Beyond COP26, Building Back Better for the Post-Covid Era... Part 1: Biden’s $1.2 tr. Infra Bill

Abstract

The co-authors of this article, M. Nicolas J. Firzli, the Hon. Nick Sherry and Dr. Guan Seng Khoo, are amongst the original coiners of terms such as “infrastructure as a new asset class” , the “SDG driven world economy”, and “building back better”. They were asked to comment on the passage of the long-awaited Infrastructure Plan by the U.S. House of Representatives. The $1.2 trillion infrastructure bill can be read on multiple, multi-disciplinary planes: US domestic dynamics (political science, legal, regulatory and fiscal angles), and, also, perhaps more significantly, within the broader context of the accelerating Sino-American race for "private market preeminence" (geoeconomics, supply chain sovereignty etc), and ESG/the SDG 2030 agenda (renewable energy, green infrastructure, green tech innovation).But $1.2 trillions may not be enough to bring back the United States in the global infrastructure race...A possible policy avenue could be to leverage the U.S. federal government balance sheet by bringing additional trillions from institutional asset owners, starting with US pension funds.The authors assess the "pent-up investment potential of US asset owners, such as public pensions and sovereign wealth funds" and present the latest version of their Private Market Assets Matrix (PMAM), a strategic assessment tool originally developed by M. Nicolas Firzli, World Pensions Council (WPC), and Dr. Joshua Franzel, MissionSquare Research Institute (MSRI), formerly known as the Center for State & Local Government Excellence (SLGE). Finally, Australia and Canada are presented as solid examples of global leadership in infrastructure investment. Interestingly, both are middle ranking economic powers, with Canada at No 10 with US $1.83 trillion GDP and Australia at No 14 with US $1.48 trillion GDP. They have one other shared characteristic however which places them in the pension superpower category: large, independent, arms’ length from government, pension systems. Whilst the US is easily the largest by far in $ value of overall pension assets, Australia and Canada have the 4th and 5th largest pension systems in the world by size, and are second and third, respectively, as a percentage of GDP.