When a publicly funded asset or piece of major infrastructure is privatized how is this offset to provide equity back to the public? Take a major public asset, let’s call it Sydney Harbor Bridge. This was designed, built and paid for with taxpayers money and then operated by the government for the people who funded it so they can use it. The government then wish to raise money do they privatize it by selling it to a private company for millions of dollars. The private company now charge a toll fee for everyone who now drives across it making millions of dollars and turning it into a good business. So now, how is the public reimbursed for the costs that their tax dollars were spent on? Given the public paid for it to be constructed and now pays to use it with a toll fee, do they get an equivalent tax cut or similar mechanism out of fairness? Seriously asking how this works, so serious answers only please.
In: Economics
>The government then wish to raise money do they privatize it by selling it to a private company for millions of dollars … So now, how is the public reimbursed for the costs that their tax dollars were spent on?
You’ve basically answered your own question there. The government gets money from the sale. They can use that money to do whatever they want to do (or the public want them to do).
There are variations of course. There could be a revenue or profit share agreement, so the initial sale price is lower but there’s an ongoing stream of revenue. That’s a different risk profile for both parties. There may be something in place that kicks in if the assets prove to have been drastically undervalued and the company starts making massive profits (or overvalued, because there are problems if a company operating infrastructure goes bust).
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