[Infrastructure, From Construction to Renewal]⑨UK Puts 'Repair Before New Build'... Advanced Countries Focus on Extending Infrastructure Lifespan

Control Tower Independence, Shielding from Political Influence
Funding Expansion via Private Capital and Sovereign Wealth Funds
Performance Improvement Reserve Fund: Only One Entity in Korea

Major advanced countries have institutionalized funding and asset management systems at an early stage to address the aging infrastructure that was heavily supplied during periods of economic growth. Specialized agencies, rather than government ministries, determine infrastructure investment priorities, and the insufficient budget is supplemented by attracting private capital. In addition, investment is made not in new construction, but in extending the lifespan of existing facilities.

A key point to note is the independence of the control tower that manages infrastructure. The United Kingdom established the independent advisory body, the National Infrastructure Commission (NIC), in 2015 to assess infrastructure demand for the next 10 to 30 years and provide recommendations to the government. In 2016, the Infrastructure and Projects Authority (IPA) was established to oversee major project financing, support private investment, and evaluate performance. In April last year, these two organizations were merged to launch the National Infrastructure and Service Transformation Authority (NISTA), thereby integrating long-term strategy formulation and project execution management.

In Australia, Infrastructure Australia (IA), an independent statutory agency, verifies the feasibility of projects that require a federal budget of at least 250 million AUD (about 260 billion won), creates a recommended investment priority list, and provides this to the government. This agency has been maintained even through two changes of administration since its establishment in 2008. In the United States, the Federal Permitting Improvement Steering Council (FPISC) centrally manages infrastructure project procedures involving multiple departments. Consistent investment is carried out without being swayed by short-term political events such as elections.

The investment approach has shifted from reactive restoration to proactive maintenance. Last year, the United Kingdom made “fixing before building new” the highest principle through its ‘10-Year Infrastructure Strategy.’ It established a dedicated fund of 9 billion pounds (about 18 trillion won) annually for the repair of hospitals, courts, and schools that have reached the risk-of-collapse stage. In 2013, Japan established the ‘Long-life Infrastructure Basic Plan,’ and in the second phase of the plan in 2021, it made life-cycle cost (LCC) management mandatory, placing top priority on lifespan extension. In the United States, the 2012 MAP-21 Act required that more than half of highway funding be allocated to maintenance and improvement of major roads.

Shortfalls in government funds are made up with private capital and sovereign wealth funds. The United States secured USD 1.2 trillion (about 1,816 trillion won) through the Infrastructure Investment and Jobs Act (IIJA) of 2021, and also introduced financial mechanisms to incentivize private participation. One such mechanism is the Transportation Infrastructure Finance and Innovation Act (TIFIA), introduced in 1998, which lends up to 49% (typically 33%) of the total project cost for large road and bridge transportation projects at a fixed rate equivalent to US Treasury bond yields. The maturity can be up to 35 years after completion, and repayment can be deferred for up to 5 years after completion.

The United Kingdom established the UK Infrastructure Bank (UKIB) in 2021 with 22 billion pounds (about 44 trillion won) of public funds, and in 2024 further expanded and reorganized it into a sovereign wealth fund (NWF) by adding 5.8 billion pounds (about 12 trillion won) of additional capital. In Japan, the Basic Act for National Resilience was enacted in 2013, following the Great East Japan Earthquake and severe rainfall, setting the basic policy to utilize private funds (PPP, PFI). When local governments carry out disaster prevention and aging response projects, the full project cost is raised through municipal bonds, with 70% of principal and interest covered by the central government through local allocation tax grants, as part of a special municipal bond system.

In Korea, the 2020 “Infrastructure Facility Management Act” specifies the accumulation of performance improvement reserves as funding for upgrading aging infrastructure. This was aimed at requiring national agencies, local governments, public institutions, and local public enterprises that manage infrastructure such as roads, water supply and sewage, and dams, to set aside funds in advance. However, among the roughly 300 public management entities nationwide, the only one to have actually made such a reserve was Korea Water Resources Corporation, with 11 billion won.

This content was produced with the assistance of AI translation services.