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Paying Forward to Future Generations: How infrastructure can do more

/ Garry Bowditch / Leave a comment

Infrastructure decisions act like ripples on a lake, radiating out in time and space that can both help and hinder future generations. The quality of those decisions is set here and now.

This piece was published by Oxford University Press on 25 April 2023. Follow link: Oxford Open: Infrastructure and Health

Abstract

When infrastructure is done well, it forms the fabric beneath us that enables individuals, businesses, and communities to experience more prosperous and inclusive living for current and future generations. In this brief commentary paper, I offer arguments and case examples from my recent book ‘BIG FIXES: Building Bridges to an Inclusive Future’. 

Unfortunately, as an infrastructure practitioner for over 30 years, I have observed a global shift among policymakers to exaggerate the benefits of investing in infrastructure without accountability and a framework for governance to assure positive long-term outcomes. In essence, infrastructure has fallen victim to short-termism. 

The central thesis of my book for readers and future contributors of Oxford Open Infrastructure and Health (OOIH) aligns well with the journal’s mission for infrastructure and health scholarship that fosters ‘Big Connections’. My argument is as follows.

Is your vision of infrastructure about physical assets like roads, bridges, tunnels, power lines, water pipes, schools, and hospitals? If so, then it is too narrow. There is an urgent need for policymakers, investors and scholars to widen their perspective to consider infrastructure as a gift that current generations pay forward to future generations.

The infrastructure decisions of our forebearers act like ripples on a lake, radiating out in time and space. These ripples can amplify benefits into the future, like favourable tailwinds. But equally, where short-sightedness has taken root in the past, the consequences of earlier infrastructure decisions (or none at all) can saddle future generations with the burden of headwinds – slowing, dragging upon efforts to improve.

When a society invests in infrastructure, they express hope and optimism for the future. However, that aspiration implies a big bundle of expectations, including health and economic wellbeing and sustaining and building trust between people and the institutions created to serve them. Moreover, as environmental and social issues grow in importance, society has less room to be complacent with non-responsive infrastructure blocking adaptation and innovation to support new growth. These are examples of the lens to view ‘Big Connections’ referred to by OOIH.

Introduction

At its heart, OOIH invites contributors and readers to think more critically about how institutions responsible for infrastructure and health need to change and the necessary evidence to guide reform. For example, public policy settings and procurement practices for infrastructure projects overemphasise the importance of construction and neglect the governance regimes necessary for assuring positive economic and social outcomes for decades ahead.

Infrastructure provision is a litmus test of a society’s stewardship – planning and acting responsibly long term. So it is alarming how myopic infrastructure governance has become and short-term expediency the norm in fulfilling political ambitions and satisfying powerful vested interests. Hence, this is the reason a reset is vital.

It is time for scholars to help illuminate the case for change so citizens and policymakers can be encouraged to think and act long-term. What is needed is a ‘true north’ beacon where infrastructure provision and health policy work together in making an amplified positive impact on people and the planet. 

That is why I encourage readers and contributors to OOIH to adopt a wide-eyed view of infrastructure where services that flow from physical assets matter most in shaping our sense of safety, wellness, liveability and optimism for the future. 

Lighting the Way

Understanding the ‘big connections’ between health and infrastructure is surprisingly vacant. There is a real opportunity for scholars to make their mark. Yet, despite its importance – researchers, policymakers and practitioners find themselves in a humble position of knowing a great deal less than we should. Unless redressed, we can expect short-termism to prevail without another competitive framework to shift decisions that address long-term impact.

Building a community of practice and a pool of scientific knowledge relevant to the challenges ahead will need people to be restless with the status quo and willing to take risks. Pursuing small and narrow questions may serve certain risk-averse work cultures; however, in this domain, it may increase the risk of irrelevance. 

The task is to illuminate the field of play with floodlights – to reveal the breadth and depth of complexity – the contours of institutional, environmental and people landscapes associated with the interactions of health and infrastructure. The skill sets most valuable are subject matter experts committed to interdisciplinary inquiry and collaboration because so much of quality of life is multi-dimensional and pivots on the quality of relationships with citizens and institutions of government and business. 

