28 minute read
Treasurers in conversation
L–R: Adrian Dwyer, Dominic Perrottet and Tim Pallas
Key points:
• The states require more autonomy in infrastructure funding. • Reformist states should be rewarded for their efforts. • Further targeted reforms and continued investment in infrastructure are required.
Panellists:
► The Hon Dominic Perrottet MP, Treasurer of
New South Wales ► The Hon Tim Pallas MP, Treasurer of Victoria
Moderator:
► Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia Adrian Dwyer (AD): New South Wales and Victoria have been the key drivers of 28 years of uninterrupted economic growth – the longest run in the developed world. From each of your perspectives, what’s underpinning that success, and how optimistic are you that we can continue that to three decades and beyond?
Tim Pallas (TP): One of the things that’s underpinned the economic growth of the nation has been the sort of reforms cemented in the 1980s and 1990s, and we’ve been the proud beneficiaries of those. Whether it’s floating the dollar, regulating our banking networks, or the movement towards enterprise bargaining.
Increasingly, the challenge for us is where we go next in terms of reform, because we will get ever-diminishing returns and productivity out of past generations of political intervention.
We must recognise that with growing populations in New South Wales and Victoria, particularly in our capital cities, we’re going to have to make further and better provision for
infrastructure. And that becomes quite testing, because industry is under considerable stress given the level of work that we’re attempting to dish out.
And on top of that, we need to think of better and more efficient ways of delivering services. In practical terms, we need to accept that people’s expectations from politicians can be assuaged by simply saying, ‘Well, you know, times are tough’. We’ve got limited budgets. But we need to find better ways to deliver services and infrastructure in a timely way.
AD: And your optimism for getting to three decades and beyond of uninterrupted growth?
TP: I am a professional pessimist. I see that as part of being a Treasurer. I am quite concerned about the emerging international headwinds and problems associated with world trade.
I often say that Australia’s an island, but we’re not an economic island – we are going to be affected by this. Any efforts that can be made to encourage all the principal participants to work together would do a great service to the world economy and here in Australia.
Despite that, both New South Wales and Victoria are in a very strong position, largely because of the effort that we put into making what now appears to be countercyclical investment. The key for us is to see if we can ensure that we’re complementing each other’s efforts, and that we find a way to work positively with the Commonwealth.
AD: Dom, let’s come to you for full-bore optimism.
Dom Perrottet (DP): I’m more optimistic than Tim, and obviously I have cause to be, being in New South Wales. There’s no doubt that there are challenges globally and nationally with the softening economy. A lot of those factors are outside of our control.
From a state’s perspective, what can we do? One of the biggest areas that we can drive is investment in infrastructure – that’s what New South Wales and Victoria have both been doing. When we took the leasing of the poles and wires to the 2015 election, there were views that this wouldn’t drive economic growth, but unlocking that capital has.
Governments can be responsive. It’s got to be ahead of the curve. And when you now see a softening in national economy and state economies, it’s infrastructure investment that’s holding us up. We’re building more than $90 billion of infrastructure over the next four years, which is adding about 0.5 per cent to New South Wales’s economic growth.
If we hadn’t gone down the path of asset recycling, which has been a substantial focus of the New South Wales and Victorian governments, we would not have been able to unlock that capital to invest in productive infrastructure.
L–R: Adrian Dwyer, Dominic Perrottet and Tim Pallas
It’s the major projects in the cities that are really holding up our economy. There’s no doubt that there are challenges coming our way, but the number one thing we can be focused on that’s really helping our economies is infrastructure investment.
I’m very confident about where we sit in New South Wales. What is key is maintaining that asset-recycling philosophy and borrowing to build – that is going to ensure that our economy continues to grow into the future.
AD: Tim, you mentioned what the states can do and what the Commonwealth can do. You’ve both been reasonably vocal about the failures of the current federal financial relations system. What’s broken, and how can it be fixed?
TP: The first and most important thing is that we must start dealing with each other with respect. I often make the joke that as soon as the wheels of the plane hit the tarmac in Canberra, you turn into an instant genius.
