Good Debt vs Bad Debt across the public infrastructure space

Debt for all sectors is an essential, accepted form of good business, particularly forbig-ticket items such as infrastructure. Good debt assists in the generation of income and (generally)increases the net worth of the responsible entity. This discussion paper outlines the burgeoning crisis facing us all in the public sector infrastructure space; as it relates to an ever-mounting deficit in backlog maintenance of assets, hard targets of energy and greenhouse gas reductions, balanced against competing demands for budgets. This crisis existed pre-Covid19, however our urgent need to head off a catastrophe around public sector infrastructure deficit is more pressing than ever. To address this issue, the paper reinvents an existing solution, building upon existing tried and trusted delivery mechanisms to align more closely with today’s needs and drivers for public accountability and increased efficiencies around spending within the public sector. The recommendations are drawn from direct observations and advisory studies across the public sector and promotes joint working practices and ventures between public and private entities, so that together we can appropriately allocate risk and share in the prevention of a
calamity that if not addressed soon, we will be handing to the generations to come.
There are many definitions outlining what”good debt” and “bad debt” are, but the following brief descriptions areagoodstart: Good debt is that which increasesnet worth and/or helps to generate value. Bad debt, in contrast, is that which does not increase wealth and/or is used to purchase goods or services that have no lasting value. For many public-sector bodies, in curring debt is considered irresponsible, exposing taxpayers to unnecessary risk. Many public entities build in an overly cautious risk factor to approaching their debtratio limits, with an absolute limit placed no matter how just the cause.