Case Example: Birthing of the ‘Weekend’

As a social, health and economic reform, the idea of a weekend off was radical and highly experimental in 19th-century Britain. But interestingly, it did not result from a government mandate but evolved through grassroots activism, trade unions and industrialists[1]. All these vital stakeholders were concerned with the negative impacts of the industrial revolution – long hours, repetitive and dangerous work and the flow on consequences of exhaustion, family breakdown, childhood welfare, loneliness and isolation. 

The activism that birthed a five-day working week required a collaborative mindset and a sense of purpose that transcended self-interest and a commitment to seeking a better outcome for the whole. These similar threads compel us again to build the case for change, in this case, for more excellent stewardship in making infrastructure and health work together to achieve genuinely transformational outcomes for current and future generations.

Infrastructure – a means to an end

Too often, modern infrastructure is slow to adapt and overly cautious in permitting innovation. These barriers can cause enormous inertia in improving wellbeing. This dysfunction must not persist.

From this perspective, I wrote ‘BIG FIXES’ because, over three decades, I observed that citizens no longer have sufficient control or agency over crucial questions of what projects get funded, why and assurances of long-term impacts. 

Infrastructure must resist devolving into an endless cycle of more construction jobs and short-term economic stimulus – it is not an end in itself. Instead, infrastructure should be a means to an end – where these public assets and services are a vehicle for reciprocity by enriching connections across society, making it easier for people and institutions to adapt and be flexible to ever-changing needs and new opportunities. 

New technology and digitisation of infrastructure services can renew the grassroots power of the people. However, the key to this transformation must recognise that infrastructure is a dynamic and adaptable service, not just a physical asset to build, leaving its impact for others to be concerned with later. Instead, it is a means to an end – helping others achieve whatever they deem necessary in their life and business aspirations, from decarbonising economies to more profound social and economic inclusion. 

Fixing short-termism in infrastructure requires leadership across society. BIG FIXES, and OOIH, seek to challenge your perspective and help focus on the challenges and the size of the potential benefits that flow from reform. But, importantly, we first must recognise that most people take infrastructure for granted because they are busy with their own lives and probably do not think of it immediately as a real presence in shaping the quality of life. However, their busyness with other things does not suggest an indifference to infrastructure; instead, they choose to place enormous trust in those responsible for infrastructure provision to get it right. 

The research community of infrastructure and health experts can help preserve and build upon that trust through evidence and case examples – because infrastructure is incredibly personal to people’s wellbeing. After all, it determines where we live, what jobs we can do, and how healthy we are. It also determines the types of jobs our children will do, so infrastructure and health research can catalyse positive change. 

Alternatively, when infrastructure is poorly conceived and slow to adapt to the shifting needs of society, quality of life is at risk, and community trust diminishes in responsible institutions. 

As a community of practice develops around the OOIH, we must play our part to bolster health and infrastructure policy and practice working together. If successful, then OOIH would have helped today’s endeavours to pay forward to future generations. Securing greater trust and collaboration in society is our long game – unleashing human ingenuity and creativity that fashions the future. 

Case Example: Ride sharing 100 years too late

During the early 1900s, with the introduction and rapid take up of private motor vehicle ownership in the United States, a ride-sharing scheme was started in 1914 by L. P. Draper, a car salesman from Los Angeles. He observed very long queues to catch the public transport trams in the city, so he set up a sign on his car alongside these queues to say he would take passengers wherever they wanted to go for a ‘jitney’ (slang for a nickel). 

Draper met with extraordinary success. By 1915 there were 50,000 rides per day in Seattle, 45,000 rides per day in Kansas and 150,000 in Los Angeles. However, Uber founder Travis Kalanick says that the thriving Jitney ride-share was 

regulated and taxed out of existence within just a few years. The local monopoly public transport authorities had convinced policymakers to impose onerous conditions and licensing fees. The government, which owns the public transport monopolies, saw the ride-sharing scheme as pernicious, according to Kalanick[2]. 

