In the last blog, there was a discussion of some of the major infrastructure and capacity constraints that may adversely affect our economy in the years ahead. In this blog we will look at some of the suggestions being proposed to alleviate these constraints and foster economic growth.

One of the views expressed by many experts in this area is that a collaborative effort is required from governments at all levels and the private sector. Finger pointing and name calling serve no purpose. Here are some concrete suggestions to address the problems.

1. Create a senior contact person in the major government bodies to provide leadership and oversight

Creating an Undersecretary of Infrastructure in the U.S. Department of Transportation and an Assistant Deputy Minister of Transportation in the Canadian Department of Transportation would be productive first steps. The suggestion is that these individuals would oversee all modes of transportation and take a holistic approach to infrastructure..

2. Establish a coalition of transportation organizations, both private and public, to create a White Paper on Infrastructure and establish Priorities and Funding Requirements

To be productive, the group must include representatives from the key stakeholders (e.g. shippers, railroads, ports, trucking companies, government) and must look first at developing a macro level plan.

3. With a White Paper as output, create a set of Regional and Corridor plans

The $2 billion Alameda Corridor project in Southern California is an example of a public – private partnership that succeeded. The federal and state governments, two ports and three railroads joined to prioritize the rail corridor as a project of national significance. The Alameda Transportation Authority continues to manage the project.

4. Create new Funding Mechanisms and Methodologies

Some projects, while high in priority, are too costly for a single entity to fund and a public-private partnership is often needed to draw funds from a number of sources. The burden of maintaining roads, bridges and other facilities, many built during the 1950’s, is becoming difficult to bear. Federal, state and local governments need to spend an estimated $155.5 billion improving highways and bridges in 2007, according to transportation officials, up 50% over the past 10 years. At the same time, politicians find it difficult to raise taxes.

What is the solution? For some people, the answer is to sell public assets to private investors and have them manage these “infrastructure funds” as a “fixed income proxy”or Infrastructure Income Trust. Investors are looking at achieving 11% to 12% returns and lower risk. Infrastructure “delivers similar yield expectations to high yield bonds and real estate,” says Cynthia F. Steer, chief research strategist at pension consulting firm Rogersway.

Chicago’s former chief financial officer, Dana R. Levenson sums up the situation: “There is money to be had and cities need money.” U.S. representative Chaka Fattah, a Pennsylvania Democrat, proposes to privatize the Philadelphia International Airport and use the proceeds to fund poverty programs – a much easier sell than raising taxes.

5. Provide Tax Credits

Another suggestion is to provide tax credits to companies to encourage them to make infrastructure investments. As an example, Gil Carmichael, senior chairman of the board of directors at the Intermodal Institute has proposed a 25% tax credit to encourage investments in rail trackage. Many railroads cut back on excess trackage in the 90’s to reduce costs. Creating double or triple tracks in some areas would result in more throughput and less bottlenecks.

6. Expand the use of long combination vehicles (LCV’s)

Currently LCV’s are in use in Western Canada and Quebec but not in Ontario. While LCV’s are not “politically palatable” in Ontario at this time due to concerns over public safety, this concern does not appear to have any basis in fact. Increasing the use of LCV’s would increase capacity without adding more trucks to the road.

7. Approve legislation to reform Immigration

A shortage of qualified drivers remains a major issue in North America. The current “softness” in the freight industry should not mask the long term problem that exists in attracting drivers into the transportation industry. A review of current immigration policies could result in new sources of drivers.

8. Create a Central Repository of Information on Infrastructure Proposals

As this topic gains interest and visibility, a host of new ideas will be developed. These new ideas may include innovative funding proposals and infrastructure creation proposals that may not have previously come to light. It would be valuable to create a website or central source that can easily be referenced.

Do you have any thoughts on what can be done to address this major issue? If so, please respond to this blog and share your thoughts with the readers.