With transportation funding from last year’s Act 44 looking increasingly unlikely to materialize, Gov. Rendell is wisely continuing to push for a private-sector lease of the Pennsylvania Turnpike as part of the solution to the state’s transportation woes.
Yet, as discussions over the turnpike move forward, a protectionist undercurrent is rearing its ugly head. Some legislators want to ban foreign firms from leasing and operating the turnpike. These ill-advised efforts ignore the increasingly global nature of business and will hurt the commonwealth’s economy.
Several firms bidding to operate the turnpike are U.S. subsidiaries of international companies, primarily from Spain and Australia. Private financing for multibillion-dollar toll-road projects has been used around the world for decades, but it is relatively new in the United States, where most toll roads have been run by government authorities. Hence, international firms are the most experienced private-sector, toll-road operators. Anyone interested in getting the best deal for taxpayers should surely consider experience and track record when choosing a partner for a multibillion-dollar deal.
U.S-based firms such as Goldman Sachs, JPMorgan and Merrill Lynch are also among the bidders, but even they get much of their capital from foreigners. Today, Americans regularly invest in international firms. For example, the New Jersey Teachers’ Pension Fund is a major shareholder in the Spanish toll-road operator Cintra. Australia-based Macquarie, one of the biggest international toll-road firms, has received significant investments from the Mid-Atlantic Carpenters Pension Fund and the Midwest Operating Engineers Pension Fund. Therefore, restricting the participation of foreign firms actually threatens the investments of hard-working Americans – union members, public employees and individual investors alike.
When our friends, family and neighbors are invested in these companies, are they really foreign? And when Goldman Sachs of New York teams with Transurban of Australia and two Canadian public pension plans to compete for the turnpike lease, is that really a domestic venture?
In the case of the turnpike, we are talking about international companies that would operate permanent roads and create jobs in Pennsylvania. They can’t pick up and ship the turnpike overseas. Their investment and all of that concrete would stay in the commonwealth.
Pennsylvania should welcome companies interested in creating job opportunities and investing billions of dollars in the state. This is the reverse of outsourcing – it’s “insourcing” – and it’s good for the economy.
Macquarie, for example, employs nearly as many people in North America as in its home of Australia. In its lease of the Indiana Toll Road, Macquarie and Spanish partner Cintra hired local citizens and are using local contractors for road work. That’s on top of the $3.8 billion the firms paid the state for the lease itself, which was double the highest bid made by an American-led team. Had Indiana restricted competition to domestic firms, the state would have left billions on the table.
Those fostering foreign fears need a reality check. We drive foreign cars and strap our kids into foreign-made car seats every day. Most people watch the news on foreign-made televisions and surf the Internet on computers filled with foreign-made parts. We routinely fly on foreign-made Airbus planes. But somehow we don’t want to drive on asphalt poured by a foreign company?
Pennsylvania is in desperate need of funding to repair, maintain and expand its roads and bridges. Leasing the turnpike offers a great opportunity to catch up on repairs and finally start tackling future road needs. But preventing many of the world’s top road operators from working in Pennsylvania just because they aren’t based exclusively here in the States does a huge disservice to taxpayers. That also all but guarantees the state won’t get the best possible deal. That is bad business in any country.