See article in Star-Telegram.

Just a few examples (cited in the article) of deals that went south leaving taxpayers with the tab…

SR 91 Express Lanes, California — Private investors in 1995 built toll lanes in the median of a busy freeway connecting Riverside and Anaheim. A few years later, county officials wanted to expand adjacent non-toll lanes but were forbidden by a noncompete clause in their contract. SR 91 investors didn’t want non-toll roads hurting business. The county bought back the toll lanes for $208 million to clear the legal hurdle.

407 ETR, Toronto — Residents and government officials have gone to court to try to stop Madrid-based operator Cintra and its partners from raising toll rates and taking strict steps to punish motorists who use the road without paying their tolls. Because of a contract between the company and the Ontario provincial government, Cintra can block motorists from re-registering their vehicles if they haven’t paid tolls, and some residents say their credit is shot.

Cross City Tunnel, Sydney — Australians boycotted the 1.2-mile tunnel rather than pay a stiff toll, roughly $2.60 in U.S. dollars. Above ground, perfectly good lanes on city streets were shut down to try to persuade people to try the tunnel.

It seems there’s no public infrastructure Cintra doesn’t want to own and operate, and, what’s even more frightening, we’re willing to sell. Feast your eyes on this article about Cintra vying to buy-up an airport in Niagra Falls. Read it here.

Then read this article after the lease was signed and the confusion about two companies named Cintra, one that’s owned by the Mexican government, and one owned by Spanish interests. Read it here.

Toll roads are for the rich
“You won’t see anything but Land Rovers, Mercedes and Beamers,” says one toll road user in Denver. “No one else can afford it.” One of our San Antonio Toll Party members refers to them as Lexus Lanes, and that’s exactly right!

Junk Bond Status
Last month, Fitch Ratings downgraded the debt for Northwest Parkway in Denver to junk bond status. Guess why? Because growth was less than projected. Guess what they’re doing now? RAISING THE TOLL RATES to make-up for their higher interest payments due the shortfalls and higher debt load.

Non-compete agreements are the devil in the details!
“In the mid-1990s, to get the toll roads built, eight communities agreed that they would not compete with the toll road. They cut a deal to limit what roads could be improved, expanded or even built.”

Read about it in the Denver Post.

Toll roads lead to government at its worst…toll roads are bad fiscal policy, they’re more expensive to build and maintain, they’re based on implausible assumptions that growth projections will be the same with or without a toll road (it shouldn’t take a rocket scientist to know that once you toll a road, it changes people’s behavior…you bet it will slow down growth, who wants to live where you have to pay a toll to get to work, school, or shop?), they use gas tax money to build them and yet you can’t drive on them, the non-compete agreements prevent the maintenance and building of other free roadways, and they give control to a private company who’s primary goal is profit not efficient travel for all taxpayers.

Our politicians MUST BE STOPPED…they’ve sold out the public interest to special interests and we’ll be paying for their corruption for generations. Is this the inheritance we want to leave our children and grandchildren…an America where you cannot travel about with affordability and freedom? Where simply driving to work will cripple the family budget and take away their ability to provide a better quality of life since basic transportation costs will gobble up their dreams? Say, “No!” to this toll road corruption and bad fiscal policy. We’ve demonstrated for months that we can do better with much less cost and continue to build highways EVERYONE can use. Our politicans are CHOOSING NOT to do it!

Link to article here.

Toll roads with a cash-out option
Governments look at leasing highways to private sector
By Dennis Cauchon
12/15/05
USA TODAY

State and local governments are singing a new tune in operating toll roads: selling or leasing them for cash and letting private companies run them.

The governments plan to use money from the transactions to build new roads, repair old ones or pay for other programs.

The idea has caught fire since Chicago leased its Skyway — an 8-mile elevated highway that carries traffic from the city to the Indiana border — for $1.8 billion in cash to Spanish and Australian investors in January.

The Skyway had lost money for decades and only recently had turned profitable, generating $40 million in tolls and $20 million in profits last year. The price for the 99-year lease was more than twice as much as any other company bid.

