RoadWorks
Inside the highway and bridge industry G overnments at all levels are turning to private op-tions to help them get through, and break out of, the current recession, according to the Reason Foundation's Annual Privatization Report. Governments are swimming in red ink and realizing the effects of the recession will be felt long after the economy recovers, said Leonard Gilroy, editor of the report and the foundation's director of government reform. Interest in privatization is sky-high and rightly so. Now more than ever, policymakers need to study their priorities, re-examine what are really core government functions, and then tap the pri-vate sector's expertise in all of the areas where they can save taxpayer money and improve the quality of services. In his introduction to the report, Gilroy says that the cur-rent national economic recession has swung the pendulum strongly toward federal intervention in the economy and there are many indications this interference is making the economy worse, not better. At the very same time, however, interest in privatization is sky-high and far reaching, with many state and local governments facing severe and pro-longed fiscal crises. Even privatization-resistant states like California, New York, Massachusetts and New Jersey are now turning to the private sector to help solve major fiscal and capital investment challenges. The report, the foundation's 23rd, forecasts a bleak out-look for competitive sourcing under the Obama administra-tion and a hostile Democratic Congress. According to the report there are numerous discrete privatization initiatives in the states, and policymakers' inter-est in state privatization and government efficiency boards is rising with advisory commissions on privately financed infrastructure set up in several states. The report also looks at local government, especially Chicago's $1.15 billion park-ing meter system lease - which it calls both groundbreaking and troubled - and reports that Los Angeles, Pittsburgh and other cities are contemplating similar initiatives to generate municipal revenues in the economic downturn. The report examines developments across the country, in-cluding the following: Â Florida's Council on Efficient Government identified 511 outsourced projects in 2008. A review of 21 potential privatization projects forecast $94 million in savings for taxpayers. Â Louisiana Gov. Bobby Jindal established a Commission on Streamlining Government that is using privatization to help reduce the size and cost of state government. Â California Gov. Arnold Schwarzenegger signed a public-private partnership law that enables and encourages the private sector to fund and manage road, prison and courthouse projects. Â New York Gov. David Paterson created a Commission on State Asset Maximization to identify areas where public-private partnerships can save the state money. Â New Jersey policymakers are achieving a major environ-mental goal by privatizing the cleanup of nearly 20,000 contaminated properties in the state. The Reason Foundation (), created in 1968, www.reason.org says it is a nonprofit organization advancing free minds and free markets, and advances a free society by developing, applying, and promoting libertarian principles, including indi-vidual liberty, free markets, and the rule of law. by John Latta and Tina Grady Barbaccia RoadWorks Better Roads November 2009 5 Privatization Report: Some Ups, Some Downs The global construction, engineering and infrastructure industry saw a significant decline in fraud activity with companies losing an average of $6.4 million over the last three years, according to the latest edition of the Kroll Annual Global Fraud Report. This new figure represents less than half of last year's amount of $14.2 million. Construction, engineering, and infrastructure companies registered a below average loss compared to other sectors, with the financial services industry being hit hardest by fraud over the past 12 months. The findings are the result of a survey Kroll commissioned from the Economist Intelligence Unit of more than 700 senior executives worldwide. While the construction industry experienced a slowdown in fraud, this was not the case in every industry. In fact, despite the most challenging global economic conditions in recent history, the report revealed that across ten industries, fraud activity worldwide remained steady in 2009. On average, companies lost $8.8 million to fraud over the past three years, up just seven percent on last year's figure of $8.2 million. Although fraud losses are down in this year's survey for construction companies, the prevalence of the problem is not declining at nearly the same rate. More than nine out of ten (91 percent) companies reported being hit by some form of fraud over the past three years, down slightly from last year's figure (95 percent) but still well above the survey average (85 percent). Industry Fraud Worldwide: Losses decrease but cases increase