The Private Sector and the 'Public' Highways

Update: July 2007. A new study was produced by Robin Lindsey and published by the C.D. Howe Institute (cdhowe.org): Congestion Relief: Assessing the Case for Road Tolls in Canda. It "lays out the merits of road pricing worldwide, and makes the case for road pricing in Canada."

Update:Jan. 2002. An article in the Globe& Mail by Graeme Smith asserts that "A toll highway [the 407] that the province of Ontario sold less than three years ago is worth four times as much as the sale price, documents show." ("Bank Values Highway 407 at Four Times the Sale Price (G&M, Jan. 9, 2002, p.A1). This article prompted another the following day. See "Taxpayers Got Good Deal on Sale of 407, Harris Says," also by Smith. In this article it is also noted that "The 300,000 drivers who travel the highway on an average day began paying more last week, when the price for off-peak hours jumped by 92 per cent -- the fourth increase since the highway was sold". (G&M, Jan.10, p.A22)

Recently some economists and policy wonks have been arguing that transportation is too important to be left to government bureaucrats. One argues that: "By allowing innovation and state-of-the-art technology to flourish free of government interference, the private sector can vastly improve transportation and thereby advance our standard of living...Scores of billions of dollars - perhaps hundreds of billions of dollars - might be pared from the nation's transportation-related bill were greater entrepreneurial spirit released...The only real uncertainty is how long policymakers will resist change" ( Cliff Winston, "You Can't Get There From Here: Government Failure in U.S. Transportation," Brookings Review, Vol. 17, No.3, Summer 1999). Others suggest that there is simply not enough public funding available, so the private sector might as well be allowed to operate to provide roads and other transportation services.

Increasingly the subjects of toll roads and the private construction of highways show up in the Canadian press. Fairly typical is this article reporting on remarks made by the Transport Minister: "Collenette Hints at Need for More Toll Roads," The Globe and Mail, April 11, 2000, p.A2. As well, there have been many reports and much controversy about Highway 407 near Toronto. A list of related articles dealing with the "407 project" is provided below.

Highway privatization efforts are international phenomena as the table below illustrates. For good background articles relating to the United States see: "Making Inroads in Private Highway Construction," in The American City & County, Aug. 1999, and "Hitting the Roads" in the November, 1999 issue of the same journal. Both of these pieces are available to members of the UWO community via the database ProQuest. For additional information relating to the business side of international private road projects, see both Business & Industry and Lexis/Nexis. For a discussion of some of the major companies involved (Cofiroute, Brisa Auto-Estradas de Portugal S.A., Autostrade and Autopistas del Mar Nostrum S.A.) see the interesting article by John Tagliabue: "The Private Road to Riches," The New York Times, Jan.2, 2000, B7. Cofirute, a French company, is involved in a California project. When the Italian government sold its shares in the national highway management company Autostrade, roughly one-third of its shares were picked up by the Benetton family which sees a retailing potential in toll roads. "Seven million Italians use Autostrade roads at least once a month, and of those, two million hold a toll payment card called ViaCard, which lets them pay tolls automatically but also provides a huge customer base for selling other things, from film tickets to furniture. One idea is for minimalls at highway rest stops".

Update:"Toronto's Toll Highway Making its way on the Road to Increased Earnings", National Post, Wed. July 25, 2001, p.C7. "407 International Inc., the company that operates the toll highway north of Toronto, said yesterday revenue for the second quarter was $54.8 million, up 18% from $46.5 million during the corresponding quarter last year.... 407 International is owned by a consortium composed of Spanish company Cintra Concesiones de Infraestructuras de Transporte; SNC-Lavalin Inc, a Montreal-based engineering and construction company, and Capital d'Amerique CDPQ, a subsidiary of the Caisse de depot et placement du Quebec".

Update: "407 International Reports Third Quarter Loss of $26 million" , Financial Post, Wed. October 24, 2001, pFP8. "TORONTO. 407 International Inc. yesterday reported a third quarter net loss of $26.2 million, compared with a loss of $11 million in the comparable period a year earlier. Revenue was $69.6 million, up 24% from the corresponding quarter of 2000. The company operates and manages highway 407, an east-west toll highway north of Toronto."

