AEM doubtful on US transport budget

16 February 2011

Dennis Slater, president of the Association of Equipment Manufacturers (AEM), has raised doubts over the funding framework behind the US government's US$ 556 billion transport spending package.

Outlined in US President Obama's 2012 budget, the six-year infrastructure plan would fund the country's largest transportation schemes and include the creation of an infrastructure bank capitalised at US$ 30 billion to back the most significant projects.

Competitive grants, state funds and private investment are planned to provide some finance for the plan, which will not increase the US deficit. But while the AEM welcomed the increased spend on transportation infrastructure, Mr Slater said the funding outlines did not go far enough.

"Unfortunately the proposal falls short by not addressing the crucial issue of how this essential infrastructure investment will be funded, putting in question whether it will ever be approved," Mr Slater said.

Mr Slater described the proposal outlined in the budget as "only a beginning".

Budget documents state that he current highway trust fund would be expanded to form a transportation trust fund, widening its mandate to include backing the infrastructure bank, high-speed rail and transit projects.

The transport plan also includes a US$ 53 billion proposal to advance high-speed rail over six years, of which US$ 8 billion would be spent in the first year. Budget documents also recommend US$ 50 billion investment "jump start" in the first year of the project.

The previous transport bill, a five-year, US$ 285 billion package, expired in September 2009, and the gap has been bridged with short-term extensions since then.

Commentators have suggested that the new bill could attract finance from private equity, pension funds and other sources looking for long-term investments.

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