States are in the business of delivery, whether it’s infrastructure or services – we’re closer on the ground to people’s lived experience and satisfaction. This means that states have great value to add. We’ve got to move away from this mentality that the Commonwealth calls the tunes and the states are basically nothing more than service delivery entities. We are so much more than that.
Every time there has been a dispute between the Commonwealth and the states around particular pieces of infrastructure, it’s always the states that win because we control the planning and the environment where infrastructure is being built. Being closer to the communities affected also means that we have a crucial role.
I’m not being belligerent, but we do need to have some measure of recognition that it’s a state responsibility to deliver infrastructure. I don’t have any problem whatsoever with the Commonwealth seeking to identify what constitutes value for money for its investment, nor do I have a problem with it expecting to be fully apprised of all the options and choices that are being made in the delivery of infrastructure.
Where I get a little disconcerted is when the Commonwealth thinks that it’s driving the bus – it’s just not. When the Federal Treasurer said that he was spending $100 billion over the next 10 years on infrastructure, I was underwhelmed given the amount of effort that New South Wales and Victoria are putting in. That’s not to say just give us an obscenely large amount more; it’s more about recognising the effort being put in by the big states in comparison to the Commonwealth.
We have been pushing the envelope in terms of trying to make sure that we’ve got better contracting arrangements to make it clearer and easier to enter into negotiations. We’re varying the idea of Public Private Partnerships and how we leverage value for money, both for the state and for participating companies. But we’re on the ground, we know the problems and we have to deal with them daily.
From my perspective, it would be much better if we started the conversation from a point of view of mutual respect. My view is that the Commonwealth needs to start thinking about some countercyclical investment, not necessarily in big infrastructure, but in maintenance. I think that there’s an opportunity to get into those third- and fourth-tier constructors and get some activity going.
As we’re starting to see, consumer confidence in spending is starting to erode; you’ll see that the state’s revenue base is starting to deteriorate. The GST pie will drop because of the
Tim Pallas
lesser activity around consumption, and payroll tax will drop as a result of hours worked dropping.
As states, we often find ourselves increasingly constrained, but now is not the time to become timid. What the community needs and what state governments need to provide is some confidence that there’s a way through this. And the Commonwealth can play a pretty substantial role in recognising that what it needs to do is work in partnership with states to find those sections of industry where appropriate and quick investment can stimulate more economic activity.
AD: Do you share the view that if there’s stimulus required, things like maintenance could be an area of focus?
DP: Certainly; look at maintenance. But I also agree with Tim in that the Commonwealth relationship can be improved. There have been successful initiatives from the Federal Government, and it can play a role in incentivising states to reform.
We currently have a system where the more that states reform and the more they stand on their own two feet, the less support they get from the Federal Government. So, why would you be incentivised to go down the path of asset recycling or taking reform options that might be politically challenging if you’re going to get less revenue off the back of it? The Asset Recycling Initiative was one of the more successful schemes that the Federal Government ran.
The Commonwealth can play a role and say, ‘We’re not forcing you to do this, but if you want to participate then there’s some financial benefit for you off the back of it’. Tim makes a point about states having our own autonomy when it comes to these relationships. I mean, we are closer to the problem, we are closer to what the infrastructure needs of the community are.
I understand that the Federal Government wants to make sure that it’s getting value for money, and that its projects are not for political purposes but are driving economic growth. But at the same time, you want states making decisions on their priority and major infrastructure. You don’t want the Federal Government determining that for us.
During the most recent federal election, we had Minister Tudge coming out and saying we need to fund roundabouts and commuter car parks. I mean, that’s the role of the councils, not the Federal Government. So, when it comes to infrastructure decisions and investments, the Federal Government should be involved in major areas like airports, ports and interstate infrastructure.
States should be able to determine what major projects should be invested in, and then negotiate on the funding arrangements with the Commonwealth. When I first became Treasurer, Tim and I worked to establish the state Board of Treasurers, separate from the Council of Australian Governments (COAG). I don’t think Scott Morrison appreciated the idea, but I think he does now. States can’t just sit back and criticise the Commonwealth, even though it’s pretty easy to do.
