The end of the affair
This blog is all about me. After nine years working at the Bulletin, it is time to move on and so please indulge me for a moment as I take the time to look back on the industry.
When I began covering private finance, the UK was in the middle of its PFI boom, with practitioners barely able to look up from their desks due to the large number of projects being churned out – with new opportunities seemingly emerging on a daily basis. Then came the 2008 global financial crisis, the ‘age of austerity’ and a backlash against long-term contracts where maintenance budgets were ring-fenced – and suddenly looked way over-engineered in a time of cutbacks.
This was, of course, not the view taken around the world, with other countries beginning to recognize that using the private sector might actually be a good way of continuing to deliver new infrastructure despite not having the cash in hand to pay for it all up-front.
Even so, with the exception of a few pockets like Canada and Australia, the last five years have seen a clear reduction in the number of investment-ready projects available, not just in the UK but in places around the world. And this at a time when there are a growing number of investors holding cash that is looking for a stable, long-term home that can offer strong returns.
But of course, these are well-rehearsed arguments in favor of private sector investment in public infrastructure that have been made time and again over the past decade. The question has often been, ‘is anyone listening?’
For all the negativity – and the current morass of Brexit is only restricting dealflow across both the UK and Europe (previously among the powerhouses of P3) – I believe that there are some good signs for the industry at present and there are some strong indications that the Americas can lead the way.
As mentioned above, Canada has long emerged as the world’s foremost P3 proponent, led by Infrastructure Ontario (IO). The good news coming out of that province in recent weeks, with promises of continued support for P3 and the new ability for IO to offer its advice beyond Ontario’s borders, can only be welcomed as a major step in the country’s continued leadership of P3.
Meanwhile, the US is now a completely different beast to the one I first started covering, with the vast majority of states using P3 or having P3-enabling legislation on their statute books. It is clear from the debates that are had at municipality, state and federal levels that the old fears of private sector involvement in public infrastructure have greatly receded and on the back of some high profile projects, the market has been able to move the debate on a long way.
President Donald Trump may still be somewhat skeptical of P3s (according to rumors), but a look across the country quickly tells you that he is increasingly in the minority on this issue. There is still a long way to go until the US starts to get anywhere near its potential for P3 development, of course, but it is now consistently moving in the right direction. Indeed, the momentum is now very much with the P3 proponents, in a way that it was not a decade – or even just five years – ago.
Further south, infrastructure will remain a critical element of many Latin American countries’ efforts to boost their economies. But to do that, many already recognize that they will need the help of the private sector (both financial and in terms of expertise).
Ultimately, there are few countries in the world that can afford to deliver all the infrastructure needs of their population through public cash alone. Private finance is here to stay, even if I won’t be around to cover it.
Fortunately, I leave you in the very capable hands of Amanda Nicholls, who will be stepping back into the editor’s chair after I leave, ready to cover this exciting new phase of the P3 industry.
Finally, I would like to thank all those with whom I have worked in the industry over the years, it has always been an interesting and enjoyable experience, and one which I may well return to at some point in my career!
Paul Jarvis, managing editor