As infrastructure project
proposals become more frequent, and demands for funding increase,
all levels of Australian government should consider innovative
funding methods to keep up with the momentum of change.
During the Committee for Geelong's USA trade mission we visited
Virginia and learned how the Chesapeake Bay Bridge-Tunnel, a 37km
fixed link crossing at the mouth of Chesapeake Bay, was
funded. This remarkable piece of infrastructure remains one
of only ten bridge-tunnel systems in the world, three of which are
located in Hampton Roads, Virginia.
Although the original vision for
a facility consisting of tunnels and bridges was widely criticised
as 'extravagant and dangerous', the project went ahead. The
Chesapeake Bay Bridge-Tunnel has since been described as one of the
engineering wonders of the modern world. It was financed, not
by the use of state or local government public funds, but by the
issue of 'revenue bonds'. In 1960 investors bought $US200
million in bonds which were to be repaid from toll
revenue.
Over time, all debtors were
repaid and the project began to make a profit. Money was
re-invested for future maintenance and expansion. The Chesapeake
Bay Bridge and Tunnel District (CBBTD) became the governing body of
the facility. By 1991, it realised that, in order to cope with
future traffic growth, to provide safer travel and to allow for
maintenance and major repairs, expansion of the facility would be
needed. Again, toll revenue bonds were sold to finance the
project.
In 2003, a state government
review found that the construction and operation of the Chesapeake
Bay Bridge-Tunnel had been a successful endeavour with the facility
providing 'an essential link between the Eastern Shore and the
mainland, supporting the agricultural economy on the Shore, and
tourism on both sides of the bay.' In financial terms, the
toll structure was assessed as providing 'adequate revenue for
operation, maintenance, and existing debt service.'
Subsequent expansion of the
bridge-tunnel in 2015 has been financed primarily from three
funding sources: the issuing of bonds supported by bridge toll
revenues, funds the CBBDT has on hand and an anticipated federal
loan. While this project is not receiving any state or local
subsidies, CBBDT has applied for a state government loan through
the Virginia Transportation Infrastructure Bank.
Building the Chesapeake Bay
bridge-tunnel using infrastructure revenue bonds was an excellent
achievement by the Commonwealth of Virginia. It was driven by
visionary leadership, boldness and financial insight. The use
of bonds in Australia has been uncommon in the past, and they do
not seem to be used currently to raise finance for major projects.
This is an option which, if administered by a specially constituted
and independent authority, could provide better accountability and
financial returns than using debt, tax revenue or asset
sales.
As Geelong transforms,
innovative funding methods for future infrastructure projects
should be considered for Victoria's second largest city.
Perhaps such funding methods could be used for a new convention
centre, the final stage of Simonds Stadium or even a revolutionary
bridge-tunnel system between Geelong and
Melbourne.
Rebecca Casson is the Committee
for Geelong Chief Executive Officer. Follow the Committee for
Geelong on Twitter @Comm4Geelong.