“Like fixing a cracked bridge with silly putty.”
That’s how Democratic politician Lois Frankel described the US government’s piecemeal efforts to fund its highway system last year.
Meanwhile, the Washington Metro system has been so neglected entire lines may have to be closed for months to get it up to standard.
And a quarter of all California’s bridges were judged to be “structurally deficient or functionally obsolete” by national transport research body TRIP.
That the US is facing an infrastructure crisis is something both Democrats and Republicans agree on, and part of the solution may come from Australia.
It is a situation that industry superannuation funds are uniquely placed to work with them to address.
While they stand ready to invest in the critical infrastructure required to build an efficient Australia for the 21st century, the interests of their members can also be well served by funding major projects offshore in the absence of local opportunities.
And they have recently turned their gaze to the US.
The American Society of Civil Engineers recently gave the US a grade D for its infrastructure quality, and estimated $A4.75 trillion would be needed to bring it up to standard by 2020.
But neither party has the stomach to raise the taxes needed to tackle the problem. So it’s no surprise American lawmakers are beginning to cast their eyes internationally for a solution.
Sounds like a meeting of minds.
In August the US Secretary of Transportation, Anthony Foxx, visited Australia to scout out interest in US infrastructure investment.
“We are working to set up large projects that would be attractive to investors,” he told the Australian Financial Review during his visit.
To encourage that investment even further, the US has set up the Build American Bureau, which will streamline legislation, planning and delivery of major projects, so investors can have confidence that projects seeking investment will get the go-ahead.
“Hopefully that will reduce some of the anxiety about if the projects will get done,” Mr Foxx told the Australian Financial Review.
His visit came after a May trip to the US by a delegation of representatives from industry super funds to discuss the way forward on the issue.
With a proven track record of successful investment in Australian infrastructure – which has helped industry super funds outperform retail super funds by 2 per cent over nearly two decades – industry super funds are now on the lookout for sensible and profitable investments in the US.
It has already been a source of beneficial investments.
Industry super funds are already invested in US projects such as the 8851-kilometre Colonial Pipeline, which carries 378 million litres of fuel daily, and Pennsylvania power company Duquesne Light.
And thanks to industry super fund investments in the 252-kilometre Indiana Toll Road, the divided highway system is about to get $A263 million worth of repairs and upgrades.
Unsurprisingly, during their recent trip the delegates had to turn down meeting requests, such was the interest from US infrastructure experts, who asked for case studies of successful infrastructure investments in Australia by super funds and showed particular interest in Australian asset recycling programs.
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