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The president-elect reaffirmed that in Argentina “there is no money” and confirmed that public works projects already approved and those that are underway will be paralyzed. He said that the investments must be made by "the private sector" and pointed out that the model that
Javier Milei confirmed that his Government will cut public works. “There is no money,” he replied to Alejandro Fantino, at the same time as he assured that the initiatives that are already underway will have to be completed by the mayors with the help of the private sector and that to do so they will have to look for their own sources of financing. It is not new: as a candidate he had already said that the country was going to advance in a “Chilean-style” public works model. But what is the model that the libertarian admires and how does it work?
What is the public works model like in Chile?
In the neighboring country there are two systems that coexist: bidding and concessions . This was explained to Página|12 by the commercial engineer and professor at the Faculty of Social Sciences of the Alberto Hurtado University, Carlos Aparicio.
The first of the two systems, the bidding system, is identical to the one that works in Argentina. It consists of opening a search for companies to carry out tasks, drawing the winner based on the project and the suggested price, and paying the contract directly to the private companies.
The concession system that Javier Milei refers to has to do with a mechanism by which “the State gives the private sector the responsibility of being able to generate an investment, understanding that the priorities are defined by the Government.” In exchange for the works, the private sector receives the right to exploit the investment. For example, if a company builds a highway, it may receive the right to collect tolls for the next 20 or 35 years. At the end of this time, the State can take charge of the service or initiate a new tender for its operation and maintenance.
Until then, nothing very different from what happened in Argentina decades ago. However, with other types of works the situation becomes more complex.
From sewers to rural roads
In this system, a priori, there is a single criterion for the exploitation of public works: whether it is a good or bad investment for the private sector. But naturally the businesses of private individuals do not always coincide with the needs of societies.
A paradigmatic example was provided by the libertarian Diana Mondino, future chancellor, who suggested that the neighbors themselves should do the sewers if there is no company interested in doing so. But an endless number of needs can be added to the sewers, such as the creation of medical rooms and rural roads, just to mention a few examples.
In Chile this was not left in the hands of the neighbors. This was explained by Aparicio, who explained that the drains for the rains in Santiago were made by modifying the concessions that existed for the construction of highways. In exchange, the companies obtained more years of operation for the management of tolls and made investments in the drainage system. In some cases, the bidding system promoted and financed by the State was also used.
Not all that glitters is gold
The public works model in Chile also has a series of very deep questions. One, for example, completely linked to this dilemma of how to move forward with necessary but unprofitable works. Dilemma that, it should be clarified, is not such for Milei: as he made clear to a follower during a pro-libertarian demonstration, the president-elect believes that, if it is not profitable for the private sector, the work should not be done, since using money public for a power line or a rarely traveled rural road is like “stealing” from all citizens for personal benefit.
Denise Misleh, professor at the Institute of Geography of the Catholic University of Chile, explained to this medium that “infrastructure fulfills a social function and it is not always profitable for companies to develop infrastructure in more remote and island areas with fewer users, where “The State has to provide basic services.”
For Misleh, the concessions model “served a function for a period of time,” for example, in the 1990s it allowed the rapid construction of “an infrastructure that supported the development of the country,” but currently it has a “ highly questioned usefulness.”
Collateral problems
Currently, problems linked to transparency have also appeared: for example, when it comes to works that the companies themselves offer to the State, these are approved without bidding, that is, without competition, and it is not clear with what criteria the projects are considered, or not.
Another point, pointed out by Misleh, has to do with the renegotiation of concessions, where the State often ended up subsidizing the works carried out so that they generate private profits. Thus, the State ends up transferring money to the concessionaires without a competitive and non-transparent process.”
A third element exposed by the specialist has to do with the consequences of exploitation. For example, in Santiago, it is increasingly expensive for users to travel, which generated a series of protests over the use of automatic charging and the lack of alternative roads with a free option.
Also interviewed by Página|12, former Chilean deputy Marco Enríquez-Ominami assured that behind “the freedom to choose” and the voucher system and the private exploitation of public works is the fact that “true freedom is to get into debt.” “In terms of public works, what Chile did had successes, but also contrasts. There was a great crisis, which is that the contracts went to very unbalanced private companies, very much in favor of the private sector and with a State that did not take care of the rate,” he commented.
“So, Chilean roads are not only relatively expensive to use, but also, if you are late, the contracts allowed the concessionaires to charge 40 times the price of the delay. There was a case of a person who was late four times and ended up owing $10,000,” he described. “That was corrected through Parliament. It is a successful concessionary system, but it had to be modified due to the abuse of companies and a political class that gave a lot in exchange for investments. This debate had a great role in Chile,” he said, and put an eye on the role of monitoring this plan. |
