23 minute read
The future of social infrastructure | panel discussion
L–R: Andrew Haining, Cathryn Cox PSM, Jason Loos, Sam Sangster and Rebecca Wark
The future of social infrastructure
Key points
• In planning for the future, we need to embrace digital technology solutions. • New models of service delivery will help us move into the future. • Increasing efficiency in asset construction and maintenance is important for the sector’s future.
Panellists:
► Cathryn Cox PSM, Executive Director, Strategic Reform and Planning, New South Wales Ministry of Health ► Jason Loos, Deputy Secretary, Victorian Department of Treasury and Finance ► Sam Sangster, Chief Executive Officer, Western City and Aerotropolis Authority ► Rebecca Wark, Chief Executive, Health Infrastructure NSW
Moderator:
► Andrew Haining, Investment Director, John Laing
Andrew Haining (AH): The vast majority of Australians are fortunate to enjoy a high quality of life by global standards. And we probably all gleefully tell our international friends that our major cities consistently rank highly in the quality of life surveys. Social infrastructure and services have played a key role in achieving those outcomes.
However, maintaining this and providing services to those in Australia who don’t have a high quality of life requires social infrastructure and services to constantly evolve. There are lots of challenges that we face, like our growing and ageing population, increasing urbanisation, competition for space in our major cities, technology advancements, changing expectations about services that social infrastructure helps to provide, funding constraints, and asset maintenance backlogs.
We will consider the future of social infrastructure and services by looking at a number of the trends that are disrupting the way people access and use social infrastructure and services. How will the coming two decades of social infrastructure differ from the last two?
Rebecca Wark (RW): The biggest thing facing us now is changing societal and community expectations. For example, people don’t want to be in hospital. People have an expectation that we can provide services and contemporary models of care in an outpatient setting. People also expect digital technology to make life simpler, and for the built environment to be more environmentally sustainable. In short, people expect things to be more permeable, like you are at home, where you can move from inside to outside.
Sam Sangster (SS): One of the fascinating things that’s happened in New South Wales is the creation of the Department for Customer Service. Governments are recognising that we don’t just have citizens; we have customers. Service delivery is now being done in an environment where customer and community expectations have increased.
New platforms are being created, changing the way we deliver government services. When you look at smart cities around the world, the ones that are successful are putting customers at the heart of what they do. This is a novel thing for all governments, and it’s interesting that the Federal Government is now looking to set up Services Australia, replicating the New South Wales model.
AH: Do you think that other countries are doing that better than we are?
SS: It’s mixed. Cities are doing it differently and better, but it’s much harder to do on a national scale. This is what I’ve found over the last year at the Western City and Aerotropolis Authority.
AH: Jason?
Jason Loos (JL): Social policymakers have a harder job than transport infrastructure policymakers. This is because the environment they’re working in requires them to be nimble and flexible in understanding the different services needed in particular locations – it differs a lot.
L–R: Jason Loos, Sam Sangster and Rebecca Wark
L–R: Cathryn Cox PSM, Jason Loos and Sam Sangster
Depending on what is needed, this affects the infrastructure that is needed to assist service delivery – the infrastructure is almost secondary, but it’s important. Getting that balance right between infrastructure and services is much more difficult in the social infrastructure space.
For example, with the conversations in Victoria around precinct-based solutions that we want around suburban rail loop stations, it’s the transport solution driving that, but we’re to work out what type of communities we want around those stations. Over the next 10 years, planning will be more about how we can respond and pre-empt where service delivery models are going, and what type of services we need to deliver locally and statewide.
That changes the type of infrastructure that you ask for in a tender. It’s quite complicated, and we’re going to have to focus on that more and more over the next two decades.
AH: Cathryn?
Cathryn Cox (CC): There are a lot of people with Fitbits or that have an app on their phone generating data. For example, all of the information in a Fitbit – how much and how you sleep, how much water you drank today, how much you exercised – imagine if that was all shooting through to your doctor.
We need to shift the conversation, because social infrastructure is only there to support service delivery. It’s not there as a means in itself. Over the next 10 to 20 years, we’ve got to think differently about that.
We need to be asking questions like, how do we enable digital services? How do we empower people to manage their own health care? We need to be focused on value-based health care, which asks people, ‘What actually matters to you? Do you want to get to the shops? Do you want a garden?’ This is rather than saying, ‘You’ve got an arthritic knee and you’re going to have a knee replacement’. It’s a different conversation.
