Month: May 2015

Infrastructure Australia Audit: first ‘listen’ to the people

/ Garry Bowditch / Leave a comment

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Infrastructure Australia is under new management, and it shows in its first national audit report released today.

Demographics, land use and infrastructure are all bundled together in the Audit, and its not a minute too soon. The mega trends in demographics and land use are the big drivers of infrastructure demand and recognition of ‘integrated infrastructure planning’ is welcomed.

But how IA proposes to capitalise on this ‘integrated infrastructure approach’ is unknown at this stage. So we are all left wondering about the types of infrastructure outcomes, how our cities might be shaped, community impact and liveability we might expect in the future. Without these types of pointers, its hard to know what IA’s big picture strategy over the next 15 years is all about.

However, while ‘integrated infrastructure planning’ language should be encouraged, putting it into practice is a whole other ball game. Thats because there remains a culture of resistance across Australian bureaucracies and industry to the big picture shape of networks and cities into the future.

The culture of silos, where transport, land use, energy and water (to name just a few) are all separate and isolated from one another remains as big a problem today, as it has been in the past.

This is where IA can play constructively.

The biggest problem with silos is that they fragment infrastructure planning and intelligence. Departmental silos prevent proper recognition of the ‘customer’ who is having to traverse all the silos at once as they live, work and play. In addition, silos prevent proper policy and design reasoning so that the community can be assured that every time a new project is proposed that its actually makes people and the network of infrastructure better off.

Remember Sydney’s Cross City Tunnel, and closure of adjacent roads to drive up patronage for the new tunnel. Such business models are destructive to community trust and are typically incubated in a silo.

Securing permission from the community to do infrastructure is Australia’s newest and biggest hurdle.

While IA appears to be trying to express themselves in the language of openness and consultation, so much more is required. Engaging the community goes deeper than traditional consultation asking ‘what do you think’ of our latest project thought bubble.

Government’s must be prepared to ask the community what are the problems that concern them most, and set up a deliberative conversation to explore how these problems can be addressed, identify the trade offs without the presumption that building something new is the best way of meeting that need.

This is how infrastructure can inject much needed innovation and drive up productivity by being focussed on the problem and inviting more ‘unsolicited bids’ to solve them. There have been too many projects in Australia that are engineering brilliant solutions but are in search of a problem. Inland and high speed rail, decentralisation initiatives and reversing rivers come to mind.

Finally, headlines leading the IA Audit like congestion costs Australia $53 billion are simply meaningless. Instead, the community deserves to be engaged about infrastructure with language and values that meaningfully impact their lives, like travel time to school drop off, access to services like hospitals, schools and amenity, air quality and can it help my kids get a job. This is the new and necessary language of infrastructure.

These are some of the issues that shape liveability and infrastructure must be slavish to them, not the other way around.

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Another budget of ‘reverse philanthropy’

/ Garry Bowditch / Leave a comment

Australia brought down its Federal budget tonight. Sure the Prime Minister was right, it had ‘no surprises’ and the flip side is ‘no aspiration’ either.

While Europe and US have had an appetite for public debt for a prolonged period of time, and have enjoyed the favour of the capital markets, Australia should not bank on the same.

Yet the budget is on track to do exactly that, with deficits that will accumulate as a burden on the Australian taxpayer for decades into the future. The big difference for Australia is its volatile ‘terms of trade’ (the relative price of exports to import prices) must be planned for, and contingencies put in place to ensure living standards can be sustained.

Debt is not the answer, and younger people in particular need to get on the case.

The question in search of a proper response is why does this budget, like so many budgets that  came before it from both Liberal and Labor, enable the transfer of wealth from the young to the old.

Australia has a serious case of what I call ‘reverse philanthropy’, and the consequences are serious.

The budget provides extraordinary tax expenditures to older groups by virtue of concessional tax treatment of superannuation, and an expectation of a universal pension funded by the taxpayer. Other benefits include, tax exemption to the family home that favours incumbent land owner, generally the older generation who also had the benefit of free university education as well.

