Ontario’s Public Infrastructure Minister David Caplan has come under fire for releasing a plan to repair Ontario’s aging and increasingly decaying infrastructure using public-private-partnerships (P3s) and user fees.

Opponents of P3s and user fees point to the 407 Express Toll Road (407ETR) as an example of a poorly executed P3, bemoaning the recent efforts to raise tolls on the highway. With regard to turning to more direct user fees to fund the transportation system, opponents of Minister Caplan’s plan argue that Ontario’s transportation infrastructure already has a user-fee based system, in the form of vehicle license fees, license plate fees, and fuel taxes.

But opponents of P3s and tolls miss several key points: P3s can effectively produce new infrastructure and upgrade old infrastructure faster and cheaper than governments can. And tolls set by private companies at the level necessary to maintain the free flow of traffic and to allow for roadway maintenance and expansion offer sustainable mobility, and better incentives to reduce air pollution.

With no concerns for profitability or cost-containment, government transportation agencies have few incentives to bring projects in on time, or on budget. That’s not the case with well-designed P3s: though now contentious because of the setting of tolls, the experience with the construction of the 407 Express Toll Road shows the power of P3s. The 407ETR was developed as a public-private partnership between Canadian Highways International Corporation (CHIC) and the Government of Ontario. There was a guaranteed construction price tag of $930 million, paid for by the Government of Ontario, which was met by CHIC according to budget and on schedule. The road was then sold to a private company, 407 International Inc., for $3.1 billion dollars, earning a windfall for the taxpayers in Ontario.

Now, let’s look at direct user fees, otherwise known as tolls. Toll systems are not only the best way to fund transportation infrastructure, they help ensure that motorists bear the cost of their mobility, and they can reduce the environmental impacts of transportation. By contrast, tax financing (vehicle license fees, license plate fees, and fuel taxes) of infrastructure by government has not only amassed a long history of projects coming in late and over budget, but also creates the wrong incentives for infrastructure maintenance and efficient use.

There is the issue of equity and incentives for environmental stewardship. Financing road construction and maintenance of roadways through taxes on gasoline is inequitable, taking money from people who never use certain roads, and subsidizing other people who do. It doesn’t account for relative impacts on the roadway of different vehicle classes. Yes, heavy trucks pay more in fuel taxes than lighter cars, but they have a still greater and disproportionate impact on roadway degradation. Tolls could charge differential rates for different vehicle classes. And tax-financing is also regressive: lower-income people must often live farther from their work, have less transportation flexibility, and often have older model cars with lower-fuel economy.

Gas-tax financing of highways also undercuts efforts to reduce air pollution, and results in the overuse of newly constructed capacity. Under gas-tax and license-fee financing, people have little incentive to conserve highway infrastructure by limiting trips. They may want to save gas, but they have little incentive to consider how often they use roadways, or at what time of day. Tolls that vary as traffic congestion increases can free up the flow of traffic and reduce the time that vehicles crawl along congested roadways putting out air pollutants and dripping lubricating fluids.

P3s can reduce wasteful governmental spending, produce new infrastructure, and repair aging infrastructure at lower costs, and with better on-time performance. Privately administered user-fee systems can give motorists the mobility they need, fairly apportion costs according to use, and create better incentives for environmental protection. Opponents to such P3 and fee-based systems should get out of the way, and let the process of securing rationally administered transportation infrastructure for Ontarians continue.