Information relating to highway privatization is spread widely across several subject areas and books and articles will be found in a variety databases and in different Western Libraries. The purpose of the lists below is to assist you in getting started. If you need additional assistance, ask a Librarian.

Selected Books in the Western Libraries

Gomez-Ibanez, Jose. Going Private: The International Experience With Transport Privatization.
DBWSTK HE308.G65 1993.

Hakim, Simon, et al (eds.) Privatizing Transportation Systems.
HE193.P75 1996

Lawther, Wendell. C. Privatizing Toll Roads: A Public-Private Partnership.
DBWSTK HE336.Y64L38 2000.

Mylvagnam, Chandran and Sandford Borins
If You Build It ... Business, Government and Ontario's Electronic Toll Highway
HE 357.Z6O56 2004
[The book] charts the history of Ontario’s Highway 407, the world’s most technologically advanced toll highway, from its development as a toll road in the early 1990s, through construction and operation by a crown corporation, to its subsequent privatization in 1999 by means of a 99-year lease and its performance thereafter.
.
Palda, Filip (ed.) Essays in Canadian Surface Transportation.
DBWSTK HE215.E87 1995.

Porter, Richard C. Economics at the Wheel: The Costs of Cars and Drivers.
DBWSTK HE5611.P67 1999.

Ralphaelson, Arnold H.(ed.) Restructuring State and Local Services: Ideas, Proposals, and Experiments.

Weiner, Edward. Urban Transportation Planning in the United States: An Historical Overview.
DBWSTK HE308.W45 1999

Highway 407: Selected Articles from CBCA

CBCA stands for "Canadian Business and Current Affairs", a database covering many Canadian publications. It contains many articles relating to the "407". The samples below trace the developments from their earliest stages up to the sale of the "407" and beyond. Some of the most recent articles may be available in full-text on CBCA; some others will be available, either in other databases or, in the case of some newspapers, on microfilm. Ask for assistance in locating sources - some of which may not be available in the Western Libraries.

TI: Work starts on major interchange (407)
SO: Heavy Construction News, v.34(5) May, 1990 pg 3.

TI: Highway 407 opens with a jam
SO: Canadian Press Newswire, Je 7'97.

TI: 407: the long road to privatization - Corcoran
SO: Globe & Mail Metro Edition, Je 6'97 pg B2.

TI: Toll highways a gamble [Highway 407]
SO: Canadian Press Newswire, Je 1'97.

TI: Drivers get free ride for first month [Highway 407]
SO: Daily Commercial News, v.70(105) My 30'97 pg A1,A7.

TI: Highway 407 set to open June 7
SO: Toronto Star, My 27'97 pg A6.

TI: Highway 407 safety upgrade to cost up to $15m
SO: Toronto Star, My 2'97 pg A2.

TI: 407 builders scrimped on safety: report. Ontario should "immediately consider" 132 improvements to toll road, engineers say
SO: Globe & Mail Metro Edition, Ap 5'97 pg A8.

TI: Brakes applied to non-stop Highway 407 (Opening delayed until March 31)
SO: Heavy Construction News, v.41(1) January, 1997 pg 8.

TI: Highway 407 IPO to go on the road: investors to be offered three classes of revenue bonds
SO: Financial Post (National Post), v.1(192) Je 9'99 pg D3.

TI: Paving the drive to privatization: the Highway 407 sale will bring $1.6b into Ontario's coffers, but some wonder what's down the road
SO: Financial Post (National Post), v.1(153) Ap 24'99 pg D10.

TI: Ontario bags $3.1b from Highway 407 sale: but users to pay tolls for 70 more years
SO: Toronto Star, Ap 14'99 pg E1,E4.

TI: The great Ontario toll-road cover-up: highway 407 bidding is cloaked in a veil of CIA-like secrecy
SO: Financial Post (National Post), v.1(92) F 12'99 pg C7.

TI: SNC defends toll highway``: highway 407 lost $9m in first quarter, but builder plans two more road bids
SO: Montreal Gazette, My 5'00 pg D1.

TI: SNC Lavalin profits down due to investment in Toronto's Highway 407 [Annual meeting and first quarter results]
SO: Canadian Press Newswire, My 4'00.

