"Only private sector can free Israel's traffic jams"

Israel's jammed roads

It will cost NIS 250 billion to bring Israel's backward infrastructure up to standard, money the government doesn't have.

Israel's transport infrastructure is inadequate for the load placed upon it by a modern economy, and countless road, interchange and railway projects planned years ago have not been carried out.

This is not just an impression or a moan. Ministry of Finance and Ministry of Transport figures show that the average investment per resident in transport infrastructure in Israel is just one seventh of the average investment in the OECD. The result is that use of public transport in Israel accounts for only 20% of total journeys, while in the OECD countries the figure is 30-50%. The average speed of a journey by public transport in Israel is 16 kilometers per hour, compared with 25 kilometers per hour in the OECD.

Israel lags not just the OECD, but other, less developed countries as well. The comfortable and pleasant 1,300 kilometer train journey from Beijing to Shanghai takes just five hours; the 230 kilometer journey from Naharia to Beersheva takes three hours.

The lag has a price, but closing the gap also has a high price. According to Ministry of Finance figures, the infrastructure deficit in relation to the OECD costs the Israeli economy lost work hours to the tune of NIS 25 billion annually, in addition to severe cumulative damage to the quality of the air and the quality of life, and the huge social damage caused by living in a country without developed public transport, reflected in unemployment in the periphery and the high cost of housing in the center.

On the other hand, closing the gap will cost NIS 250 billion, 75% of the Israeli government's annual budget. This money cannot come entirely from the state budget. Other sources of finance are required, and the government must bring in the private sector to assist. This is not just a matter of money. Even if the state had the money to finance all the investment required without cutting other vital budgets, past experience shows that private sector involvement is needed for projects to materialize.

In order to understand the solution, we have to understand the source of the problem: the lag in infrastructure construction has arisen over decades in which the entire burden fell on the public purse.

In the past fifteen years, a welcome change has come about. The state has started to outsource vital infrastructure projects under the BOT and PPP methods. Many of them have gone ahead and become success stories that have changed the daily lives of all of us. Among the projects that have succeeded beyond expectation are the desalination plants at Ashkelon, Hadera, Palmahim, and Nahal Sorek, which today provide about half the water consumed in Israel, and which have literally saved Israel's water economy; Route 6, which aroused fierce criticism as it was planned, criticism which it is now completely clear was mistaken; the Carmel Tunnels; and the Fast Lane into Tel Aviv, the first project of its kind in the world, which has changed many people's transport habits for the better.

But the work is only at the beginning, and must not be stopped. Dozens of infrastructure projects have been in the pipeline for too long, and they need to be expedited: construction of high-speed rail links; underground railways with connections to mainline rail services; the railway line to Karmiel; electrification of the rail system and its upgrade to 21st century international standards; construction of the fourth lane of the Ayalon Freeway; widening and upgrading of the neglected and dangerous Arava road; and so on and so forth.

Many projects, too many, are delayed by disputes between the state and the developers. The loser is always the public. Often the delay costs more than money. There are cases in which the decision makers would be better advised to act wisely and have in mind only the completion of the project in the shortest possible time.

Another important lesson of the projects that have become stuck is that the state needs to select tender winners carefully. To that end, a transport umbrella authority should be established with statutory powers to enable developers to proceed with projects swiftly. There are enough companies in Israel capable of carrying out projects at low cost, with financial expertise and good relations with the banks that enable them to raise large amounts of finance on time, and to meet timetables strictly. Selecting developers that are financially strong will not only prevent delays in a project, but will also lead to pleasant surprises and to the completion of the project ahead of schedule.

The bottom line is that the State of Israel can, within a decade, become a normal Western country, in which morning traffic jams finish by 9:00. Half its residents will use rapid public transport, and many will be able to work in the big cities and live in remoter places where they will benefit from a higher quality of life and reasonable housing costs. For this to happen, the state and the private sector need to join forces and cooperate.

The author is chief engineer at Shapir Engineering and Industry Ltd.

Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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Israel's jammed roads
Israel's jammed roads
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