Since the demise of the Jitney, the global economy had to wait almost 100 years before another scaled attempt at ride-sharing began. In the meantime, without ride-sharing, car ownership exploded, along with congestion, massive carbon emissions and wasteful spare capacity. As a result, private vehicles are typically in use for less than 10 per cent of their productive capacity.

The loss of ride-sharing services has had severe consequences as car fleets worldwide struggle to be fully effective. The mass adoption of motor vehicles has shaped every city with ever-increasing road capacity and the loss of amenities to accommodate near-empty cars. Furthermore, Kalanick argues that at least 30 per cent of cities’ building stock is devoted to car parking, again for mostly driver-only cars.

Provocation for OOIH

The demise of the Jitney is an excellent case example for the OOIH community to reflect upon and debate. With the benefit of hindsight, Jitney was an innovation taking advantage of the leap in technology with the advent of private motor vehicle ownership that upset incumbents like public transport operators. In the wash-up, Jitney’s innovative new services got set aside in favour of the status quo – public transport. However, were the benefits relative to the costs justified? And if so, how did that change over the short, medium, and long term? 

Looking at Uber, Lift and other ‘mobility as a service’ businesses today, their unique business models pivot on flexibility to quickly respond to changes in demand. In contrast, traditional taxi services and public transport are more rigid and less able to change short-term supply in response to demand. 

But as with the Jitney, fundamental issues emerge from modern ride-share schemes. For example, serious questions persist today about ride-share driver pay and conditions – such as access to paid sick leave and minimum wages. These questions are even more critical when ride-share drivers are disproportionately people of colour and immigrants.

How should these sensitive issues be handled, considering that the ride-share business model requires high flexibility from drivers to log on and provide service on demand? Normalising drivers to standard employment contracts will have a peculiar set of costs and benefits for the drivers and the broader ride-share ecosystem. How can these be better examined, and is the current focus on pay and conditions too narrow? 

Is a border perspective needed? For example, what are the issues to consider regarding the algorithms’ governance that impact independent contractor drivers’ ability to perform their duties fairly and reasonably? Unfortunately, the transparency around algorithms that allocate and despatch jobs is poor. Furthermore, a lack of transparency is frustrating for stakeholders to trust one another and prevents a maturing of the debate to finding better solutions.

Regardless of the merits of different perspectives, the community of OOIH  help must define a place where these issues are peeled back and examined rigorously with a clear objective of clarifying the short-medium-long-term consequences. As a result, we must be less compelled to react to the obvious and to drill into problems to understand the complexity at play as a crucial ingredient to mapping possible solutions with positive impacts.

Stewardship – a vital missing link

Continuing an unbroken chain of stewardship from generation to generation must be embedded as a vital goal in governing society. No matter how weak stewardship may appear, our urgent duty is to strengthen its effectiveness with evidence, frameworks and case examples that build the momentum for disrupting short-termism. 

Stewardship that is ongoing and continuously improving is important because future generations are hopefully less likely to break the ripples of goodwill and competence when these are already present in peoples’ experiences. 

As a researcher and infrastructure practitioner, it is astonishing how society is becoming more complex, diverse and interdependent. These developments may explain why top-down bureaucratic solutions are far less effective in meeting community needs. Instead, more nuanced grass-root responses can better fulfil a wider diversity of needs if given a chance. Moreover, communities yearn to co-create solutions that continually adapt to meet their unique needs. They also increasingly question old-world notions of centralised, one-size-fits-all edicts from government and business. 

Scholars must help redirect institutional efforts to the diversity and complexity of grassroots responses that can emerge from communities to address their challenges and aspirations.

Fixing infrastructure to adapt as a service to changing needs of people is a first step to addressing many of society’s broader ills. Doing good infrastructure must draw on our better selves to think and act long-term and carry on a chain of benevolence. Stronger institutional accountability to citizens is vital in ensuring we can navigate a safe passage through the countless uncertainties we face and be more adaptive to a changing world. 

Undoing short-term, reactive and low aspirational intentions in our institutions are fundamental. There is no time to waste in rebuilding trust; collaborations, accountability, and community action are essential in getting to a better place. Contributing to OOIH is worth your time and commitment.

