kiwi sign

Private Participation in Public Property

by Bob Keall

Infrastructure is public property built up over time from taxes or local rates. It may be constructed and/or operated competitively under contract, lease, licence or fee, but not owned other than publicly. It may include natural monopoly rights¹. This is the proper public/private partnership.

It must be financed from intergenerational Government and Local Government borrowing, not from equity over a short term for dividends now. Such funding is the only satisfactory trustee investment.

Congestion tolls may be tolerated or user pays charges used, but only to shorten the repayment term, not for dividends.

Building infrastructure boosts employment on a 1:4 ratio. Every person directly engaged in it creates 4 or more jobs downstream. This raises wages. It is essential for economic growth which is reflected, even anticipated, in higher land price. For this reason the funding should be serviced on a cost/benefit basis from Land Value Rates as set out in "Rates Relief". This restrains land price, again effectively raising wage-rates. Land Value Rates in lieu of interest on mortgages.

The combination of economic growth and Land Value Rates is a powerful force for higher wages-from production rather than from inflation caused by land price.

Infrastructure previously privatized should be recovered by a Resource Rental set off against income tax.

1. Natural monopolies are rights to land, water, airwaves, minerals, fisheries, hydro-power generation and supply, any public utility such as a port, airport, or the monopolistic rights to reticulate wires, pipes, rails, roads, and the like; even the right to pollute.