But COAG functions in a way where the Federal Treasurer will sit there but there’s no real engagement at the table on issues of the day. By states working together – both Labor and Liberal states – we can come up with ideas for reform and infrastructure investment. We can work those out together and then put those in a constructive way to the Commonwealth to get better outcomes.
This leads to more productive outcomes as you don’t have a situation where you’d go to Canberra twice a year, have a crack at government, it has a crack at you and you go home. We’ve got to be participating more in the process and having a bottom-up Federation, rather than a top-down one.
AD: I’ll just write down the oxymoron ‘COAG functions’. Tim, I just wanted to give you a chance to opine on whether you’ve got your fair share of the Asset Recycling Initiative money?
TP: Victoria doesn’t get its fair share of anything. The interesting thing with regards to the Commonwealth is just a lack of transparency around the choices that are made for funding allocation.
We reached the dizzying lows of about seven per cent of infrastructure allocations. If the Commonwealth meets its commitments going forward, Victoria will get something like 17 per cent, despite being 26 per cent of the national economy and having one of the largest population bases. So, we feel a little aggrieved about what has been an embedded and long-term disparity. Often the argument that comes back to us from Canberra – it’s a dated one – is, ‘Well, you’re a small state in terms of land mass’. They say it’s much harder to build in a large state with a lot of area to cover.
That’s nonsense and it has been for quite some time. We know that building in an urban environment often requires tunnelling. We don’t have this Sydney sandstone that you people dig through in New South Wales; Victoria’s is mud and rocks – a nightmare for tunnellers. So, the cost of construction in a built urban environment is always going to be higher. I call it the tyranny of proximity, not the tyranny of distance.
And we do need greater transparency. For example, we often see the Commonwealth come in and form a one-size-fitsall approach towards service delivery. It’ll say to states, ‘Well, you should all meet a standard student resource package level for education’. This approach is dangerous.
But yes, I would like for Victoria to get its fair share, whether it’s in infrastructure or any other area. But I’m not at all interested in a situation where states lose their funding autonomy as a consequence.
DP: In terms of fair share, New South Wales and Victoria, as a percentage of population, get the least infrastructure investment from the Commonwealth. You also have two strong states that are reforming and making better use of their assets getting penalised for standing on their own two feet.
Tim’s point is 100 per cent right in terms of the way that the Commonwealth looks at funding arrangements. When we’re going through things like the Gonski reforms, Victoria could be sitting there saying it’s putting X amount of dollars into its education system, but it may actually be getting the best outcomes. But under that model, it’s actually worse off because it’s seen to be putting less in. Whereas you could flip that around and quite easily say, well actually, we’re putting less money in but we’re getting better outcomes. That should be supported, not penalised.
L–R: Adrian Dwyer, Dominic Perrottet and Tim Pallas
AD: Can New South Wales and Victoria be leaders in driving national-scale reforms in the absence of Commonwealth leadership?
DP: This is what the motivation was in establishing the Board of Treasurers. As a Liberal, I was in a better position to set it up. If Tim had established it, it would have just been seen as a state Labor Government attacking a federal Liberal Government.
AD: So, it’s his idea, your implementation?
TP: No, it was a mutually formed idea. But I can tell you, it was my idea that Dominic tell the Federal Treasurer that it’s being set up!
DP: Telling them didn’t go so well, but we stuck to it. The main point here is that I have more in common in terms of the constituency I represent with Tim than I have with Josh Frydenberg. My role is not to represent the Liberal Party; my role is to represent the people of New South Wales.
Being in the situation we are, having had a federal election, a Victorian election and a New South Wales election, which won’t line up the same way again for another 60 years, the opportunity for reform is right now.