*Garry Bowditch is an Oxford Open: Infrastructure and Health Editorial Board member and author of BIG FIXES: Building Bridges to an Inclusive Future.

[1] Brad Beaven, History of the two-day weekend offers lessons for today’s calls for a four-day week, The Conversation, 3 January 2020

[2] Kalanick, T. Uber’s plan to get more people into fewer cars, TED ideas worth spreading, February 2016.  

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ESG Complacency no longer cuts it

/ Garry Bowditch / Leave a comment

By Garry Bowditch*

A version of this opinion piece appeared in the Australian Financial Review on Wednesday, 16 March 2022

Over a decade ago, the world that birthed the ESG juggernaut had not fundamentally changed from today. Instead, high-level principles and manifestos helped build a wall of money, a platform for announcing good intentions, but real change and impact is missing.

There is an urgent need for an honest conversation about rescuing ESG from complacency. Loss of transparency and more delistings of assets from public exchanges like Sydney Airport make ESG friendly investors more critical. But, are they up to the task to tackle entrenched and systemic problems across its three domains: environment, social, and governance systems when accountability and public reporting is so unreliable?

Bloomberg expects ESG funds to exceed $US53 trillion by 2025 and account for one-third of all assets under management. Such an eye-watering pool of funds should suggest we are amid an ESG revolution. But, unfortunately, the answer is far from clear.

One take-out of the last decade is how hard it is to assess an organisation’s ESG performance. Lack of rigorous conceptual frameworks, quality data and corporate cultures shunning transparency undermines convictions. Vagueness in defining what good looks like – both in transition and its final state needs replacement with precise and clear thresholds of ESG performance.

A big part of the problem is that too many ESG proponents focus on an organisation without proper consideration to the environment, geopolitical, economic, industrial and social systems. The founders of ESG had got this right in principle, but unfortunately, as it grew in the marketplace, concepts and methods have drifted into being too myopic and strident. Urgent action is needed to get ESG connected back to systems thinking.

BHP’s Mike Henry typifies CEOs at the pointy end of the ESG journey. As a global mining and resource company, they dig up the planet and disrupt the environment daily. At the same time, their research and output of precious minerals and metals enable new technologies to decarbonise economies and power up renewable energies. But, equally, efforts to eliminate modern slavery and increase diversity can be overshadowed by a more zealous focus just on the environment.

No doubt, BHP brings a ledger of positives and negatives to ESG, just like most organisations. However, knowing the sum of their impacts implies more risk and uncertainty, or a pathway to something better would be helpful guidance.

ESG proponents should step back from its stridency – labelling some sectors and organisations’ pariahs while being unclear and imprecise about what constitutes good ESG.

Only weeks ago, defence stocks were shunned on the MSCI by many ESG investors. But their potential contribution to repelling Russian aggressors in Ukraine has prompted a change of heart. Unfortunately, some ESG institutions have somehow thought that democracy and state sovereignty is a magic pudding while overlooking the ESG benefits implied from military power and maintaining the integrity of national borders.

Again, geopolitical systems matter and understanding them remains too weak.

Similar oversimplifications abound. During COVID, remember the speed at which alcoholic beverage companies switched production to cover the shortfall of hand sanitiser? They did this when demand was already strong for their regular products and their decisive actions were an outstanding example of corporate citizenship in a time of need. Yet there has been little recognition given to this in the ESG universe – where alcoholic beverages are pariahs.

These issues pop up in many areas requiring analysts to understand the context and balance nuances to arrive at an informed ESG viewpoint. Perhaps analysts would be helped if ESG investing principles could evolve faster from their current state of being too vague that in turn invites arbitrary and subjective interpretations.

Carbon net-zero and endeavours for greater social justice and resilience will throw up plenty of difficult decisions reflecting painful trade-offs. Therefore, it is fundamental for ESG to enable these transitions and not inhibit them with inconsistent methodologies and poorly made judgements made out of context and without sufficient regard to system issues.