AH: When you’ve got an employee base of people who may have been in the existing system for a long period of time, how difficult is it to get their focus to change?
CC: Historically, we haven’t been good at telling the story. I don’t think that we’ve talked to our people enough. NSW Health has more than 120,000 employees, but they’re also our patients and customers. They have an ability to influence what we’re doing in a major way.
So, the challenge over the next 10 to 20 years is how we harness a whole range of our technologies and personalised medicine to paint a very different picture. I’d love to see my GP pop up on my TV and have a drone drop my pharmaceuticals off – that would suit me so much better. It may not be for everyone, but that’s the sort of discussion we need to be having.
AH: Sam, you’re tasked with planning and building an entire new city servicing millions of people. Thinking about education, how do you forecast the kinds of infrastructure and services that people will need both in the near term and also 30 to 50 years down the track?
L–R: Cathryn Cox PSM and Jason Loos
SS: Look, it’s essentially the thinking we’re doing already. We know the companies that we’re already trying to attract and bring into the aerotropolis. One of the primary reasons that we have been successful is because of the quality of the skills we have in this country. If you look at best practice across the world, education capability is being driven by industry as much as government.
This is particularly true in vocational education. The New South Wales Government announced $80 million in the last budget to build a new TAFE. The work we’re doing now is how to adapt the TAFE model.
In Europe, many organisations are now training their workforces through micro-credentialing. So, you might take a 2–3 hour module, rather than attending TAFE for several years to gain a certificate in robotics. When you start thinking about that, it fundamentally changes the way you deliver education infrastructure.
It shifts from being purely about real estate to facilitating educational outcomes. The shift is already happening. Take the new library in Camden, for instance; it’s not just a library, it’s a learning place used for a whole range of things. The shift is about thinking about how every asset built can be a learning location.
AH: Sustainability is currently a big focus. Sam, you have the advantage when you’re starting from scratch in embedding sustainability in everything you do. How are you factoring sustainability into your planning?
SS: In the 11,500 hectares, there are existing dwellings and not one of them is connected to a sewer – they’re all on septic tank. That provides us with an incredible opportunity to begin to reconceive how we deliver water, wastewater and other utilities with a longer-term focus.
Our initial thinking is that we need to be doing things at a smaller scale, allowing for a much more localised response to things. Underlying that is a fundamental tenet that we shouldn’t create a greater impact than the area we’re in. It’s very easy to say, but a lot harder to achieve in an area that will grow exponentially over the next 100 years.
We need to set the building blocks by doing things like reserving the big trunk infrastructure corridors needed and
L–R: Andrew Haining, Cathryn Cox PSM, Jason Loos, Sam Sangster and Rebecca Wark
the provision for future developments that we don’t even know about yet. For example, how do you have a refuelling station for a hydrogen vehicle that hasn’t yet been developed?
It’s a complex area. We’re not pretending to be able to pick technologies. But if we get the right platform and the right thinking regarding things like how we build a place predicated on mass transit and highly walkable spaces that are green – then we’re heading in the right direction.
AH: Jason, funding constraints are putting significant strain on social infrastructure and services. What kind of procurement approaches are you using to get more from your future social infrastructure assets?
JL: Before I come to procurement, we’re about to go into a phase with funding and debt constraints. Given that, in social infrastructure, we need to better understand the quality of the assets we already have and how to extend the life of those through smaller strategic investments. While new projects will play a part, in the current environment it is critical to sweat and augment existing assets.
Regarding procurement, the question is, ‘How do we come up with more effective procurement strategies to get more efficiency?’ Can we link new asset investment with upgrades of existing assets? When you don’t integrate asset delivery and maintenance at the same time, you end up with a situation where the asset is built and it lasts for 20 years. But what happens after that?
That’s where you get benefits from the Public Private Partnership (PPP) model. Under a PPP, you’re getting a contractual and funding commitment for the new asset, including the maintenance of it.
AH: There is a lot of conjecture about how much infrastructure activity there is in Australia, and the shortage of contractors that are able to deliver it. The sort of work you’re talking about naturally lends itself to enabling smaller contractors to enter the market and participate. How important do you see that being going forward?