Part of the incentive in setting up the Board of Treasurers was that if you have Labor and Liberal states working together, you can take a lot of the politics out of reform – you can have both sides of politics working together for better outcomes. It’s been very successful so far in negotiating on the education reforms and negotiating on GST. It ensures that states aren’t getting picked off by the Commonwealth. The next wave of opportunity for this body is to be proactive in driving reform opportunities to the Commonwealth.
TP: Dom and I are doing a good double act in the circumstances. There are a lot of things that we can have arguments about, but the things that we differ on are so marginal to the practical and material benefits of our respective constituencies. When we bring the Board of Treasurers together, it’s so rare that we have issues of political difference because of what we are in the business of: efficient service delivery, efficient infrastructure delivery, and sharing ideas about how we can get that all done together.
I like to call this the ‘Lennon and McCartney’ of reform. I’ll take the title of Lennon and Dom can be McCartney. I’m not sure Dom would sit comfortably with the surname Lennon.
DP: Very true.
TP: The Commonwealth can play the role of Ringo Starr – it beats the drum. From my perspective, the challenges that confront us are really about recognising that states must work positively with the Commonwealth.
I really enjoy banging on about how limited the Commonwealth’s role is in people’s lives. The Commonwealth is good at raising taxes, defending the realm, looking after welfare, and lecturing the states about them not doing enough. But for all that, it’s a gratuitous swipe. The Commonwealth feels a little better saying it, but we’ve got to try and find ways that we can work together.
The Board of Treasurers says, ‘Let’s talk about how we can put together our agenda, get our act together, stop complaining about the Commonwealth doing one egregious act after another’. The Board of Treasurers allows states to think about what we can do better, and then think about how we can come together as states of varying political views and go to the Commonwealth and say, ‘We’d like to partner with you on these things’. That’s how you get real reforms.
AD: Is the idea that you will take a package of reforms to the Commonwealth? Or are there things that you can do at the state level without needing the Commonwealth?
DP: It’s a combination of both. There are opportunities for the Board of Treasurers to put reform opportunities and ideas up. In that context, not all states agreed on GST changes – Western Australia was never going to agree with us on that. But what underpinned the discussion was mutual respect and agreement that we would drive these opportunities.
The other thing we are doing in New South Wales is a review of federal financial relations. I’m assuming that there’ll be several lessons, ideas and opportunities for reform that
will come out of that – some of which I may take to the Board of Treasurers for the other states to have buy-in on.
If there are areas where there’s mutual interest, then we’d work together to put that up. It’s very easy to attack the Commonwealth, but we have an obligation to not just participate in, but to drive a better Federation. At the end of the day, though, states are closer to the infrastructure investments and service delivery than those in Canberra. We’re building $90 billion in infrastructure, providing significant services right across the state.
States are at the coalface; we see the daily challenges facing our constituents and we have an obligation to look at reforms. Reforms differ across the nation. The reality is that there are issues in Queensland and the Northern Territory that we just don’t face, but there are areas that Victoria and New South Wales see every day that need reform. If the Commonwealth can help states like ours drive reform and not lose political skin over it, it should.
AD: What are some of the areas of reform that you can tackle together?
TP: We are obviously doing a lot of work together and that’s important. We’re trying to bring along the other states. The real value of the work we are doing is that we all accept that we’ve got to get our act together if we’re ever going to be dealt any measure of respect from the Commonwealth. The Commonwealth generally takes the view that states are very easy to divide and conquer.
Just think about some of the big reforms that have gone on in this country, such as case-mix management in hospital service delivery or the National Reform Agenda – a document put together by the Bracks Labor Government and the Howard Federal Government. States were key to that.
Reform is about understanding that we have a job to do. While the push and shove of politics might be attractive to us, we’re going to be judged, when we pass from this job, on what effect we’ve had upon the communities in which we live. From my perspective, states are getting their act together, understanding and sharing good ideas, and, importantly, working in partnership with the Commonwealth, which is critical.
DP: If you look at the Productivity Commission’s ‘Shifting the Dial’ report, many of the next wave of productivityenhancing reforms are located within the states. It’s really a state’s obligation to drive these reforms.
