Peters: US must get serious about PPPs

In an exclusive editorial for Infrastructure Investor magazine, former Secretary of Transportation Mary Peters argues the US needs to understand the old ways of funding transportation will no longer work and do more to attract private investment in its infrastructure.

Now is the time for the United States to make private investment a significant part of how it finances its massive transportation infrastructure needs, according to the former head of the US Department of Transportation.

Mary Peters

“We now need to decide if we are serious about making private investment and PPPs part of the solution to meeting our transport requirements, or see that private capital go to our neighbours in the Americas,” Mary Peters, the Secretary of Transportation from 2006 to 2009, writes in an exclusive editorial for the October issue of Infrastructure Investor magazine.

“The old ways of funding our surface transportation programmes are simply not going to work for the future,” Peters says. And the US, she believes, has “for too long failed to truly face up” to this fact.

Historically, the US has funded its transportation spending using a tax on gasoline use, currently at 18.4 cents a gallon, paid into a Highway Trust Fund dedicated to transportation spending. “For much of the last century,” Peters writes, the gas tax was a “somewhat accurate proxy to meet our needs”.

The old ways of funding our surface transportation programmes are simply not going to work for the future

Mary Peters

Not anymore: “By the summer of 2008, it became apparent that the 18.4 cent federal fuel tax was not providing sufficient revenue,” Peters writes. That’s because money authorised by Congress under a 2005 transportation bill was way more than gas taxes coming into the Highway Trust Fund. 

“In the ensuing 18 months, Congress would have to provide $34.5 billion in general fund revenues just to keep the Highway Trust Fund solvent,” Peters writes, referring to transfers from the US Treasury.

There is private capital available to fill this gap in lieu of the taxpayers, but Peters believes the US has not made as much progress as other countries in attracting private investors to its infrastructure needs. “There are currently only five or six major PPP projects under development in the US,” she writes, but “Canada is expected to close 30 projects this year, and 50 percent of the infrastructure in Chile is funded by the private sector”.

To read Secretary Peters’ full editorial, click here.