JL: It’s very important. It’s a segment of the market that we need to focus on more, because the major transport infrastructure spend is significant. If you go back 10 years, we used to have one or two mega projects and a lot of projects in the hundreds of millions. We’ve now got many projects in the billions, and we’re stretching the construction market and project directors, project managers, on the government side. Invariably, we’re getting the A, B and C teams now working on some of these significant infrastructure projects. It is now about how we build capability in the private and public sectors together.
AH: As a PPP investor, risk allocation is an issue close to my heart. It’s been said that Victoria’s leading the charge, and you’ve been more willing to sit down with the private sector and ask us about what actual risks we’re concerned about. Is that a theme we’re going to see going forward?
JL: Absolutely. Between New South Wales and Victoria, we’ve got all the procurement models covered. Once we have made an investment decision and know what we’re building, we’re getting far more sophisticated at tweaking the risk allocation within those models. Even in an alliance model, there are certain risks that a construction contractor should be able to take and manage through ‘painshare’ and ‘gainshare’. Then there are other risks that they probably aren’t best placed to take. And that’s where the ‘painshare’ has to kick in from government, and that’s the same in PPPs.
For example, on North East Link, we’ve spent a lot of time talking to the industry to understand what its concerns are with utilities, cost escalation, ground conditions and so on. This is a process to try and establish the best approach to managing risk. Both the private and public sectors must be open-minded, and I think that’s what we’re doing. But it comes down to culture and behaviour, as well. Whenever there’s a big issue, it’s not good for either party. It requires behaviour elements from both sides.
AH: Cathryn, the New South Wales Ministry of Health has been working to implement a range of reforms across health. How are these reforms impacting service delivery and ensuring that today’s health projects can withstand future challenges and changes in the sort of way people access services?
CC: The unique feature about social infrastructure is that the public health business in New South Wales is $25 billion. Our capital spend, which is our largest ever, is about $2.6 billion. That just gives you an idea of the difference with health infrastructure and service delivery versus transport, which is more capital-intensive.
The vision New South Wales has set is for a sustainable health system. Tracking along at $25 billion a year, we can’t continue to expect that rate of recurrent operational expenditure to keep growing. We need to put ourselves on a sustainable trajectory, and building very large hospitals, which are expensive to run and maintain, is not putting us in a very good space in that regard. The other part of our vision is delivering on outcomes that matter to patients in the community with a focus on wellness and digital delivery.
When you put all of that together, you can see how that influences the kind of infrastructure and service planning we do. We’ve got a raft of processes that sit under that regarding integrating care. That includes right from when you go and see your GP through to accessing care in our hospitals and at home.
We have a program called Leading Better Value Care. The program is about improving patient outcomes relative to the cost. For example, if I have an arthritic knee, I go to my GP. They say, ‘That’s terrible. Here are some painkillers; you’ll need to go and see the orthopaedic surgeon,’ and you think you’re going to have a knee replacement. What we’ve found is that if someone exercises, loses some weight and watches their diet, they’re avoiding or deferring their need for a joint replacement. A joint replacement is a big surgery; it’s costly, and they don’t always go well.
But if you just stop for a moment and say to the patient, ‘What would you like?’ rather than, ‘You’ll have a new knee,’ they might say, ‘I’d just like to get to the shops,’ or ‘I’d like to garden,’ and then you have a very different conversation. That’s the sort of reforms we’re trying to drive through health – looking for the value proposition in everything.
In an environment where capital is getting scarce, there is huge opportunity locked up in people’s homes. A hospital bed in a home is a lot cheaper than building a hospital bed in a great, big health facility. This will lead to a very different focus regarding infrastructure.
AH: Rebecca, how are you planning, designing and building health infrastructure in response to these sort of health reforms?
RW: A lot of it will be around digital enablement. It’s about building smarter and breaking things down into more bite-sized pieces; things like doing imaging medical equipment with a third-party partner instead of doing it all in a major hospital. Talking about the size of our facilities, given the growing population, that means we’re not just going to have major metropolitan hospitals, but we’ll also have major facilities in rural areas and remote areas.
Part of what we’re striving for is getting much better access to health care. If you have blood cancer, you may not have to go from a small country town to Newcastle or Sydney for treatment, and be away from home for four weeks out of five. You may be able to have treatment within 100 kilometres of your home. Things like that make a real difference to people’s lives. Enabling that is a big step in what we do.