Now other governments around the country are examining what their toll roads are worth and wondering whether they can get a Chicago-style windfall — or at least a good deal.

“A toll road is a wonderful financial asset, and we need money for roads,” says Charles Schalliol, director of Indiana’s Office of Management and Budget.

It’s hard to say how private operation of a toll road would change life for the motorists who use it because each deal is different. Potential benefits: The private ventures might operate and maintain the roads better than government can. Possible negatives: Rising tolls that could push traffic onto local streets.

Some deals being studied:

•The Indiana Toll Road. This 157-mile interstate across northern Indiana connects to the Chicago Skyway. The state is soliciting bids that are likely to top $2 billion. Indiana Gov. Mitch Daniels, a Republican, wants to spend the money on new roads, including extending Interstate 69 fromIndianapolis to Evansville.

•Harris County, Texas, toll roads. The county operates 83 miles of toll roads in the Houston area that could be worth more than $10 billion. Investment banker Goldman Sachs told county commissioners in September that the system could generate a $7 billion upfront payment.

•The Dulles Toll Road. Virginia plans to lease this 14-mile road near Washington, D.C., for 50 years. The state is studying four bids of about $1 billion each. The bidders also promise to pay for improvements such as express lanes on the busy commuter road. Virginia may use the cash to help build a rail line between Washington Dulles International Airport and the region’s subway system.

Other states are weighing the idea. Delaware Gov. Ruth Miner, a Democrat, is awaiting a task force recommendation on whether to privatize the state’s toll roads, including a 24-mile stretch of Interstate 95. New Jersey Gov.-elect Jon Corzine, a Democrat, has said he is open to considering leasing parts of state toll roads such as the New Jersey Turnpike. The issue also has been raised in California and Wisconsin.

The wisdom of privatizing roads depends on the specifics of the deal, says David Schulz, director of the Infrastructure Technology Institute at Northwestern University. He says the 99-year lease of the Skyway was a great deal because of the extraordinary price.

“The Skyway has been a money-losing headache for city government for years. I know. I used to run it,” says Schulz, former Chicago deputy public works commissioner. He says he’s confident that the new management can run the road better, enabling the city to focus on other matters.

Chicago has managed its windfall prudently so far, saving most and paying off old debts on the Skyway, he says. He doubts that other governments will get such huge bids, “but you never know until you put it up for auction.”

Skeptics of privatizing toll roads worry that communities will lose control of their road systems.

“We have concerns about fairness,” says Mark Eagan, president of the St. Joseph County, Ind., Chamber of Commerce. His group fears that a private operator will raise tolls and push traffic onto local streets and that the state will spend its money on projects elsewhere in the state.

In Texas, Harris County Commissioner Steve Radack says it would be shortsighted for his county to give up toll revenue of more than $1 million a day.

“The toll roads belong to the people of Harris County,” Radack says. “We manage it well and need this money to shape our future.”

But Harris County Judge Robert Eckels, the county commission’s top elected official, says leasing part or all of the system could provide more than $10 billion for road construction. “The biggest issue in transportation today is how to pay for it,” Eckels says. “We need to look at the whole range of financing possibilities.”

He agrees that loss of control is the disadvantage of privatizing toll roads. “But the amount of money Chicago got for the Skyway — that got folks’ attention. How can you not look at the value of your toll roads?”

A few private toll roads have been built in Virginia, California and Texas since 1995. But efforts to privatize existing toll roads are new.

Options range from outright sale of roads to long-term leases that last 25 to 100 years. A private company could do everything — maintain roads, operate rest stops, pay for police — or just run the toll booths. A contract could limit future toll increases or require discounts for local residents — moves that may be popular but would lower the road’s economic value.

Private toll roads are common in some countries, says Peter Samuel, editor of TollRoadsNews, a Web newsletter. Italy privatized its state toll authority a decade ago, and France has three publicly held toll road companies. Foreign investors should have a lot of interest in U.S. toll roads, he says.