It is essential to call out that ESG generalisations and vague principles will no longer cut it. There is too high a risk of damaging organisations making genuine attempts to improve while giving camouflage to others less committed to enacting change.

Redressing the ever more ESG announcements of great intentions and substituting them with decisive strategic actions has never been more critical given the challenges.

A Way Forward

The future of ESG will boil down to the quality of leadership and strength of willpower to bring diverse peoples and organisations together to make a difference. That means the ESG universe must evolve rapidly into a place of inclusive leadership that positively compels all stakeholders to change deeply entrenched attitudes and practices. The weight of ESG money cannot do this alone.

But the immediate leadership task is to encourage much greater willingness to adopt organisational openness and transparency. Too many ESG devotees have been complacent, greenwashing, and cherry-picking data to tell a rosy story. At the same time, hiding failures and the valuable lessons from these experiences will alienate those struggling to do better and diminish trust in ESG’s purpose.

Letting the sunshine into an organisation is the first step to cleansing cultures and decision processes. Regrettably, this is not the language of business, but Mike Henry and IFM’s David Neal could change that, one business at a time.

Until sunlight shines into all institutions, doubt and cynicism of ESG will linger.

END

*Garry Bowditch is Co-Founder Customer Stewardship Alliance and author BIG FIXES: Building Bridges to an Inclusive Future, available on Amazon.

Earning Public Trust: Lessons of a Sled Dog Musher

/ Garry Bowditch / Leave a comment
Photo by Robert Tjalondo on Unsplash

In Times of Uncertainty

Trust among people is precious, just like the oxygen we breathe. Our future depends on it. Some people may take trust for granted and even abuse it, but we all learn the full extent of the loss and the enormous difficulties in bringing it back when it’s gone.

In my book BIG FIXES: Building Bridges to an Inclusive Future, I use infrastructure (the provision of public assets and services like hospitals, roads, bridges and water systems) as a prop to open up a conversation about the future. I argue everything relies on ‘earning trust’ and keeping society hinged to it.

But the problem is trust is disappearing as a force for good, and we need to fix it fast. That is where sled dogs and their musher come into the picture. Because I think they can inspire us and build a deeper understanding of what trust means, especially in times of great uncertainty like COVID. Here is an excerpt from Chapter 1 of BIG FIXES.

A Musher’s Masterclass

Blair Braverman* is now a famous author and ‘musher’, a human driver of a sled dog team that races across the Arctic. She says that her dogs know many things she does not. For example, they know if a storm is coming or if a moose crossed the trail days before. Every time the dogs hit the trail, they run hard, giving it everything they’ve got without knowing if the race is 10 miles or 100 miles.

Braverman has learned the importance in long races the need to front-load rest. You’re four hours into a four-day race, and the dogs are charging down the trail, leaning into their momentum, barely getting started — and then, despite their enthusiasm, it’s time to stop. The dogs might not even sit down; they’re howling, antsy to keep going. It doesn’t matter. You rest. Four hours later, you rest again because it’s far easier to prevent fatigue in the dogs than it is to recover from it later.

Resting early, anticipating your dogs’ needs, does something even more important than that, says Braverman: it builds trust. For example, a sled dog learns that by the time she’s hungry, her musher has already prepared a meal; by the time she’s tired, she has a warm bed. If she’s cold, you have a coat or blanket for her; if she’s thirsty, you have water. And it’s this security, this trust, that lets her pour herself into the journey, give the trail everything she has without worrying about what comes next. But if she knows you’ve got her back, she’ll run because she wants to, because she burns too, and she’ll bring you along for the ride.

Infrastructure Mushers Needed

We, too, need to know that our institutions have got our back in the human world. We run our unique races in life, focussed and energised to achieve what we choose. We expect the people charged with keeping our towns, cities, and the nation we live and work in – safe and productive – that they are doing their job!

While the rest of us are investing, running businesses, getting educated and growing families and communities, we can do this without worrying about the detail of keeping essential systems going. Transport, energy, water and waste, schools and hospitals (the infrastructure) needs to work. Like there is the equivalent of a sled dog musher taking care of things so you and I can get on with living, contributing to society and making a decent living for our efforts.

