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House hearing highlights limits of PPPs

A Democratic congressman questioned the role P3s will play in the Trump administration during the infra committee’s first meeting.

Public-private partnerships will not solve all of the country’s infrastructure needs, corporate and labour leaders told Congress on Wednesday.

Michael Capuano, a Massachusetts Democrat, questioned panellists on the role of PPPs during a hearing of the House Committee on Transportation and Infrastructure, the first of the new Congress.

“Thus far, the smoke signals coming out of the new administration is that somehow, we’re going to do this with just public-private partnerships, no new money,” said Capuano, who in 2014 served as ranking member of a House panel on P3s. “They have a role, and they’re good, but they’re no better than maybe, maybe, 10 percent of our needs.”

Capuano asked each of the witnesses – the heads of FedEx, Cargill, BMW of North America, Vermeer and the AFL-CIO, the largest US labour federation – whether they believed that PPPs alone are adequate to address US infrastructure needs; none said yes.

“It has got to be some kind of combination of public private partnerships [and] effective tax policy,” said David MacLennan, Cargill’s chairman and chief executive.

Mary Andringa, board chairwoman of Vermeer, agreed that an “all of the above” approach is needed when it comes to funding. FedEx chief executive Frederick Smith agreed that PPPs can accomplish “some things” but not everything, while AFL-CIO president Richard Trumka responded that PPPs have “limited applicability” since a revenue source is needed to draw in private capital.

During his campaign, Trump called for $500 billion to $1 trillion in infrastructure investment, one of his few proposals to draw bipartisan support. A plan drafted by two of Trump’s policy advisors clarified that most of the funds would come from the private sector, with the government’s contribution coming through federal tax credits.

Democrats, on the other hand, have called for direct spending on infrastructure and for additional revenues to pay for this spending. At Wednesday’s hearing, Democrats including ranking committee member Peter DeFazio and some experts on the panel called for the federal gasoline tax to be either lifted or indexed to inflation.