Potential for Minor Cost Savings on Existing Toll Roads Does Not Offset the Higher Cost of Capital

Privatization advocates often counter concerns about the high capital costs of privatization by talking about potential efficiency increases from private operators. Relatively minor cost savings may be gained by avoiding public-sector rules about hiring standards.83 Overall, how-ever, the potential savings are so limited that Macquarie Infrastructure Group, for example, reported to potential investors on the Indiana deal, "no significant cost savings envisaged."84 The U.S. Government Accountability Office (GAO) reported that the minor cost savings are often out-weighed by increased monitoring costs.85 In sum, private operation cannot be expected to produce sufficient cost savings to offset the high costs of privatization.