The infrastructure musher (if you like) must have our back when loved ones fall ill there are hospitals and medical attention at the ready. When a business learns, it must pivot to a new product or service; managers are confident they can access new pools of talented workers thanks to excellent land use planning ensuring vibrant neighbourhoods and educational facilities. If a start-up is hungry for more data, it has broadband connectivity to manage mega data transfer upstream and downstream around the globe. As environmental accountabilities grow, organisations know they can access sustainable energy low carbon transport services and provide education and childcare services to support social inclusion and diverse teams. All these are vital ingredients to success beyond most organisations’ front gate.

Custodians of Trust

There is an enormous trust that those responsible for public services, especially infrastructure planners, owners and operators, are doing their job well. Policymakers and regulators are looking ahead, listening to people and businesses, understanding what is essential to success and having the conviction to ensure economic and social opportunities prosper and not peter out from fatigue and frustration.

The better authorities do these services, the better the rest of us can be innovative, productive, and responsible in contributing to our wellbeing and a better society.

When that happens, not only do we live better, we build trust!

EndNote

* Blair Braverman, Welcome to the Goddam Ice Cube. Chasing Fear and Finding Home in the Great North. March 2017

Telstra’s retreat has lessons for infrastructure*

/ Garry Bowditch / Leave a comment

* A version of this article was published in the Australian Financial Review on 17 July 2018.

Telstra’s latest predicament exemplifies what is Australia’s problem of failing customer stewardship in infrastructure.

Like a world cup own goal, team Telstra is scrambling to make up lost time by seeking to fix stubborn old problems. The quest to simplify Telstra in one fell swoop is a sign that long-term, steady and consistent customer stewardship of our big institutions is becoming very difficult, but not impossible.

Telstra typifies all the challenges of infrastructure. It has huge upfront investments, big focus on engineering and technology that defines its long term legacies yet these characteristics also make it hard to respond to customers and bring about change when needed – hence stewardship by customers.

The good news is that some Australian infrastructure firms are making the change in mindset and practice to get better at customer stewardship – rich in data, technology and innovation: driven by responsible people accountable for their actions.

These firms have gone beyond the basic compliance mentality of ‘ticking the box’ evident in so many annual reports where the reader can only be hopeful but not assured the right thing is being done.

Customer stewardship is an opportunity for infrastructure investors, owners, operators and policymakers to expand their toolkit of solutions for the nation’s problems from a pretty obvious starting place, the customer.

That means a determination to deliver good long-term outcomes, based on substantive relationships, where reciprocity strengthens performance and participation with stakeholders comes first.

This reflects a realisation among CEOs that not all our economic and social challenges can be addressed through reducing costs, lifting prices or through more funding.

Examples of customer stewardship are not abundant, but there is a growing cohort of spirited exemplars making their mark. Like Port of Brisbane with its storm water treatment in Lockyer Valley is helping redress silt build up down stream and avoiding expensive and disruptive dredging of channels. This is benefiting a multitude of stakeholders, including its private owners.

Unfortunately the social licence to own and operate infrastructure by the private sector is drifting into troubled water and must be corrected. Already there have been calls to renationalise Telstra. While that may seem absurd, nationalisation of broadband assets is exactly what has happened with NBN and UK is in the midst of maelstrom on similar issues.

A lack of connectedness of decision makers in Telstra to the anguish customers often face in dealing with their service provider has persisted across the decade.

While transparency is usually an enabler of managerial accountability to long-term outcomes, in the case of Telstra the sheer complexity and effort to understand the labyrinth by managers inside and outside has aided and abetted half hearted remedies to customer service and corporate misadventure.

Telstra appears to have finally self-medicated with a new business model splitting off its legacy physical assets into InfraCo. This reflects what customers have understood for a long time, that Telstra has reached a tipping point where benefits of size and scope of operations no longer justify the cost of underperformance.

Institutional investors can help buttress an enduring customer led, market based stewardship for infrastructure. That is where responsible owners are active in managing their assets to the shifting needs of customers, and are front footed in reimaging infrastructure to adapt and perform to higher standards of service and innovation over the long term.

