Trump Looks to Australia for Infrastructure Guide, Roth Says
(Bloomberg) -- As he seeks models for his planned $1 trillion infrastructure program, President Donald Trump is looking halfway around the world for inspiration: Australia.
The Trump administration is looking “very carefully” at Australia’s model for financing roads, bridges and other public projects, Steven Roth, co-chairman of the president’s infrastructure task force, said at a Bloomberg panel discussion in New York on Monday. The country depends on public-private partnerships for infrastructure improvements.
“The gospel is that the government sets goals, and is bureaucratic,” said Roth, chief executive officer of New York-based Vornado Realty Trust, one of the largest U.S. real estate investment trusts. “The private sector is entrepreneurial and more efficient. The process is improved by switching over from government-managed to private-managed as early as possible.”
Trump’s administration is “on track” to have a legislative package ready in the coming months to push forward his infrastructure program, U.S. Transportation Secretary Elaine Chao said at an event near Columbus, Ohio, on Monday. The plan will rely on public funding and public-private partnerships, she said, and financing may also come from repatriation of overseas earnings planned for upcoming tax legislation.
At the discussion New York, Roth expressed interest in what fellow panelist John Schmidt, a former associate U.S. attorney general and now infrastructure partner at the law firm Mayer Brown LLP, called Australia’s “infrastructure recycling” program, under which roads and other public utilities are privatized, with the proceeds put into additional infrastructure. In Australia, Schmidt said, any state that participates in the program gets a 15 percent bonus from the national government to spend on improving infrastructure.
Schmidt also pointed to a model closer to home. The Indiana Toll Road was leased long-term to a Spanish-Australian team of private companies, with $3.8 billion coming back to the state under Governor Mitch Daniels, Schmidt said. The governor then took $3.5 billion of that and invested it in other Indiana projects: new and rebuilt roads and bridges.
“Not surprisingly, Indiana is now rated the No. 1 state in the United States for the quality of transportation infrastructure,” Schmidt said.
The first problem Trump’s task force looked into was why it takes so long to get approvals for infrastructure projects, said New York developer Richard LeFrak, who is teaming with Roth to lead the committee. For larger initiatives, the process can take 10 years, he said.
“Given everybody’s relative frustration with what’s going on now, I’m optimistic we’ll be able to make some difference in how the federal government regulates that activity,” LeFrak, chairman and chief executive officer of the LeFrak Organization, said during a separate panel at the Bloomberg event.
Roth noted that the idea for an ambitious infrastructure upgrade got bipartisan support last year in what was otherwise a divisive election.