MASSPIRG Assesses the Risks and Rewards of Public-Private Partnerships

MASSPIRG

BOSTON — Private financing deals can be good and bad for taxpayers. A new MASSPIRG report examines whether high-speed rail should be public, private, or both. While public-private partnerships for high-speed rail could be very promising, they can also create a lot of pitfalls. The report examines experience with public-private partnerships for high-speed rail in other countries, and recommends ten principles to protect taxpayers and the public interest under private financing deals.

The questions raised in the report are particularly timely as Congress and state officials are debating future funding for high-speed rail. At the same time, the U.S. House Transportation and Infrastructure Chair, John Mica, has proposed privatizing Amtrak with the hope of garnering private financing for new bullet trains along the Northeast. California is seeking private funds as part of a planned route connecting Los Angeles and San Francisco.

“Private financing can be a supplement but not a substitute for public companies to support high speed rail,” said Lizzi Weyant, staff attorney at MASSPIRG. “In other nations the majority of the support comes from the public sector. Rail companies overseas often have public ownership and the public on their board, much like a public utility or Amtrak.” Compared to the United States, other industrialized nations around the globe tend to be far ahead in developing high-speed rail, and invest more in infrastructure.

Public-private partnerships in other countries have often run into trouble. When private financing has been used as a short-cut around public funding, taxpayers often end up paying dearly. It is for this reason that partnerships must have the highest levels of transparency, with clear rules of accountability, and strong capacity for monitoring enforcing arguments.

“While Congress is having trouble finding money to invest in high-speed rail, they need to consider the serious costs of not moving forward,” said Weyant. “Without high-speed rail, we will be more dependent on oil and will pay dearly to build more airport runways and ever-wider highways.”

# # #