Now, a lot of them are politically challenging, but there is great opportunity for states to work together. But if the Commonwealth is the one saying, ‘Well, here is the next wave of productivity changes that should be happening’, and it’s the state’s responsibility to drive them, then the Commonwealth has an obligation to assist the states with those reforms.
The Hon Dominic Perrottet MP – Treasurer of New South Wales
Dominic Perrottet is the New South Wales Treasurer and Deputy Leader of the New South Wales Liberal Party. He was reappointed Treasurer in March 2019 in the newly re-elected Liberals and Nationals Government, having been first appointed to the role in January 2017. Mr Perrottet previously served as the Minister for Finance, Services and Property under Premier Mike Baird.
As Treasurer, Mr Perrottet is driven by the belief that responsible fiscal management is the key to delivering better services and infrastructure. His budgets have been characterised by strong surpluses, record investment in new productive infrastructure, and tax cuts of around $2.4 billion, all while maintaining New South Wales’s coveted triple-A credit rating.
He is a firm believer in governments making better use of public assets, and oversaw the final stages of the New South Wales Government’s highly successful Rebuilding NSW asset recycling program, which generated almost A$30 billion in proceeds for investment into new productive infrastructure across New South Wales.
Mr Perrottet is an outspoken advocate for reform, leading the rollout of Service NSW and the establishment of icare, instituting the state’s first-ever Productivity Commission and Chief Economist to drive a new economic agenda for New South Wales, and launching a landmark Federal Financial Relations Review to increase the autonomy and self-reliance of the states.
Mindful of the pressing intergenerational challenges that New South Wales faces, Mr Perrottet established the NSW Generations Fund in 2018 to offset future public debt and secure New South Wales’s financial strength for generations to come.
The Hon Tim Pallas MP – Treasurer, Minister for Economic Development, Industrial relations
Tim Pallas was elected to the Victorian Parliament in 2006, where he serves as the state member for Werribee and as Treasurer of Victoria – a role he has held since 2014. He is also the Minister for Economic Development and Minister for Industrial Relations. Mr Pallas previously served as a Minister in the Brumby and Bracks governments, holding portfolios including roads, ports, and major projects. As Minister for Roads, he delivered EastLink; oversaw the M1 Upgrade, the construction of the Deer Park Bypass and Geelong Ring Road; completed the upgrade of the Calder Freeway to improve links to Bendigo; and was responsible for commencing the Peninsula Link project on the Mornington Peninsula. In the major projects portfolio, he was responsible for projects including the development of AAMI Stadium, the Melbourne Convention and Exhibition Centre, the Melbourne Recital Centre, and Melbourne Theatre Company’s auditorium. Prior to entering Parliament, Mr Pallas served in roles with the Federal Firefighters Union, Storemen and Packers Union, and later as Assistant Secretary of the ACTU, and as Chief of Staff to former Premier Steve Bracks.
Adrian Dwyer – Chief Executive Officer, Infrastructure Partnerships Australia
Adrian Dwyer is the Chief Executive Officer of Infrastructure Partnerships Australia – the nation’s leading public and private sector infrastructure think tank. He was appointed to the role in March 2018. Mr Dwyer served as Infrastructure Partnerships Australia’s Head of Policy from 2011 until 2015, where he led major studies on road pricing reform and contracting and financing models, among others. From 2015 to 2018, Mr Dwyer served as Executive Director of Policy and Research at Infrastructure Australia – the Commonwealth Government’s statutory infrastructure body.
Leading steel manufacturer and supplier in vanguard of construction boom.
InfraBuild is poised for a new era of growth as its innovation in steel manufacturing inspires nationbuilding projects, helping customers, communities and the environment.
Formerly known as LIBERTY OneSteel, InfraBuild is Australia’s largest integrated manufacturer and supplier of steel long products to the infrastructure, construction, engineering, mining, manufacturing and agriculture sectors, and is a leading metals recycler.
The company has a rich history, having operated in Australia for more than 100 years and contributed to many of the nation’s largest projects. More than 5000 InfraBuild employees across 100 locations deliver steel products and solutions.
