Survey: Politics, Lack of Funding Biggest Threats

Municipal infrastructure market participants believe that insufficient funding and the politicization of infrastructure are worse impediments to investments than corruption, earmark abuses, public policy instability, or poor creditworthiness of public authorities, according to a recent survey by KPMG LLP.

Of the 116 respondents from the United States, 69% said the lack of funds was one of the “greatest public sector impediments” in the country. Politicization of infrastructure project priorities is the biggest problem, according to 37% of respondents.

The survey was conducted in Western Europe and Asia as well, where respondents expressed fewer concerns about funding.

Only 56% of non-American respondents said that lack of funds was the greatest hurdle to infrastructure investment. Politicization is equally problematic in those countries as in the U.S., the survey found.

The survey follows two similar ones KPMG conducted among senior business executives and private-sector infrastructure providers.

This most recent survey aligned in some ways with an earlier one the firm conducted last summer of 118 private-sector infrastructure providers in the U.S.

Most respondents in the earlier survey said politicized infrastructure priorities and lack of financing posed a significant problem.

However, more than twice as many participants from the private sector than from the public sector blamed corruption and misuse of earmarked funds for impeding infrastructure investment.

“There’s a consensus that a lack of funds and the politicization of the process” is a major impediment to infrastructure, as “confirmed by this survey,” said Rich Lee, head of KPMG’s U.S. infrastructure advisory group.

Lee also offered a more optimistic take on the results, noting that about one-third of the public survey respondents believed funding limitations are unrelated to the infrastructure investment problem.

While Congress weighs a jobs bill, or second stimulus bill, the public sector sees the slow approval process for American Recovery and Reinvestment Act funds as the greatest challenge to being able to spend the money, the survey found.

The ARRA package ostensibly was intended to get grants out the door and flowing into the economy right away, in particular by requiring a large part of the money to go to “shovel-ready” projects. But about 44% of public sector members said slow approvals are making it hard to spend ARRA money effectively.

In addition, the survey suggested an openness to private investment. “Greater use of public-private partnerships” was the second-most popular factor to “produce the greatest improvement in infrastructure development” in respondents’ jurisdictions, the survey said.

“As we go to market, I think a critical role for us is trying to educate public-sector clients” on public-private partnerships, Lee said.

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Transportation industry Washington
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