Limited but positive incentive for efficient behaviour. Licence fees vehicle, people Efficient tax collections. No incentive for efficient behaviour. – Hypothecation increases consistency with beneficiary pays principle. Developer contributions None Well established system. Narrow focus primarily local infrastructure. – Can be consistent with beneficiary pays principle. Value capture None Can be integrated with existing property tax system. Usually only partial funding. Can be consistent with beneficiary pays principle. Public sector borrowing Borrowing general State taxes, user Low cost of finance. Constrained by limited and volatile State – charges, licence Suitable for public projects. revenues and impact on AAA credit rating. fees, sale of assets Not consistent with beneficiary principle. GTE Borrowing User charges May encourage efficiency as the management of the Debt appears as State debt and impacts AAA agency responsible for debt also bears some risk. credit rating. Consistent with beneficiary pays. Special purpose infrastructure Tax revenue Low cost of finance. Constrained by limited and volatile State hypothecated to Suitable for public projects. revenues and impacts on AAA credit rating. servicing debt Not consistent with beneficiary principle. Private sector financing Mixed private public instruments PPPs user charges fund private – investment None Can combine advantages of public and private sectors. Requires clear contracts to ensure efficiency Offers for greater efficiency in construction and gains and to manage project and social risks. PPPs user charges do not fully operation Long contracts necessarily incomplete and – fund private investment Tax revenue Can be structured to allow for appropriate sharing of not conducive to periodic reviews. hypothecated to History of managing risk, especially demand availability risk is problematic.
Limited but positive incentive for efficient behaviour. Licence fees – vehicle, people Efficient tax collections. Hypothecation increases consistency with beneficiary pays principle. No incentive for efficient behaviour. Developer contributions None Well established system. Can be consistent with beneficiary pays principle. Narrow focus – primarily local infrastructure. Value capture None Can be integrated with existing property tax system. Can be consistent with beneficiary pays principle. Usually only partial funding. Public sector borrowing Borrowing – general State taxes, user charges, licence fees, sale of assets Low cost of finance. Suitable for public projects. Constrained by limited and volatile State revenues and impact on AAA credit rating. Not consistent with beneficiary principle. GTE Borrowing User charges May encourage efficiency as the management of the agency responsible for debt also bears some risk. Consistent with beneficiary pays. Debt appears as State debt and impacts AAA credit rating. Special purpose infrastructure Tax revenue hypothecated to servicing debt Low cost of finance. Suitable for public projects. Constrained by limited and volatile State revenues and impacts on AAA credit rating. Not consistent with beneficiary principle. Private sector financing Mixed private public instruments PPPs – user charges fund private investment PPPs – user charges do not fully fund private investment None Tax revenue hypothecated to availability Can combine advantages of public and private sectors. Offers for greater efficiency in construction and operation Can be structured to allow for appropriate sharing of Requires clear contracts to ensure efficiency gains and to manage project and social risks. Long contracts necessarily incomplete and not conducive to periodic reviews. History of managing risk, especially demand risk is problematic.
PATREC_Transport_Infrastructure_Financing_Report.docx