“The Chicago Skyway opened a lot of minds,” Samuel says. “That $1.8 billion is a big hunk of money.”

Sounds too nutty to be true, but the idea seems backed-up by a recent news clip in the October 28 issue of the San Antonio Business Journal (page 9, in the Week at a Glance not available by link) that describes Kelly USA as the new “Port of San Antonio for trade with Mexico.” Councilman Art Hall has been instrumental in this (noted in a previous article in the San Antonio Business Journal) which explains his vote AGAINST the PEOPLE when he voted down an independent audit of the toll plans in August. Here’s what the CEO of Kelly USA said in the clip: “We are joining forces with Mexico to develop multimodal corridors that will be mutually beneficial to each partner.” Note the term “corridors”…that means toll roads. Note the word “partner.” How cozy and chummy for them and how detrimental and costly for the taxpayers!

Texas: Keystone State of the FTAA
by Robert L. Dacy
November 14, 2005

Because of its location, Texas is integral to the creation of the FTAA and the eventual merger of North and South America under a single regional government like the EU.

Based in Austin, Texas, Robert L. Dacy is a political researcher and host of The Simple Truth, a TV talk show.

A little more than two years ago, political allies of Texas Governor Rick Perry quietly passed legislation creating the “Trans-Texas Corridor” (TTC). With the connivance of a largely silent press, the most expensive project in the state’s history became law with scant public notice.

It’s bad enough that the TTC will cost at least $185 billion, much of it derived from new toll taxes imposed on existing free roads. It’s even worse that the project — 4,000 miles of roads, rail lines, and other infrastructure crisscrossing the state, bypassing all of the cities — will be built by a Spanish contractor rather than a firm based in the United States. But worst of all is the role to be played by this hugely expensive boondoggle in linking the transportation system of the United States with that of Mexico, thereby creating the infrastructure that will facilitate the creation of the Free Trade Area of the Americas (FTAA).

Because of simple geography, the road to the FTAA must go through Texas. For a short time, the Texas Department of Transportation website illustrated the true purpose of the corridor via a map showing how the project would connect with the Mexican highway and railway system, and a sketch of North America showing the strategic placement of Texas, with giant arrows pointing from Texas north to Canada and south to Mexico.

The strategic significance of Texas in the scheme to amalgamate the Americas was underscored by the trinational summit held last March at Waco’s Baylor University. During that event, President Bush, along with Mexican President Vicente Fox and Canadian Prime Minister Paul Martin, approved a pact to create a “Security and Prosperity Partnership” that would deepen the economic and security integration of the three countries. Last month, Baylor’s Hankamer School of Business hosted an important follow-up meeting intended to shore up flagging support for the FTAA in the United States.

Appropriately, Waco sits astride Interstate Highway 35, a route parallel to the envisioned TTC — the first of what would be several FTAA corridors gradually binding North America and the entire Western Hemisphere into a single economic and (eventually) political region.

FTAA on the Ropes?

This writer attended the recent Waco “Free Trade in the Americas Conference,” held on the Baylor University Campus on October 6-7. In his speech at the conference’s opening banquet, Dr. Supachai Panitchpakdi, former director general of the World Trade Organization (WTO) and current secretary-general of the United Nations Council for Trade and Development, specifically mentioned connecting economic regions through international infrastructure projects. Referring to projects of this sort being undertaken in Southeast Asia, Dr. Panitchpakdi said that, “if you can link them all up, it would make a trade area that would be wide enough for everyone to participate.”

It’s vital to understand that Dr. Panitchpakdi is not seeking to expand participation in authentic free trade, in which private interests engage in mutually beneficial commerce without government intrusion. Rather, his vision calls for each national government to regulate trade and economic policy according to mandates handed down from the WTO and administered through regional trade blocs, such as NAFTA, CAFTA, and the proposed FTAA.

In his native Thailand, Dr. Panitchpakdi led the campaign for that government’s ratification of the WTO agreement. His bio proudly states that he also worked to ensure “his government’s full and faithful implementation of its obligations” under the WTO.