InfraBuild is a company of LIBERTY. InfraBuild’s new name, adopted this year, reflects its commitment to ‘build possibilities’ for the Australian industry. The company’s mission is to inspire and drive infrastructure and construction using local resources, sustainable solutions, new technology and big thinking.
Key strengths
InfraBuild has three divisions: manufacturing, steel processing and distribution, and recycling. Its operations include InfraBuild Steel, InfraBuild Wire, InfraBuild Construction Solutions, InfraBuild Steel Centre and InfraBuild Recycling.
InfraBuild Steel operates two electric arc furnaces with a production capability of more than 1.5 million tonnes annually, and four rod and bar rolling mills.
InfraBuild Wire is Australia’s largest manufacturer of wire for construction, manufacturing and rural applications. Both businesses were formerly LIBERTY OneSteel.
In major projects, InfraBuild Construction Solutions (formerly LIBERTY OneSteel Reinforcing) is Australia’s leading reinforcing supplier, which provides high-quality, prefabricated, customised solutions to tier-one builders and mega infrastructure projects.
InfraBuild Steel Centre (formerly LIBERTY OneSteel Metalcentre) is Australia’s premier supplier of metal and building products, supporting more than 10,000 customers. The business is known for its expertise in engineering and design optimisation to minimise cost, risk and waste.
As a major metals recycler, InfraBuild Recycling is an important contributor to the raw metals requirement of the steel industry, and offers a sustainable alternative to landfill. The business collects, handles and processes more than 1.4 million tonnes of scrap metal annually, distributing it to InfraBuild Steel’s Australian steel mills and international customers.
InfraBuild Recycling forms part of InfraBuild’s broader commitment to sustainability. The company promotes steel’s role in the circular economy by aiding in the recovery, re-use and recycling of steel and other products. InfraBuild has four Environmental Product Declarations (EPDs), each independently verified and central to its sustainability focus.
Perth Stadium
InfraBuild and infrastructure
InfraBuild is playing a key role in Australia’s infrastructure and construction booms and is strongly positioned to contribute to future growth in major projects. The country has
West Gate Tunnel. Image © West Gate Tunnel
$200 billion in committed infrastructure projects, and will require more than $600 billion of investment over 15 years, according to the Australian Infrastructure Audit 2019 report.1
InfraBuild is participating in several of the country’s largest transport infrastructure projects. It was awarded the contract to supply 92,200 tonnes of steel for the West Gate Tunnel project in Melbourne, which will be used to reinforce the lining of the project’s twin tunnels, bridge segments, noise walls and retaining walls. InfraBuild has employed an extra 150 staff for the project.
Also in Melbourne, InfraBuild Construction Solutions is supplying up to 150 tonnes of prefabricated cages daily to the Metro Tunnel, a transformative nine-kilometre city rail project. InfraBuild’s innovative Glass Fibre Reinforced Polymer cages are inserted within the tunnel’s diaphragm walls, allowing for easy breakthrough of the tunnel boring machines.
In Sydney, InfraBuild has been extensively involved in WestConnex, a 33-kilometre, predominantly underground motorway that will transform the city’s road network.
InfraBuild Steel Centre’s state-ofthe-art coping machine facilitated the supply of several thousand tonnes of universal and welded columns to the St Peters Interchange for WestConnex. Also supplied was high-quality steel bar, used in 150,000 bolts that reinforce the project’s twin tunnels, and structural steel to the award-winning Concord Road to M4 west on ramp.
Across Sydney, InfraBuild Construction Solutions manufactured, processed and delivered complex and adaptable steel-reinforcing lattice girders for the nine-kilometre NorthConnex project – Australia’s deepest road tunnel when complete. The girders were integral to primary passive ground support, providing a safe work area to continue tunnel excavation.
