Aussie Rules: Recycling to modernize American infrastructure
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As underscored in the recent report issued by the American Society of Civil Engineers (“ASCE”), America’s once world leading infrastructure continues to decay. We’re far removed from wonders like the Golden Gate Bridge, Hoover Dam and interstate highway system, which are products of the Roosevelt and Eisenhower Administrations. Now, we’re managing only a D+ on the ASCE’s report card, and it’s estimated that our chronic underinvestment in infrastructure is costing each US family approximately $3400 annually. Collectively, that is a staggering number and an impairment of our GDP.

In the 2016 election cycle, as in so many others preceding it, every prominent American politician pledges to improve our transportation, water, energy and social infrastructure. Rather than hearing these recycled speeches, we should actually take a lesson from our counterparts in Australia and adopt another version of infrastructure “Recycling.”

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Recycling in this context means encouraging privatization of appropriate infrastructure assets with proceeds reinvested in needed new infrastructure. Despite having roughly 10% of the population and GDP of the US, in 2013, Australia adopted a National Infrastructure Plan calling for $100 billion in infrastructure asset recycling.

Rather than increase taxes or increase government debt, Infrastructure Australia has encouraged its state and local leaders, in competitive processes, to divest to the private sector select airports, roads, bridges, water services, ports, rail systems as well as power generation, transmission and distribution systems. Assets are sold or leased to qualified private operators, and the assets remain subject to appropriate public oversight.

For example, New South Wales awarded a 99-year lease of two ports to a private consortium for the sum of $5 billion. These proceeds in turn were committed to new motorways and other new infrastructure in the Illawarra region south of Sydney. 

Tasmania sold the Hobart Airport to fund the Brighton Transportation Hub and to invest in agricultural water storage and irrigation.

Queensland sold the Port of Brisbane to fund the Port of Brisbane Motorway and has saved its taxpayers over $1 billion.

While still in its infancy, Australia’s Asset Recycling Fund is improving the lives of average Australians. It has helped accelerate infrastructure investment and improvement by offering a relatively modest economic incentive to its state and local governments. Canada’s new government is reportedly developing a similar model.

Surely we can learn from our Aussie friends and work our way back at least to an average infrastructure grade. We must not tolerate Flint, Michigan water infrastructure, Amtrak service into antiquated Penn Station, or a structurally deficient Memorial Bridge that connects national shrines as well as Northern Virginia and the District of Columbia.

The cost to our national health and productivity from substandard conditions is enormous. Five years ago, a US Chamber of Commerce study estimated that stalled infrastructure projects were costing the US economy over $1.1 trillion and 1.9 million jobs. Those numbers have grown every year since; and the problem will only intensify as our infrastructure ages and our national population grows.

Why not try a recycling program that would create an incentive and a mechanism for politicians across America to improve the infrastructure of their constituents—with support rather than direction or interference from Washington?

Whether it is repatriated corporate profits, a gas tax hike, new user fees, a shift of funding from other federal programs or another funding mechanism, the US must act to preserve its standing as a global economic superpower. Main Street, Wall Street, and hubs of innovation like Silicon Valley all depend on reliable transport, water, power, communications, education and public health. To continue leading the global economy, America requires enormous investment in infrastructure. 

The Australians have devised a dynamic option that is decentralized, democratic and market driven. It may not be perfect. It may not be seamlessly adaptable to the US market. But let’s give the next generation of Americans a competitive socioeconomic foundation.

Elected representatives in Washington, in every city hall and city council, and in every governor’s office and state legislature need to show they can listen, learn and lead. Enough public safety has been compromised and enough economic opportunity and time have already been wasted.


Jay M. Tannon is managing partner at American Infrastructure Holdings LLC and of counsel at DLA Piper LLP.