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

Respondents say less politics, more public/private collaboration needed to support future development

TORONTO, Feb. 1 /CNW/ - Public sector executives around the world agree with private infrastructure providers and business leaders that government effectiveness and financing are top challenges to delivering infrastructure projects, according to a survey commissioned by KPMG, a global network of independent firms, providing audit, tax and advisory services.

The survey is the third in a series of global infrastructure surveys in the last 12 months from KPMG International, which has commissioned the Economist Intelligence Unit (EIU) to conduct these surveys on their behalf; 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.

In the latest survey, 70 percent of North American respondents said lack of funds remains the largest obstacle to infrastructure development, compared to 56 percent of their global peers.

"While stimulus spending was a first step, many government officials are clearly telling us that they need a long-term infrastructure investment strategy to meet the needs of their country," said Stephen Beatty, head of infrastructure advisory for KPMG's Global Infrastructure practice in the Americas and a partner in KPMG in Canada. "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 are likely to be the leaders of tomorrow."

President Barack Obama espoused the short and long-term benefits of strategic and sustained infrastructure development in his State of the Nation address, calling it "one of our best investments." Similarly, Canada's big city mayors are urging the federal government to keep billions of dollars in infrastructure money flowing as the country enters a new era of restraint. The mayors want the federal government to extend the 4 billion dollar infrastructure stimulus fund-and consider more funding in the upcoming federal budget, even as it looks to save money elsewhere.

"Officials at all levels of government are clearly telling us that they need a long-term infrastructure investment strategy to meet the critical needs of their jurisdictions," said Beatty. "Public sector executives are as aware as anyone that we need to be prudent during this period of economic recovery, but investing in public infrastructure is critical to maintaining our quality of life and also makes good economic sense."

Eighty-two percent of North American public sector respondents believe that government effectiveness is a significant barrier to delivering infrastructure. This sentiment was shared by respondents in the earlier KPMG surveys, with 62 percent of business executives and 76 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 77 percent of North American public sector respondents, 60 percent of business executives and 66 percent of infrastructure providers.

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

    
    -   Forty-seven percent of respondents cited the slow approval process
        for stimulus funds as the greatest challenge in spending this money
        quickly and effectively in their jurisdiction.

    -   Lack of funds (70 percent) and politicization of project priorities
        (38 percent) are named as the greatest impediments to infrastructure
        delivery, followed by a lack of a sense of urgency and inadequate
        understanding of the severity of the issue (both 21 percent).

    -   Echoing the views of the private infrastructure providers, 59 percent
        of public sector respondents said they are concerned that the
        political environment impedes them from delivering needed
        infrastructure.
    

Interestingly, there was relative agreement among the three surveys in how to solve the infrastructure impasse; 65 percent of public officials, 80 percent of business executives and 36 percent of infrastructure providers respectively surveyed said governments 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. "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 half of North American respondents.

When specifically asked about ways to de-politicize the infrastructure process, the leading solution among public sector respondents was to establish and enforce guidelines for setting infrastructure priorities (33 percent), followed closely by increasing transparency in infrastructure project selection (32 percent), improving the public private partnership procurement process and increasing stakeholder involvement (both 31 percent).

The public sector respondents also indicated that depoliticizing the infrastructure public policy process (38 percent), greater use of public private partnerships (34 percent) and better training of public sector officials (31 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 executives from across the globe involved in infrastructure policy, procurement or development, including 126 based in North America (32 percent). The survey was fielded in November and December 2009. For a copy of the full report, "The Changing Face of Infrastructure: Public sector perspectives," please visit: www.kpmg.ca.

About KPMG in Canada

KPMG LLP, the audit, tax and advisory firm (kpmg.ca), a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

SOURCE KPMG LLP

For further information: For further information: or to arrange a media interview, please contact: Mark Klein, Manager, Media Relations, KPMG in Canada, mklein3@kpmg.ca, (416) 777-3895; Julie Bannerjea, Head of Media Relations, KPMG in Canada, jbannerjea@kpmg.ca, (416) 777-3243


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