Construction focus
In property, InfraBuild played a major role in Lendlease’s award-winning Barangaroo development. InfraBuild Construction Solutions supplied more than 77 million different steel products, including 45,000 tonnes of reinforcing steel. Processes were implemented to ensure that a 20 per cent reduction in embodied carbon was achieved for reinforced steel, contributing to the project’s 6 Star Green Star Rating and exemplifying InfraBuild’s sustainability innovation.
In Brisbane, most of the steel used in the prominent 300 George Street building was manufactured in Australia and supplied locally by InfraBuild Steel Centre. The supply involved 2500 tonnes of structural steel. Precambered beams were used in the structure to make them lighter than conventional beams and reduce the thickness of concrete slabs.
In Melbourne, InfraBuild Steel Centre is contributing to 80 Collins Street, due for completion in 2020. The building features a unique cantilevering design and a large floor area that projects over heritage street levels, before rising a further 31 levels. Processing of steel product by InfraBuild Steel Centre, prior to fabrication, was an important part of its service offering, and has helped the project meet its project time lines.
To the west, InfraBuild Steel Centre collaborated with Civmec to supply 16,000 tonnes of structural steel to the iconic five-level Perth Optus Stadium superstructure, and 9000 tonnes of seamless pipe for construction of the stadium’s Matagarup footbridge.
These – and other projects –reinforce the breadth of InfraBuild’s work across industry – and its contribution to projects that are making cities more livable and sustainable. It’s a contribution that continues to grow as InfraBuild supplies the foundations for Australia’s infrastructure boom, enabling governments, industry and communities to embrace new building possibilities. ♦
To learn more about InfraBuild, visit www.infrabuild.com.
1 Infrastructure Australia, ‘Australian Infrastructure Audit 2019’, August 2019.
What drives successful knowledge networks?
For more than 20 years, organisations have championed knowledge networks – also called communities of practice – as a way of improving skills to innovate, and to be more productive and satisfied at work.
Until now, the mechanisms behind these networks have not been well understood. How do these knowledge networks operate to create, manage and transfer knowledge?
Now, a research project run by Monash Business School and sponsored by the Project Management Institute sheds new light on what makes knowledge networks successful, and the effective practices needed to develop project management skills.
‘Communities of practice work best when they’re formed with a clear plan of intention, operational structure and feedback mechanisms,’ says Associate Professor Chivonne Algeo, the project’s principal investigator.
‘This is the case even when networks are volunteer-led and improvisational.’
An organisational model specifically built to generate knowledge and member-inspired action, knowledge networks can spread innovative project management practices by expanding the toolkits of members. Knowledge networks also act to provide a safe space for project managers to reflect on, and enhance, their own skills.
Along with colleagues Associate Professor Henry Linger and Dr Zaheer Asif, as well as Columbia University’s Katrina Pugh, Algeo examined two knowledge networks: a bilateral government-funded research centre in Australia organised in an informal, cluster structure; and a global life sciences company based in the United States, which is a formal network supporting multiple departments.
The researchers found that psychological safety and trust played a key role in how well the members of the two different networks interacted and produced results.
The hub structure of the research centre focused on productivity and solutions-driven collaboration; however, wider information sharing was at times a challenge, leading to isolation, frustration and ultimately limited benefits.
The life sciences network downplayed the creation of things, and played up mutual support and problemsolving. ‘Members felt safe about taking risks, laughing at themselves, conducting bold experiments, and playing games as a way of learning,’ the report says.
The main findings? Ensure that there are clear aims around inspiring members to discover and share new practices and ensure that frameworks are developed for improved management capabilities and outcomes.
Yet, an important finding was also that in both networks, members were often motivated by social aims or a belief in the greater good.
‘There needs to be something that motivates members to stay together despite their differences and time constraints,’ Algeo says.
Algeo plans to incorporate this research into Monash Business School’s Master of Project Management, and further extend the research to identify the impact of networks in economic, demographic and technological contexts.
‘Being able to build project management capability through knowledge networks can be a vital skill for project managers,’ she says. ‘It can really transform the network into an engine for collaborative innovation.’ ♦
Bendigo Hospital
Sunshine Coast University Hospital