While many investors are attracted to the infrastructure asset class because it is typically a safe haven from volatility and with inflation adjusted returns, it is important that they closely engage customers and community to ensure services are timely, scaled and feasible.

A plethora of challenges confront investors, owners and operators of infrastructure. On the one hand, pressure to payout dividends especially to retired security holders dependant on their investment to meet living costs has never been more acute, and on the other immense pressure to reinvest in assets and networks in response to climate, technology and social change. Public trust is delicately balanced as to how investors navigate these challenges.

Australia needs a stronger ambition to an infrastructure future where customers, asset owners and operators exchange information, understand needs and preferences and are motivated to meet them in a way that lifts the entire system. This simple process of stewardship underpinned by respect and humility to the customer and the community from which they come has been lost, as infrastructure gets bigger and more complex.

Customer stewardship is a means to a very important end, rebuilding trust. Integrity demonstrated through consistent behaviour towards the customer (and community) will be a big step forward. Too often communication with customers is not targeted, timely, clear or helpful and dressed with over-promise served on a platter of poor delivery.

Telstra along with the whole infrastructure sector must commit to being a beacon for exemplary customer stewardship. Its time to bring the customer and community in from the cold, and when they do not only will shareholders and customers be better off, so will Australia.

A Successful Infrastructure Australia should spell its demise*

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*Opinion piece published Australian Financial Review, 19 February 2016

Infrastructure Australia (IA) is under new management, with a grand plan and reform agenda that at first blush seems sensible enough.

However, there are early signs of an identity crisis in IA as it wrestles with the need for more market efficiency in infrastructure and how it will evolve from its purpose of anointing projects through an administrative selection process that can produce ‘hit or miss’ result.

The end game may necessitate IA to plan for its own redundancy in no more than 15 years as this would be evidence of its success with markets and would come with the gratitude of the nation.

IA’s call for even more funding is to be expected, but Australia can be too trigger-happy when it comes to spending up big on infrastructure. For example, in the past decade more than half a trillion dollars has been invested in infrastructure, double the previous decade.

Despite this, escalating congestion, higher emissions, greater service costs, lower service quality and lost business and investment opportunities persist in both cities and regional Australia.

It appears Australia has a problem translating big spending on asset building into meaningful benefits that lift competitiveness and improve the lives of its people.

Part of the diagnosis is that too much emphasis is on rushing the engineering blue prints for ‘shovel ready projects’ without proper consideration to setting objectives to measure future success. Compounding the situation further is an absence of problem identification the project is seeking to fix.

Governments must choose their infrastructure well, if it is to live up to the rhetoric of boosting productivity and living standards. The trouble is choosing projects is not easy, in fact it’s very difficult.

Australia’s experience suggests that the best way to deal with this is for the Turnbull government to finish the reform agenda started in the 1980s, and then do some more.

Many sectors in infrastructure have been reformed through corporatisation and privatisation. The big successes like airports and telecommunications has transformed these sectors for the better. We have seen excellent investment in facilities and customer service. Brisbane airport currently looks more like Dubai with its massive new runway excavations is a case in point, and other airports are decongesting and debottlenecking to ensure good customer experiences.

But other sectors like roads and public transport remain largely untouched by reform. As a result an undisciplined investment process has seen taxpayer dollars failing to fix poor service levels, and tardiness with introducing capital saving new technologies. In contrast, telecommunications has had a far more stable investment pathway and has been quick to introduce new technology. Customers have been the winner as they have benefited from markets and competition.

A good first step for new infrastructure minister Darren Chester is to step into the customer shoes and be their champion.

Customers want services, not assets. All governments need to adapt by enabling markets to deliver these services where possible.  It is better that infrastructure is provided through businesses to customers, not politicians lobbying voters.

When markets are not possible, then governments must seek to procure service outcomes. This will invite a broader participation in the market, not just those that want to build assets. It should seek to give greater emphasis to using existing infrastructure better, stimulate innovation and reward risk taking.

These issues are the focus of the University of Sydney’s Better Infrastructure Initiative report ‘Re-establishing Australia Global Infrastructure Leadership’ released on Monday.