In rural, Indigenous and lower socio-economic communities, there’s often comorbidities. For example, if you have low socioeconomic status and poor diet, you then have obesity issues. If you’re not exercising properly, you might then have diabetes and renal problems. In these instances, there’s a whole load of reasons they need to be an inpatient. But if we can make them better and keep them out of hospital, they never need to go there. So, it is largely about digital solutions, and how we design and build smarter hospitals, not just bigger hospitals.
Regarding procurement, we now have nine mega projects in New South Wales – and that will soon be 12. We’ve got 113 active health capital projects. The state needs to be able to afford to run those, not just build them. This will require building them in much more efficient ways.
Cathryn Cox PSM – Executive Director, Strategic Reform and Planning, New South Wales Ministry of Health
Cathryn Cox PSM is the Executive Director of both the Health System Planning and Investment Branch, and the Strategic Reform Branch in the New South Wales (NSW) Ministry of Health. Ms Cox has extensive services and capital planning experience from roles in the previous South Western Sydney Area Health Service, NSW Ministry of Health and NSW Health Infrastructure, where she was the interim Chief Executive from December 2018 to May 2019.
In recognition of her contribution to health services planning in New South Wales, she was awarded a Public Service Medal in the 2018 Australia Day Honours List.
Jason Loos – Deputy Secretary, Victorian Department of Treasury and Finance
Jason Loos is Deputy Secretary at the Victorian Department of Treasury and Finance, where he is responsible for providing strategic commercial, financial and risk management advice to the Victorian Government. Activities include managing the state’s balance sheet, prudential supervision of the public financial corporations, Public Private Partnerships (PPPs), infrastructure procurement and investment, commercial and property transactions, and the monitoring and governance of the state’s major government business enterprises.
Prior to this role, Mr Loos was the Executive Director, Infrastructure Delivery (Partnerships Victoria), where he was responsible for providing strategic commercial, financial and structuring advice to the Victorian Government on major infrastructure projects. Mr Loos has overseen a number of major projects, including the West Gate Tunnel Project and Metro Tunnel project.
Sam Sangster – Chief Executive Officer, Western City and Aerotropolis Authority
Sam Sangster commenced with the Western City and Aerotropolis Authority as the inaugural CEO in December 2018. Mr Sangster’s career spans both the public and private sectors, including significant roles with some of Australia’s largest ASX-listed companies and professional service firms. Mr Sangster has worked in the Victorian Government, delivering multibillion-dollar projects, such as Melbourne’s Docklands, in partnership with the private sector. As CEO of NSW Health Infrastructure, Mr Sangster was responsible for steering the delivery of the largest portfolio of health capital works in Australia, spanning metro, regional and rural New South Wales. During the nearly six years of his tenure, Mr Sangster oversaw the growth of the portfolio from $3.2 billion in 2011–2012 to $14.4 billion in 2018–2019.
Rebecca Wark – Chief Executive, Health Infrastructure NSW
Rebecca Wark is Chief Executive of Health Infrastructure NSW. She is an experienced leader of major infrastructure projects and has been with Health Infrastructure NSW since 2008, overseeing the development of some of the state’s largest hospitals and public health services. Today, she is proudly leading the delivery of the largest health capital works portfolio in Australia.
Previous to Health Infrastructure NSW, Ms Wark worked on significant infrastructure projects across the public and private sectors. Her experience is multisector; her first public sector role was planning and delivering venues for the Sydney Olympics, and she has since delivered facilities in education, justice and health.
Gosford Waterfront
Central Coast primed for growth
Strong case for infrastructure investment and industry co-location in strategically important area.
Central Coast Council CEO Gary Murphy believes new thinking on infrastructure can boost connectivity, decentralise populations, energise regions and ensure the Central Coast in New South Wales becomes one of Australia’s next great cities.
‘Governments can’t just keep building roads – more roads inevitably attract more cars,’ says Murphy. ‘Nor can governments focus mostly on capital cities with infrastructure spending. That encourages population concentration.’
According to Murphy, ‘The most sustainable solution is infrastructure that makes it easier for people to live, work and recreate in cities, such as the Central Coast, and encourages families to relocate there because of jobs, housing affordability and lifestyle.
‘The old model of people commuting to a capital city for work is failing. The cost to families, communities, the economy and the environment is rising. If companies want to boost productivity, the answer is partly creating jobs in places such as the Central Coast.’
The Central Coast, about an hour north of Sydney by car, has much to gain from an infrastructure-led, population decentralisation strategy. Around 40,000 of its estimated 346,459 residents work in Sydney, some spending up to four hours commuting daily.