TI: Fast track for Highway 407 extension called political back-scratching
SO: Globe & Mail Metro Edition, Ap 18'00 pg A20.

TI: Plate denials for non-payment of 407 tolls to resume, company says
SO: Canadian Press Newswire, Ap 14'00.

TI: Highway 407 to Pickering gets go-ahead, foes fight on
SO: Globe & Mail Metro Edition, Ap 14'00 pg A19.

TI: Opposition attacks Ontario government after company raises fees on toll highway once again [Highway 407]
SO: Canadian Press Newswire, Ap 13'00.

TI: 407 clears bank debt in short order
SO: Financial Post (National Post), v.2(118) Mr 11'00 pg C3.

TI: Ontario won't seek money for erroneous Highway 407 bills
SO: Globe & Mail Metro Edition, F 24'00 pg A26.

TI: Highway 407 sale made more sense than extension, Eves says - Ibbitson
SO: Globe & Mail Metro Edition, F 24'00 pg A9.

TI: Inquiry demanded over sale of Highway 407
SO: Globe & Mail Metro Edition, F 22'00 pg A8.

TI: Cash grab prompted Tories' sale of Highway 407 - Ibbitson
SO: Globe & Mail Metro Edition, F 21'00 pg A1,A19.

TI: [Ontario taxpayers and the province's economy are better off because of the sale of Highway 407, Premier Mike Harris says]
SO: Canadian Press Newswire, F 21'00.

Selected Articles from EconLit

EconLit stands for "Economic Literature". Most of the articles listed below are available in the Western Libraries. Simply click on the links for more details.

TI: "Private Toll Roads: Competition under Various Ownership Regimes"
AU: de-Palma,-Andre; Lindsey,-Robin
SO: Annals-of-Regional-Science; 34(1), February 2000, pages 13-35.

TI: "Road Funds, User Charges and Taxes"
AU: Gwilliam,-Ken; Shalizi,-Zmarak
SO: World-Bank-Research-Observer; 14(2), August 1999, pages 159-85.

TI: "The Economics of a Single Toll Road in a Toll-Free Environment"
AU: Gronau,-Reuben
SO: Journal-of-Transport-Economics-and-Policy; 33(2), May 1999, pages 163-72.
This journal was cancelled in 1994 and the issue above is not available in the WL.

TI: "Commercialising the Management and Maintenance of Trunk Roads in the United Kingdom"
AU: Haynes,-Lawrie; Roden,-Neil
SO: Transportation; 26(1), February 1999, pages 31-54.

TI: "Transport at the millennium"
AU: Long,-Stanley-G., ed.
SO: Annals of The American Academy of Political and Social Science, Vol. 553. Thousand Oaks, Calif.; London and New Delhi: Sage Periodicals Press, 1997, pages 240.

TI: "Highway Franchising: Pitfalls and Opportunities"
AU: Engel,-Eduardo; Fischer,-Ronald; Galetovic,-Alexander
SO: American-Economic-Review; 87(2), May 1997, pages 68-72.

TI: "Private Roads"
AU: Viton,-Philip-A.
SO: Journal-of-Urban-Economics; 37(3), May 1995, pages 260-89.

TI: "Getting on the Right Road: Highway Policy in the 1990s"
AU: Hulten,-Charles-R.
SO: American-Enterprise; 2(3), May-June 1991, pages 39-43.
Unfortunately, this periodical is not available in the WL.

TI: "The Prospects for Privatising Infrastructure"
AU: Gomez-Ibanez,-Jose-A.; Meyer,-John-R.; Luberoff,-David-E.
SO: Journal-of-Transport-Economics-and-Policy; 25(3), September 1991, pages 259-78.

TI: "Privatization of Public-Sector Services in Practice: Experience and Potential"
AU: Poole,-Robert-W., Jr.; Fixler,-Philip-E., Jr.
SO: Journal-of-Policy-Analysis-and-Management; 6(4), Summer 1987, pages 612-25.

(Source: The Reason Foundation. Privatization 1996: Tenth Annual Report on Privatization
taken from Table 12.1 in "Introducing Market Forces to the Use of Public Roads",
by Gabriel Roth in Privatizing Transportation Systems, ed. by Simon Hakim, et al.
HE193.P75 1996)