That perspective dominated the October FTAA conference, which also devoted a lot of time to bemoaning opposition to the proposed hemispheric merger. The assembled bankers, trade representatives, globalization experts, and professors all presented a unified picture of an FTAA on the ropes.

Felipe Frydman of the Central Bank of Argentina complained that the United States Congress was an impediment to trade negotiations. Many participants echoed the lament that the Brazilian government of Marxist Luis Inacio Lula da Silva — which favors a more overtly socialist hemispheric arrangement — was not cooperating. Robert Devlin of the Inter-American Development Bank went so far as to lament that all momentum for the FTAA was lost.

These frustrations were coupled with apparent indifference on the part of some invitees. A few of the scheduled speakers were absent; the dinner, breakfast, and luncheon hosted by Baylor were not overflowing with hungry attendees; and the mainstream press was largely missing. A case in point is the press conference held in the media room at the Business College at Baylor. Only two reporters — one from the Houston Chronicle and one from THE NEW AMERICAN — showed up for the event, which was simulcast live on the Internet.

Asked by THE NEW AMERICAN if the U.S. Congress would be able to veto decisions made involving trade disputes settled by his envisioned FTAA, Dr. Panitchpakdi responded with a rambling non-answer. A few minutes later, after reminding the former head of the WTO that Article 1, Section 8 of the U.S. Constitution gives Congress the power to regulate foreign trade, we asked if the U.S. Constitution stands in the way of the FTAA. After another discursive non-response, Dr. Panitchpakdi opined that the Constitution does not stand in the way. At that point, the eminent former head of the WTO and his entourage very quickly left the room as someone announced the press conference was over.

Don’t Celebrate Yet

Encouraging as it is to see the proponents of the Free Trade Area of the Americas in such apparent disarray, celebration is premature. The credentials, statements, and governmental philosophies of the heavy hitters at the conference should cause alarm bells to sound in the ears of all freedom-loving Americans.

Dr. Panitchpakdi, the main attraction at the Baylor conference, inadvertently flashed his totalitarian underbelly when he mentioned in passing a meeting he had last July with Bo Xilai, the Trade Minister of Communist China, whom he described as “the present Trade Minister of China, whose father used to be one of the six heroes of the Chinese Revolution, one of the close colleagues to Mao Tse-Tung.” (Bo Yibo, the father of Bo Xilai, is actually known as one of the “Eight Immortals” of Communist China.) Realizing that Dr. Panitchpakdi, a powerful proponent of the FTAA, referred to one of Chairman Mao’s cohorts as a “hero” should suffice as a “red” flag signaling the true intentions of this FTAA cheerleader.

Another credentialed globalist at the conference was Richard Fisher, chief operating officer of the U.S. government for NAFTA, former vice chairman of the Board of Directors of the Overseas Private Investment Corporation, former vice chairman of Kissinger McLarty Associates, current president and chief executive officer of the Federal Reserve Bank of Dallas, member of the Council on Foreign Relations, and a member of the Trilateral Commission (these last two organizations promote global governance).

Contrary to the pessimistic assessment offered by Robert Devlin of the Inter-American Development Bank, Fisher stated we must have the political will to achieve the FTAA, insisting that enacting the pact is a moral imperative. If we do not help the poor countries of Latin America, Fisher declared, “it becomes for us a security issue. There’s your moral imperative.” This is a rehash of the argument used by the Bush administration to win approval of CAFTA, namely that we owe it to the “fragile democracies” of the region to enact a trade agreement that amounts to a massive wealth transfer from the U.S. to Central America.

In response to a question concerning the huge trade deficits the United States is running, Fisher claimed that if we did not run these deficits, we would hurt other countries because we are the “consumer of last resort” to the world. “We play a role by running these deficits … we are performing a service.” Which is to say that Americans have a global obligation to impoverish themselves through debt-driven consumption in order to build economies in the “developing world.”

