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About Funding

In general, it is easier to access money to build physical infrastructure than to maintain it.

Major capital infrastructure is often funded directly by external government agencies – by grants to public infrastructure agencies - or by government regulators agreeing price (or rates) for a privately-owned infrastructure company explicitly against what they agree is necessary capital expenditure. A ‘public private partnership’ may use private investment, but often with guaranteed returns backed by government, using public money, infrastructure and sometimes even land as the collateral.

Grants for public agencies are often taken to be ‘free money’, even when they come with restrictions. Because of this, many public infrastructure agencies have full time grant writers who look for opportunities and find ways to capture more of ‘their’ share. Yet the large majority of government grant money is directed at growth and expansion projects.

New infrastructure can be a good decision that pays dividends for the community well into the future.

However, expansion is not the only thing our communities require: in the first place, we need to keep our existing physical systems working. We need resources to maintain them in a state of good repair and deliver essential service. We need money to replace assets when they inevitably wear out and become unreliable or unsafe, or become obsolete and no longer supported by current technology.

And any new asset system we build… will need maintaining, and eventually replacing, too. Every growth asset gives us future liabilities, costs someone will have to pay for sooner rather than later.

Price determination or rate assessment for privately owned infrastructure companies at least now usually considers necessary capital replacement or major refurbishment. But it still incentivises capital (essentially repaid through rates or prices) and downgrades on-going pro-active maintenance, which can be much more-cost effective for the communities the infrastructure serves. Good practice maintenance is still too often seen as a burden on the Profit and Loss account, rather than a value.

Funding capital can easily distort our perspectives, to look at one-off costs instead of on-going requirements.

And if nobody wants to pay for maintenance, we end up with major backlogs in the state of good repair of our essential infrastructure. Public agencies are squeezed on operating budgets, and private companies don’t see a return from maintenance.

It is our communities that suffer the consequences.

stewards_of_the_21st_century/about_funding.txt · Last modified: 2022/03/17 10:26 by ruth

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