In Montreal, the federal government is building a new bridge over the St. Lawrence river, to replace the aging Champlain bridge. There has been plenty of discussion about whether tolls should be charged to users of the new bridge. It goes without saying that actual users are highly reluctant to pay tolls, but there is also a case to be made that users of a facility should pay some sort of user fee, that infrastructure costs should not be borne entirely by all Canadian taxpayers.
In Ontario, Highway 407 is a toll highway that was built to bypass highway 401 around the Metro Toronto area. A 99-year lease of the highway was sold by the Ontario provincial government in 1998 to a consortium of private Canadian and Spanish investors for $3.1 billion. There are no toll booths along the length of the highway. Transponders or licence plates are read at entrance and exit points and distances are calculated electronically. Toll fees vary according to the time of day, so that users pay more at times of high traffic.
Clearly, the investors in this project believe that infrastructure projects can be profitable. But why should all the profits go to further enrich people who are already rich? Why not set it up so that many more people could benefit?
I propose that we consider an new business model for large infrastructure projects such as the new Champlain bridge and the light rail system being proposed for Montreal’s West Island. That model is equity crowdfunding, in which online, internet-based platforms (think Kickstarter or IndieGoGo) are used to raise money, typically for startup ventures. Investors who are also users of the infrastructure will be happy to pay user fees such as bridge tolls, as they will be contributing to their own profits.
And there is no reason to stop there. The success of the ride-sharing service Uber has shown us that demand pricing, based on actual, real-time usage, is easy to implement and is acceptable to users. Why not use a similar model for bridge or highway tolls? Or for light train fares? For that matter, parking fees for the light rail system stations could also use a demand pricing model.
But wait! Why should Uber’s profits also go only to Uber’s founders and investors? There is definitely room in the ride-sharing space for competition; a crowdfunded model would allow the profits to be widely distributed, and many small investors would also be many users of such a service.
Around 1600, the creation of the first joint stock company that issued tradeable shares, the Dutch East India Company, is believed to be the event that kickstarted the 100-year long Golden Age of the Netherlands. This tiny country experienced unprecedented economic growth during this period, becoming the foremost maritime and economic power in the world. The urban merchant class came to dominate Dutch society, and used their wealth to finance the the arts, the sciences, music, and literature. Canada could use a similar renaissance right about now!
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