Public Sector Execs Cite Need for Increased Infrastructure Funding Despite Stimulus Spend, Says KPMG Study

NEW YORK, Feb. 1 /PRNewswire-USNewswire/ -- Public sector executives around the world agree with private infrastructure providers and business leaders that government effectiveness and long-term financing are top challenges to delivering infrastructure projects, according to a survey commissioned by KPMG International, the global network of audit, tax and advisory firms.

The survey is the third in a series of global infrastructure surveys conducted by KPMG in cooperation with the Economist Intelligence Unit (EIU) over the last 12 months; the first one surveyed business executives (January 2009) and the second surveyed infrastructure providers (August 2009). Survey respondents shared similar views on most of the survey topics across regions and countries.

Stimulus is Not Enough

In the latest survey, 56 percent said lack of funds remains the largest obstacle to infrastructure development.  

"While stimulus spending was a first step, government officials are clearly telling us that they need a long-term infrastructure investment strategy to meet the needs of their country," said Nick Chism, Head of KPMG's Global Infrastructure practice, and partner in the UK firm. "Modernizing the world's infrastructure will require massive investment and cooperation by the public and private sectors for many years to come. But those countries that find ways to make the necessary infrastructure investments now will be the leaders of tomorrow."

Government Effectiveness and Need for Additional Financing Cited by All Players

Eighty-one percent of public sector respondents agree with the private sector's assessment that government effectiveness is a barrier to delivering infrastructure. This sentiment was shared by respondents in the earlier KPMG surveys, with 68 percent of business executives and 69 percent of private sector infrastructure providers voicing similar concerns. All three groups also cited the availability of financing as a leading barrier to infrastructure development, including 69 percent of public sector respondents, 56 percent of business executives and 60 percent of infrastructure providers.

The public sector officials surveyed also identified other issues hampering infrastructure development:

• Half of the respondents cited the slow approval process for stimulus funds as the greatest challenge in spending this money quickly and effectively in their jurisdiction.

• After the need for additional funding, politicization of priorities (33 percent) and a lack of a sense of urgency (21 percent) are named as the greatest impediments to more infrastructure investment.

• Echoing the views of the private infrastructure providers, 58 percent of public sector respondents said they are concerned that the political environment impedes them from delivering needed infrastructure.

Solutions: Working Together, Increase Transparency

Interestingly, there was relative agreement among the three groups surveyed in how to solve the infrastructure impasse; 65 percent of public officials, 80 percent of business executives and 40 percent of infrastructure providers surveyed said the government should work more closely with the private sector to improve the infrastructure delivery process.

"Clearly all groups are telling us that forging greater collaboration between the private and public sectors is crucial," said Stephen Beatty, head of infrastructure advisory for KPMG's Global Infrastructure practice in the Americas and a partner in KPMG in Canada. "We have been the beneficiaries of infrastructure innovations made by our parents and grandparents, but if we don't work together to find solutions soon, we're leaving our children and grandchildren an unfortunate legacy."

However, public sector officials also recognize that there are barriers to working more effectively with their private sector counterparts, most notably cultural differences between the two, which were cited by 45 percent of respondents.

When specifically asked about ways to de-politicize the infrastructure prioritization process, the leading response among public sector respondents was to increase transparency in infrastructure project selection (41 percent), followed by improving the public private partnership procurement process (37 percent).  

The public sector respondents also indicated that better training of public sector officials (37 percent), depoliticizing the infrastructure public policy process (35 percent) and greater use of public private partnerships (34 percent) are the leading ways to improve infrastructure development in their jurisdiction.

"Today there is a rare opportunity to achieve non partisan consensus on how we can make strategic investments in infrastructure," said Beatty. "Infrastructure investments can pay dividends immediately and for years to come, boosting the economy through long-term job creation, attracting and retaining businesses, and improving living standards."

The KPMG survey represents the views of 392 senior public sector executives from across the globe involved in infrastructure policy, procurement or development, fielded in November and December 2009. For a copy of the full report, "The Changing Face of Infrastructure: Public Sector Perspectives," please visit:  http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Pages/Changing-face-of-infrastructure-frontline-views1.aspx.

About KPMG's Global Infrastructure Practice

KPMG's Global Infrastructure practice has extensive local and global experience advising government organizations, contractors, operators, and investors in planning, structuring and management of new infrastructure investments; procurement and financing support; improvement and monitoring of construction and operations; restructuring of distressed projects; investment due diligence assistance; and infrastructure related audit, tax, accounting and compliance issues.

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services.  We operate in 146 countries and have 140,000 people working in member firms around the world.  The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

SOURCE KPMG