Mr. Fisher’s résumé shows that he knows how to play ball, and that he’s clearly not playing for the home team. He has spent a good deal of his life encouraging industrial production and jobs to leave our shores, shoveling taxpayer-funded welfare to corrupt foreign governments, debasing our currency, peddling influence, doing an end run around the Constitution, and damaging our national sovereignty by encouraging trade with an aggressive Communist Chinese government whose business interests are controlled by its military machine. He is not about to stop now, and he and his CFR teammates are adept at manufacturing the political will to turn the Western Hemisphere into a totalitarian American Union.

Meanwhile, elsewhere in the great State of Texas, the fight over the Trans-Texas Corridor continues, with little awareness of the elaborate design for hemispheric convergence of which that scheme is a part. Dr. Panitchpakdi pointed out that a unified trade region requires infrastructure, and it is therefore up to patriotic Texans to see that the corridor never gets built. It is up to the American electorate to put pressure on the Congress to ensure that the FTAA never comes to fruition. Robert Fisher knows that the political road to a successful FTAA goes straight through the U.S. Congress. So do we. It is up to us to build a roadblock.

© Copyright 2005 American Opinion Publishing Incorporated

Tunnel path altered ‘without approval’
Ean Higgins

The Autralian
08nov05

THE private consortium building Sydney’s controversy-plagued Lane Cove Tunnel secretly changed its route without seeking approval or informing the local council.

Had the company stuck to the plan approved by the council, a block of apartments seriously damaged by a tunnel cave-in last week would have been spared.
The 65m change in the route around the site of the tunnel collapse has prompted speculation as to whether the builders had conducted adequate geological surveys or, as some independent engineers have suggested, they rushed the project.

The extraordinary revelations contained in a Lane Cove Council report released last night will fuel outrage over the state Government’s handling of privately funded infrastructure projects.

“It is yet another example of how government oversight of such projects is grossly inadequate,” Opposition Leader Peter Debnam said.

It will also play into the hands of an expanding group of dissidents in the Labor Party, whose caucus meets this morning.

The Left, emboldened by intervention from the right-wing Labor machine, will press for the Government to scrap “public-private partnerships” such as toll roads and the controversial $2billion desalination plant planned for Sydney.

The Left will press for the Government to borrow for infrastructure rather than cede control to the private sector and grant concessions.

It may even suggest a state version of infrastructure bonds, a concept which under a federal plan provided extraordinary tax concessions to rich investors.

The Left, which will also take on Premier Morris Iemma over terror laws, could use the latest scandal over the $1.1billion Lane Cove Tunnel as a prime example of the way public-private partnerships can lead to a loss of transparency.

The council report indicates that the successful consortium, the Lane Cove Tunnel Company, which involves Chinese and other investors, quietly made substantial changes after it won planning approval.

In the scathing report prepared for last night’s meeting, council officers say they discovered a number of previously secret “major modifications to the project”, made after approval was given in December 2002.

The changes had not been acknowledged by the company or the Government, the report says.

It lists changes including the fact that the “exit to eastbound tunnel and entrance to westbound tunnel (was) relocated further to east by 145m”.

The report also says that “of particular relevance to events this week”, the project deed drawings dated November 18, 2003, and plans on display at the Project Display Centre just last week, show the location of the collapsed exhaust tunnel 65m further east of the damaged block.

“Whilst not discussing causation, an investigation needs to consider what information was provided to the unit owners in regard to the relocation,” the report says.

It lists a number of other changes that appear to have been secretly negotiated with the Roads and Traffic Authority.

“The changes were agreed to without any consultation with other government agencies,” the report says. “None of these changes were formally assessed by the RTA until 28 April, 2004, nearly five months after the contract was signed.”

A spokesman for the tunnel consortium, Trent Mumford, said the changes were made according to state government guidelines.

© The Australian

These public private partnerships are met with the same disdain by our friends overseas in Australia as well. Cintra has a similar reputation for the Ontario Toll Project in Canada.

