Private sector plea to build more roads

Scott Charlton says governments are more willing to listen to proposals from the private sector. Photo: AFRTransurban chief executive Scott Charlton has called on governments to allow the private sector to build more roads, arguing governments should not be the default provider of new infrastructure.
Nanjing Night Net

”It makes sense to test the private sector,” Mr Charlton told Fairfax Media. ”Just because we might have a windfall gain from the privatisation of poles and wires doesn’t mean the government is best placed to deliver [infrastructure] on the other side.”

Mr Charlton’s comments were made to The Australian Financial Review’sBOSS magazine.

The NSW and Queensland governments are planning to privatise their electricity transmission networks, raising billions of dollars to spend on roads and other infrastructure. Typically, governments oversee the construction of new networks, such as NSW’s $11 billion WestConnex motorway.

Construction of the road is due to start in 2015 and the government is considering bids from local and international contractors.

But Mr Charlton said private companies, such as Transurban, which owns toll roads in Australia and the US, could build roads more efficiently.

As well as managing toll roads, such as Melbourne’s CityLink and Sydney’s Hills M2, Transurban is building a new road for the NSW government, the $3 billion NorthConnex tunnel that will link the M2 and F3 freeways.

Transurban struck a deal with the NSW government to build the road after approaching it in 2012 with an unsolicited proposal. Transurban and the government formed a working group to progress the proposal and a final deal was struck in March.

Governments are becoming more willing to listen to proposals from the private sector, Mr Charlton said.

”In the past, there always seemed to be a wall with the private sector – we will tell you what we want, when we want it and you will respond to that,” he said. ”Now there are more people in government who are open to sitting down with the private sector and having a dialogue.”

Mr Charlton has also called on governments to be more open with the public on what proportion of taxes are devoted to roads and how much roads cost to build and maintain. ”The funding model is effectively broken,” Mr Charlton said.

Transurban’s proportional toll revenues – which measure revenues relative to ownership stakes in its toll-road assets – rose 11.8 per cent in the quarter ending in June to $286.7 million.

Proportional revenues for the full year to June 2014 increased 12.6 per cent to $1.1 billion. Transurban’s shares rose 3¢, or 0.4 per cent, to $7.58.

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