At this year's National Governors Association (NGA) meeting, Governor Ed Rendell's tenure as Chair fittingly came to a close with a plenary session on infrastructure financing. For the last year, Rendell has highlighted the issue through a timely NGA initiative, "Strengthening Our Infrastructure for a Sustainable Future."
Rendell has been a tireless advocate of an infrastructure-driven recovery within the NGA and also as co-leader of Building America's Future along with Governor Arnold Schwarzenegger and Mayor Michael Bloomberg, as well as through his leadership of the State of Pennsylvania. He has made his case under a Los Angeles freeway overpass, at the White House and on Meet the Press.
Invariably, Rendell has three main talking points:
(1) Our infrastructure is hopelessly degraded and in need of massive carefully planned investment;
(2) Given constrained budgets, we should explore innovative financing techniques like P3s; and
(3) We should model our own projects on success stories abroad in China, the United Kingdom and Western Europe.
The NGA plenary was no exception. It urged us to look to China and the UK.
Rendell is not alone in his preoccupation with the need to import international best practices. President Obama made a similar argument on the campaign trail and on the Rachel Maddow Show. It is also a central aspect of two major pieces of legislation now in Congress: the National Infrastructure Bank and the Clean Energy Bank. Former Governor Howard Dean together with his colleague former Mayor Stephen Goldsmith are also pushing for shepherding international best practices into America.
America's last great experiment with P3s was disastrous: the Gilded Age railroads. So, there's good reason to look abroad rather than to American history for good models.
For thirty years, infrastructure projects throughout the world have been carried out through P3s. Policy makers within the US are now carefully debating whether this model is an appropriate one to meet urgent domestic needs.
However, these policy debates about importing the international model are not grounded in an evidentiary assessment of overseas experience with P3s. The public policy debate would be well-served by close examination of this track record to ensure that the public purpose of our own projects is served by our chosen mode of financing and delivering them.
For instance, every major advocate of P3s within America stresses the importance of accountability.
A central lesson of P3 projects internationally is that civic participation drives project accountability, financial durability, and quality infrastructure. However, governments around the world have too often treated participation by citizens as oppositional to the interests of P3 projects. For example, the European Investment Bank P3 model, now being advocated with the US, has viewed meaningful civic participation as inherently contrary to its goals. Instead, the European Bank has identified participation by citizens as a financial risk to be mitigated. A recurring lesson with P3s internationally, documented at great length, is that citizen participation drives durable, accountable projects.
This lesson must inform the debates over P3s generally, particularly the discussions of financing, regulatory, and contractual approaches. The first wave of transportation P3s within the United States over the last several years has not adequately addressed these concerns. As a result, projects have not been optimally structured and sufficiently considered.
We should not only focus on emulating foreign P3 models. Attention should be paid to learning lessons from an international experience in which accountability has been the exception, not the norm.