Necessity is the mother of invention. But it has been difficult for Australians to bring their genius to the fore in resolving our infrastructure challenges when the system is awash with money without clear purpose and procurement processes inflexible to new ideas

Australia has an infrastructure services deficit, but piling more money into it does not seem to be delivering the outcomes required. Minister Chester and IA can change that by first acknowledging services matter more than asset building, and allowing the discipline of markets and customers to guide the spending.

END

 

Stop the infrastructure ‘boom bust’

/ Garry Bowditch / Leave a comment

images-2

The Australian Financial Review’s National Infrastructure Summit last week resonated with calls for reform to deliver better value for money, proclamations of broken procurement models, need for more rational risk allocation and furious agreement about importance of infrastructure to help rebalance Australia’s post-mining boom economy.
No doubt these sober deliberations confirm once again that Australia is a much better manager of adversity than it is of prosperity. This national characteristic was clearly evident at the Summit, and begs the question how Australia can be better prepared for the next bonanza and have more to show for it.
The boom-bust cycles of commodity prices are here to stay, but that does not mean infrastructure has to follow suit. Currently it does, which is a serious indictment on the nation that is failing in its long-term planning capabilities.
Despite the measured and grounded discussions of reform at the Summit a framework for growth remains illusive until Australia rebalances the scales so that its passion for more infrastructure is matched with its reason.

PROLIFIC BENEFITS
Sure, governments invest in infrastructure because the benefits are so prolific. It connects people and institutions with markets and opportunities, creates competition, drives up productivity and elevates living standards.
The promise of so much, however, is not an excuse to passionately invest in the blind hope the next crop of infrastructure will yield more again.
But governments need to heed the message and plan infrastructure for the long term. Current 15-year planning horizons of Infrastructure Australia and their state equivalents are a good start, but remain too short-sighted.
Infrastructure plans should not be just a project list but also a narrative of Australia’s demographic and spatial challenges, aspirations and intentions. The population task alone in accommodating 70 million people by 2100 is an unprecedented national challenge.
What is the future shape of Sydney, Melbourne and Brisbane as these cities absorb most of the additional 30 million people. For example, do we have in place the rudimentary options for growth that our mega cities will need such as land corridors for freight, utilities and passenger logistics.
President Eisenhower made the astute observation that ‘plans are useless, but planning is indispensable’.
The challenge before Australia is to break away from the stop-go, boom-bust approach to infrastructure, and set out a purposeful and strong planning framework for growth of cities and regions. This will demand a fundamental mind shift of policymakers and stakeholders alike.
Governments across the globe are calling for more long-term investors to finance infrastructure. When that is done well, the old way of ‘invest, set and forget’ should be a relic of history.
For that to happen, owners and operators of infrastructure must be more exposed to customers, and incentivised to meet their preferences. This strengthens scope for innovation, improves business cases, lifts ROI and long-term asset values while lowering revenue and political risk.
Unfortunately, the model today is back to front; infrastructure first, customer second.

SWEATING THE OPTIONS
The big utilities like electricity and gas companies are sweating the options to better understand and partner with customers, despite decades of loyalty they still know very little about them. Utilities have not been helped by plethora of regulatory changes that have been poorly thought out and executed in a vacuum of research and data on customer behaviour.
Transport and electricity infrastructure share a great deal in common. Their customers demand more in the peak as average consumption declines, which present a very challenging situation. It is exorbitantly costly to ensure reliability in the peak and holding idle capacity at other times.
The upshot of the utilities experience for the rest of infrastructure is clear, especially for transport, get closer to the customer sooner.
Of course, infrastructure needs to be marketed better in the language of community and customers. What does it mean for my commute time, access to different types of transport, kids drop off, getting to hospital, my house price and liveability of my neighbourhood.
Community support and trust towards credible infrastructure plans must be earned with sound community engagement and better customer service outcomes. These must form the central plank of the new long-term infrastructure-planning regime, not just a focus on assets and projects.
This is by far Australia’s most pressing infrastructure imperative.

 

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.