Their cars consume approximately 250,000 litres of fuel and emit 500 tonnes of carbon daily, council research shows. Most of these commuters are high-income earners who must drive to Sydney for knowledge-based jobs.
Gary Murphy, CEO, Central Coast Council
This outflow adds to traffic congestion in the Central Coast and Sydney, and contributes to wear on New South Wales roads. ‘The bigger
cost is what it does to families,’ says Murphy. ‘They have less time together, and stress levels rise when people have long commutes.’
Central Coast Council is researching the economic and social effects of commuting – and the opportunities in alleviating this problem.
‘Imagine if the Central Coast created 20,000 jobs and took 20,000 cars off the road,’ says Murphy. ‘Our community and economy would benefit greatly, and there’d be less pressure on Sydney’s infrastructure and housing. It’s a win-win solution.
‘The key is raising industry awareness of the benefits of co-location at the Central Coast. Our research shows that 150 residents travel to Sydney to work for a single big bank. If that bank had an office in the Central Coast, 150 of its staff would get back hours of lost commuting time. The productivity gains, time back with their family and time in the community are potentially large,’ says Murphy.
Peter Auhl, Chief Information Officer of Central Coast Council, says governments need to rethink what modern infrastructure looks like in the digital age. ‘It’s not just about roads and bridges anymore. Smart cities have smart connectivity; they invest in digital infrastructure that enables people to work anywhere, anytime. In doing so, they stimulate creativity, innovation and collaboration; encourage industry to grow; boost the local economy; and create jobs.’
Development appeal
The Central Coast’s strategic location between Sydney and Newcastle is an attraction. The international experience has shown that regional cities within an hour or so of capital cities are prime economic development areas, and some have even become leading innovation clusters.
‘The Central Coast is superbly positioned to benefit from Sydney’s growth,’ says Murphy. ‘We are a strong city in our own right, but as Sydney’s population increases, companies will need more affordable locations.’
The Central Coast’s population is another attraction. The city is expected to grow by almost 70,000 people by 2036, reaching 414,615 residents. Combined with neighbouring Hunter, the Central Coast is a hub in a region that will have well over one million people by then.
‘The Central Coast is often perceived as a holiday destination because of its beaches,’ says Murphy. ‘We are also a key area in one of Australia’s largest and fastestgrowing regions.’
Peter Auhl, Chief Information Officer, Central Coast Council
Bouddi Coastal Walk – Bouddi National Park
Central Coast Stadium
The NSW Government is investing in the Central Coast – in 2016, it announced the Central Coast Regional Plan 2036, outlining its vision to grow Gosford, the main commercial hub, and the wider municipality through better infrastructure and services.
The government announced $550 million for Gosford and Wyong hospitals, more than $600 million in road improvements, and extra school funding. Gosford Hospital’s transformation is near completion, and planning for Wyong Hospital’s redevelopment is underway.
Another $52 million of funding has been earmarked for the Gosford City Centre revitalisation.
‘It’s a great time to invest in the Central Coast,’ says Murphy. ‘There’s a lot of activity underway, and potential to expand health care, education, food, tourism and other sectors.’
Industry foundations
The University of Newcastle (UON) is developing the UON Central Coast Medical School and Health and Medical Research Institute in Gosford. The facility will be the centrepiece of a Health and Wellbeing Precinct at Gosford Hospital.
In education, UON in 2019 outlined its vision for a $250-million campus at Gosford. Murphy says there is potential for other universities to establish campuses in the Central Coast.
Food remains a Central Coast strength. Several food multinationals have operations there, and the region has a world-class agriculture sector. ‘Our food production industry is going from strength to strength,’ says Murphy. ‘The Central Coast climate, land and location are ideal for food producers.’
Central Coast tourism attracts millions of visitors each year, and is among New South Wales’s bestperforming tourism markets. Murphy says the city has opportunities to grow Indigenous tourism and accessible tourism. ‘The Central Coast has a wonderful Indigenous population and some amazing Aboriginal sites.’
A proactive council is another strength. The Central Coast Council was established in 2016 after the amalgamation of the Gosford City and Wyong Shire councils. Murphy joined as CEO last year. ‘There’s much work to do, but council is identifying problems, such as commuting, and developing strategies to turn them into opportunities. It’s an exciting time for our city.’ ♦