In contrast the younger generation face extraordinary house prices, (fuelled by poor land use regulation that has restricted supply in favour of the old), and the burden of financing their university education as well.

Young people in Australia need to make their voices heard, and question the inter-generational  wealth transfer that is doing them no favours what so ever. For the younger generation to pull off this financial trick of supporting themselves and paying off the debt legacy of the older generation, is going to rely on a productivity boost equivalent to the invention in 1765 by Hargreaves of the spinning jenny which could spin numerous spools of cotton simultaneously.

Of course, if such transformational technology does not eventuate the impact of high marginal tax rates required to fund the budget will crush incentive and productive purpose. If you think this sound a bit like Greece today, then your probably not wrong.

 

 
 

Customers first, infrastructure second

/ Garry Bowditch / 2 Comments

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Why are customers left out of infrastructure?

The preferred language in infrastructure circles for the people that consume infrastructure services are ‘users’.

And this says it all.

Users are the anonymous and forgotten people that have no say in what is offered to them when it comes to our roads, trains, energy and water systems. Its just take it or leave it.

On the other hand, customers are enticed with a ‘value proposition’ – they get something of value for their spend. Customers can choose on the price/quality spectrum, cheap and cheerful through to luxurious and exotic.

While infrastructure may not be able to meet the extremes of choice in the consumer retail market, there is plenty of scope to do more and no doubt some utilities and companies are trying.

So next time you are travelling on a toll road well under speed the limit as you endure another traffic jam, arrive late for your next appointment you are entitled to ask the question, what service did my toll just pay for?

If there was no service at all, then a toll is just another tax.

The community will fund infrastructure by paying fees and charges provided the value proposition of the service is good enough and can be delivered consistently overtime. Yet, so little of these considerations of the customer come into play when we plan and design infrastructure.

When we recognise the ‘customer’ and account for their needs and expectations many of the problems of infrastructure delivery and funding become far more manageable.

That is why community participation and confidence in the infrastructure planning and delivery process is of critical importance. Connecting major decisions with better and relevant services directly impacts people’s lives.

When projects are accountable to customer service outcomes, this will help prevent inappropriate political influence and lift confidence that proper planning against clear objectives and service outcomes are taking place. Together this can help unlock the infrastructure impasse, win community approval, attract new funding sources and unlock much needed innovation.

Infrastructure assets and services have a very privileged and intimate role to play in our society, because they provide the platform for conducting modern life. For example water for living, energy for growth and employment and technology for connection and coordination.

Shifting the focus of infrastructure planning from its physical attributes to the services it is intended to deliver is a critical reform that will require a different procurement approach and culture of planning within government. The dividend of this reform, however, will better reflect the community’s expectations and help justify the investment and disruption caused during construction.

The increasing reliance on private investors to fund public infrastructure places an even greater imperative on governments to have the ability to interact, negotiate and secure outcomes in the best interest of the community. This requires strong institutional architecture, including anti-corruption agencies. Governments need to be open and transparent about the relationship with private sector participants and the value such participants provide to overall infrastructure development.

Jurisdictions need to be frank about success and failure; and to demonstrate they are capable of learning lessons from the past and can transfer best practice from other projects and jurisdictions.

Australia has an alarming lack of information, data and culture of review (benchmarking) of the performance of its infrastructure. There is an urgent need to build a body of evidence that will inform future infrastructure policy and decisions of past lessons and successes.

Public trust and confidence within a jurisdiction can improve when there is demonstrable success of previous projects. Jurisdictions should recognise public trust and confidence is cumulative, and every project successfully delivered builds trust one-step at a time. Therefore, infrastructure planning must ensure a very high level of competence in delivery, and genuine and in-depth consultation occurs to take account the needs of the customer and the community customers live in.

Public infrastructure in the eyes of the community expects a very high level of accountability and transparency. Of course government must ensure that legitimate commercial-in- confidence considerations are protected but this should not be used as a means of blocking the ability of the community to have an appropriate degree of scrutiny to ensure the value proposition of infrastructure is relevant and good value.