Note this article that tells how stockbrokers have downgraded Macquarie’s rating due the controversy and uncertainty of public disdain for toll roads managed by public private partnerships.
Read the article in the Australian.

Did you read that? CONTROVERSY means private banks may choose NOT to sell bonds and finance toll roads! They’re a risky proposition for investors. That’s GREAT news for taxpayers! Let’s continue to stir up controversy…it’s one of our paths to stopping this highway robbery!

ANGRY? TAKE ACTION!
Write AND call the Governor (800) 252-9600 (web mail) and your State Representative to DEMAND this be STOPPED!

Go here to find your state representatives.

If you live in the 281/1604 corridor, your State Reps are likely Rep. Frank Corte STREP123@aol.comor (210) 349-0320 or Joe Straus at joe.straus@house.state.tx.usor (210) 828-4411.

Give some fresh calls to your legislators and the Governor and tell them what you think about these companies having exclusive control of our highways (even the roads surrounding the toll lanes) WITH NO OVERSIGHT BY ANY ELECTED OFFICIAL!

Link to article here.

Open secrets
The Cross City Tunnel scandal should lead to more public scrutiny of private infrastructure deals
By Matthew Moore
Fairfax Digital
October 31, 2005

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 member
s, 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.

Macquarie vulnerable, broker say
The AUSTRALIAN
Richard Gluyas and Glenda Korporaal
20oct05

INVESTOR sentiment could be turning against the “millionaires’ factory” Macquarie Bank, according to a leading firm of stockbrokers, which yesterday downgraded its rating of the nation’s largest investment bank.

Goldman Sachs JBWere said Macquarie’s recent meteoric rise, as well as its reliance on fees from specialist funds holding infrastructure assets including toll roads, were vulnerable to changes in sentiment and it advised investors against buying the stock.
Goldman said the recent switch in sentiment towards the bank, which has no involvement in Sydney’s expensive and under-used Cross City Tunnel, has a parallel in the investor backlash that followed Macquarie’s $5.6billion purchase of Sydney airport in 2002.

Macquarie was criticised for paying too much and ramping fees to earn a financial return.

Shares in the nation’s biggest investment bank surged to a record high of $78.23 on September 27.

But since then, amid faltering global share markets, it has been mostly downhill.

Yesterday, the bank’s stock shed a further $2.41, or 3.7per cent, to $63.51.

Goldman downgraded Macquarie from a buy recommendation to a hold, citing factors including increased competition for infrastructure assets and inferior performance by all of the bank’s listed specialist funds.

However, at the same time Goldman Sachs JBWere was downgrading Macquarie to hold, Credit Suisse First Boston was upgrading the merchant bank from hold to buy.

CSFB said there were some valid concerns about Macquarie but they were “overdone”.

A Macquarie spokesman said yesterday the bank did not comment on analysts’ reports.

Meanwhile, a project management expert warned yesterday that public servants were being “rolled” by banks wanting to make big profits out of public-private infrastructure projects.

Australian Institute of Project Management president David Dombkins called for a halt to new public-private sector projects such as the Cross City Tunnel to allow governments to design more appropriate deals.

These should include lower profits for banks and the inclusion of community service obligation provisions that would allow governments to have a continuing say in the project.

Dr Dombkins said the PPP projects negotiated to date in Australia had all ended up costing at least twice as much as they needed to.

“The deals that are being done don’t deliver for the public anyway,” he said. “It is the banks that have got control. We have very immature governments in Australia, which are being rolled by the banks.”

His comments came as a leading pensioner group joined the growing criticism of public-private sector deals such as the Cross City Tunnel.

Combined Pensioners and Superannuants Association president Morrie Mifsud said many pensioners were concerned at the growing trend for private-sector involvement in government services such as transportation and health.

In a submission to the NSW Public Accounts Committee, the association called for an end to PPP deals used to deliver public services.

“The association calls on all governments to halt this practice and to use public funding to build infrastructure and deliver services on the basis of public need, not private profits or contractual pressure,” it said.

© The Australian