private sector borrows the money and state borrowing levels are not affected. But with NSW Government borrowings at virtually zero, Dombkins says the Government should be using its capacity to borrow money cheaply at close to 6 per cent, building the project itself and delivering tolls of about a third what the private sector wants.

“I just object to the community paying exorbitant deals for infrastructure,” he said. “It’s a highly profitable business where the returns they are getting are extraordinary.”

Dombkins also rejects the claims that PPPs transfer the risk to the private sector and says that with the Harbour Tunnel, the airport rail link, the M2 and M4 and the Eastern Distributor, the risks have been borne by taxpayers who’ve paid more than they should.

He says the Government should go back to a version of the model used to build the Sydney Harbour Bridge, where the government borrowed the money and set the toll at a level to pay the debt over a defined period; there was little need to vary it.

He also complains that governments are setting themselves up for a failure by signing 30-year contracts that do not have the flexibility to deal with a huge range of variables. What if the City of Sydney or the Government wants to charge people to bring cars into the city like London is doing, he asks. It would be better to have the tunnel owned and operated by the Government or with a flexible contract where government retains a high degree of control.

Gary Sturgess, the head of the cabinet office under the Greiner government, and now an advocate of PPPs in Britain, says while there are always some problems, the outcry over the tunnel contract has been “a little shrill”.

Handing over financing of projects to the private sector brings “a really sharp discipline”, collapsing construction times and making a host of cost savings the public sector would struggle to achieve.

Byres agrees taxpayers have got good value from the most common PPPs, toll roads, and reckons the new ones have trimmed returns for operators.

“Five to 10 years ago it was 19 per cent, now it’s down to 12 per cent and governments are working out how to drive it down further,” he says.

He said much of the criticism of the tunnel is confused. “You can’t say the tunnel is designed to pour money into the pockets of the developers and then say it’s a white elephant.”

Despite the beating he’s taken over the tunnel, Iemma is adamant PPPs are here to stay and there are no plans for government to start funding these projects.

To placate the critics, he has ordered a review of the way the Government handles PPPs, but it will look only at toll roads, and not other projects such as the desalination plant at Kurnell.

The Cross City Tunnel has shown how hard it is to predict traffic flows. Predicting Sydney’s weather over the next 20 or 30 years could be a lot harder still – one of the reasons Dombkins is so opposed to having the private sector building and running a desalination plant to sell drinking water the city might not need.

It would be far better for the Government to oversee the project itself, contracting out the various elements but retaining enough control to adapt when unforseen circumstances emerge.

“The last thing you would do is set up the desalination plant as a PPP project,” he says.

Copyright 2005

Toll roads to sting drivers
Anthony Marx
Queensland Newspapers

BRISBANE’S North-South Bypass Tunnel could spawn the traffic restrictions, secret deals and multimillion-dollar taxpayer subsidies that have enraged Sydney motorists this month about their new Cross-City Tunnel.

Plans already call for the addition of two new T3 bus and transit lanes on the Story Bridge under the guise that they will promote public transport and car-pooling.

But RACQ economic and public policy manager Ken Willett argued this week that the lane restrictions would mainly encourage more drivers to use the planned $1.5 billion tunnel.

He said it amounted to a sweetener for whichever of the two private consortia wins the contract.

“Effectively, what we’ll have is people using the tunnel who will be paying for the provision of new bus lanes and those who don’t use the tunnel will suffer increased congestion,” Mr Willett said.

Transit lanes are also envisaged for the William Jolly and Captain Cook bridges and Lutwyche and Sandgate roads as part of future bridge or tunnel projects, he said.

Sydney drivers howled in protest when it was revealed that the New South Wales Government had secretly agreed to close key roads, worsening congestion and forcing traffic into the $680 million toll tunnel. Taxpayers also were slugged through sweetheart arrangements with the private operator, including payment of up to $45 million if public transport upgrades reduced the number of motorists using the tunnel.

Sydney’s tunnel debacle has fueled a growing concern about the value for money and transparency of public-private partnerships, which have been used across the country to build toll roads over the past decade. A public-private partnership will almost certainly be used in Brisbane for the 4.7km tunnel linking Woolloongabba and Bowen Hills.

In theory, PPPs allow governments to shift project risk and debt to efficient private interests.

But Sydney University traffic expert John Goldberg said that privately operated toll roads were not even viable without massive government assistance in the form of infrastructure bonds.

These financing mechanisms have delivered huge profits to corporate giants such as Transurban Group and Macquarie Bank, which is part of one of the bidding consortia in Brisbane.

“It is obvious that capital resources could be better allocated if state governments simply paid for the roads. Governments are less likely to default and consequently can obtain access to capital at lower interest rates than the private sector,” Dr Goldberg said.

A spokesman for Lord Mayor Campbell Newman said yesterday no road closures were planned and a PPP would only be used if it provided good value.

He rejected RACQ claims that the tunnel would worsen traffic congestion, stressing that some streets could see a 35 per cent reduction in vehicles.

About 55,000 vehicles a day are forecast to use the tunnel initially, with that number gradually rising to 95,000.

But Mr Willett predicted about 120,000 vehicles would use the tunnel every day if there was no $3.30 toll.

“When you have a PPP, you have a choice. You can have a profitable toll road or you can alleviate congestion. You can’t have both. There’s a trade-off,” Mr Willett said.