“Accelerating Infrastructure to Boost Growth and Employment"
The gap between infrastructure requirements and countries’ ability to finance investment for projects is a yawning one and efforts to bridge it are testing the best and brightest minds in both the public and private sectors.
The world needs US$ 65 trillion between now and 2030 just to cover existing infrastructure needs and modernisation but raising the money is proving problematic, a panel at the EBRD 2014 Annual Meeting and Business Forum heard.
“How can governments come up with these US$ 65 trillion?” asked Thomas Maier, the EBRD’s Managing Director, Infrastructure and the panel’s moderator. “In both emerging and mature markets the ability of the public sector to do so is under threat. Indebtedness is at record levels.”
“The private sector needs to come in. Users need to contribute more to financing and running infrastructure.”
Not surprisingly, governments, even in western Europe, are finding it difficult to “sell” expensive infrastructure projects to populations still emerging from the last decade’s crisis and sometimes suspicious of the motives of the private sector when they are involved.
“The top and bottom line is that it is easier to increase existing charges to carry out infrastructure improvements than introduce user charges from scratch for the first time,” said Lord Mandelson, now Chairman of Global Counsel, but a veteran of British governments in the 1990s and more recently.
British governments were having to invest in infrastructure “by stealth,” he said. Speaking openly about such projects risks ensuring that they are “dead in the water”.
Governments, especially in Britain, needed “to get much better at explaining about infrastructure projects and leading people with them,” he said. “At the moment governments will make a big announcement but then duck for cover when it’s a question of how much it will cost.”
Governments need to be realistic about the environment in which they are seeking to plan major infrastructure projects, said Robert Milliner, the B20 Sherpa of B20 Australia.
We are no longer living in a world of “rising economies and a post-war recovery” where infrastructure projects can be pushed through. “The political environment is very difficult.”
Thierry Déau, the Founding Partner and Chief Executive Officer, Meridiam Infrastructure, suggested that agreeing on major infrastructure projects was a more simple matter in cities than on a national scale.
“It’s easier to finance infrastructure projects when there are lots of different sources – in an urban setting – than outside cities, somewhere like across Germany where it seems almost impossible,” he said.
Planning many decades ahead was also vital, he said. “We need to think about 20 or 30 years hence. Most of the things we’re thinking about won’t be affordable if we start them then.
But Hanna Gronkiewicz-Waltz, the mayor of Warsaw, the host city for the Annual Meeting this year, voiced a lament on behalf of all politicians, saying that in infrastructure as with everything else, “politicians get blamed for everything”.
Global Agenda Council on Infrastructure 2012-2014
Wednesday 14 May
Moderator:
- Thomas Maier, Managing Director Infrastructure, EBRD
Panellists:
- Thierry Déau, Founding Partner and Chief Executive Officer, Meridiam Infrastructure
- Hanna Gronkiewicz-Waltz, @hannagw, Mayor of Warsaw, Poland
- Lord Mandelson, Chairman, Global Counsel
- Robert Milliner, Australia B20 Sherpa, B20 Australia
- James Stewart, Chairman Global Infrastructure, KPMG
- Alex Wong, Senior Director, Head of Centre for Global Industries and Head of Basic & Infrastructure Industries, World Economic Forum
- Deborah Zurkow, CIO and Head of Infrastructure Debt, Allianz Global Investors
