Private-sector infrastructure executives in the U.S. are concerned that current investment in infrastructure is inadequate to create long-term economic growth, and that government ineffectiveness and poor economic conditions are more of a barrier to projects than the lack of available financing.
These are the findings of a survey of 118 U.S. executives mostly representing transportation, energy, water, sewer, and public building infrastructure providers who were polled by KPMG International, a consortium of tax, audit, and advisory firms.
More than 90% of the executives were concerned that current levels of infrastructure investment cannot support long-term growth of the national economy - an increase from 74% polled in January on the same issue.
Executives in the U.S. were more pessimistic than those in other countries about governmental or economic conditions creating barriers to infrastructure investment, according to KPMG.
More than three-fourths of them said that governmental ineffectiveness - such as excessive bureaucracy, lack of long-term planning or maintenance, corruption, or lack of funds - is a barrier to delivering infrastructure projects. Nearly as many also cited economic conditions as a major barrier to investment. As many as 10% fewer executives in other countries said those factors were to blame for infrastructure investment problems.
The U.S. executives said the public sector impedes infrastructure investment by allowing politics to surround infrastructure projects, lacking a sense of urgency about infrastructure investment, and misusing funds earmarked for infrastructure. At least one-quarter of them also blamed poor credit of public authorities and fickle or inappropriate public policy for helping to create barriers to investment.
Most of the solutions proposed by the executives would involve increased responsibility of the public sector.
"State and local governments should explore alternative delivery models, such as public-private partnerships, which can make funding a 'win-win' situation if structured intelligently," said Richard Lee, who heads KPMG's U.S. infrastructure advisory group.
The largest group of executives said they want the public sector to take on more risk in infrastructure financing deals. About 30% of them said that government loan guarantees or loans, public funding, and increased lending by international financing institutions would be most helpful in increasing the availability of project financing.
About 41% of the executives said that increasing user fees and charges, such as gasoline taxes or electricity rates, would be the most viable source of infrastructure revenue.
About one-third of respondents said that increasing general taxes or spending less in other areas would best provide money for investment in transportation and other infrastructure programs. And 7% said the financing problem will resolve itself.