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Article Summary

ONeill, Phillip. (2010). Infrastructure Financing and Operation in the Contemporary City, Geographic Research 48(1):3-12.

ONeill provides a discussion of the role of economic infrastructure (water, sewer, telecommunications, gas, and transportation) in creating a sustainable and productive city. These infrastructure systems are defined by public good, positive externality, and monopolistic traits. Ignoring these central features blatantly overlooks the core reason for infrastructure provision and could have substantial implications for the future of Australias cities. However, new issues such as funding shortages, questions about sustainability, and increased corporate financing have put pressure on the existing model of infrastructure provision.

Like many other developed nations, the Australian state has been deeply involved in providing large-scale infrastructure since the end of World War II. ONeill describes five elements that drove this trend: (i) the idea of nation-building, (ii) the strong role of a state bureaucracy, (iii) the presence of an organized and skilled public service staff, (iv) the growth of monopoly utilities, and (v) public support for government-sponsored infrastructure.

A confluence of diminishing funding and increasing demand has created what ONeill refers to as an infrastructure crisis. The reaction to this crisis has been rapid liberalization and privatization in the ownership, operation, and regulation of infrastructure. However, our author suggests that public officials leading this privatization process have ignored some of the core social and economic benefits traditionally provided by an ample and equitable infrastructure distribution. These benefits arise from four primary principles:

A) Universality: The availability of infrastructure to all households.

B) Bundling: The delivery of multiple types of infrastructure in a single channel.

C) Access: The ability for individuals to have basic services, affordable housing, and places of employment.

D) Positive Externality: The broader public benefit created by the provision of infrastructure.

Over the past three decades, the state has relinquished its commitment to these four principles, replacing it with public-private partnerships that offer narrow benefits to generate market-based returns. According to ONeill, the role of government has shifted from providing infrastructure to procuring infrastructure, whereby the services are available in a narrow, targeted manner. In analyzing the implications of this change, ONeill points to the work of Graham and Marvin (2001) that claims that the elimination of a broad public commitment to infrastructure risks splintering cities. Projects are increasingly selected based on targeted economic benefits or for private gain, users are charged based on market determinations of optimal pricing, and networks are established based on specific needs rather than broad social benefits. Graham and Marvin argue that the city is thus becoming divided between those who can access these systems and those who cannot, causing increased economic and social if not spatial isolation.

ONeill concludes by articulating the need for decision-makers to consider the broad public benefits of urban infrastructure systems. While there is clearly room for reform, an unplanned transition to unregulated privatization negates much of the social good inherent to a state-run infrastructure system.