With elections due on both sides of the Atlantic, the role of the infrastructure lobbying body is becoming critical. Christopher Walker speaks to CEO Jon Phillips
More than one hundred of the world鈥檚 leading infrastructure investors and advisers have now joined the Global Infrastructure Investor Association (GIIA), which has seen eight years of year-on-year growth since it was founded in 2016.
Augment Infrastructure, a US-based fund manager, and Aware Super, one of Australia鈥檚 largest profit-for-member superannuation funds, are the latest to join. The total value of members鈥� infrastructure assets under management has now more than tripled to US$1.65trn (鈧�1.51trn) across 70 countries
鈥淎ugment is a DC-based firm focusing on Asia and Latin America, both areas where we are keen to grow,鈥� says GIIA鈥檚 CEO Jon Phillips. 鈥淎nd I think the very significant capital based in Australia is increasingly realising the important role which our organisation can play in giving them access and better understanding of the UK and European landscapes in particular.鈥�
GIIA is looking to further expand membership internationally, emphasising its networking and convening role. 鈥淚 have just one message to communicate to infrastructure leaders 鈥� come join the band,鈥� Phillips says.
GIIA has clear role in lobbying governments. 鈥淭his is the year where half of the world gets to vote and given that infrastructure is never far away from politics this is a very significant factor in our work in 2024,鈥� Phillips continues.
The political backdrop to infrastructure investing in the UK has become particularly challenging. The screeching U-turn on the major high-speed rail project, HS2, by the UK government was not so important in terms of the direct effect it had GIIA members 鈥� the project was government funded. But, says Phillips, it was 鈥渧ery significant in setting the tone for long-term investment in the UK鈥�. The failed wind auction was another signal that the UK government is 鈥渏ust not close enough to understand investors鈥� perspectives鈥�.
GIIA takes the temperature among investors with a poll every six months. 鈥淲e have seen the UK fall from most favoured developed nation for investment right down to the bottom,鈥� says Phillips. 鈥淢uch of this downfall reflects a frustration with UK regulation. The UK has very lofty ambitions, but in reality it has a tremendous amount to do.鈥�
GIIA worked closely with Richard Harrington, a member of the House of Lords, in his review into increasing foreign direct investment. In November, the government said it had accepted all of the 鈥渉eadline recommendations鈥�. Phillips says: 鈥淲hat we need now is concrete evidence that the government is [really] taking his recommendations on board and making changes. They have a long way to go to rebuild confidence.鈥�
One crucial aspect of this according to Phillips is 鈥渢he pace at which decisions are made鈥�. He says: 鈥淭ake hydrogen, where the UK was initially in the lead in considering innovation, but that lead has been completely lost to the US as a series of swift US government actions have catapulted it to the top of the investment league table.鈥�
Recent polls all point to a Labour government winning the next general election in the UK, now expected in the autumn. The part is now led by Kier Starmer who is more representative of centre-left politics than his predecessor Jeremy Corbyn. 鈥淭he consensus is that there has been a significant shift in Labour Party policy compared to where we were under Jeremy Corbyn,鈥� says Phillips. 鈥淲hilst there is a degree of circumspection on the detail of policy, it is certainly true that the mood music has improved immensely.鈥�
The EU is also at a 鈥渃rucial Inflexion point鈥�, says Phillips. 鈥淲e are about to have major elections in June which will create a new [European] Commission and a new parliament.鈥�
GIIA has worked closely in the last year with the Commission, particularly in areas such as transport and energy. 鈥淲e are very keen to ensure that policy making is still developed in consultation with industry, and we will need to establish new relationships and deepen existing ones once that election has taken place,鈥� Phillips says.
There has been a 鈥減ush-back鈥� regarding net-zero plans, but Phillips remains optimistic. 鈥淚t is hardly surprising that there is an increasing realisation that some of the time scales in place for net zero are slipping,鈥� he says. 鈥淏ut I don鈥檛 think investors are fundamentally concerned that we are going to see any change in the direction of travel. That is irreversible. Rather it is simply a question of timings and what I would characterise as simply bumps in the road.鈥�
The biggest uncertainty surrounds the US election. 鈥淚t is hard to predict what direction a second term for President Trump would take when it comes to infrastructure, and it is clear that he is less committed to the environmental agenda than President Biden,鈥� Phillips says. 鈥淢aybe we will see some changes, but of course any significant changes would require the Republicans not just taking the presidency but also having control of both houses. That means there are several 鈥榠fs鈥� along the road.鈥�
Phillips also points out that individual Republican States are disproportionately getting the majority of the benefits from the Inflation Reduction Act (IRA). 鈥淥verall, the penny has dropped on the US鈥檚 crumbling infrastructure. It is noticeable that both the [Infrastructure Investment and Jobs Act] and the IRA were passed on a bipartisan basis because of a united agreement on the need for infrastructure renewal. So, I think it is very unlikely we will have any fundamental change.鈥�
