Future Building 2018 by Infrastructure Partnerships Australia

The Australian Infrastructure Review

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Contents

futurebuilding The Australian Infrastructure Review

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Contents 2

Chairman’s foreword | Adrian Kloeden, Chairman, Infrastructure Partnerships Australia

Tim Pallas | Treasurer of Victoria

Respected leaders | panel discussion

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The Hon Michael McCormack MP | Deputy Prime Minister, and Minister for Infrastructure, Transport and Regional Development

Social licence | panel discussion

Electric vehicles and road funding model failure | panel discussion

How to avoid a water crisis: lessons learned from Cape Town | panel discussion

The Hon Anthony Albanese | Shadow Minister for Infrastructure, Transport, Cities and Regional

Waste to energy | panel discussion

Managing Editor: Mitch Dudley Editor: Giulia Heppell Future Building is published by: Executive Media Pty Ltd

Development; and Shadow Minister for Tourism

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Foreword

Chairman’s foreword It is my pleasure to present the 2018 edition of Future Building, a journal of proceedings from Australia’s most prestigious gathering of infrastructure leaders, Partnerships.

Confronting these challenges and capitalising on the opportunities that technology and change present will require genuine partnerships between government and business.

This year’s programme covered the contemporary issues facing the sector, while also challenging us to keep our eyes firmly on the long-term developments and opportunities.

Working together, the professional public service, federal and state political leaders, and the wider business sector can play a critical role in driving the national debate on infrastructure reform.

The respected leaders’ panel comprising Sir Bill English, Dr Kerry Schott AO, Tony Shepherd AO and Alan Stockdale AO considered the need for leadership in restarting microeconomic reform and resolving the challenges in Australia’s energy sector. Political leaders spoke to the importance of certainty in the pipeline for industry. They also outlined their respective project priorities, and discussed how they are each confronting issues like resources and skills constraints in the sector. The panel sessions on electric vehicles and road funding, the Cape Town water crisis, social licence, and waste management invited reflection on how the sector needs to be prepared to respond to changing community expectations, as well as emerging technological and environmental challenges.

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Through national gatherings like Partnerships 2018, Infrastructure Partnerships Australia continues to provide an honest and open forum for this debate and a fertile ground for the development of leading infrastructure policy. I hope that the proceedings of Partnerships 2018 challenge your thinking and offer new insights.

Yours sincerely ADRIAN KLOEDEN Chairman Infrastructure Partnerships Australia

LIVING INFRASTRUCTURE

MELBOURNE CONVENTION AND EXHIBITION CENTRE

QUEENSLAND SCHOOLS PROJECT

46 PPP PROJECTS ACROSS AUSTRALIA, CANADA AND THE US $32 BILLION PROJECT CAPITALISATION

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Encouraging a competitive infrastructure construction market A report commissioned by Deputy Prime Minister Michael McCormack in September 2018 focuses on examining how procurement policy and practices can deliver better value for taxpayers and foster the development of expertise and experience in the construction sector. Speaking at the Infrastructure Partnerships Australia conference in Melbourne, McCormack said that it is important that taxpayers get maximum bang for their buck under the government’s $75-billion, decade-long infrastructure pipeline. ‘As an informed investor, the Australian Government is committed to ensuring that we deliver value for money for the Australian taxpayer,’ McCormack says. ‘Around the country, our investment is focused on improving safety and driving economic growth, creating around 50,000 additional direct and indirect jobs, and we want to maximise that benefit. As our infrastructure programme grows, it becomes even more imperative to ensure that there is nothing in the current Commonwealth and state payment arrangements hampering a competitive market. ‘The community should have confidence in the size of the government’s infrastructure investment and the opportunities it provides across the construction supply chain. We know the benefits that can come from fair and reasonable opportunity for Australian businesses to compete for work.’ Minister for Cities, Urban Infrastructure and Population Alan Tudge says that the increasing scale and complexity of urban infrastructure

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projects makes it even more important to get procurement and tendering right. ‘As part of the government’s $5.3-billion commitment to build Western Sydney Airport, it has embarked on a competitive, value-for-money procurement strategy to secure a range of companies to provide design, technical, project management and construction services,’ Tudge says. ‘The tendering for the first stage of the Western Sydney Airport has been broken down into smaller parts to encourage more potential bidders to put their names forward to complete the early earth works, including second- and third-tier providers.’ Assistant Minister to the Deputy Prime Minister Andrew Broad says discussions with industry will help the government understand experiences in major procurements, and identify the best ways to support local construction contractors engaging on infrastructure projects funded by the Commonwealth. ‘It is important that we show the leadership, and work with state and territory governments to refine the settings for major infrastructure projects. Doing so will support local content and grow the experience and capability of the Australian construction industry,’ Broad says.

Deputy Prime Minister Michael McCormack

The Australian Government will work with industry to develop a report to take to the Council of Australian Governments (COAG) Transport and Infrastructure Council later in 2018. A series of workshops with industry will be held over the next month. ♦ For more information on the Australian Government’s $75-billion infrastructure investment pipeline, visit investment.infrastructure.gov.au.

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The Hon Tim Pallas

The Hon Tim Pallas, Treasurer of Victoria Key points: • • •

in response to the mounting pressures of rapid population growth, the Victorian Government has embarked on a substantial infrastucture investment programme industry and government need to work in tandem to address issues like resources and skills shortages, and effective procurement and delivery methods, and there is a clear need to engage with the community early in the development of projects to ensure that they have support.

Welcome to the economic hub and economic focus of the nation, Victoria. There are many challenges that we must confront as we go forward, but they’re challenges of opportunity and aspiration. Melbourne’s population has increased by 125,400 people, or about 2.7 per cent, in the year to June 2017. With the population growing at that sort of magnitude, Melbourne is effectively reducing the distance between the comparative populations of Melbourne and Sydney by about 25,000 people a year. We have enormous pressure on our infrastructure, and the challenges for Victoria are quite multifaceted. Firstly, we need to recognise as a state that we can’t simply put out applications and specifications into the public domain, and expect that we’re going to get a fully cooked proposal capable of service delivery. The state has to see itself as a partner in this process, and we have to actively involve ourselves in the way that we shape and procure the infrastructure that the community needs. We can already see an extractive materials resources shortage starting to impact

on price. When you consider that the raw components are about 30 per cent of infrastructure costs, this is something the Government is focused on. The second thing we need to recognise is we can’t continue to believe that we can be the beneficiaries of providence. For example, when we first came to Government, there wasn’t a lot of work around and it was relatively easy to put away projects. What we’ve found as we’ve started to become a lot more active in the infrastructure delivery space is that skilled workers that exported themselves from Western Australia and Queensland, because of the downturn in the construction phase of the mining boom, have reverted back to New South Wales and Victoria. They’re now fully occupied. We need to recognise that we have to grow the product at home. That’s why the state has put so much effort into developing the skills and the capability base domestically. From our perspective, when Victoria hits a population of 10.1 million, as was predicted in a 2016 report, the effort to build our skills, our resources capacity and the adept way in which we engage

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The Hon Tim Pallas

the private sector to be able to deliver infrastructure, will be critically important. 10.1 million people by 2051 brings enormous challenges and nervousness to the community, especially when Melbourne will reach about eight million. I often bemoan the fact that the easy thing for state politicians to do with population is to go to warring stations, and to try to assert that they have a solution. It is the Federal Government’s responsibility to manage population. The Australian Constitution guarantees free movement between the states for citizens wherever they are. We need to recognise that population is something that states manage, but that the Commonwealth has principal responsibility for the migration side. Population growth is a challenge that Victoria is prepared to meet, and also has capacity to meet. Victoria has the fastestgrowing economy in the nation. It’s estimated that over the last four years, about $48 billion has been added to the Victorian economy. Nearly one in every seven dollars circulating in the Victorian economy today didn’t exist four years ago. Recent Australian Bureau of Statistics (ABS) figures show that Victoria’s state final demand is up 4.9 per cent, the highest growth rate of all the states. We’re also leading the states on wages growth, retail trade growth and real gross state product growth. The story of this Government has been one of consistent, progressive and cumulating growth that has demonstrated itself in very material ways. The most material way is the creation of jobs. About 370,000 jobs have been created since this Government was elected. When we came to Government, we inherited unemployment of about 6.7 per cent. It is now at about 4.8 per cent. That is a very profound shift in the economic circumstances of the state. Infrastructure has played a vital part in this. The State Government has about $13.7 billion in infrastructure in this Level Crossing Removal Camp Road, Campbellfield. Source – North Western Program Alliance – John Holland and KBR

year’s budget alone. To put that into context, $4.9 billion is the 10-year average investment of governments of all persuasions. That number now sits notionally at $10.1 billion going forward. That number will rise because we’re giving the industry a much clearer picture of the pipeline of projects that the Government is intending to pursue. The clear intention of the Government is to have a credible and long-term strategy around infrastructure. The message that we’re giving to industry is that we are not taking a peak-and-troughs approach to infrastructure. We’re building to a new normal and, perhaps dauntingly for a Treasurer, we’re not there yet. The challenge is to make sure that industry appreciates it and makes the necessary investment for us to get there, and that Government understands that it has a substantial role to play with regards to skill acquisition and procurement strategies. We also have to recognise that we have a substantial role to play in easing the administrative burden in the tender process. The intent and requirements we need must be clear to ensure that industry can meet compliant bid requirements. While the state has put $13.7 billion of investment into infrastructure for the coming year, if you look at the whole-ofgovernment investment, about $78.9 billion of infrastructure projects are either underway or about to start. That shows that as a state, our capital projects are going from strength to strength. In terms of major projects, we’ve got the $10.1 billion Melbourne Metro underway, the biggest rail project in Victoria’s history. Melbourne Metro will increase capacity on the city loop – making it possible to run more trains more often on rail lines across Melbourne. Melbourne Metro will double the capacity of the city loop by taking two dedicated lines that feed into the loop and running them under the loop. The $6.7 billion West Gate Tunnel Project is a marketled proposal that will provide an alternative river crossing to the West Gate Bridge. This project is vitally important to the economic growth of the state. The state’s dependence on the West Gate Bridge is not sustainable. The West Gate Bridge was designed to carry 40,000 vehicles per day, but it is now carrying about 200,000 vehicles per day. The need to differentiate that traffic flow to take trucks off inner western suburban streets and to provide greater capacity into and out of the biggest port in the nation, the Port of Melbourne, is critically important. We have allocated $110 million in this year’s budget to fasttrack the completion of detailed planning and design for the $15.8 billion North East Link. If we are re-elected, we will have a mandate to get on and deliver this project. I don’t think any project has been the subject of more public disclosure, planning work, and community engagement before an election. The community and industry know exactly what they’re signing up for. In an unprecedented move, we released the business case for the project to allow people to know the full value North East Link will provide. This means the community can scrutinise it,

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The Hon Tim Pallas

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he $6.7 billion West T Gate Tunnel Project is a market-led proposal that will provide an alternative river crossing to the West Gate Bridge. This project is vitally important to the economic growth of the state

criticise it, and have a public discussion about the merit of the project. There shouldn’t be any fear in infrastructure circles about greater transparency around our infrastructure agenda. In many senses, it is a relief measure that the community demands and deserves. As a government, we need to be prepared to advocate for these projects in the public domain. Industry support is critical to this, as well. The $2.2 billion High Capacity Metro Trains project was announced in November 2016. This project will deliver 65 new High Capacity Metro Trains (HCMTs) capable of carrying 20 per cent more passengers than any other train on the network. The $1.7 billion Regional Rail Revival will provide the infrastructure needed for more frequent and reliable train services for regional Victorians. The work that we’re doing with the Federal Government on the airport and regional rail plan, including the preferred Sunshine route, is also very important. The Suburban Rail Loop is a big plan and a big vision for Victoria and Melbourne. We have committed $300 million for a business case for the 90-kilometre circle line through Melbourne’s suburbs. Work that has been completed to date suggests that it would be a line servicing about 400,000 passengers – the busiest suburban line in Melbourne – and it would cost about $50 billion. The Premier has a nice way of describing this. He doesn’t pretend that this project will be done in one or two terms of government. This is a long-term infrastructure project. That should get industry quite excited because it speaks volumes about this Government’s commitment to the longevity of our infrastructure agenda. What Premier Andrews says is, ‘Well, I won’t be the Premier that gets to cut the ribbon on the completed project, but I will be the Premier, if I get the opportunity at the next election, to get it

West Gate Tunnel. Source AECOM

started’. Looking beyond our own time and political mortality is critically important. This is about thinking beyond ourselves and our aspirations and looking to build for the future. We said before the last election that we would lease the Port of Melbourne and we did. We got about twice the value that New South Wales got for Port Botany and Port Kembla for half the period of time under the lease. That shows it was a premium asset, and it went to the market at the right time and was properly managed. We said that any proceeds from the lease would go directly to meeting the infrastructure needs of the community. Now, let’s look at the Level Crossing Removal Programme. Those of you who aren’t from Melbourne wouldn’t know the drag on our economy, on your sanity, that level crossings have – particularly in peak hour. The Victorian Government is well on its way to achieving our aim of removing 50 of those level crossings in the first two terms of government. We said that in our first term about 20 would be completed. That number looks to be closer to 27 or 28 by the time our first term comes to an end. All of those projects highlight that we are a government that does what it says it will do. Some people in this room have been critics of some of the choices we’ve made. I must also add that people in this room have also been robust advocates for other things we’ve done. People here call it as they see it. However, it is also vital to reconnect the electorate with politicians that honour the things that they say they will do. That’s what you get from this Government. What you see is what you get, and we don’t have any fear about declaring our agenda. It would be strange if I didn’t talk about my friends in the Federal Government. If you watch the press conferences that the Prime Minister and Federal Treasurer give, they take credit for the economic growth of the nation. The contribution that

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The Hon Tim Pallas

West Gate Tunnel. Source – AECOM

Victoria makes to the nation’s economic growth is happening without much support from the Commonwealth Government. There is a reason we called Malcolm Turnbull the Prime Minister for Sydney. It struck a tone with Victorians around the same time that our infrastructure share was about seven per cent of the national average. Over the long term, the Commonwealth is moving to arrest that to some extent, and we’re pleased to see what’s happening with the Melbourne Airport Rail Link, but there’s a long way to go. However, in the fourth year of the current forward estimates period, the Federal Government expects that it’ll contribute about $250 million to infrastructure spend in Victoria. New South Wales hit a high of 48 per cent of the national infrastructure allocation. We’ve got a long way to go. Victoria’s got a pretty robust agenda. When the Commonwealth lays claim to its great economic management, take out the Victorian figures because they had nothing to do with it. These figures then start looking poor by comparison. Because we’re in Victoria, I should at least make an observation about Sydney. There was a recent article in The Daily Telegraph that fired a shot at the New South Wales Government. The article said the New South Wales Government has a can’t-do attitude and is apathetic when it comes to driving

The Hon Tim Pallas MP – Treasurer of Victoria Mr Pallas was elected to the Victorian Parliament in 2006 and is the state member for Werribee. Following the election of the Andrews Government in November 2014, he was sworn in as Victoria’s 50th Treasurer. In October 2017, Mr Pallas was appointed the Minister for Resources. His first budget in May 2015 delivered the biggest education budget and

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major Sydney events. Now, I don’t necessarily know much about the agenda New South Wales is chasing, but there was a great line there. The author said Victorian leaders were leaving the New South Wales Government for dead. As much as we love the niggle between Sydney and Melbourne, the nation functions best when Sydney and Melbourne are performing well. My focus is now beyond the idea of a Melbourne–Sydney rivalry. We are looking to Victoria’s place on the world stage. As a nation, we would be much better served by a much more dispassionate, non-political provision of resources out of the Commonwealth. This would allow all states to either flourish or flounder on the way that they administer their economies and the way they provide for their communities. This Government has delivered the highest average surpluses in the state’s history. Victoria has posted another extension on its surplus, by about $270 million. Our economy is strong and our debt is low. This means that we’ve got a great opportunity to partner with industry to drive our dollar as hard as we can. But we do also recognise that sometimes projects require creative thinking and the skills that the private sector brings. We welcome your participation and involvement in driving our agenda forward in a genuine and collaborative partnership.

investment in public transport in the state’s history. His second budget in April 2016 included the single biggest school capital investment in Victoria’s history, as well as fully funding the construction of Melbourne’s new Metro Tunnel. His third budget in May 2017 included an unprecedented $1.9 billion investment to tackle family violence. Mr Pallas is most proud of his latest budget. The 2018 –2019 Victorian Budget delivered another strong surplus focused on continued jobs growth, and investment in projects and services vital to the state.

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Smart infrastructure to support future technologies Australia is going through an infrastructure boom. The top nine planned infrastructure projects are expected to cost $140 billion, yet with such a big increase in both the number and size of projects, there are some accompanying challenges that go beyond traditional engineering and finance requirements. There can also be a change in thinking about where the focus should be in a project.

Scott Young, Executive Director, Real Estate and Infrastructure at Commonwealth Bank, says that the bank is taking a broader approach to infrastructure projects. ‘In addition to providing the much-needed funding, we are partnering with clients in our Innovation Labs to explore ways they can leverage emerging technology and evolve their business models for changes in urban density, sustainability and mobility,’ he says.

technological trends, financing models

To build modern infrastructure projects effectively, it is necessary to take into account a wide matrix of factors: demographic and

clients investing in the real estate and

and stakeholder expectations. For Commonwealth Bank, it has also meant rethinking its operating model. Tracy Gibson, Executive Director, Real Estate and Infrastructure at Commonwealth Bank, says that the bank is bringing together its infrastructure and real estate teams, with a focus on future cities. ‘We need to be collaborating to effectively support infrastructure sector, as their assets are becoming more integrated and interdependent,’ says Young.

Gibson says that one example of how infrastructure and real estate can go together is the Cross River Rail project in Queensland, which will be developing four new stations, including in-station retail and commercial opportunities, along with the Over Station Development at Albert Street station. That makes it, she says, both a property/real estate project and an infrastructure project. Young points to the development of Western Sydney as another instance of collaboration. ‘Over time, development in and around Western Sydney Airport will include a range of real estate and

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infrastructure facilities. A large number of stakeholders have been consulted or involved in the development planning stages to ensure that this area caters for the needs of the community better than an unplanned, piecemeal approach might.’ Infrastructure is, in the first instance, usually thought of as ‘hard infrastructure’, like roads and airports. But that definition is widening to include such areas as providing better access to health, education, water and clean energy. Australia is widely acknowledged to be at a turning point in its infrastructure development. There is a growing need to upgrade legacy infrastructure and to invest in the types of infrastructure that will support future technologies. At the same time, there is a limited supply of contractors and some emerging skill shortages. It has increased pressure on planners and financiers. The way in which physical and social systems are being understood is also changing and altering assumptions. One trend is circular

economies: a focus on maximising the use of resources with the aim of reducing waste (in contrast to linear economies, which focus on making, using and disposing of products). This can include technologies that enhance value. Emerging technologies like artificial intelligence, the Internet of Things and big data analytics are playing roles in improving existing infrastructure. The sums involved in the sector are large, and the market is global. According to the consultancy McKinsey & Company, more than US$2.5 trillion a year is invested just in transportation, power, water, and telecommunications systems. At the same time, infrastructure investment has declined as a share of gross domestic product in 11 of the G20 economies since 2008. McKinsey forecasts that US$3.3 trillion will be required until 2030. In Australia, the federal government has committed more than $75 billion just to transport infrastructure for the

next 10 years. The effectiveness of the future infrastructure development may prove crucial to national productivity. Demographics will be an important factor. ‘In Australia, where the working age population is growing at a decent clip, 40 per cent of government taxes will be spent on health care by 2043, versus 25 per cent today,’ says Young. He adds that fuel-efficient cars and electric vehicles will render many traditional road funding mechanisms, including fuel excises, ineffective. Gibson notes that population growth will be an influence, especially in Melbourne and Sydney. She expects activity in these infrastructure sectors to be intense. ‘There is a large volume of infrastructure projects and urban renewal that is going to come down the pipeline over the next 20 years.’ ♦ This article has been prepared in conjunction with the Commonwealth Bank of Australia, ABN 48 123 123 124 and is not Financial Advice or Independent Research. Any opinions or views of contributors are reasonably held or made, based on the information available at compilation, but no representation or warranty is made or provided as to the accuracy, reliability or completeness of any statement made.

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A shared vision for the future In 2007, the City of Sydney developed a long-term strategic plan for our city, endorsed by our communities. It involved tens of thousands of residents and businesses, government and statutory authorities, visitors, and educational and cultural institutions. The result was Sustainable Sydney 2030, which has been the cornerstone of everything we do. Our consultation showed that 97 per cent of people wanted us to take action on climate change. They also wanted a city with a strong economy – one that supports the arts and connects its people to each other and the world. Since 2004, we’ve completed more than 250 projects, including parks, playgrounds, childcare centres, pools, libraries, theatres, and community and cultural spaces. We’ve planted 12,329 street trees, and provided more than 78,211 square metres of landscaping and 154 rain gardens. We’re building a network of bike lanes, and are upgrading footpaths and city laneways. We were also a key driver in Sydney’s small bar revolution. Our Eora Journey project, which celebrates our First Nation people, involves the creation of seven major public artworks and an economic development plan. We recently released plans for Bara, a major new artwork overlooking Sydney Harbour. The City generates affordable housing through levies by selling its land at a discounted rate and by providing funding to community housing providers. These land sales have totalled more than $26.8 million

and created more than 920 affordable housing dwellings. We’ve established the Better Buildings Partnership, City Switch, 100 Resilient Cities and the C40 Climate Leadership Group. We’ve reduced emissions in our own operations by 25 per cent and have been carbon neutral since 2007. Across our local government area, we’ve helped to drive emissions down by 20 per cent. We’ve played a leading role in establishing Resilient Sydney, the first strategy for metropolitan Sydney to set out the directions we must take to strengthen our ability to survive, adapt and thrive in the face of increasing global uncertainty and local shocks. The last decade has seen unprecedented growth and development in our city. In recent years, our residential population has grown by 38 per cent, adding almost 10,000 new residents each year.

Through good planning and a consultative approach, we can

It is now 10 years since Sustainable Sydney 2030 was first adopted, and we can see how our city has been transformed in that time; but it’s time we look beyond 2030 to what the future of our city could be out to 2050.

strengthen social cohesion in our

We will soon conduct another extensive consultation program in the development of a new Sustainable Sydney 2050 plan.

and other challenges rising from our

fast-changing community, while also supporting social and affordable housing needs and planning for critical issues, such as traffic congestion, area livability, amenities, infrastructure changing climate. ♦

Lord Mayor Clover Moore

It’s important that community members share their ideas for the future of our city, to help to identify where we can work together on solutions.

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Green Square library and plaza

Planning essential infrastructure for growing communities

We’ve taken the lead on Green Square, one of the country’s largest urban renewal projects that will ultimately have 61,000 residents and 21,000 workers. We’ve committed almost $540 million to Green Square for facilities and infrastructure including Green Square library and plaza, our community and cultural facility that opened in May and a new aquatic centre and Gunyama Park.

cityofsydney.nsw.gov.au

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Respected leaders – panel discussion

L–R: Adrian Dwyer, Alan Stockdale AO, Tony Shepherd AO, Sir Bill English and Dr Kerry Schott AO

Respected leaders Key points: • • •

national leadership and sound policy are essential to micro-economic reform politicians need to treat the public with respect and understand that trust is a finite commodity, and the asset recycling programme provides a benchmark for explaining reform.

Panellists: ►► Rt Hon Sir Bill English, Former Prime Minister of New Zealand ►► Dr Kerry Schott AO, Patron, Infrastructure Partnerships Australia ►► Tony Shepherd AO, Patron, Infrastructure Partnerships Australia ►► Hon Alan Stockdale AO, Former Victorian Treasurer, Non-Executive Director

Moderator ►► Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia

Adrian Dwyer (AD): We see survey after survey in Australia saying that trust is declining in institutions and in government. Does it matter that trust is declining? Can we get reform done without trust?

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Tony Shepherd AO (TS): There’s no doubt that the surveys are accurate. Trust is declining and there are many causes of that. Frequent political leadership changes do nothing for creating trust and a feeling of confidence in the political system. Social media has turbo-charged criticism and has tended to oversimplify the policy debate. But there’s been a lack of leadership, too. The courage of the 1980s, 90s and 2000s saw big things done, like serious economic reform and the introduction of a GST. That courage and capacity to get out there and bring the community with you by actively selling quite difficult policies that are not popular with the community seems to be missing. It is lacking in the current environment, and that is the challenge for our political leaders. By the way, that’s a bipartisan comment. Alan Stockdale AO (AS): Currently, I think Australia is virtually ungovernable. For a long time, the Senate has been destructive of good government and good policy, and that hasn’t improved. I think New Zealand, Germany and a whole lot of other places have rules that unless you get five per

Respected leaders – panel discussion

WestConnex. Source – Sydney Motorway Corporation

cent of the vote, you can’t be represented in the Parliament. I think we should introduce a rule of that kind so that we don’t have all these people who are accountable to nobody and very rarely elected because of any sophisticated policy agenda. In recent times, we’ve aggravated the instability in the Senate by electing knife-edge majorities in the House of Representatives, and I don’t know how you deal with that. I mean, it’s the outer workings of democracy. The electorate is very evenly split between the major parties, and the minor parties are very seldom represented in the House of Representatives. However, I think the reason that we’ve had a succession of unpopular Prime Ministers defeated by their own party room is largely a government’s inability to deliver through a knife-edge balanced Parliament. In this environment, it’s just so difficult to drive anything other than platitudes. AD: Sir Bill, is rising populism affecting the balance of politics in Australia? What are your reflections on that trust and populism question? Sir Bill English (BE): Cheer up a bit, you’re doing pretty well. You just heard a politician here talk about the size and scale of the infrastructure investment. These are large, sophisticated projects that are being carried out under much more intense scrutiny than the sort of nation-building projects of the past where they just went in with the bulldozers and did it. Everyone thought it was pretty good. Australia is getting an awful lot done. The worry for people like myself, who’ve come out of politics, is that politicians don’t actually seem that relevant in Australia. I mean, you just keep pumping along. Back in New Zealand, we’re very pleased about that. We just can’t afford to be like that ourselves. We must have a good government, or we drop off the end of the Earth. You guys can afford a lot of messy politics and in that sense, you should be a bit more optimistic than the mood is here. Don’t listen to the chirpers, anti-business, so-called populist stuff. I mean, some of it is just genuine opinion but some of it is just the dominance of a small, noisy group of people. When you look at trust surveys in Australia, the institution people trust the

most after nurses and firefighters is their employer. That’s not anti-business, so you’ve got to keep it in perspective. AD: We’ll come back to that question around trust in business later. Kerry, is trust the reason behind the lack of policy focus on some of the big reform issues or is there something else driving it? Dr Kerry Schott AO (KS): I think trust is really important at a business level. I think with infrastructure projects and particular industries there is a lot of trust, but not with all of them. Light rail being a case in point in Sydney. NBN had a lot of trouble with its rollout and people went through a phase of hating us, and it was in a bit of a parallel universe with ads about how terrific we were. Meanwhile, everybody was struggling with having their garden dug up and couldn’t get through to their garage. There was a complete mess on the communications front.

“

We’ve really worked very hard at fixing that and we’re getting trust back again, and our stats are all going the right way. But once you lose trust, it’s really hard getting it back and that’s true politically too.

L d p i h s e

AD: Tony, I want to come back to this point about trust in business. Sir Bill said that people trust their employers, but trust is declining for business as a whole. How are things like the Banking Royal Commission and other issues affecting broader trust in business? Is trust something that businesses need to better deal with? TS: Business needs to have a serious look at itself, because the Banking Royal Commission has come out with some behaviour that is frankly disgraceful. In many cases, the behaviour has been illegal and certainly unethical. You’ve got to put those things in perspective. To take a leaf out of Bill’s book, we sailed through the global financial crisis (GFC) better than any other country in the Organisation for Economic Co-operation and Development (OECD), and continue to grow as an economy. Our finance sector actually stood up in the GFC. The finance sector does billions of transactions a year. I

futurebuilding

Respected leaders – panel discussion

“

usiness in Australia B needs to lift its game. I think Australian businesses – and there are some notable exceptions – as a whole, are not customer focused

Alan Stockdale AO

don’t know what the exact number is, but it’s got to be billions, and a very small proportion of them are dodgy. We should deal with those dodgy incidents, and we should deal with them firmly and harshly. That’s why we’ve got regulators. We’ve got more regulators in the finance sector than any other country in the world. They should just do their job. Get in there and enforce. It’s a pity we needed a Royal Commission to blow all that stuff up. It shouldn’t have happened, given the degree of regulation that the sector has. The regulators should’ve been in there investigating and enforcing. That’s the failure. Business in Australia needs to lift its game. I think Australian businesses – and there are some notable exceptions – as a whole, are not customer focused. Our oligopolies and our monopolies, on top of our remoteness, makes us complacent in dealing with the customer. Dealing with the customer properly is more than a friendly voice telling you ‘no’ over the telephone. It’s about really engaging when dealing with the customer’s needs. I’ve spent a lot of time offshore and I think the customer focus in Australia, certainly in big business, is not as strong as it should be. We’ve seen that in the energy sector, we’ve seen that in the finance sector, and we’ve seen that in other sectors like retail and telecommunications. So, if it’s just a cheery voice from the Philippines telling you that they can’t fix that problem for you, or somebody from the same company calls you half an hour later to ask if you’d do a customer survey, that’s not customer service. Frankly, that approach typifies a lot of Australian business now – certainly big business. That approach does reduce trust in business. However, it’s comforting that surveys show that most people trust their employer virtually more than any other institution.

people out. We’re still a democracy. Populism’s now become a word for ‘democratic results I did not like’. People out in northern New South Wales or the Midwest in the United States have had to put up with a lot of democratic results they didn’t like for a long time. In an economy where you’ve had a lot of growth for a long time, it is easy for businesses to lose grip, and the banks certainly did. Even though New Zealand was a customer of Australian banks, they used to treat us pretty badly, and we’re a country. The attitude when I first became New Zealand’s Minister of Finance was a bit like someone from the outer edge of the empire turning up in the head office in Rome to pledge allegiance. That’s changed, thank goodness, but that’s how it was when I first became the Finance Minister. That attitude is shifting and that’s a good thing. I’m fortunate to be part of the Wesfarmers board. Wesfarmers has nine million customers and I can tell you, it knows it must be relentlessly customer-focused. Where it’s relevant, I think, to a group like this is in the planning process. It’s clear to me that the planning process has had no customer focus whatsoever and that’s one of the reasons for the discontent. The policy establishment has let the public down on its biggest single cost, and that’s housing, because planning has been wilfully non-economic, and it’s been driven by planner preferences, not by customer preferences.

AD: Sir Bill, you’ve spoken about this kind of customer service not just in the private sector but in the public sector, too. Can you offer any reflections on whether this is a pervasive challenge?

More broadly, I think the sector needs to start thinking about who uses the infrastructure and the reasons for it. We’ve seen some great innovation here in Australia along those lines, but it needs a continued focus on it to help make infrastructure more acceptable and easier to roll out.

BE: A lot of what’s called populism is just normal people who disagree with the media and political class. And it just happens that they’ve got more votes going and they’ve thrown a few

AD: Is getting reform done just about how we communicate? Is it about telling the right stories, or is there something more fundamental we need to do?

futurebuilding

Respected leaders – panel discussion

Dr Kerry Schott AO and Sir Bill English

AS: Could I suggest two things I think should happen? We are in a policy freeze out. No-one is developing good national policy at the moment, and you can’t provide leadership if you haven’t got solutions to issues. New Zealand’s a great example of where it is happening. The Business Roundtable in New Zealand has been an enormously successful contributor to the public policy debate. I believe that the Business Council of Australia has the resources and the interest to be the foremost policy developer in this country. I’ve urged it before to go out, search the world, find the best think tank leader, then recruit good people and start participating in the development of national policy. If we can’t get a first-rate taxation reform proposal out of the Business Council, then who’s going to do it? The Council represents an enormous proportion of the Australian economy. Jointly, it has more interest in it than anybody else. Secondly, our national government must stop focusing on itself and start developing policy and providing leadership. If you look back at the 1990s, we had a very successful period of micro-economic reform. The Commonwealth took a lead and provided financial incentives for the states to introduce a programme of micro-economic reform. Unfortunately, they paid some governments, like New South Wales, who didn’t complete the reform agenda. I think we need another round of microeconomic reform backed by the incentives needed to do it. We need a real effort to harness more resources in the community to come up with the agenda for reform and then the Commonwealth has to do three things. One, provide leadership through the Council of Australian Governments (COAG) and through other multi-jurisdictional resources. Second, spell out the agenda. Third, provide financial incentives for the states to actually deliver it. You need the carrot and the stick. I would also have the Grants Commission review the progress of each state every year in implementing the reform agenda. The Commission would penalise states that lag behind with reductions in their grants, and reward states who accelerate the programme.

Tony Shepherd AO

We’re not going to get anywhere until somebody puts a premium on the development and implementation of policy. If our national government and our national business leaders aren’t doing that, then I think it’s whistling in the wind to think other people are going to do it. AD: Speaking of the pre-conditions for reform, Kerry, the stars almost aligned on the National Energy Guarantee (NEG). It got pretty close, but ultimately fell through, at least with that title. Where to from here? KS: The stars did align and the sad thing is that the leadership at the national level just couldn’t take the final step. I think what will happen going forward is that the reliability obligation part of the NEG will probably get support. We’ll have to wait for the rest of it. The sad thing is that the drop in prices that would’ve occurred in the wholesale market will be less than what would have been with the NEG. The other sad thing is that there’s a flavour of more market intervention rather than just stepping back and letting industry and the states get on with it. I think that’s the biggest risk now. AD: How do we have a sensible conversation with the public about energy prices? TS: That’s a big issue. The public has been burnt and they’re understandably upset. Electricity prices have effectively doubled in the last 10 years. Wholesale prices in the last 18 years have gone up by a factor of four in most states. So, people are upset, and this has again created a lack of trust. The NEG must be taken to the people and explained in more detail so that they can have more confidence in the results. I went around the community and business when the NEG was on the table, and I couldn’t find many people that understood how it would work. I know it’s complicated, but it can be simplified without losing its true meaning and taken to the consumer with a lot more clarity. That’s what is really required, so we can get people comfortable and confident with the predicted outcomes.

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Respected leaders – panel discussion

L–R: Adrian Dwyer, Alan Stockdale AO, Tony Shepherd AO, Sir Bill English and Dr Kerry Schott AO

AS: Governments over the last 20 years have created massive uncertainty about future prices, the reliability of the system, and the effectiveness of the market. That is hindering the investment we most need. Right now, we need more dispatchable power. Renewables are not the answer. They don’t necessarily run when we need the power. We need baseload power, and to close down coal-fired power stations without a plan as to how you would replace that baseload verges on insanity. Due to the uncertainty, we’re not getting investment where we need it, so the Government needs to take the initiative. The Commonwealth should call in every one of the states and tell them they’ll provide government-guaranteed debt for one renewable project and one dispatchable power project. It

won’t be coal in all probability, simply because the lead times are too long and because of the politics of it. However, combined cycle gas and other technologies should be considered. I think we should also launch an inquiry, as de-politicised as you can, into whether part of the long-term solution is nuclear power. Then, use that inquiry to educate the community about the risks and the advantages of having or not having nuclear power. There are lots of nuclear power stations around the world that haven’t had accidents and haven’t had problems. Germany has a substantial proportion of its power coming from nuclear stations and it’s never had a problem. We should be having a sensible discussion about whether that’s part of the mix. But the immediate solution is to increase baseload power. AD: Sir Bill, we have a lot of people saying that what we need is a good crisis. Can you talk everybody out of the need for a crisis to reform? BE: Yeah. You don’t need one, only because it would be bad for New Zealand. The NEG is a good example of what you do instead of a crisis and you treat voters with respect. That is, the respect of believing that their opinion matters and that they’re capable of understanding most things.

WestConnex. Source – Sydney Motorway Corporation

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One of the things that’s noticeable out of Australian politics is how little time the politicians spend on policy. They can tell you an awful lot about what was on Sky or ABC, but are not that clear about what they think should happen in the world. The GST change was the best example, because we’ve gone down a different track than Australia. By the time we went to put the GST rate up to 15 per cent, there was no controversy. That’s because we started the process with a very straightforward argument. Stuff we like we’ll tax less – that’s work and savings. Stuff we don’t – like consumption and property – we’ll tax more. It was a very transparent and open process where people could see the logic. We’ll put up your GST and cut your income tax. So, you can work harder if you like, and if you spend a bit less, you’ll be a lot better off. If there isn’t a way that a family can understand it, then it’s probably not that well thought through.

Respected leaders – panel discussion

WestConnex. Source – Sydney Motorway Corporation

Basically, treat voters with respect, and provide them with arguments that they can understand. I don’t mean slogans and ad campaigns. I mean treat them as thoughtful participants in the process.

AS: At the risk of being repetitive, we do have a marketing problem. We lack people who can identify the problem, and then explain the solution. Why is the Government doing what it’s doing and what will it produce?

AD: So, in some ways it’s about telling a good story. We saw that with asset recycling, where it became about the thing that was being bought, rather than the thing that was being sold.

The problem for Australia at the moment is not just marketing. All the marketing in the world won’t help if we don’t have soundly developed policy and we don’t have people who are providing leadership for that policy. I’ve always believed that nothing worthwhile happens without a champion. We don’t have a champion for anything. We need leadership.

TS: Yeah. Asset recycling was one of the great policy initiatives of the last 10 years and it’s a policy that New South Wales pioneered. Mike Baird won an election on the policy and it did happen. They sold assets and invested the proceeds into new infrastructure. Now they’re doing that cycle continuously, with the partial sale of WestConnex. That sale will enable them to invest in other infrastructure projects, and the community has bought into that approach. They relentlessly sold the concept to the public and put it in layperson’s vernacular. They didn’t wrap it up in complex economic equations. They just very clearly said, ‘We’re selling that asset, and we’re going to put the money into A, B, C and D’, and it’s working. BE: In the political environment, when you’re saying you’re going to sell an argument, people are immediately suspicious, but they explained it. I’m a firm believer in the power of explanation and most voters can understand things if you go to the trouble. TS: Yes, they do. I think we vastly underestimate the common sense of the average Australian.

I’ve been very critical, for example, of Commonwealth governments of both political persuasions and their privatisation of Telstra. They didn’t bother looking at the experience of the rest of the world as we did with electricity reform. They just went ahead and did what they thought would work. They had a view that if you deregulate, the competitors will just come. It didn’t happen, and we still have a massively dominant organisation that has never recovered from being a public monopoly. We need to forget about marketing for the moment. We need to focus on the fundamental problem, which is that we’re not developing sound public policy. There’s no way you can explain something on one of those crazy shouting matches on Sky or on social media. You’ve got to have good policy to begin with and we don’t. TS: I agree totally.

futurebuilding

Respected leaders – panel discussion

AD: In closing, if there was one area where we could have some good policy developed and bipartisan support, what would each of you choose? TS: I have to pick two. One is micro-economic reform and the other is energy. AS: Mine would be micro-economic reform, because I think it has just fallen off the agenda, so I’d say that is a top priority. Energy would be a close second. BE: One is the structural separation of Telstra and resolving that with the NBN. Another one I’d watch out for is public accounting rules. You need a pretty big upgrade in public asset management, because there is a vast pool of

Rt Hon Sir Bill English – Former Prime Minister of New Zealand Sir Bill English was Minister of Finance and Deputy Prime Minister from October 2008 to December 2016, and Prime Minister of New Zealand until the change of government in October 2017. He retired from politics in March 2018. Sir Bill guided the New Zealand economy through the global financial crisis to be one of the faster-growing developed economies with sustainable government surpluses. Sir Bill also focused on public sector reform and balance sheet management, and led the development and implementation of Social Investment, a worldleading policy innovation for large-scale social services. He oversaw significant investment in digitalising government and improving the customer experience of public services. Sir Bill is now a consultant with commercial government and not-for-profit clients. He is a director of Wesfarmers and was recently appointed to the Commonwealth APS Review reference group.

AD: Kerry? KS: I think I’d probably have a good look at the boring old chestnut of Commonwealth–state relations. The Commonwealth has increasingly been getting into spaces where it really doesn’t have either the responsibility or the capability to operate, and it is mucking things up hugely.

as the Sydney Harbour Tunnel, Melbourne City Link and East Link. He was also the inaugural Chairman of WestConnex. Mr Shepherd oversaw the listing of Transurban, Transfield Services and Connect East, and was President of the Business Council of Australia, Chairman of the National Commission of Audit and Chairman of ASTRA (the subscription TV Association). Mr Shepherd is also a Patron of Infrastructure Partnerships Australia. The Hon Alan Stockdale AO – Former Victorian Treasurer, Non-Executive Director Alan Stockdale has extensive business and government experience. Elected to the Victorian Parliament in 1985, he was Shadow Treasurer from 1985–1992, and then Treasurer (1992–1999) and Minister for IT and Multimedia (1996–1999) in Victoria’s Kennett Government.

Dr Kerry Schott AO – Patron, Infrastructure Partnerships Australia

As Treasurer, he implemented one of the most far-reaching reform programs in the world, including more than A$30 billion of privatisations, restoring the Government finances of Victoria, reducing Government debt and regaining Victoria’s AAA rating.

Dr Kerry Schott is Chair of the Energy Security Board, Chair of Moorebank Intermodal Company, a Director of NBN, and a Director of TCorp NSW. She also Chairs the Assurance Board for Sydney Metro, and is a member of the Advisory Board for City and SouthEast Light Rail.

He was a key Minister in the Government team responsible for the reform of Victoria’s public infrastructure and the development of major projects. In 1999, the prestigious ‘Privatisation International’ named him its Privatisation Minister of the Year.

Dr Schott was Managing Director and CEO of Sydney Water from 2006 to 2011. Before that, she spent 15 years as an investment banker, including as Managing Director of Deutsche Bank and Executive Vice President of Bankers Trust Australia. During this time, she specialised in privatisation, restructuring, and infrastructure provision. Prior to becoming an investment banker, Dr Schott was a public servant and an academic. Dr Schott holds a doctorate from Oxford University, a Masters of Arts from the University of British Columbia, Vancouver, and a Bachelor of Arts (first class Honours) from the University of New England.

After leaving Government in 1999, Mr Stockdale worked as an investment banker with Macquarie Bank for seven years, specialising in infrastructure projects, and developed a career as a company Chairman, Director and consultant.

She was recently awarded an Order of Australia and Honorary Doctorates from the University of Sydney and the University of Western Sydney. Dr Schott is also a Patron of Infrastructure Partnerships Australia. Tony Shepherd AO – Patron, Infrastructure Partnerships Australia Mr Shepherd is Chairman of Macquarie Specialised Management (a global infrastructure fund), the Sydney Cricket Ground Trust and the AFL GWS Giants. He is also a Director of Menzies Research Centre, Virgin Australia International Holdings and Racing NSW. He is an adviser to Bank of Tokyo Mitsubishi UFJ, a member of the ASIC External Advisory Panel and the Pacific Leadership and Governance Precinct Executive Advisory Board. Mr Shepherd has had an extensive career in Australia, and overseas in the private and public sectors. He pioneered private infrastructure with projects such

capital-intensive assets coming online across the east coast of Australia. The operating cost of these assets will place a major burden on state treasuries. If it’s not managed properly, five to 10 years down the track, it could be a recipe for large write-offs, ruined government budgets and poor service. Your Treasuries should be accounting for that now.

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Mr Stockdale was Federal President of the Liberal Party from 2008 to 2015 and a member of the Party’s Federal Executive from 2008 until 2017. He is currently Chairman of the Medical Research Commercialisation Fund (MRCF) and KNOSYS, a consultant to Maddocks Lawyers and Metro Trains Australia, and a member of the Advisory Board of Lazard Australia. 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. Mr Dwyer served as Infrastructure Partnerships Australia’s Head of Policy from 2011 until 2015, where he led major studies on road pricing reform, contracting and financing models, among others. In 2015, Mr Dwyer left Infrastructure Partnerships Australia to serve as the Executive Director of Policy and Research at Infrastructure Australia – the Commonwealth Government’s statutory infrastructure body. He was appointed as Infrastructure Partnerships Australia’s Chief Executive Officer in March 2018.

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Our new city is connecting Australia to the future The new Maroochydore CBD is set to become the landing point for an international subsea broadband cable, paving the way for the Sunshine Coast region to become a global innovation hub. A smart city wi-fi system will operate throughout the CBD’s public realm, enabling smart signage, lighting, security, parking and traffic management systems to make life easier and safer for visitors, residents and workers. In his report ‘The Activated City: Imagining the Sunshine Coast in 2040’, leading Australian commentator Bernard Salt found national technology, construction and professional services companies will have head offices on the Sunshine Coast by 2040, luring a wave of young families, universityeducated millennials and ‘secondgeneration’ CEOs. The fibre-optic cable will enable the Maroochydore City Centre and the broader Sunshine Coast region to deliver Australia’s fastest telecommunications connection to Asia, stimulating investment and business growth, and generating jobs. Located 100 kilometres north of Brisbane, the new Maroochydore CBD is a unique development being constructed on a 53-hectare greenfield site. With no legacy infrastructure to remove or upgrade, the company overseeing design and delivery of the new city centre, SunCentral Maroochydore, has a once-in-a-lifetime opportunity to create an entire CBD from the ground up. Apart from commercial, retail, residential and public precincts, the new city centre will be one of the most

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digitally advanced CBDs in the country, and promises to set a new benchmark for technological integration and innovation in Australia.

Laying the groundwork More than $10 million in underground infrastructure has been laid beneath the streets of the new Maroochydore CBD, providing a smart city framework capable of delivering cutting-edge urban design and innovation. The development is the first in Australia to include a CBD-wide underground automated waste collection system that will make wheelie bins obsolete throughout the city centre. Instead, waste will be transported at up to 70 kilometres per hour through a network of underground vacuum pipes to a central collection point.

Salt predicts the region will see a rise in tech-savvy young people, as well as baby boomers who retire to the Sunshine Coast and kick off new startup businesses.

Claiming a stake More than 90 per cent of the core commercial precinct of the new CBD is under commercial or contract negotiations, with interest strong across the health, education and technology sectors. Local company Evans Long has unveiled plans to develop premium commercial buildings in the city centre and the Sunshine Coast Regional Council has confirmed its intention to relocate its headquarters to the new Maroochydore CBD. SunCentral Maroochydore Chief Executive Officer John Knaggs says the expansion of the Sunshine Coast Airport

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to allow direct flights from Asia by 2020; a new $1.8-billion hospital and health precinct; the growth of the University of the Sunshine Coast; and plans for a light rail in the region would combine with the new CBD to have a transformative effect. ‘The economic opportunities to arise from this infrastructure investment, along with its coastal lifestyle and connectivity, make the new CBD compelling to large, national firms as well as small businesses and entrepreneurial startups,’ Knaggs says. Construction is expected to start on the first buildings in 2019.

Building a legacy Hundreds of trees and thousands of shrubs have been planted alongside the CBD’s first city streets, bringing the Sunshine Coast’s new urban heart to life. Tree-lined boulevards and a 2800-square-metre public park are also taking shape with more than 40 per cent of the new CBD devoted to waterways, parks and plazas. Street names in the core commercial precinct have been selected to honour the site’s cultural history, as well as people and events that have played significant roles in the region over time. For instance, Fairway Drive acknowledges that the site was once the home of a golf course, while Festival Parade reflects the creative events that will take place in the new CBD. The new city centre will ultimately include 150,000 square metres of prime commercial office space; 65,000 square metres of retail gross floor area, convention and exhibition facilities; a premium hotel and recreational spaces, and 2000 residential apartments.

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The development is expected to create more than 15,000 jobs in this rapidly growing region and provide a $4.4-billion boost to the local economy.

Looking to the future Sunshine Coast Regional Council has long recognised that developing a modern city centre would be essential to cater to the region’s future. Maroochydore was identified as the Sunshine Coast’s Principal Regional Activity Centre in the ‘South East Queensland Regional Plan 2005– 2026’. The Queensland Government declared the 53-hectare site a Priority Development Area in 2013. The Maroochydore City Centre Priority Development Area (PDA) scheme was gazetted in 2014. SunCentral Maroochydore Pty Ltd was subsequently created to oversee

the design and delivery of a new city centre to meet the demands of future workers, residents and visitors, with the population of the Sunshine Coast expected to surge from 330,000 to more than 500,000 by 2040. Knaggs says the total construction cost of the 20-year project was estimated at $2.1 billion (in 2015 dollars). ‘This isn’t just a construction project,’ Knaggs says. ‘It’s about building a new heart for the community – a city centre that will ultimately shape the lives of hundreds of thousands of people. ‘The future has never looked brighter for Maroochydore and the Sunshine Coast.’ ♦ To find out more about the Maroochydore City Centre development, call the head office on 07 5452 7274 or visit maroochydore-city.com.au. You can register for regular project updates via the website.

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The other side of the infrastructure boom

By Daniel Gradwell, Senior Economist, ANZ

Australia’s $120 billion in construction projects is a boon for the economy, but rising cost pressures are a real risk.

This picture has been clear for several years now, and the past 12 months have seen a number of additional commitments that have added to the already-strong pipeline of major projects. The strength in construction activity is good news for Australia’s economy, but the strong competition for labour, resources and equipment carries the risk of rising cost pressures. Nationwide, there is nearly A$120 billion in housing, commercial property and engineering construction (excluding mining) work in the pipeline. The housing sector was the largest component of this number for several years, driven by the boom in high-rise apartments across Sydney, Melbourne and Brisbane. More recently, engineering construction has taken the mantle, supported by the many road and rail projects now under construction. To top it off, the backlog of commercial property construction is now also at a record high.

Work yet to be done by sector The outlook for infrastructure spending has further improved over the past year on the back of greater cooperation among various levels of government. Projects such as the Melbourne Airport rail link and North

140

120

100

AUDbn

40 80

AUDbn

The Australian economy has done a solid job of transitioning away from the mining sector. Though mining investment has fallen to its lowest level in a number of years, the overall investment story has been positive on the back of a tremendous upswing in infrastructure spending.

30 60 20 40 10

20 * ex mining engineering

Residential

Non-residential building

Engineering construction*

18 Total (RHS)

Source: ABS, ANZ Research

East Link road (Victoria) and Badgerys Creek airport rail link (New South Wales) will involve contributions at both state and federal levels.

especially in Sydney, are likely to limit the pace at which this pipeline can be worked through’.

Further ahead, the scale of the road and rail works provides unusually clear visibility of the pipeline right through to the early 2020s.

Major infrastructure projects

This rising rate of capacity utilisation has had a mixed impact on costs to date. Wages in the construction sector remain subdued, but there are several examples of rising construction costs.

With this strong pipeline of work, employment in the construction sector has been the second-highest job creator over the past three years, only behind healthcare. In addition, the rate of capacity utilisation in the construction sector is now at the highest levels since the financial crisis.

Nationwide building construction costs are up 2.4 per cent year on year, but the divergence across the states is noteworthy. New South Wales and Victoria are seeing the strongest growth in costs, up 3.4 per cent and 3.9 per cent respectively in line with their strong levels of work.

The Reserve Bank of Australia (RBA) has noted in several recent publications that the volume of work taking place is posing challenges.

This story is true across different types of construction. New South Wales and Victoria housing construction costs are up 4.3 per cent and 6.2 per cent year on year, while road and bridge construction costs are up 3.4 per cent and 10.6 per cent. Keep in mind that

The RBA’s Statement on Monetary Policy August 2018 warned, ‘Capacity constraints in the building industry,

Mixed impact

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22 20

Cross River Rail (QLD) Sydney Metro West (NSW) Badgerys Creek Airport Rail (NSW) Melbourne Airport Rail North East Link (VIC)

these figures are coming at the same time as overall consumer price index (CPI) inflation is running at just 2.1 per cent. At this stage, the impact of these cost and capacity increases has been fairly limited, but it is worth watching closely given the experience of the construction industry in New Zealand.

AUDbn

Melbourne-Brisbane Inland Rail

Snowy Hydro Expansion

Metronet (WA)

Airport Link (WA)

12 10

This is not to say that Australia is inevitably heading down a similar path. There are several important differences across the two countries. Capacity utilisation began to accelerate in New Zealand much earlier, prompted by the 2011 Canterbury earthquakes, meaning that spare capacity has been lower for longer than in Australia. Australia’s construction capacity was ramped up during the mining boom.

Melbourne Metro (VIC) Level Crossing Removals (VIC) West Gate Tunnel (VIC) Cranbourne-Pakenham Rail (VIC) Western Harbour Tunnel (NSW) CBD and South East Light Rail (NSW) NorthConnex (NSW)

Sydney Metro Northwest (NSW)

NBN

WestConnex (NSW)

2 0 2011-12

2013-14

2015-16

2017-18

2019-20

2021-22

2023-24

Source: BREE, company reports, Deloitte Access Economics, state government budget papers, ANZ Research 90

86 92 Capacity utilisation

84 90

82 80

Capacity utilisation

As a result of these pressures, a growing number of companies has been forced into receivership or posted material losses. Perhaps the most noteworthy example is Fletcher Building, which has lost almost NZ$1 billion over the past two years on large construction projects, and posted a loss of NZ$190 million in 2017–2018 – its first annual loss since the GFC.

Pacific Highway - Woolgoolga to Ballina (NSW)

Sydney Metro City and Southwest (NSW)

Capacity utilisation in Australia and New Zealand New Zealand’s construction sector has been struggling to keep up with demand in the face of capacity constraints. While there is plenty of work taking place, profitability has been squeezed as a result of cost pressures and delays. A BDO survey also found that many construction firms and subcontractors are operating on unsustainable margins.

Badgerys Creek Airport (NSW)

84 74 82

70 01

New Zealand - Builders

Australia - Construction (RHS)

Source: NAB, NZIER, ANZ Research

It’s likely the interstate migration of workers away from the mining sector in Queensland and Western Australia toward the housing and infrastructure sectors in Sydney and Melbourne has helped to relieve pressure on labour availability. Labour availability has been a significant constraint in New Zealand. This is reflected in wages growth, which, in New Zealand, has seen construction wages rising faster than the industry average for almost every period since 2011. In Australia, construction wages have been below the industry average since 2014. In New Zealand, housing

construction costs have been rising at 5.3 per cent year on year for the past five years, which is significantly above average inflation of just 1.1 per cent. Australian housing construction costs have also been running ahead of inflation, but the difference over the last five years (2.6 per cent versus 1.9 per cent) is much smaller. At the national level, we are not seeing much evidence of cost pressures in Australia. But the details across New South Wales and Victoria, as well as anecdotes from ANZ clients, confirm that this story is worth keeping a close eye on. ♦

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Adapting to an everchanging environment The TRILITY group of companies is an Australian environmental services provider with extensive remote, rural and regional operations, and servicing capabilities across Australia and New Zealand. Since its inception, the group has been involved in the delivery of hundreds of water infrastructure projects currently servicing more than 600 facilities, and has extensive operations spanning from far south to the northernmost tip of the country. Providing adequate, secure and safe potable water in rural and remote regions is a major challenge for all Australian states. This is why TRILITY works in collaboration with state and local governments to provide the essential services required to deliver safe, reliable water.

TasWater project, transporting a modular plant into position

TasWater Project – L-R: Hydramet Project Manager; Francois Gouws, TRILITY Managing Director; Mike Brewster, TasWater CEO

Securing such diverse work in such varied locations is a clear testament to the group’s impressive capabilities. More than a year ago, the group invested in Tasmania with the opening of an office in Launceston. The following year, the first project, a $13-million contract with TasWater, was successfully completed whereby eight new water treatment plants were delivered in regional towns and communities across the state. TRILITY Managing Director Francois Gouws says that being part of such a successful project was an honour. ‘It was the innovative and collaborative approach taken by TasWater that ensured the project’s success,’ he says. ‘And it’s not only a success for TasWater, but a great outcome for Tasmania overall.’

Hydramet Western Australia, internals of a mining site packaged treatment plant

TRILITY, along with subsidiary Hydramet, built the modular treatment plants in a factory in Launceston while civil works were completed on site using local contractors. The streamlined process of centralising the workforce in a factory, avoiding weather delays and the logistics of isolated building

sites around the state, proved to be much quicker and more effective than traditional construction. Once completed, the treatment plants were transported to each site and positioned prior to in-field commissioning and stringent testing overseen by the Tasmanian Department of Health to ensure that the water met the Australian drinking water guidelines. These plants are now supplying fully treated water to Herrick, Gladstone, Mathinna, Cornwall, Rossarden, Conara, Bronte Park and Wayatinah. TRILITY will continue to support TasWater with the operations and maintenance of these sites during the defects liability period. This marks a historic achievement for TRILITY and Hydramet, along with our client, TasWater, and the Tasmanian community, providing long-term infrastructure improvement and underpinning public health for generations to come. Moving to the far north region of Australia, the group works in conjunction with the Department of Infrastructure, Local Government and Planning (DILGP), and Northern Peninsula Area Regional Council (NPARC), where the company provides operational and maintenance services for five Indigenous communities. These communities are located approximately 1000 kilometres north of Cairns, adjacent to the Jardine River National Park at the northern tip of Cape York.

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Redcliffe Wastewater Treatment Plant – view of the top of the new inlet works

The contract involves operating and maintaining a raw water collection and transfer station, a membrane water treatment plant, and a treated water distribution system. Most of TRILITY’s staff members working on the project are local, representing an important employment and training opportunity.

instrumentation assets across 26 sites over 762 square kilometres.

Furthermore, through Hydramet, the company provides vital service support to numerous councils and communities in Far North Queensland, including Mareeba Shire, Carpentaria Shire, Pormpuraaw, Mapoon, Isaac and Whitsunday Regional councils, and it services all of Mackay Regional Council’s chemical dosing, gas chlorination and

The company operates and maintains more than 46 plants and schemes, as well as hundreds of kilometres of irrigation pipeline networks across the country, and Australia’s largest biosolids facility in Geelong. TRILITY is responsible for assets that provide water for millions of Australians in urban, rural, regional and remote areas.

Hydramet Western Australia remote package chloramination plant

Established in 1991, TRILITY continues to work with statutory authorities and companies around Australia to upgrade and manage critical water assets, to design and construct water infrastructure, and to finance and own water assets and projects.

‘At TRILITY, we are passionate about what we do – helping to protect and direct our precious water resources for Australia’s economic and environmental future.’ TRILITY is an Australian-run company with strong international links through its Hong Kong–listed shareholder, Beijing Enterprises Water Group (BEWG) Limited, which is principally engaged in global water businesses. TRILITY brings with it outstanding global expertise and a wealth of local knowledge developed over two decades. With some of its contracts stretching back more than 20 years, TRILITY has developed strong relationships with water authorities, government departments and industry bodies.

Redcliffe Wastewater Treatment Plant – odour control facility

Indeed, this capacity to successfully partner with government and industry is reflected in its operating projects: 32 water

treatment and desalination plants; 15 wastewater treatment and reuse plants/schemes; two irrigation schemes; more than 600 service sites; and Australia’s largest thermal biosolids facility at Geelong. In South East Queensland, TRILITY was selected to design, build, operate and maintain the Redcliffe Sewage Treatment Plant upgrade, which is near completion. In Western Australia, TRILITY is part of the Helena Water consortium, which delivered the $300-million Mundaring Water Treatment Plant. Through Hydramet, we service a number of major mine sites across Western Australia, providing clean, safe water using custom-designed packaged water treatment plants. In regional Victoria and South Australia, TRILITY is the operator of numerous water treatment plants and has a footprint in New Zealand. ‘TRILITY has an incredible workforce that is very passionate about water and the environment. We continue to invest heavily in staff and systems, and a core part of my role is to maintain and enhance our exceptional culture,’ Gouws says. ‘We also pride ourselves on being innovative, nimble and adaptable. ‘Water is a vital resource, and change is a certainty that creates exciting opportunities. Community and industry need change and so does the environment – so at TRILITY, we’re focused on adapting so that we can continue to make an important contribution to Australia’s future.’ For everyone at TRILITY, ongoing improvement is a driving force. ♦

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The Hon Michael McCormack

The Hon Michael McCormack, Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development 28

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The Hon Michael McCormack

It was certainly interesting to listen to the panel and their thoughts on state–federal relations, governance, and the need for more energy infrastructure. It is always fascinating to hear those perspectives. When you are right in the middle of the debate, you appreciate the fact that we do need more infrastructure and we do need to resolve the energy situation. As a Government, we are trying to resolve those sorts of things. We’re certainly, as part of a phased-in infrastructure rollout, getting things done. That’s why we have committed to a $75 billion infrastructure investment pipeline over the next decade. All too often, governments are criticised for not having vision, not having a long-term plan. We, as a Federal Government, are putting in place the sorts of things now to have that plan over the next decade. I am the Minister for Infrastructure, Transport and, after the latest changes, Regional Development. I’m very proud of those portfolios. I’m very proud to be a part of this Government, which has the future of these sectors front and centre of our policy making. Infrastructure supports economic activity and efficiency, livability, and the productivity capacity of our communities. It is the connector between people and markets, and the safety of our citizens. On our roads last year, 1,227 people sadly lost their lives and 35,000 people were injured. Those figures are too high, and we should always want to make sure that whatever infrastructure we put in place is mindful of getting people home, getting people to work, getting people from point A to B – wherever they want to go – sooner and safer. We’re taking a leadership role in infrastructure investment and reform, alongside road safety. We’re building the things that we need to – whether it’s ports, rail, whatever it is – to make sure that we get better outcomes for our industries, factories, farmers, small businesses and communities. I welcome input from organisations such as Infrastructure Partnerships Australia, who help guide thinking on future developments. We’re focused on getting more from our infrastructure investment dollar, the taxpayer’s dollar. We need to make sure that we can get maximum value for money – maximum bang for our buck. We also need better integration between our infrastructure needs and planning, especially around urban centres. The Commonwealth is becoming a more informed investor, and is having a say in where, how and why taxpayers’ funds are invested. We’re also encouraging those who are best placed and have the skills to fund and deliver the infrastructure we need in the private sector and capitalising on technology advances to deliver our programme. That is why the discussions that we have at forums such as Partnerships are so critical to our thinking and the way we put the plan we have into action.

There are rapid developments in our Asian region and around the world which continue to challenge our competitiveness. The capacity of nations to respond to their infrastructure needs is often marked on the league tables. This is an important measure for governments to consider, because infrastructure is essential to boosting our productive and development capacity, and to improving connections to international markets. We have had great success in recent times. One of the first jobs of Scott Morrison as the new Prime Minister was to go and forge better trade relations with Indonesia and sign a deal that builds on a recent signing with the Trans-Pacific Partnership (TPP-11). That’s a $13 trillion opportunity for Australian businesses, Australian farmers and Australian markets. This builds on the free trade agreements we already have with Peru, South Korea, China and Japan. These deals are enabling our businesses and our farmers to be able to compete on a global stage because we are geographically best placed to do just that. The important thing is we need the infrastructure to be able to capitalise on those markets. We know that to be successful as a Commonwealth Government, we need to work in partnership with industry and with state and local governments. The local government level is where it all starts. We should never underplay the significance of our local councils – the people that are at the very coalface of interaction between people and communities, and government. We should never forget that.

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I nfrastructure is essential to boosting our productive capacity and development capacity, and to improving connections to international markets

With this in mind, the Government is not going to ignore the chorus from industry for a better approach. Industry said, ‘We need certainty, we need consistency of work so we can grow our businesses and keep our skilled personnel employed’. We have future projects to plan and we know how to invest for the future. That’s industry. Government does not always share those same ideals when we get bogged down in bureaucracy and the politicking

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The Hon Michael McCormack

of the day. But we need to make sure that we are in tune with industry. Our Government is providing that certainty by being industry-focused, jobs-focused and future-focused. I will talk about how we are supporting you and about what the informed investor is. This concept, of course, has multiple leanings. We have consistently said that we are no longer an ATM for the states, but it is also about ensuring that industry knows that we are investing taxpayer funds. We need to make sure there is value for the dollars, and we have made a major shift in the way the Australian Government invests to support industry. We are committed to a nationwide $75 billion, decade-long infrastructure pipeline. In the 2018–2019 Budget we invested an additional $24.5 billion in new infrastructure projects. Our pipeline of projects looks out over 10 years – that planning, vision and future focus. We’ve made this commitment to create certainty for industry. We are conscious of the fact that investment of that nature does take planning and does take vision. That is where we need industry participation to tell us what we should be doing and how we should be doing it. Currently, there are 600 major projects and more than 24,000 smaller projects that have been delivered, are being delivered, have been committed to or are under construction. This has been made possible by us focusing on what is needed and taking on board industry advice. It further proves that we cannot deliver all the projects at the same time, and that’s why we are focused now over a 10-year period.

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An ‘informed investor’ means that we’re smoothing out the boom and bust of the construction cycle. That means there’s phasing in, consistency, continuity and certainty. We know that it’s important to have an eye to market capacity. I also want to work with state governments to make sure that we do roll out the infrastructure where we need it. I don’t care what colour they might be, as long as we get the infrastructure pipeline rolled out and in a timely fashion. Solving those intergovernmental agreements and making sure we get on with the job – that’s what people expect us to do, in a bipartisan way. Though we might be the Liberal-National Government in Canberra, we are working for all of Australia, no matter who might be in government at a particular state level. We are getting on with the job of working with the states to deliver the other sorts of projects that we should be doing. Right now in Sydney, Melbourne, Brisbane and Perth, there’s an enormous amount of infrastructure. Work is happening in other capitals, too. I was very pleased to stand with Steven Marshall, the South Australian Premier, and Stephan Knoll on the NorthSouth Corridor recently. We were looking at what we’ve done, but more importantly, we were talking about what we need to get on with and do for Adelaide and South Australia more generally. Through the pipeline, we’re investing in projects at differing scales – from mega urban rail projects such as the long-awaited Melbourne Airport Rail Link (I’m delighted to hear about private sector investment and the encouragement in that regard),

The Hon Michael McCormack

to Western Sydney Rail, METRONET in Perth, upgrades on regional freight corridors through our new Roads of Strategic Importance Initiative, and the $9.3 billion investment that we’ve committed to Inland Rail connecting 1700 kilometres – a corridor of commerce – between Melbourne and Brisbane. This shows we’re getting on with the job of delivering nation-building infrastructure, not just for the areas between Melbourne and Brisbane, but for the entire nation. When you build that sort of nation-building infrastructure, everybody benefits, not just the states through which it goes. It’s providing opportunities for all areas of the construction sector to benefit from this investment. The booming infrastructure work has pushed the number of cranes across Australia’s skylines to a new high of 735, more than all of the United States according to the latest RLB Crane Index. In Melbourne, there’s a record 192 cranes over the skyline and in Sydney, that number is about 320. They’re impressive numbers. It shows that it’s not only Government getting on with the job, but that there’s confidence in the private sector, and that’s perhaps even more important because we need to have people backing themselves. We need to have large and small businesses backing themselves. Obviously, we’re getting behind and backing them, with record low tax rates – the lowest the small business tax rate has been in 78 years – but also making sure there’s the confidence, the certainty, to invest and to go forward. The 2018−2019 Budget pipeline provides for the next tranche of major projects. Even we realise that this is not enough. That’s why we’ve committed $250 million to a new Major Project Business Case Fund. The Business Case Fund will ensure that as projects in the pipeline are built, the next wave of priority projects are being planned. That’s the key to our rolling investment approach. We’ve also heard from industry that we need to consider the long-term development of the industry, by ensuring that procurement and tendering practices are competitive in delivering value to taxpayers, and a level playing field to tiertwo and tier-three companies and contractors through the supply chain. That’s of critical importance, and I know each and every one of you understands it as well. The Australian Government generally does not have a direct role in procurement – that’s generally the responsibility of states. However, national leadership demands greater interest in ensuring that tendering processes are efficient, cost-effective and flexible, and promote competition in the market. The majority of the Infrastructure Investment Program is delivered to states and territories through the National Partnership Agreement on Land Transport Infrastructure (NPA). Under the NPA, all projects receiving more than $20 million in Australian Government funding require local industry participation plans. That’s critical in ensuring that local jobs

Encouraging a competitive infrastructure construction market In connection with Partnerships, the Deputy Prime Minister announced he would commission a report to examine how procurement policy and practices can deliver better value for taxpayers, and foster the development of expertise and experience in the construction sector. The Deputy Prime Minister said the community should have confidence that the size of the Government’s infrastructure investment provides opportunities across the construction supply chain. To help inform the report, workshops with industry were held in Melbourne and Brisbane during October. This report has now been considered by the COAG Transport and Infrastructure Ministerial Council. At the meeting, Ministers acknowledged issues raised by industry, including the importance of developing market capacity, improving procurement processes and adopting more market-responsive approaches to risk allocation, and improving skills and training. The Ministerial Council endorsed seven high-level principles, against which all jurisdictions have committed to reporting within 12 months on the actions taken.

are going to local projects, delivered by local contractors. This policy aims to ensure full, fair and reasonable opportunity for Australian businesses to complete the work. That’s really critical and has been apparent in the Western Sydney Airport project. Investment in transport infrastructure is providing certainty for industry that there is work ahead. It’s about maximising the benefits of the investment. It’s making sure that we get on with the job of rolling out the infrastructure pipeline. If the Commonwealth is being an informed investor, we need to be involved earlier in decision-making processes to best influence the desired social and economic returns on investment. We need expert advice to inform that investment strategy. So, we established Infrastructure Australia as an independent body and tasked it with maintaining the national Infrastructure Priority List and providing assessments of major project business cases. Infrastructure Australia’s Infrastructure Priority List was a major input into the development of the project pipeline that was announced in the Budget. In fact, 85 per cent of that pipeline was identified as high priorities or priorities on the Priority List published in March. I compliment and congratulate Infrastructure Australia on the work that it has been doing. We need to pick the right projects and then plan, design and invest

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to make sure that the project maximises its benefits – whether it be improved safety or reduced congestion, a very big topic for anybody who lives in a capital city. We’ve invested $1 billion of the Budget into just that: breaking through some of that congestion. We’ve got a lot of work to do. We’ve just made Alan Tudge the Minister for busting congestion, as well as urban infrastructure projects and population. It’s really important that we have population as a portfolio on its own, standing alongside urban infrastructure and congestion busting. It’s critical that we make sure that the population is evenly distributed so that we can maximise the benefits of those infrastructure projects. Over recent years, the Government has undertaken numerous initiatives to encourage and support wider use of innovative financing. We’re interested in using alternative funding mechanisms, such as equity where appropriate, but continue to recognise that financing should not drive investment decisions alone. When determining how best to invest in a project, the Government considers a number of factors, including the best way to manage risk and how to deliver value for money for taxpayers. Commonwealth equity investments recognise that the Federal Government takes a longer-term view to investments than the private sector does. That’s certainly the case for a project such as Western Sydney Airport. I mentioned Inland Rail earlier. The businesses I speak with don’t care if the Government’s investing in Inland Rail through an equity contribution or as a grant. They just want to see it done. What they care about is the Government funding real construction and getting on with the job. We dropped off the first 600 tonnes of steel at a little place called Peak Hill in Central Western New South Wales, earlier this year. We’ve just had the Narromine-Parkes section Environmental Impact Statement ticked off on and work is beginning. It’s going to be a marvellous project, and offers rewards and investment opportunities, especially for regional areas. The establishment of the Infrastructure Project and Financing Agency (IPFA) has strengthened our ability to maximise the use of innovative funding measures. IPFA has been in operation for around a year now. Prior to IPFA’s creation, there was a misconception from some in the industry that they

The Hon Michael McCormack MP – Deputy Prime Minister, Minister for Infrastructure, Transport and Regional Development Prior to entering Parliament, Mr McCormack began professional life as a cadet with The Daily Advertiser. At the age of 27, he was appointed to the newspaper’s editorship, becoming the youngest person appointed to edit a daily newspaper in Australia at the time. During his career at the newspaper, Mr McCormack was a champion of many community issues. Mr McCormack was elected as The Nationals’ Member for Riverina on 21 August 2010. Following the 2013 Federal Election, Mr McCormack was appointed Parliamentary Secretary

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would be competing in the market as a financier. I hope that a year on those fears have been laid to rest. This approach of better utilising innovative financing and funding mechanisms delivers better value for taxpayers. Under the leadership of Chief Executive Officer Leilani Frew, IPFA has delivered milestone achievements on a number of nationally significant projects. I look forward to continuing to work with Leilani and her dedicated team to making sure IPFA ticks off on its KPIs and provides specialist Public Private Partnership expertise through conducting market soundings for things such as intermodal terminals. IPFA is supporting the negotiations process for the Western Sydney City Deal with the New South Wales Government. There’s so much that’s going to be done. But of course, we need to consult with all stakeholders, whether it’s private or public. We need to make sure that stakeholders are engaged and aware of what’s happening, and the investment opportunities. This ensures that benefits are maximised for the people who use that infrastructure. The Government understands its responsibilities in ensuring the whole construction industry benefits from the opportunities that we’re helping to create. It’s not old-school industry policy. It’s about the Australian Government supporting the development of expertise and experience in our construction market to continue to be able to bid for work. Forums such as Partnerships help form our framework for what we need to do. Of course, I can stand here as the Infrastructure, and the Transport and the Regional Development Minister and talk to you, but it’s also important that I listen. And it’s important I take on board those soundings with a better view, with a greater view, and with a more widely held view from public perception about what we need to do as a Government to better serve the people who voted us in and for those people who didn’t vote for us. We need to also make sure that we deliver value for money for our taxpayers, and we see this through our road projects, rail projects, and in investments in the aviation sector. These are the sorts of investments that people need, want, expect, and deserve so that they can get home sooner and safer. We can make the right financing decisions, we can take on board financing help from the private sector, and we can get on with the job of building a better Australia.

to the Minister for Finance and in September 2015 he was then appointed Assistant Minister to the Deputy Prime Minister. In this role, Mr McCormack worked alongside then Nationals’ Leader and Deputy Prime Minister, Warren Truss, in the administration of regional development programmes. Following the announcement of Mr Truss’s retirement in February 2016, Mr McCormack became the Assistant Minister for Defence and after the 2016 Federal Election, Mr McCormack was appointed to the Ministry as the Federal Small Business Minister. On 26 February 2018, Mr McCormack became the 14th Leader of The Nationals and the 18th Deputy Prime Minister of Australia.

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Parramatta Light Rail project on track to drive smart city transformation World-class infrastructure will benefit residents, business and broader region. The Parramatta Light Rail project will support Parramatta’s development as Sydney’s second CBD, as well as the New South Wales Government’s vision of Greater Sydney as ‘a metropolis of three cities’ where people live within 30 minutes of their job, education and key services. ‘Stage 1 of the project, due to commence operations in 2023, will transform travel in Greater Parramatta, improve community amenities and create vibrant public spaces,’ says Parramatta Light Rail Project Director Tim Poole. By 2026, nearly 30,000 people are expected to use Parramatta Light Rail daily, and 130,000 residents will live within walking distance of the line’s 16 stops. More people visiting the CBD daily will generate employment and investment opportunities, and will help Parramatta to realise its potential to become one of Australia’s leading smart cities. Stage 1 of the project is expected to create 5000 direct and indirect jobs. Parramatta is the epicentre of an economic boom in western Sydney. Approximately 40 developments are approved or under construction in Parramatta, and more than half of all new jobs in Sydney are expected to be created in Greater Western Sydney by 2031. The region was home to an estimated 2.17 million people in 2016, and its population is forecast to reach 2.92 million in 2036. Parramatta’s

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Parramatta Light Rail at Macquarie Street near Western Sydney University’s Parramatta CBD campus

population is expected to rise from 237,250 residents in 2016 to 388,900 in 2036, according to New South Wales Government forecasts.

in the region in 2012, and the need to collaborate with the City of Parramatta to identify a new transport network that would best serve the city’s growth.

Parramatta Light Rail is integral to managing this growth. The 12-kilometre line will support high-frequency, turnup-and-go light rail services seven days a week, thus enhancing Parramatta’s mobility, connectivity and productivity as its population grows.

Council completed the Western Sydney Light Rail Feasibility Study in 2013. The benefits of light rail aligned with the Department of Planning and Environment’s ‘A Plan for Growing Sydney’ (2014), which recognised Parramatta’s potential to become a much larger employment, housing and services hub.

Environmental benefits are significant. Parramatta Light Rail is expected to take the equivalent of 25,000 cars off the road each day in Greater Parramatta by 2041. Many trees will be planted along the light rail corridor, and the existing Carlingford Line will be transformed into a green corridor with a dedicated link for pedestrians and cyclists between Carlingford and Parramatta.

Community support for project

A preferred network for Parramatta Light Rail was unveiled in December 2015, and after two years of extensive public and stakeholder consultation, Stage 1 of the project received planning approval in May 2018. Key contracts for project works are expected to be awarded by the end of this year.

The New South Wales Government recognised the potential of the light rail

Stage 1 will connect Westmead to Carlingford via the Parramatta CBD

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Parramatta Light Rail at Church Street near Parramatta’s Centenary Square

and Camellia. The two-way track runs past the Westmead Precinct, one of Australia’s largest health, education, research and training precincts; several historical sites; the new Western Sydney Stadium and Powerhouse Museum; Rosehill Gardens Racecourse; three Western Sydney University campuses; and the cultural precinct on Parramatta River. It also traverses the Parramatta North Growth Centre, the new Camellia Town Centre, and the private and social housing redevelopment at Telopea. The project’s proposed second stage will connect to Stage 1 at Camellia and run north of the Parramatta River through the fastgrowing suburbs of Ermington, Melrose Park and Wentworth Point to Sydney Olympic Park, providing a new public transport option to this booming sport, entertainment and employment hub. In October 2017, the New South Wales Government announced the preferred route for Stage 2, and a final business case is expected to be completed in 2018. If approved, Stage 2 will add another nine kilometres to the light rail system, making it one of Australia’s longest light rail networks. Project governance and community consultation have underpinned Parramatta Light Rail’s early progress. More than 200 project staff members, based in Parramatta, are working directly with contractors, suppliers

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and stakeholders. ‘Robust processes and monitoring are in place to ensure that the Parramatta Light Rail project delivers benefits to both the community and government,’ says Poole. He adds: ‘Project integration is central to the strategy. The Parramatta Light Rail team is working closely with stakeholders, community and other projects including Sydney Metro (Metro West) to deliver an integrated, city-shaping solution that creates sustainable value for the community, industry and region for decades to come’.

Light rail integral to smart cities Light rail is a feature of many of the world’s great cities and smart city transformations. International experience shows that light rail can improve community connectivity and mobility, energise CBDs by making them livelier and more cosmopolitan, and can support the development of knowledge hubs, including education or health precincts, which create jobs. Several Australian cities have constructed, are currently building or are investigating the feasibility of light rail networks in their CBD. Stage 1 of Parramatta Light Rail is similar in length to the Sydney Light Rail, Gold Coast Stage 1 and Canberra Light Rail projects. ‘The experience of these and other light rail projects are being studied to produce the best outcome for

Parramatta and the Greater Western Sydney region,’ says Poole. ‘The 10-year goal for Parramatta Light Rail is that anybody in Greater Parramatta can use light rail to enjoy new and existing leisure and recreational options in the region. That could include watching a game at Western Sydney Stadium, visiting a blockbuster exhibition at the Powerhouse Museum or dining out on Eat Street.’ Tens of thousands of students could use Parramatta Light Rail each year to go to university. There is potential for people to walk or cycle to a light rail stop and hop on a service that runs every seven-and-ahalf minutes in peak periods. Parramatta Light Rail will be a catalyst for new investment in Parramatta’s CBD and around the main stops on the corridor, as more people choose to live close to public transport, adding to Parramatta’s smart city transformation. ♦ To learn more about Parramatta Light Rail, visit www.parramattalightrail.nsw.gov.au. 1

Deloitte Australia, ‘Parramatta Crane Survey’,

NSW Government Planning & Environment,

December 2017. ‘Western Sydney Land Extension’, December 2014. 3

O’Neill, P. Centre for Western Sydney, Western Sydney University, ‘Addressing Western Sydney’s Jobs Slide’, 2016.

NSW Government Planning & Environment, ‘2016 New South Wales Government State and Local Government Area Population Projections’, 2016.

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Parramatta Light Rail forms part of the NSW Government’s record $87.2 billion infrastructure pipeline, which includes the largest transport infrastructure program in Australia. Stage 1 of Parramatta Light Rail will connect Westmead to Carlingford via Parramatta CBD and Camellia with a two-way track spanning 12 kilometres and 16 stops. Major construction on Parramatta Light Rail will begin in 2019, with major works on Parramatta’s ‘Eat Street’ to begin in 2020 and some associated roadworks, site investigation works and traffic changes to take place in late 2018. Services are expected to commence in 2023. Top to bottom: artist’s impressions of the Parramatta Light Rail at Robin Thomas Reserve; at Lennox Bridge; light rail and a new cycling path on the Carlingford Line.

The Parramatta Light Rail will provide high-frequency ‘turn-up-and-go’ services, seven days a week, approximately every seven and a half minutes in peak periods. By 2026, an estimated 130,000 people will be living within walking distance of Parramatta Light Rail stops and nearly 30,000 will hop on a service every day. For more information, visit our website at www.parramattalightrail.nsw.gov.au

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A dynamic gateway to regional Australia The Port of Newcastle is one of Australia’s largest and most diverse ports. A global gateway to regional Australia, the Port handles all cargo types, including dry bulk, bulk liquids, project cargo, general cargoes, roll-on roll-off (RORO) vessels and containers. coast’s port of choice for steel and general cargo handling, with improved berth availability and the best in cargo care. The recently commenced Newcastle Bulk Terminal project is a $33-million investment into worldleading bulk-handling equipment, which will also drive efficiency and maximise trade growth at the busy common user bulk terminal. Port of Newcastle is also continuing to progress the establishment of a niche automotive and oversized RORO facility, and is ready to leverage the future disruption of traditional automotive import supply chains.

Few Australian ports can match the unique capacity, connectivity and capability of the Port of Newcastle. Its channel can accommodate double the current trade and direct connections to uncongested road and rail networks, linking the Port with a large and diverse catchment across New South Wales. The Port of Newcastle has embarked on an ambitious diversification strategy to expand trade and service new markets. The development of a container terminal is a key element of this strategy. The Port has developed the concept for a container terminal

development that takes advantage of the best-connected vacant port land site on the Australian eastern seaboard. The site has the capacity for a twomillion twenty-foot equivalent unit (TEU) per annum terminal, and the Port has plans for an efficient, best practice operation that will be unlike that of any other Australian port. As part of the Port’s diversification agenda, the team is working on a number of additional key strategic development opportunities. Plans are currently being finalised to develop a General Cargo Hub with a focus on making Newcastle the east

The Port of Newcastle may be well known as the world’s largest coal export port, but its supply chain is also recognised as a global leader. The Port maintains a proven track record in the delivery of complex logistics projects, and is ready to work with the supply chain to support current and future infrastructure projects planned across the state. The Port of Newcastle has recently released its Port Master Plan, which provides a broad and strategic approach to future port developments and opportunities through to 2040. The plan will be a key part of the Port’s ongoing conversation with its customers, partners, government and the community. ♦ To find out more about Port of Newcastle, call 02 4908 8200 or visit www.portofnewcastle.com.au.

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Pictured: Tunnel boring machinery imported via the Port’s Mayfield 4 berth.

CAPACITY CONNECTIVITY CAPABILITY Australia’s east coast supply chain alternative offering cost and time efficient logistics solutions.

MOVE SMARTER. Talk to one of our experts today. +61 2 4908 8200 trade@portofnewcastle.com.au

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www.portofnewcastle.com.au linkedin/portofnewcastle

4/10/18 3:52 pm

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Putting people at the heart of the transport revolution Keolis Downer is a leading multimodal transport operator with global experience. Our customer-driven culture encourages us to constantly innovate and provide a seamlessly integrated public transport service. A paradigm shift in public transport is happening, as we are going through a major technology revolution that is changing the way we travel, modifying the mobility ecosystem, and encouraging us to be agile and to reinvent the way we do transport – from policy to regulation, infrastructure, transport offering and skills standpoints. Transport modes have already evolved to be electric, more automated, comfortable and fuel efficient. We are now about to experience another disruption with digitisation, connectivity, and artificial intelligence (AI). The impact these will have is difficult to anticipate. As a public transport operator, we are preparing to face this disruption to continue to deliver, in partnership with governments and transport authorities, a public transport service that is safe, reliable and adapted to people’s needs.

Designing the ‘ideal’ public transport service through local insight Keolis Downer, through its ‘thinking like a passenger’ approach, has developed unique methodologies, research capabilities and tools to thoroughly understand mobility needs and behaviours, future trends, and how these factors impact the way people travel. This approach helps us to design a transport offering that is adapted to local communities. Through the integrated public transport network in Newcastle and the implementation of a new bus network, Keolis Downer delivers 40,000 extra trips per month, and

enables an optimal use of assets. In the city of Bordeaux in France, where Keolis has been operating the transport network for 10 years, the patronage on buses increased by 40 per cent in the first four years following a new bus network design. Our objective is to make public transport and shared mobility the preferred choice for people, and this requires an offer that is adapted, but is also a change of culture.

Changing mindsets and perception toward public transport We believe that understanding habits and what drives people to share their mobility even more in the future is key to increasing cities’ livability. Private vehicles offer comfort and flexibility, but individualised mobility results in congestion and pollution. Narrowing the gap between public and private transport is about changing mindsets and offering a service that is convenient; however, bringing transport infrastructure close to homes is expensive. Technology allows us to close the last-mile gap and render the experience more time-efficient and cost-effective. Through the new On Demand service that Keolis Downer operates in Sydney’s Northern Beaches, as part of the New South Wales On Demand pilot program, we are changing the way people travel. As much as 96 per cent of our customers think that the service is a better alternative to their private car. Progressively, we need to give

David Franks, CEO, Keolis Downer

people sufficient confidence that a combination of mass transit and shared mobility services will enable them to access a seamless end-to-end journey, and give them the freedom to choose the way they travel. Keolis was an early entrant in the shared mobility market by partnering with start-ups and industry organisations whose know-how and agility have proven to be real sources of added value. We will continue to engage with industry partners, transport authorities and governments to ensure that innovation is used to improve performance, enhance the passenger experience, and encourage modal shift to face population growth and create more livable cities. ♦

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Keolis Downer is the leading multimodal transport operator in Australia. We are proud to partner with Governments and Transport Authorities to design, operate and maintain public transport and mobility services that are integrated and adapted to local needs. With more than 4,000 employees and a presence in five states, Keolis Downer enables 250 million passenger journeys per year. We operate and maintain the largest tram network in the world in Melbourne (Yarra Trams), the light rail network on the Gold Coast (G:link), and more than 1,200 buses in NSW, Western Australia, South Australia and Queensland. Since 2017 we have also been operating the integrated transport network in Newcastle that includes regular bus services, On Demand transport, ferries and from 2019 the new light rail.

www.keolisdowner.com.au

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5/10/18 12:52 pm

Waste to energy – panel discussion

L–R: Christopher Voyce,John Bradley, Gayle Sloan and Preet Brar

Waste to energy Key points: • • •

it is important for industry to adhere to the waste management hierarchy and consider the role that waste to energy can play as part of an integrated approach to waste and resource recovery policy private sector investment relies heavily on policy certainty and there is a clear role for government in setting the regulatory framework within which commercially viable projects can come to market, and community acceptance is crucial to the success of large-scale waste to energy facilities, and proponents need to spend time building their social licence to operate.

Panellists: ►► John Bradley, Secretary, Victorian Department of Environment, Land, Water and Planning ►► Preet Brar, Chief Financial Officer, Veolia ►► Gayle Sloan, Chief Executive Officer, Waste Management Association of Australia

Moderator: ►► Christopher Voyce, Executive Director, Infrastructure, Utilities and Renewables, ANZ, Macquarie Capital

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Waste to energy – panel discussion

Pre-panel address

Christopher Voyce (CV): It’s a very interesting time in the waste sector, with significant policy changes in China revealing our reliance on export markets for recycling. These changes have impacted local operators and councils. States have been required to provide significant financial assistance to both councils and operators in the transition to process more recycled materials locally. That’s been an interesting crisis in that section of the market, not really 100 per cent germane to waste to energy, but what it has done is raise awareness and interest in the waste sector. It has helped in identifying the potential opportunities for investment in economic and environmental infrastructure. One area where we lag behind our global peers is in the provision of waste to energy facilities. However, recent developments have indicated that we are making progress. There are a number of waste to energy facilities in development in Western Australia, a number going through the environmental approval process here in Victoria, and a recent announcement in relation to a new facility in Queensland. Australia produces around 60 million tonnes of waste each year – around 55 per cent is recycled and about 40 per cent, or 27 million tonnes, goes to landfill. We recover energy from less than four per cent of the waste that’s generated. If you compare that to other countries where energy recovery is somewhere between 30 and 50 per cent of waste generated at the municipal level, there’s significant potential upside and investment opportunity in the waste to energy sector. Step back for a second to think about how waste to energy could fit into the overall policy framework for how

CV: Gayle, what does the waste management and resource recovery sector in Australia look like and how does waste to energy fit in? Gayle Sloan (GS): It just shows how waste has changed. It’s no longer something that we ignore and forget about. Waste is a $15 billion industry. We employ 50,000 people nationally, and there’s something like 15,000 infrastructure sites across Australia. We don’t talk about waste, we talk about resources. We are actually managing resources and if I have my way, we’ll be the next resource boom in Australia because of what we actually take out of the ground and use as resources. Our goal is to reuse those resources and comply with the waste management hierarchy. Our goal is to recycle, so China bringing us to the forefront is a great opportunity to have that conversation with the public and explain what we’re trying to do. We don’t want to send things to landfill. We want to take resources and use them repeatedly to create a circular economy in Australia. We see waste to energy as something just above landfill. We don’t see it high up the hierarchy. It is leakage from

Christopher Voyce

we deal with waste. Most jurisdictions rely on a version of a waste hierarchy in ranking the relevant treatment of waste, with waste avoidance and re-use being at the top and landfill down the bottom. Energy recovery and recycling have been somewhere in the middle. One of the key policy challenges for Australia will be how we balance increased recycling rates with the introduction of waste to energy. In terms of providing the incentive for higher uses in the waste hierarchy, several state governments have instituted waste levies, which are charged in addition to the gate fee for disposal of waste at landfill. Recently, Queensland which removed its waste levy in 2014–2015, just passed legislation to reinstate a waste levy from early next year. Relative to our global peers, Australia does okay in terms of recycling, with New South Wales performing best. It also has the highest waste levy at around $140 per tonne. But where we lag significantly is in the recovery of energy from waste. The OECD average for municipal waste is around 48 per cent recovery through recycling and 30 per cent from energy recovery. Denmark, which is the leading light in terms of waste to energy, has very little waste going to landfill: around one to two per cent. a circular economy in the sense that once we burn it, we can’t use it again. Waste to energy is absolutely better than landfill because we create energy rather than methane and leachate, and it’s something that I think has a place in our industry. It’s debatable what the place is and the size and extent of it. In Europe, there’s a prevalence of these facilities because there isn’t the same adherence in some countries to the waste management hierarchy. There’s a real risk that we’ve created facilities that need feedstock when we should be taking those resources and using them over and over again, rather than burning them. We’ve got to find a balance in Australia as to where waste to energy fits in. We do have 30 facilities currently in Australia, but you get energy in many ways, including from organics. It’s a really interesting time for us, but it’s really important that we get it right. CV: Preet, you’re the Chief Financial Officer of Veolia here in Australia. Veolia operates a range of different assets including landfills, waste to energy and sorting facilities. What are the different types of waste to energy technologies and how do they compare?

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Waste to energy – panel discussion

Preet Brar (PB): When we talk about waste to energy, there are a number of technologies and treatment solutions that are captured. Anaerobic digestion is one and we do have facilities in Australia that are doing that. You can also look at refusederived fuel as waste to energy. The attention and debate is mostly around the incineration waste to energy model. We saw the proposal recently about Remondis seeking to build a $400-million facility in Queensland. In terms of the incineration waste to energy model, there are a few different technologies. There is the mass burn incineration model, and then there is gasification and pyrolysis. The latter types, in our view, are unproven technologies and most of the facilities in Europe are the incineration type. It’s a proven technology and when we are having the debate, we have to keep in mind which type of waste to energy model we are talking about. CV: John, perhaps you have a perspective on that as well? John Bradley (JB): In Victoria, the way we’re thinking about our waste hierarchy is well reflected in the comments that Gayle made. There’s certainly an opportunity for waste to energy to play its part, but the worst waste to energy facility is not a better outcome for the community, in terms of environmental hazards and risks, than an appropriately regulated landfill facility. We’ve seen a lot of improvements in the quality of our landfill systems in recent years. There is now a fair amount of methane capture occurring at those landfill facilities, but no-one wants to see an increase in waste going to landfill.

GS: Waste is a funny industry because no-one wants to deal with it, but we’re very regulated by government. We’re a bit halfpregnant because government tells us what diversion targets we’ve got to reach by state. Government focuses actively on the household sector, which is less than 25 per cent of waste. For the remaining 75 per cent we’ve got diversion targets. So, we’ve got to do both. The market has to understand that this is the diversion target we’ve got to hit in the future, so this is the type of technology we need to see rolled out, and government needs to provide the planning certainty to do it. There’s around 51 million tonnes through construction and demolition (C&D), and commercial and industrial (C&I) waste that government doesn’t procure. The C&I sector is where the big opportunities are for bespoke waste to energy facilities. The regulatory regime needs to support it, but we’ve also got to be sure the market stacks up, because that technology is not cheap and it’s not something you build in a year or two. You’ve got to have long-term certainty. CV: Preet, do you see enough private-sector appetite for investing?

When we look at the growth projection in waste, volumes are projected to increase by about 60 per cent over the next 30 years. In Victoria, we’re recovering about two-thirds of our waste, which is a strong performance. The area where we’ve got a gap now is around organics, with about 1.5 million tonnes per annum going to landfill. That’s a lost opportunity.

PB: The appetite is there. It’s quite market-led at this stage. I don’t think it’s a question of appetite from the private sector to be in this space. It’s more a question of certainty from a planning and policy perspective. The regulations are vague and unclear when dealing with the residual waste that comes out of such facilities.

When we think about the portfolio of potential waste to energy technologies, it’s a question of where are the gaps in our achievement of resource recovery and the waste hierarchy? And what role does waste to energy have to play? We think there are some prospective opportunities. We’re certainly seeing local governments in Victoria leaning into some of those opportunities, and there are various discussions going on now with the Environment Protection Authority (EPA) around potential works approvals.

Take bottom ash, for example – some of the product still needs to go to landfill. I believe the current regulatory environment basically aligns with the waste incineration directive (WID) for Europe to comply with the air pollution standards. There is a lot of uncertainty in that space and it makes it commercially difficult to get these proposals to a stage where you can seek funding.

CV: Given some of the challenges, what’s the most appropriate way for these projects to come to market? Several proposals have been market-led proposals. Do you see a role for government in the procurement of those projects or do we leave it to industry to decide?

JB: It’s a work in progress. We need to continue reviewing standards, particularly as new technology is adopted. Some of the models around pyrolysis will take us to new places in terms of the need for the regulatory framework to evolve. When we look at the rigour of the EPA’s current environmental regulatory framework around air, noise and dust levels – issues that speak directly to the social licence of waste to energy proposals in local communities – the framework is reasonably robust in Victoria.

JB: It’s a fast-moving space and there’s been record development, particularly around landfill methane gas capture. Some of our water entities are active in relation to organics in waste to energy through commercial organic streams.

The job of government is to develop an integrated waste and resource recovery policy framework, particularly a circular economy framework. That’s something we’ll be releasing soon. That should set the policy framework within which resource recovery occurs and projects can come forward, if they’re commercially viable. We’re trying to avoid an environment where there is confusion of economic signals to market actors.

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CV: Do you think that the key regulatory and policy settings are in place here in Victoria or in other jurisdictions?

Waste to energy – panel discussion

The EPA has three works approvals in front of it now, including Victoria’s first significant waste to energy proposal, a project around 220 megawatts in scale. That assessment process is underway. The message from us to the sector is to make sure that they take the community with them and manage that local social licence in an assertive way. CV: What do you think the industry can do to generate social licence for the development of these facilities? GS: We must take a long time to do these in order to do them well. If there’s any infrastructure anyone doesn’t want in their backyard, it’s waste. We have to spend a lot of time engaging with the community. We’ve had a facility in Western Sydney that didn’t do that, and we saw the consequences of that. Equally, we’ve just had approved in Western Australia and the Northern Territory a subterranean hazardous waste facility. That consortium spent three years purely on social licence. We are long-term infrastructure that needs long-term planning and community acceptance. Remondis, while it announced its proposal recently, started consulting with the adjacent community in January this year. It is critical for any infrastructure project to take the community with you. PB: Social licence is one of the biggest barriers to these facilities. There is still a lot of misinformation around air pollution and emissions with the facilities, as well as issues such as whether there is energy recovery or not associated with it, and what happens with the residual products. The social licence phase is at the front of everyone’s mind. As you start to engage with these facilities, community engagement and education need to start years ahead of construction. Even within an organisation you can have quite contrasting views on the same topic. It gives you a sense of what the public is going to be feeling about a facility in their backyard. It is something that differentiates landfill from waste to energy. In the last 20 years, landfills have moved away from urban areas and are located out of sight. Whereas to maximise the benefits, waste to energy facilities are mostly within urban districts, and that means the social licence becomes very important. GS: One of our biggest challenges is urban encroachment. The irony is that the cities are the ones that create the waste, and we’re not very good at planning for where we put the infrastructure. The Greater Sydney Commission recently released its strategy for the growth of Sydney and mentioned waste once. How do you plan for this infrastructure where the waste is and keep that encroachment? It’s really challenging to get the planning regime right for us to build these facilities in an economically viable way. JB: When we’re looking at the kind of rates of growth in Victoria, particularly in Greater Melbourne, we’re conscious of two issues. One is the challenges of securing sites for landfill in a growing urban environment, but also resources in terms of quarries. Those kinds of finite opportunities become more

difficult in a fast-growing place. One of the things we see in the waste to energy proposals that achieve strong social licence at an early stage is the direct involvement, or a close working relationship, with local government. CV: Where waste to energy has been successfully adopted – for example, in Japan – policy says that if you generate waste within your municipal area, it needs to be dealt with in that area. This leads to a lack of space for landfill, but also a need to deal with it in the area. Do you see a change in attitude like that being driven by the community? GS: One of my favourite topics is the proximity principle that the European Union and Japan have legislated. This is the idea that you should manage your waste close to the point of generation. New South Wales has a proximity principle, but due to the Section 92 Constitutional issues, it’s allegedly unconstitutional. This needs to be addressed, because we need certainty in the market, certainty of input and certainty of levy so that we can invest. We don’t want waste moving around the country. There is currently medical waste being transported from Western Australia to Victoria. If the public knew that, they’d be appalled. We should be managing our generation of waste close to where we are. We need a national proximity principle. CV: Is there a role for the Commonwealth Government in terms of providing national leadership around these issues? JB: There is. There has been recent agreement between State and Federal Ministers to review the national waste strategy. That’s something where waste to energy will have a role to play as part of the broader agenda. It is critical to adopt an integrated approach to waste and resource recovery policy, rather than having a bespoke solution for waste to energy. GS: The Government is currently reviewing the national waste strategy. The Federal Government doesn’t really get us – it’s trying, but it’s a challenge. The states are the regulators, but we’re a market and we need market development. We need to think about how we use our products and resources, and we need to value recycled content to drive demand. The Federal Government is still unsure of how they can get into our space. We’re running this very much as an economic argument as opposed to an environmental one. If we recycle 10,000 tonnes, we create 9.2 jobs. If we landfill that amount, it’s 2.8 jobs. It’s an absolute no-brainer that we need to see waste as a resource. We should decouple ourselves from global markets and create investment in secondary manufacturing in Australia. We have good examples of that, such as Visy, which is an integrated supply chain with paper and plastic. We need more to be done and the public needs to think about buying recycled-content products in Australia. That’s where demand and investment will come from. The Federal Government needs to play a coordination and leadership role in creating a circular economy in Australia.

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Waste to energy – panel discussion

PB: The Commonwealth definitely has a role to play, certainly around extended producer responsibility. It’s going to be very hard to push some of those initiatives at a state level. CV: I think there’s a huge challenge as we transition the waste and resource recovery sector to being more sustainable. I’m quite optimistic about the prospects for waste to energy. We’ve got a couple of projects in Perth and some projects going through the EPA’s process in Victoria, and of course the recent announcement in Queensland. There is growing support. For investment in environmental infrastructure, I think there are reasons to be optimistic. Do you have some closing comments around waste to energy and its potential here? JB: If it seems like you’re hearing the dampeners being put on waste to energy in Victoria, that’s not our perspective. We’re trying to bring the community with us to maintain that social licence. If the community thinks it’s an industry that’s being propped up for its own purpose through government measures, that’s when we’ll struggle to maintain their confidence. There is a lot of waste and resource recovery institutional infrastructure in Victoria to try to support a good resource recovery sector. In Victoria, we’ve got waste and resource recovery groups that help to aggregate municipal waste and put that to market in order to stimulate market opportunities. This is a sector that is ripe for market opportunities – whether that is in resource recovery in the circular economy, or in waste to energy facilities.

PB: When we are looking at waste to energy, we have to look at resource recovery first. With waste to energy, we are looking at the red bin. You’ve got your yellow bin for recyclables, which have to go through the highest use. That starts with extended producer responsibility to reduce what’s going in the bin to start with. You’ve also got the green waste and the organics, and we need to extract as much as we can. When it goes to landfill it creates adverse environmental outcomes through landfill gas. When you look at the red bin, that’s where the efforts need to be. How can we reduce organics from that bin and what do you do with the rest of your bin? Do you continue to put it in landfill where you still have challenges that come with leachate and landfill gas? Or do you look to shift to waste to energy? That will require education and clarification. We need to take the public with us, that will be part of that social licence. CV: The opportunity is perhaps a bit broader than just waste to energy. For the infrastructure investment community, it is an area that’s worthy of much further study.

John Bradley – Secretary, Victorian Department of Environment, Land, Water and Planning

Gayle Sloan – Chief Executive Officer, Waste Management Association

Mr Bradley is the Secretary of the Department of Environment, Land, Water and Planning in Victoria. He has previously served as Director General of the Queensland Department of Premier and Cabinet, and Director General of the Queensland Department of Environment and Resource Management.

Ms Sloan is an arts and law graduate from the University of Adelaide. She spent

Until September 2017, he served as CEO of Energy Networks Australia – the peak body representing Australia’s electricity transmission and distribution and gas distribution businesses. Mr Bradley has also held senior positions with the Queensland Water Commission and the Western Australian Office of Energy.

of Australia

many years working for the New South Wales Attorney General’s Department before moving into the Attorney General’s Ministerial Office in 1998, and then the New South Wales Police Minister’s Office in 2000. Following this time in state government, Ms Sloan worked as a Director in a number of New South Wales councils, primarily looking after service delivery and assets. She developed and delivered a number of waste management contracts on behalf of councils, as well as managing environment and

He previously advised the International Monetary Fund and held several board directorships.

regulatory departments, including rangers and compliance officers.

Mr Bradley has a Bachelor of Arts from the University of Queensland and a Master of Business Administration from the Queensland University of Technology.

2012 at Visy. In November 2015, she joined the Waste Management Association

Preet Brar – Chief Financial Officer, Veolia With a Master of Business Accounting and more than 10 years in business management, Ms Brar’s passion for sustainable solutions and the circular economy is evident in the way she runs her business. A creative thinker with shrewd business skill, Ms Brar fosters and develops these same qualities in the people around her. Ms Brar has been with Veolia for 14 years across multiple business units. In her current role as Chief Financial Officer, she establishes the strategic, growth and performance expectations and is accountable for the region’s overall financial performance. Ms Brar is a staunch believer in a circular economy and leads a team that has delivered a circular model of innovative resource management, supporting economic growth while saving our valuable resources.

GS: Waste to energy has a role in the investment, but it’s one part of a whole spectrum to invest in. We’ve just seen an organics facility announced in Victoria that is $400 million worth of investment. There are so many opportunities to invest in this sector to create jobs. Waste to energy is just one of many opportunities that we have right now.

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After three years of being a stay-at-home mum, Ms Sloan returned to work in of Australia as Chief Executive Officer. Christopher Voyce – Executive Director, Macquarie Capital Mr Voyce has been an Executive Director in Macquarie Capital’s Infrastructure, Utilities & Renewables industry group in Australia and New Zealand since September 2015, after returning from 11 years as a Senior Director with Macquarie Capital in the United States. Mr Voyce has more than 20 years’ experience advising corporates, governments and investors on infrastructure mergers and acquisitions, project financing and project development. He has closed over $50 billion in infrastructure financings, fund raisings and acquisitions for a range of clients in the power, utilities, transportation and social infrastructure sectors in Australia, Asia, Europe and North America.

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Rethinking infrastructure to improve quality of life Australia’s largest cities are facing a period of sharp growth that will put great pressure on the country’s infrastructure. ‘The National Australia Bank (NAB) has a very clear strategy about being the leading infrastructure bank in Australia,’ says General Manager, Resources, Infrastructure and Government, Corporate & Institutional Banking, NAB, Connie Sokaris. ‘That is really based on the role of making leading infrastructure plays in key growth strategies across the nation, including delivering to increasing populations in a number of growth corridors like Greater Western Sydney.’ The growth is expected to be intense. Infrastructure Australia predicts that in the next 30 years, Australia’s population will increase by 11.8 million people – the equivalent of adding a city the size of Canberra each year for the next 30 years. About three quarters of the growth will occur in Sydney, Melbourne, Brisbane and Perth. Head of Infrastructure, Specialised and Acquisition Finance for NAB, Stephen Land says the bank is focusing not only on ‘being an expert’, but is also looking to change people’s lives. ‘A key thing with infrastructure is to provide a service to increase people’s wellbeing rather than just a hard asset – which may be how it’s been seen historically. The community is playing a larger role in having a say, not only on the structure delivered, but also on how it is delivered.’ Sokaris also advocates this focus on the service provided, rather than a hard asset. ‘Rather than talking about a toll road, for example, we talk about how to get people to work and home again more quickly. We consider how we can do that within 30 minutes from the city, rather than thinking about the project in isolation. Then, we look at how it ties into the broader aims that government and private enterprises are trying to achieve. The key is thinking about infrastructure services as a

Stephen Land

system that needs to be connected. To do this, we need to take a customercentric view of infrastructure.’ Taking this wider perspective on infrastructure involves having a good relationship with government. ‘When the government formulates policies, there is a certain amount of market sounding that is carried out directly and indirectly through various advisers,’ says Land. ‘We actively participate in those market soundings. We provide feedback, not only on the process but also on the bankability of these projects.’ Sokaris says that local funds and global equity funds are involved in the current infrastructure pipeline for Australia. ‘Our role has changed over the last few years. Previously, it was government that had the responsibility to ensure that community engagement was being looked at.

Connie Sokaris

‘But if you actually think about infrastructure as a service, or a way to improve quality of life, then that really falls on ourselves – not only as funding providers but also, with our key clients, making sure that the process is proceeding in a way that allows the community to have strong buy-in to the plan.’ Land says that it is necessary to support the key systems around infrastructure projects. ‘We are not only talking about limited recourse financing of hard infrastructure assets, but also about supporting the contractors – whether for a small or large business, offshore or onshore; or whether it is providing the working capital facilities and bonding. A lot of these things are subcontracted.’ Taking a national perspective on the powerful role of infrastructure and its broader impacts to ensure that

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projects support the key economic drivers of Australia is another aim for NAB, says Sokaris. ‘How is that delivered? Number one: from a banking perspective, we have really strong capabilities that enable us to execute on our plan. ‘We also understand the amount of investment and liquidity coming in from outside the banking sector, and we can play a really key role in intermediating that. ‘We engage with both government and industry, so that we are playing a role in shaping some of that thinking –

Land says that the funding sources are becoming more diverse, which is a welcome development given the need for capital. ‘We are now seeing institutional investors getting involved in that space, which helps to provide liquidity. It means greater viability for larger and larger projects.’ Capacity constraints are appearing because of the scale and number of projects. ‘That is not just in terms of handson tools and machines to dig up ground. It is also around the financial side,’ Land says.

The bank has a big part to play, given our position; we are supporting the evolution. It is a long-term play not exactly how to prioritise projects, but how infrastructure can be delivered in the best way for consumers and also in the best way for government.’

‘We are not just lending to big projects; it is much more about supporting everyone all the way through – from the sole contractor through to

these large, offshore businesses – to help build an infrastructure pipeline. The bank has a big part to play, given our position; we are supporting the evolution. It is a long-term play.’ Land adds that there is growing international interest in the Australian infrastructure market. ‘We are going to see more and more offshore businesses that will do their own research and have more money to put into infrastructure. We speak to them regularly and update them on what is happening in the Australian market and where the opportunities are.’ The fund flows are going in both directions. ‘It is not just pension funds coming into Australia to invest; we are also seeing some of Australia’s capital going offshore to invest in projects and infrastructure offshore,’ says Sokaris. ‘So, for us, it is really being able to help Australian clients deliver on their own strategy. It is another key to being able to really drive a strong infrastructure culture within the organisation.’ ♦

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Information the key to Australian energy transformation If knowledge is power in an uncertain world, then RPS’ information-first approach to infrastructure is a powerful force in the search for answers to Australia’s ‘energy question’. With so many competing forces at work in the energy sector, information-led project strategy and technology-driven data analysis are our best weapons in the fight to balance complex engineering requirements, increasing generation demand and environmental constraints, says RPS Managing Director for Energy Murray Burling. ‘RPS makes infrastructure easier for clients by acquiring, managing and providing practical project insights. We work with infrastructure proponents to measure and assess opportunities through a variety of lenses – environmental, commercial and social – which ultimately helps to accelerate Australia’s transition to more sustainable energy solutions.’ Recognising the importance of data in determining the viability of options that are new to Australia – such as offshore wind farming – RPS has invested significantly in technologies that make understanding wind resources and projecting energy yield easier and more reliable for offshore project developers. Utilising floating light detection and ranging (floating LiDAR), the firm’s latest meteorological and oceanographic (MetOcean) innovation allows RPS

specialists to measure wind speed and turbulence at turbine height with less impact, less cost and higher accuracy at sea. ‘International markets are already reaping the benefits of offshore wind at scale, and through our support for projects like the London Array in the United Kingdom, Empire Wind in the United States and a whole host of onshore wind clients here in Australia, RPS has refined the methodologies and technologies we use to deliver project design and development solutions,’ Burling explains. ‘There is a significant opportunity for offshore wind development in Australia, but as this type of generation is a new frontier for the local industry to cross, it’s vital that investors have reliable data to objectively assess potential benefit against perceived risk.’ RPS information has helped to drive the explosion in large-scale solar development across Australia in recent years, too. For example, the firm’s planning and environmental specialists have assisted RATCH Energy to capitalise on infrastructure and land lying idle, following the decommissioning of Collinsville’s coal-fired power plant in North Queensland.

‘RPS has invested significantly in technologies that make understanding wind resources and projecting energy yield easier and more reliable’

RPS Managing Director for Energy, Murray Burling

With actionable insights on everything from development applications to environmental impacts and transmission network connections, RATCH is expecting to complete the 42.5-megawatt solar array with capacity to power up to 15,000 homes later this year. RPS prepared all planning and environmental approvals for the 205-hectare site, undertook an indepth visual impact assessment and even contributed information that helped secure $9.5 million in funding for the project under the Australian Renewable Energy Agency (ARENA)’s large-scale solar round in 2016. ‘Collinsville is just one example of how quality information and strategic advice can help Australia’s energy sector to capitalise on infrastructure opportunities successfully and sustainably,’ says Burling. ‘We’re passionate about helping more project proponents take the leap into renewables, while reaping the rewards of investment in next-generation infrastructure.’ ♦

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www.rpsgroup.com.au

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Expand your possibilities with advanced energy meters

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51 8/08/2017 1:38 PM 17/9/18 12:08 pm

Social licence – panel discussion

L-R: Jodie Brough, Ashley Jarquin, Natalie Malligan, Henry Byrne

Social licence Key points: •

social licence is not just a communications challenge, it is about how a business is accepted by its stakeholders

•

social licence is an integral part of business strategy and service delivery, and

•

the relationship between government and industry is critical in getting and maintaining a social licence to operate

Panellists: ►► Henry Byrne, Group Executive, Corporate Affairs, Transurban ►► Ashley Jarquin, General Manager, Corporate Affairs and Marketing, John Holland ►► Natalie Malligan, Head of Cities, Australia and New Zealand, Uber

Moderator: ►► Jodie Brough, Partner and Office Head (Sydney), Newgate Communications

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Jodie Brough (JB): As a communications professional, I spend so much of my time talking about social licence. This is often with clients who are nervous about what it means for them and feeling that it’s going to change them in ways that are expensive and not constructive. That is why this is a timely conversation to be having. Social licence is a very fluid and subjective concept. It depends on where you are, whether you’re a proponent, a regulator, or a consumer. How do you define social licence and what’s driving the focus on it? Is it a communications or a business challenge? Henry Byrne (HB): It is not a communications challenge. Anyone who approaches the challenges around social licence as

Social licence –panel discussion

a communications challenge is missing the point. Social licence is about how business responds to changing expectations, so it must be business-oriented. It must span all different parts of a business if you’re going to design an effective response.

Jodie Brough

The definition of social licence is essentially the extent to which a business is accepted by its stakeholders. It sits on a spectrum between rejected at one end and accepted at the other. It is even defended in some circumstances. The more challenging thing is determining how you move a business up the spectrum, not down it. That’s where it gets interesting as a challenge and a conversation. It starts to mobilise around this concept of trust, and that’s certainly where Transurban has gone. You put some specific parameters around defining the trust with the stakeholders you’re focusing on. It is then about how to define and move the trust dial. Transurban has been active in framing some of the thinking out there. We have looked at some research from the CSIRO, which mapped out the building blocks of trust and then extrapolated those across to what moved the dial on trust. That gives you a framework through which you can filter issues. The challenge for business is turning an amorphous conversation into something with specifically identified issues to address. JB: Natalie, is this how Uber approaches the task? Natalie Malligan (NM): It is a little bit different for Uber, being a consumer-facing business. I think we think of it in terms of two aspects – product and operating. You ask questions like, is the product acceptable to the broader community? Is it safe? Is it something that people will accept and use? In terms of operating, you ask, do we have social licence in how we operate as a company? For Uber, it’s probably the operating questions that have presented the most challenges over the years. Most Australians love Uber as a product, but they don’t necessarily love our brand. That’s why we’re focused on rebuilding trust. How do we listen more? How do we collaborate better so people love our product and the Uber brand? If you don’t have that then people won’t use your product either. On the point of whether it’s a business issue or a communications issue, it can be both. Even with the best communications people in the world, if your business is not operating in a way that’s acceptable, then it’s not going to work. But at the same time, we work tirelessly to ensure that we are communicating what we are doing well and that we are meeting expectations. If you’re not telling people what you’re doing well, then they may not give you the benefit of the doubt. JB: Ashley? Ashley Jarquin (AJ): From a contractor’s perspective, we certainly need to consider social licence at a broader corporate

level and what it means for our business. For John Holland, social licence is very much won and lost at project level. We need to be able to deal with it very well at that project level in terms of understanding it, maintaining it, and acknowledging that when things go wrong it’s very costly for the business and our broader reputation. I think it’s been an interesting concept for construction companies recently. In the current infrastructure boom, about 95 per cent of our projects are funded by government. This has meant that social licence has gone from being something that’s off to the side but important, to something that’s fundamental to our business. If we’ve lost trust from the community, it follows that we’ve lost trust from our client, being the Government. JB: Political trust? AJ: Yep. JB: People do seem to get very nervous when you start talking about social licence in a corporate setting. My sense is that clients often view it as a threat. Do you think it is? Should industry be worried about social licence, or should they see it as having an upside? AJ: If you’re still feeling nervous or sceptical about social licence, it’s time to move on – that ship has sailed. In the world of infrastructure, it’s no longer enough to just deliver a good physical product. There are higher expectations around how we deal with the community and our customers. It is critical to the success or failure of what we do. There definitely are upsides. When engaging with the community well, you get much better project outcomes – better station designs, better routes and better environmental outcomes. In the contracting world, for organisations that understand it and get it right, it is often the true differentiator in terms of winning work.

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Social licence – panel discussion

Ashley Jarquin

JB: It sounds like it’s an internal communications issue, as well. Not everyone at a company has their finger on the pulse of the communications and political aspects. Henry, how do you see that? HB: The key is getting to a practical conversation promptly around what resonates in a business dynamic. What we’ve found is that if you stay out in this ephemeral kind of social licence space, talking in general terms about concepts like trust, you don’t very quickly get it into ‘these are the issues – this is why we think they’re going to move the trust dial – then these are the practical responses that we are looking to come up with’. If you stay too high-level, you’re destined to meander along and not achieve the outcomes you need to. That touches on the point Natalie made around the distinction between businesses like Transurban and Uber. They’re obviously dramatically different businesses. However, I think the filter that we should be running our issues through is similar – the things that will move the dial. If I go on to what we’ve seen, it’s the sorts of things like distributional fairness – are the benefits of the business fairly distributed amongst stakeholders? Procedural fairness – are they transparent? Dealings with the business and the nature of relationships – do people feel well-treated by the business? Any business needs to look through that prism. Whatever issues a business has identified – whether it is through a stakeholder perceptions audit or customer data – you push it through that same filter. And while every business will have

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different issues to Transurban, the filter through which it is pushed should be similar. JB: We were discussing before the difference between businesses that have elastic demand and those with inelastic demand. From Uber’s point of view – where you’re in a highly competitive environment trying to win customers from taxis and a lot of other people – do you have a specific view of what your priorities are when it comes to social licence and how to get it? NM: Yes, that’s where we draw the distinction between a consumer and a non-consumer. It’s more straightforward for us because the stakeholders are more streamlined. We don’t think of it so much as social licence, but customer obsession. We have a broad customer base – about four million Australians use Uber on a regular basis. That’s a huge percentage of the population, so if the community is unhappy, our customer is unhappy. We also have about 60,000 active driver partners out there. If they’re not happy, that’s also a huge chunk of the population. So, we don’t really talk explicitly about social licence – we talk about customer obsession. We are in a competitive environment. There are many forms of transport, so we must look at everything through a lens of potential impacts on our riders and drivers, and the impact it will have on those two bodies. Every time somebody walks out of their house and wants to make a trip, it is so easy for them to hail a taxi or to open a different app. Uber is operating in an industry where the switching costs for consumers are really low. If you look at banks, you might

Social licence –panel discussion

Henry Byrne

read something in the paper where you think, ‘Oh, I don’t really agree with what they’re doing there’. But to change banks, you have to go to the bank, change your mortgage provider or change your bank account, find all your documents – it is quite onerous. In our industry, you literally just walk out and put your hand out on the street. That means we must be hyper vigilant about what our riders think of us. The same goes with our driver partners. They may be running multiple apps in the cars, so we need to win their acceptance. When one of our trips comes through, they can easily hit ‘accept’ on another app. If we stay obsessed with our two customers – our riders and our driver partners – then we will the meet expectations of the broader community. JB: You must find that you’ve got a bead on what your consumers are thinking in very direct terms because you’ve got the app. People are saying what they think all the time. Is that the main way that you gauge it?

“

ocial licence is now S two or three years old as a very active board level and down discussion inside the business

NM: No, we listen, too. We hold roundtables with our driver partners and focus groups with our riders – we have many feedback channels. For instance, we have a team of people who work on driver engagement: measuring their satisfaction, gathering their feedback and coming up with priorities about how we change it. It is very much driven by data and personal feedback from our customers. JB: Are any of your businesses formally incorporating the concept of social licence into your model? HB: Yes, we certainly are. It is in our key performance indicators and part of an active discussion from the board level down. Social licence is a term that’s used explicitly in those discussions. Social licence is not treated as a discrete challenge. We have moved past the part in a meeting where you say, ‘We all now come to our social licence agenda item and talk about what we’re doing to address social licence’. Social licence is now two or three years old as a very active board level and down discussion inside the business. It is a concept that people recognise needs to be considered in the context of what the business is doing. When looking at multi-billion-dollar development opportunities, social licence is embedded in several ways across that discussion. For example, when the customer team is looking at certain kinds of initiatives, social licence is considered explicitly or implicitly in several different ways. Social licence has become an integrated concept in the business. JB: What about John Holland? AJ: When it comes to projects, absolutely. Social licence is built into our bids and ongoing project monitoring to look

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Social licence – panel discussion

Natalie Malligan

at how well we’re dealing with the community and what the sentiment is. We’re now building it into our broader corporate key performance indicators, especially in light of our new brand and business strategy. The real question for us now is: ‘This is who we want to be as a business, so how do we actually make sure we’re held accountable to that at a corporate or leadership level?’ I think that’s interesting and signals the evolution that some contractors are going through. We’re no longer just hard engineers or old-school traditional builders anymore. We need to move with the times and accept that our success is going to be dependent on our ability to manage our customers, the community and our reputation. JB: To what degree did social licence drive the decision to rebrand? By the way, I like the little human being in the logo. AJ: The brand, represented through the logo, was centred on a broader redefinition of our new purpose and values. I don’t think we ever sat down and said, ‘Because of social licence and because of where society’s moving, we need to consider it,’ but the output is definitely reflective of the times. What was interesting for us was that there were several drivers for the rebrand. One of them was our changing clientele and changing expectations from them and the community. We needed to start thinking more about the role of our people and the community in what we do. The rebrand was critical for us because we needed to make sure our response to changing expectations was more than just lip-service or a marketing exercise. It forced us to reflect on how we felt about that as a company and how much that was going to drive us going forward.

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Our employees were also a big driver for us. In terms of the infrastructure boom, resources are now difficult to come by. We all want to attract or retain the best people. We’re finding that our employees are looking for a company with higher purpose. They’re looking at what the company stands for and our role in the world. That’s becoming even more important now with the new generation coming through. John Holland’s workforce is now 50 per cent millennial, which is just incredible. So, reflecting the importance of social licence wasn’t necessarily an explicit decision, but those factors drove the direction we went in. JB: Sometimes your customers are also your staff, so there can be a degree of crossover. Do you think there’s a risk that community unease and anger (if it’s unchecked) is going to drive reactive regulatory changes or overreach? Do you think that’s already happening? HB: Yes, I would argue that we’re already there. Take our business as an example: we’ve been through three inquiries in the past 18 months – one in New South Wales, another more recently in Queensland, and a Federal Senate inquiry. We most recently went through an incredibly complex, comprehensive review by the Australian Competition and Consumer Commission as part of our involvement in the WestConnex transaction. That’s just an 18-month timeframe. I don’t know that the business had ever been through an experience like it in its history. So, I think it’s naive to think that we’re not already in that kind of environment. The interesting thing is that it’s presented opportunities. It’s not just a risk discussion now. Obviously, you need to carefully manage those processes and engage with them properly. But it has also provided an opportunity to have a

Social licence –panel discussion

“

ne key observation is O that governments have a role at the beginning of a project to get their positioning right – a marketing and public relations exercise to sell the benefits of the project

far more detailed conversation around issues that are being raised around the business in a way that you can’t do in other forums. We put comprehensive submissions into them and it’s turned out to be quite beneficial for the business. This is because the issues are out there, they’re not going away, and people have views on them. JB: Natalie? NM: We’ve just gone through the whole regulatory process in each of the states across Australia. We worked very closely with all governments at all levels across Australia to get to where we are. As we look forward, I think there are some chunky issues coming up, such as the future of work. Uber recognises that this is not something industry or governments can solve alone. I’m confident that we’ll be able to work collaboratively to come up with solutions that will stand the test of time with new innovations and industries – working together to think about the changing nature of how people work in Australia. JB: Ash? AJ: I guess I’ll reflect on it in terms of what we’re seeing in the form of the way tenders are put forward and the expectations on us. In the infrastructure space, there is a lot of good cooperation between government and the private sector. And in some ways, we’re seeing many of the Government’s priorities impact on the business world positively in terms of trends like flexibility, diversity, and a focus on engagement and training. JB: So they’re saving you from yourself? AJ: A little bit. It’s fair to say that Government has driven some of it for us, but there are now some issues where industry needs to drive Government. One of the issues we’re dealing with now is work-life balance. If you look at current projects, people across all construction companies are working incredibly long hours. It will be a very

brave thing for one company to stand up and say, ‘Well, we’re going to make our bid more expensive, so we can factor in more time for our people’. In fact, Government probably needs to stand up and say, ‘Okay, we get it, we’ll make it an acrossthe-board mandate for you all’. There is room for a lot more cooperation and improvement on both sides. JB: Okay. I think we’re going to take a couple of questions from the floor now. Who’s keen? Up the back there. Geoff Daley, MUFG: In the instances where community engagement has been good or not so good, how do you find interaction with Government? How are you finding that linked to your social licence? AJ: Because of my background, I understand both the Government perspective and that of the deliverer. It’s quite interesting. Government maintains accountability in these projects in relation to the bigger picture of social licence. But once a contract is signed, we become the stewards of that social licence. We’re seeing some examples where it has been done really well by Government, and that makes it much easier for us to come in and engage with the community at delivery stage. It can be a much smoother process. One key observation is that governments have a role at the beginning of a project to get their positioning right – a marketing and public relations exercise to sell the benefits of the project. Because of this, sometimes the nuances or the complexity in the delivery of that project aren’t addressed upfront. This means that the deliverer is faced with managing the community at that point in time when they say, for example, ‘I didn’t realise all those trees were going,’ or, ‘I didn’t realise it was going to be this close to my house’. Unfortunately, at this stage of the project, the time for that type of engagement is over because the Environmental Impact Statement is finalised. The more we get the engagement and long-term view of the project right earlier, the better. That means not just seeing it as, ‘Okay, we need to sell it here and we’ll deal with that negative issue down the track’. We need to be brave enough to see the long-term picture and to acknowledge what is required for sustainable support of that project throughout its lifecycle. JB: Do you think your view of what social licence is and what matters has changed since you moved out of government and into the private sector? AJ: Probably not, but I do have a different perspective as a deliverer. We’re closer to the impacts than when commissioning projects in government. That hasn’t changed the importance or the impact it can have on derailing a project. It has given me a broader perspective on how it can be best managed and how much it requires bravery from all sides to have those nuanced, complex conversations about a project’s impacts.

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Social licence – panel discussion

West Gate Tunnel. Source – AECOM

JB: Do either of you want to add anything there just on Geoff’s question? HB: I think industry is getting better. What we do around broad-based stakeholder and community engagement on major projects now is better than what we were doing five years ago. For example, on the West Gate Tunnel, we did comprehensive engagement through the design process, and now in the delivery phase. We’re getting better at using technology and thinking about stakeholder needs. We’re also getting better at feeding back input from those stakeholders into relevant parts of the project from the early stages of design and right through the project lifecycle. It is not a static prospect how we’re doing, but social licence is imperative in improving our practices there. JB: Other questions? Adrian Dwyer: To what extent does the regulatory environment in which you operate constrain your ability to gain and maintain social licence? To what extent is it just a firm structure that just doesn’t allow you to make decisions that help you gain social licence? I’m thinking of things like the four per cent increase on tolls or rider-levy on trips in New South Wales. HB: That’s clearly an issue. If you think about pricing in the current environment for our business and others, it’s being brought up in the context of the low-inflation environment we’re currently in. It’s a relevant consideration and it’s not one that we look at exclusively on our own. Obviously within our business, the pricing arrangements affected at the time the agreements are signed with government. It’s a critical consideration in terms of how the funding mix comes together. If a toll road is being funded privately, government only has four levers to play with – concession length, price escalators, price starting point and their own contribution. They then move those levers depending on what the appropriate funding mix is for a project. That’s never a static prospect, that’s always going to change depending on the project. How we manage community expectations around that remains an ongoing challenge and is heightened in the current environment.

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he challenges and T complexity around how you might implement a policy shift over the long term are very significant

JB: While we’re on the subject of motorways, obviously a lot of people feel a resistance to toll roads and there’s also the debate around road user charging. How do you address social licence when people have a strong perspective already? HB: In terms of road user charging, it is something that needs to happen over time, given the broader context around fuel excise that is going to impact government budgets more over time. I think most economists would agree there’s going to have to be some kind of policy shift. However, the challenges and complexity around how you might implement a policy shift over the long term are very significant. We did a very detailed study on this in 2016 with about 1,600 people in Melbourne. In the study, we trialled several pricing mechanisms on the network over a year and had the participants drive millions of kilometres. There were several observations that can be made from that study about how road user charging could work. You can create a sustainable funding platform. You can look to demand management and other tools around pricing mechanisms. But there was also an attitudinal shift. The participants came into the study and were opposed to road user charging, like the broader attitudes presently in the community. By the end of the study, however, the majority of the participants favoured a road user charging system after they had experienced it. JB: There certainly seems to be a premium on getting the formula right due to concerns about equity and so on. Is that an issue that comes up for Uber? How do you deal with the notion of people who’ve got a rusted-on perception around the brand? NM: It’s slowly changing over time. On the question of whether there is a particular piece of regulation directed towards an aspect of social licence that has an unintended consequence on the business, there is one example that comes to mind. Each state and territory in Australia has a different regulatory regime around what it takes to become an Uber driver – they vary markedly across different jurisdictions. For example, in New South Wales, if you take all of the steps – such as getting your driving history background and

Social licence –panel discussion

insurance checked, and getting your vehicle inspected – it costs about $100. In other states, that can be closer to $1000. These steps are well intentioned by the Government to try to meet its perception of social licence concerns around safety – for example, adding additional medical checks and other steps – but it has impacted a driver-partner’s ability to earn. The impact on business is that in states where the cost to get on the road is very high, you tend to see more driverpartners who want to drive a lot. By trying to protect one side of the social licence, the other side of being able to create flexible earning opportunity for people can erode. JB: Ashley, anything you want to add there?

as unnecessary regulation? Is this where social licence is ultimately leading us? HB: The interplay between the private sector and the public sector and infrastructure is not a static concept – it’s a fluid line that moves. Social licence is a key ingredient in determining how it moves and where. In the current environment, it’s particularly acute and if the challenge isn’t met, particularly on the private sector side, then that inhibits the Government’s ability to partner more expansively with the private sector. That would be to everyone’s detriment and lead to a diminished agenda. JB: Ash?

AJ: Of course, it’s an issue at a project level. Government decides the scope of a project and how it should be done, and then we take that on in delivering it. Largely, that is just the reality of what we do. We work within those confines to ensure we put forward the best outcome during the tendering phase.

AJ: It does put the onus back on the private sector to prove that we understand purpose and social licence. The more we can demonstrate it is part of our business model, that we understand it, get it and can do it well, we’ll increase trust from the government. That would then hopefully reduce some of that regulatory burden.

JB: Is the balance right between private sector delivery in the infrastructure sector and government intervention? Are there models for more integration without being labelled

JB: Do you think that construction fatigue and cumulative disruption in big cities like Sydney and Melbourne is affecting social licence? If so, how do you deal with it?

Another day at the office The research centre that’s all about road safety

A research partnership with

Transurban Road Safety Centre

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Social licence – panel discussion

AJ: Firstly, you’ve got the fatigue that comes with just so much going on. There are positives and negatives to that. For example, you might be on one project that’s doing really well but because a different project has a well-publicised community issue, you can get caught up in the halo effect of that. All of a sudden, if trees or acquisitions become an issue on another project, it’s a top priority for your project. It can also be positive. When governments have done a really good job selling the benefits of the infrastructure spend and talking about overall disruption, everyone can benefit from that. The biggest challenge is not on a cumulative impact, but on the complexity of our individual projects. It’s been a long time (if ever) since people have had to deal with a project that might take five years to finish in their backyard. So, we’re having to manage that journey and take people on a journey. In the New South Wales context, if you think of projects like Light Rail or Sydney Metro, there was a lot of goodwill from the community starting those projects. The community just wanted to see that something was being done and they could concede, ‘Okay, this is going to benefit us’. At the start, we were probably able to get away with certain things that were quite disruptive because there was positivity and goodwill. However, when you get three years down the track and people are asking, ‘How is this still going on?’ and they’re

light at the end of the tunnel. How does the Government and the private sector keep them engaged, keep them positive and keep them on side throughout that journey? There’s no silver bullet to that, but that’s the complexity and the challenge we need to work through. JB: What about from an operator’s perspective? HB: It’s something we must manage carefully. One of the prisms through which we look at it, from a community and investor perspective, is how to carefully manage disruption to our assets through major construction periods. The proof is in the pudding, and we’ve had some pretty good experiences recently. We recently completed the $1.3 billion CityLink Tulla Widening project. In terms of historical traffic impacts from work in that corridor, the results were good relative to some other equivalent projects. That tells you the level of focus that’s required. It’s got far-ranging impacts across multiple stakeholder groups – government, investors, community and the driving public. Every stakeholder is invested in that outcome, and if you get it wrong it can have serious implications. JB: Thank you very much everyone and thanks for your insights.

Jodie Brough – Partner and Office Head (Sydney), Newgate Communications

Natalie Malligan – Head of Cities, Australia and New Zealand, Uber

Ms Brough has more than 20 years’ experience in communications as a Federal Press Gallery journalist, political adviser, senior communications specialist in the bureaucracy and as a consultant. She specialises in complex strategic projects for government and corporate clients, focusing on stakeholder and community engagement, issues management and reputation-related positioning.

Ms Malligan is Uber’s Head of Cities for Australia and New Zealand.

Lead partner for Newgate’s transport and infrastructure practice, she has advised on some of Australia’s most significant infrastructure projects, including motorways, public transport, defence and urban renewal. She frequently advises on Public Private Partnerships, both for bid teams and governments, through all phases of project development from the bid through to planning, construction and operations.

Prior to joining Uber, Ms Malligan was Manager at Bain and Company’s Private Equity practice in San Francisco and Sydney.

Ms Brough also frequently works with clients managing reform or organisational change. She works extensively with government agencies managing changing community and stakeholder relationships, reflecting the central role communications and engagement play in managing risks, and delivering on outcomes.

She is responsible for the growth and efficient operation of Uber’s ridesharing service, which now serves over three million people across more than 25 cities in the region.

She holds a combined Bachelor of Commerce and Law from the University of Sydney, and a Master of Business Administration from Columbia University in New York. Ashley Jarquin – General Manager, Communications and Marketing, John Holland Ms Jarquin has more than 12 years’ experience leading communications and corporate affairs functions, predominantly in the transport and construction sector.

Prior to consultancy, Ms Brough was a Sydney Morning Herald federal parliamentary press gallery journalist and worked in state government in New South Wales. She has a Bachelor of Arts from Macquarie University.

She has led the positioning, communication and issues management for many of Australia’s largest infrastructure projects, including Sydney Metro, Light Rail in Sydney and Newcastle, and reform of transport operations in New South Wales.

Henry Byrne – Group Executive Corporate Affairs, Transurban

Ms Jarquin is passionate about the benefits and opportunities available to employees and communities through infrastructure investment, and champions the importance of putting people at the heart of project delivery. She leads her teams with empathy and creativity, and is always looking for opportunities to mentor, grow and develop others.

Mr Byrne was appointed Group Executive Corporate Affairs in July 2017. Prior to this, he was General Manager of Corporate Affairs. Mr Byrne started with Transurban in 2007 and has previously held management roles in Investor Relations and Operations within the business. Prior to joining Transurban, Mr Byrne worked as a lawyer and financial journalist.

starting to get tired and fatigued, they start to lose sight of the

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Having dealt with the gruelling demands of politics and 24/7 media cycles, Ms Jarquin is a strong advocate for work-life balance.

companyfocus

John Grill Centre at forefront of infrastructure leadership A partnerships approach helps organisations to deliver projects. Infrastructure debates often focus on building assets, politics and funding. Less considered is how infrastructure enables city shaping and a better community experience, and whether projects translate into social and economic outcomes. Professor Suresh Cuganesan, CEO of the John Grill Centre for Project Leadership at the University of Sydney, says that infrastructure projects require leaders who understand stakeholder perspectives, drive collaboration and embrace uncertainty. ‘Australia has a once-in-ageneration infrastructure opportunity,’ says Cuganesan. ‘But we will only realise its potential if it has enough current and future leaders with the capability to manage and govern increasingly large, complex projects.’ Cuganesan believes that a new paradigm in infrastructure projects is emerging. ‘The old approach of government and contractors developing a master plan, seeking comment and being constrained too early by a fixed funding envelope is failing. We must engage the community up-front on project concepts and think more broadly about outcomes, including the intangible aspects of place. This approach requires expanded skill sets in infrastructure leaders.’ Cuganesan’s view is timely. Australia will spend almost $100 billion on infrastructure this financial year – the most in three decades – according to the Reserve Bank of Australia.

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Federal and state governments are embarking on a wave of projects, amid a population boom. The risk is that some projects experience budget overruns, costing the community billions of dollars and more again in indirect costs, including loss of community trust. Sydney’s light rail project, for example, has been delayed and is in contractual dispute with a subcontractor. Melbourne’s controversial East West Link project cost $1.1 billion, only to be scrapped. Cuganesan says budget overruns are too common in major projects. ‘Much work has been done to improve projects, yet we continue to see problems. We need to step back and consider if we are asking the right questions about why we are doing particular projects.’ The confluence of new and old forces is making infrastructure projects harder to deliver. Larger infrastructure projects are needed to keep up with population growth and urbanisation. Retrofitting congested capital cities with new infrastructure is challenging. As project size grows, consortiums may have more partners, adding to complexity. Foreign and local entities working together and with different tiers of government mean that project leaders deal with larger stakeholder groups with differing perspectives. At the same time, communities have become more organised and

energised around infrastructure projects, and social media has empowered their protests. That, in turn, has added to project politicisation, and political uncertainty has compounded the problem. ‘Infrastructure leaders have to navigate a fast-moving, unpredictable project landscape,’ says Cuganesan. ‘It’s vital that they can “pivot” if needed, and that teams can draw on different disciplines to solve multidimensional problems.’

Centre’s unique role John Grill AO, former CEO of WorleyParsons, established the centre in October 2012 with a landmark $20-million donation. The goal: to work with government and industry across all sectors to enhance the value of large-scale projects through education and partnerships. The centre has achieved strong results. It has educated staff at many of Australia’s largest infrastructure companies, resources, banks, telcos and government departments; worked with boards; provided customised workshops; and helped to solve project leadership and governance problems. Cuganesan says that the centre fills an important gap in Australia. ‘Infrastructure stakeholders recognise that their staff need expanded skills, and that the John Grill Centre is uniquely placed to provide them. They also know there is a gap in the talent pipeline as experienced people leave the sector, and knowledge and skills are lost.’

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The centre’s learning approach has three key strengths, says Cuganesan. The first is a multidisciplinary approach. ‘As part of the University of Sydney, we’re able to draw on leading experts across disciplines. We’ve used psychologists and philosophers, for example, to present in courses and challenge how participants approach project leadership.’ The second strength is the program’s applied focus. ‘Our participants learn skills that they can immediately apply to their job,’ says Cuganesan. They learn about their project leadership style, strengths and weaknesses, and how they can be more effective.’ An emphasis on collaboration is the third strength. ‘We equip participants with skills to develop strongly aligned projects, to create a shared mission among multiple stakeholders, and to deliver outcomes for communities, rather than simply to execute projects. That relies on a strategic mindset and deep skills to work with stakeholders with different needs and perspectives.’ The approach is working. More than 85 per cent of course participants surveyed say that their relationships with direct reports, peers and other stakeholders improved after the program. Four in five say that the training helped them to reposition themselves as leaders in their organisation, and many participants say they established innovative approaches to solve problems, achieve cost savings, better governance or other project outcomes. Cuganesan is most pleased that participants feel more confident in their role, with a number moving up to more senior roles in their organisation. ‘They have higher job satisfaction because stakeholders are working towards a common goal, there are better team dynamics on projects, and they feel that they are making a difference for the community.’

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Tailored services The John Grill Centre’s flagship course is Executive Leadership in Major Projects (ELMP). The program runs across the year and includes an in-organisation project, leadership diagnostics (participants undertake a 360-degree review) and executive coaching. The centre also provides customised leadership development programs specific to major projects. It is currently working with a multinational infrastructure company to upskill 50 of its global project directors and a major state government department to put more than 70 senior staff members through programs. Governance is another focus. The centre has educated boards on major projects and infrastructure governance. ‘Boards often have to govern major projects, but most directors do not have specific skills in this area,’ says Cuganesan.

The centre also works with organisations on challenged projects. ‘We’ve helped to facilitate teams stuck on issues or at a stalemate with other stakeholders,’ says Cuganesan. ‘There is rising demand for this service and outcomes so far are encouraging.’ The centre’s research focuses on customer stewardship to support better practice, and to establish ways to build community and stakeholder confidence in infrastructure. Cuganesan is optimistic about the future of Australian infrastructure and the John Grill Centre’s role. ‘By developing a new generation of infrastructure leaders, and equipping them with broader skills, the centre can have significant economic and social impact. Great infrastructure shapes cities, builds nations and, most of all, enriches communities.’ ♦ To learn more about the John Grill Centre of Project Leadership, visit www.sydney.edu.au/john-grill-centre.

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5/10/18 1:23 pm

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Wonder women in construction Empowering women to boldly explore a career in construction is helping to change and revitalise one of Australia’s most critical business sectors. You don’t need superhero powers to see the galaxy of positives that having a broader and more diverse workplace brings to the property and construction industry. From new skill sets to new ways of thinking, new approaches to challenges encountered and new opportunities to grow and diversify, the list is endless. Celebrating 100 years of outstanding industry achievement, Hansen Yuncken is one company that is actively striving to expand its female workforce strength across its national business operations. With board member Louise Hansen, four female members on the Executive Management Team and a growing number of young women joining the company, Hansen Yuncken is fast becoming a first port of call for women looking to take their place at the table. One of the most notable success stories for Hansen Yuncken has been Elizabeth Matthews, who is currently the Project Manager on the $160-million expansion of the Parklea Correctional Centre in New South Wales. Matthews has been with the company since 2012, having fallen into construction when she was just 18 years old. ‘At the time, I’d been accepted into university to study French and Russian,’ she recalls. ‘A friend of mine was the daughter of a local builder, who offered me a summer job prior to attending university. After a few weeks, I realised this was for

me, and I cancelled my languages degree and switched to construction management. The rest is history!’ Commencing her career journey in the United Kingdom, Matthews headed to Adelaide and joined Hansen Yuncken, where she took on a challenging role of Site Manager on the $2-billion Royal Adelaide Hospital (RAH) project. ‘Hansen Yuncken has been fantastic in supporting and growing my career,’ she says. ‘It appointed me as a Site Manager on the RAH at a time when the business and the industry in Adelaide had never seen a female Site Manager.’ While her career to date has been notable for the success she has achieved in her diverse roles, Matthews is the first to admit that the industry can still be a tough place for women, and, like many of her peers, she is determined to be an agent of change. ‘I have always felt that I was treated equally in the industry, and have always gained respect from my peers,’ she says. ‘In saying that, it is a tough

industry that can be quite aggressive, and one of my challenges is to not adapt or change my behaviour to suit those around me.’ Seeking positives from potentially negative and unwarranted perceptions is one way she stays focused. ‘I think one of the biggest challenges women in construction face in site-based management roles is the perception of being weak and naive,’ she says. ‘I often use this to my advantage, though, as people tend to underestimate me.’ While Matthews has witnessed much change over the past five years, she still believes that more needs to be done to better support young women like her in construction. ‘I’m lucky in that Hansen Yuncken has policies in place to support me as I move through my career – both as a woman and a construction professional,’ she says. ‘For our industry as a whole, however, I think the next big focus needs to be on flexibility and retention of women in the industry.’ ♦ To find out more, visit www.hansenyuncken.com.au.

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The ability to be innovative and the desire to build better. Changing the mindset for diversity.

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31/10/18 1:19 pm

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Designing smart energy and transport solutions to move and connect people While Australian cities are among some of the most livable on Earth, country leaders and citizens have concerns about accessibility to urban centres, the cost of energy supply, the severity of waste production, the pressures that ecological systems are under, and the climate change issues our communities face. We now also operate in an era in which rapidly advancing technology and data are being used to achieve valuable insights to support strategic decision-making and to tackle some of these challenges. From the delivery of the iconic Snowy Mountains Scheme, one of the largest and most complex hydroelectric schemes in the world, through to the delivery of some of Australia’s most significant transport corridors, SMEC has a long history of providing innovative solutions and advanced engineering design across the power, water and transport sectors. SMEC has been involved in numerous landmark energy projects throughout Australia, including Snowy 2.0 in New South Wales, Gannawarra Energy Storage System in Victoria and Kennedy Energy Park (grid-connected solar, wind and battery) in Queensland. Large-scale solar power is a growing source of mainstream energy within Australia, and SMEC is now positioned as the leading provider of project development, detailed design and owners’ engineering services for solar farms across Australia. ‘The National Electricity Market (NEM) faces numerous transitional challenges over the coming decades, so SMEC’s design involvement in critical projects, including Snowy 2.0 and early uptake of advancements in power

system stability technology, is helping to make those important transitions happen as Australia moves to a lower-carbon future,’ says Graeme Pollock, Market Director, Energy and Resources, SMEC. ‘We’re seeing greater demand for next-generation renewables and firming technologies – waste to energy, solar and wind linked to synchronous condensers, battery storage, pumped hydro and advanced power system controls.’ SMEC currently has more than 6000 megawatts of new-generation projects in development, design, construction and early operation, which are using SMEC’s expertise to guide them. ‘These projects will contribute to the lower-carbon transition that will see much more distributed and diverse power generation than has traditionally been the case in Australia, with a focus on enhancing grid reliability and stability.’

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through the application of virtual reality. Subsequently, SMEC became the first engineering design company in Australia to conduct a comprehensive road safety audit using virtual reality, which led to tangible design savings.

SMEC has also been focused on pioneering new technologies to optimise data-driven decision-making, to support current projects and to enable our partners and clients to find their competitive edge.

Daniel Gregor, National Manager Advisory, says, ‘Our safety auditor found four to five items that we wouldn’t have identified until build stage. Virtual reality saved time and money, and it made the concept safer. It’s assisted with stakeholder engagement and expanded the knowledge of our people’.

On the Streamlining Hoddle Street project in Victoria, SMEC collaborated with frontier technology company Snobal to enrich stakeholder engagement and transform designs

Innovation and technical excellence continue to be key focus areas for SMEC. The organisation is constantly evolving through its thinking, approach, technologies and systems. ♦

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Electric vehicles – panel discussion

L–R, Adrian Dwyer, Fiona Orton, Dr Allison Stewart, Peter Colacino

Electric vehicles and road funding model failure Key points: • •

•

EVs are here, and every prediction suggests that they will soon dominate the vehicle fleet, governments and industry need to start the conversation with the community to prepare for the changes that are needed in the transport and energy sectors in terms of regulation, taxation, behaviour and demand management, and EVs offer a controllable and flexible source of demand that can be used to maximise utilisation of the existing energy asset base and potentially generate energy to be deployed by networks.

Panellists: ►► Peter Colacino, Executive Director – Policy and Research, Infrastructure Australia ►► Fiona Orton, Future Grid Manager, TransGrid ►► Dr Allison Stewart, Project Director, Infrastructure Victoria

Moderator: ►► Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia

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Electric vehicles – panel discussion

Pre-panel address Nick Hudson, Director, Economics Infrastructure Partnerships Australia

and

Nick Hudson

Policy,

Electric vehicles (EVs) are an example of where technology disruption is accelerating convergence across sectors – in this instance, transport and energy. This will lead to a new set of challenges for policymakers and industry, but it will also provide opportunities to do things differently. Currently, EVs represent a very minor part of the vehicle fleet. According to the Electric Vehicle Council and ClimateWorks, in 2017 there were 2,284 electric vehicles sold in Australia. While this represents a 67 per cent increase on last year (2016), EVs only make up 0.2 per cent of the total vehicle fleet. Despite the current low figures, modelling undertaken for the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) forecasts that EV uptake in Australia will surge over the coming decades. Under the current moderate and accelerated policy intervention scenarios, EV uptake will reach 50 per cent of the total vehicle fleet during the second half of the 2030s, and will potentially reach 100 per cent uptake by 2050. In terms of real numbers, under the moderate intervention scenario, ARENA and the CEFC predict that over the next five years, EV sales will grow to 70,700 per year and this will potentially reach up to 1.9 million in 2040. EVs will become a mainstay on showroom floors. It’s a question of ‘to what degree’ and ‘when’, rather than ‘if’. When thinking about ‘to what degree’, the development

and uptake of telecommunications technology is a suitable analogy to draw. The first possible scenario could follow smartphones, which were once a disruptive technology in the mobile phone market. Their growth from zero to 100 per cent now sees smartphones dominant in the overall mobile phone market. While smartphones have their own price points, their proliferation has transformed and standardised the way we connect. The second possible scenario could follow smart watches. This disruptive technology has seen strong growth in sales. Despite their powerful capability, smart watches have remained a significant but minor part of the watch market. As an emerging technology, EVs will likely follow one of these scenarios – either partial or total market penetration. If the first scenario occurs, there will be changes and opportunities for the transport and energy sectors over the decades to come.

Adrian Dwyer (AD): Are EVs going to be a mass-market but

Fiona Orton (FO): From TransGrid’s perspective, we see

niche technology like smart watches, or are they going to

that EVs are coming, and that they’re going to be an important

dominate the market like smartphones?

part of the transport mix and energy system. Some key global

Peter Colacino (PC): Infrastructure Australia sees EVs becoming the dominant technology within the vehicle fleet. We’re using work done by Energeia for CEFC and ARENA as the basis for most of our thinking on this. Looking out to 2040,

drivers are pushing EVs along. For instance, in some countries and cities, policies have been introduced that will ban the use of internal combustion engines, beginning between 2025 and 2040–2050, depending on the jurisdiction.

it is forecast that there will be close to 100 per cent adoption

Vehicle manufacturers are also pushing this along. There’s

of the technology. There’s no way that 100 per cent is a smart

been a huge ramp-up in the number and type of vehicles they’re

watch. EVs will be the dominant part of our vehicle fleet, and

offering. Volvo has a target of every vehicle it produces being

it will come quicker than people expect.

electric or a hybrid by 2019. We certainly see these drivers

Dr Allison Stewart (AS): Infrastructure Victoria has a similar view. We think that the potential for EVs is huge. In terms of the timing for uptake, it will be when price parity is reached with other vehicles – some time in the late 2020s. Once that happens, we will see much more rapid uptake.

happening at a global scale, and because Australia tends to be a technology-taker, all trends are pointing towards Australia having high uptake of EVs. AD: There are discrepancies in when people think the uptake or parity point will be. Pete, you seem to think it will happen faster?

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Electric vehicles – panel discussion

Fiona Orton

“

ike housing prices, L everyone whinges about the cost of fuel. As fuel prices vary, based on a whole range of factors outside of Australia’s control, you’ll see greater uptake of EVs

PC: We are bullish, and the two inflection points are really important. The first is model choice. Over the next 18 months, vehicle choice will expand. The Prius perhaps wasn’t the sexiest car on the market, but Tesla has disrupted – or at least given the perception of disrupting – the market. However, over the next 12 months, another 10 different EV models will arrive in Australia. Five of them will cost under $60,000 to purchase new. In New Zealand, changes to parallel export laws have led to more EVs being available, and therefore higher levels of adoption. As model choice expands, you will see changes over the next 12 months. Secondly, on price parity: people are expecting that to be around 2025, which is an important year for automation,

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Peter Colacino

which presents other challenges. The forecasters at Energeia say that it could happen soon, as people start to understand that the operation and maintenance costs of their vehicles will reduce, and they’ll get savings from not paying for fuel. If you talk to the automobile clubs, fuel price is an issue people often talk about. Like housing prices, everyone whinges about the cost of fuel. As fuel prices vary, based on a whole range of factors outside of Australia’s control, you’ll see greater uptake of EVs. AD: I’m interested by the idea of price parity. We’re not just talking about sticker price – we’re talking about whole-of-life costs. 45 per cent of cars purchased in Australia are bought by people with spreadsheets, rather than emotions. Will that drive uptake or will it be government intervention? Will it just be sticker price? AS: In terms of what we’ve seen overseas, uptake has largely been driven by sticker price – that’s what people see. Some people factor in life-cycle costs, and we would recommend that people do that, but we know that people don’t make decisions on that basis. People just look at sticker price when they go to the car dealership and decide which vehicle they’ll buy. Fleet purchasers will make a significant difference. Of course, actions that governments might take could change that. Government action will be a big teller of how

Electric vehicles – panel discussion

Source – TransGrid

much closer that timeframe will move. Where governments overseas have introduced subsidies without good long-term planning, it has led to some negative implications as people take up the subsidies and then they are removed. This creates significant change in the marketplace. No matter what happens in the future in Australia, long-term planning for the transition of consumers will be critical. AD: On the subsidy question, if it is inevitable that 100 per cent of the market becomes electric – or at least zeroemissions at the point of use – doesn’t that mean that the case for subsidies just diminishes? PC: Nick Hudson was spot-on in his opening remarks about the rate of uptake, and ensuring that it is at a desirable pace. While we have a low level of EV penetration, our global competitiveness suffers, and so do household budgets. The savings from an EV are real today. Drivers and households can already be saving money in a climate where fuel prices and electricity prices are politically topical. In the short term, higher levels of EV uptake are potentially desirable. I say potentially because, longer term, the impacts on the electricity grid will be significant. Some estimates forecast that peak electricity demand will increase by up to 450 per cent. Much thought will need to go into the impact on peak and total demand in powering EVs. AD: Fiona, what are the implications for energy demand? What impacts will there be on the network and the engineering that’s required to support that?

FO: The Energeia work that’s been referenced is one of numerous forecasts for EV uptake that TransGrid looks at. As part of our system planning, we already think about what’s going to happen with demand across different metrics, such as population growth and economic growth. These metrics are the main drivers of electricity demand growth in New South Wales today. New energy technologies, such as EVs, and household solar and batteries, will also drive changes in electricity demand. Across the different uptake forecast scenarios, we could have one million or three million or more EVs in Australia by 2030. That could increase to 13 million by 2040, making up 40 to 60 per cent of the vehicle fleet. That’s a significant change. AD: What happens if everybody gets home at 6 o’clock and plugs their car in? FO: That could have a negative impact on peak demand. As a comparison, consider air conditioning uptake. When every household installed an air conditioner, peak demand markedly increased across the system. Now, the way that the electricity system works today is that the whole system’s infrastructure is built to meet that peak demand, which may just be a few hours per year. At most times, there’s underutilised capacity in the system. Even with 10 per cent or more growth in total electricity demand by 2040, that doesn’t necessarily mean we need to build a lot of extra infrastructure. That is because electric vehicles offer the potential for smart use of energy.

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Electric vehicles – panel discussion

Dr Allison Stewart

Personally, I am enthusiastic about EVs because there are numerous benefits to be gained across the whole economy. They could lead to cheaper transport costs, decreased importation of fuel, growth in jobs, improvement in terms of trade, and a reduction in greenhouse gas and other emissions from the transport sector. From a network planning perspective, however, there are three benefits or opportunities I can see from EVs. First, we can increase the utilisation of the existing asset base. That means we can put more electrons through the same infrastructure, driving down the unit cost of electricity for all users. That can occur for consumers regardless of whether they have an EV. That will place downwards pressure on prices, which is important. The second benefit is that EVs offer a controllable and flexible source of demand, which helps when integrating variable renewable energy into the system. Currently, the supply mix is changing from producing energy all the time to something that’s more weather-driven. Having flexibility on the demand side can help by using energy and capacity when it’s available, and ensuring that we’re not curtailing wind or solar when they produce surplus energy. Third, EVs will represent large amounts of battery storage driving around in our electricity market. This offers the

“

I f Bloomberg’s forecasts are correct, by 2040 EVs could provide 350 gigawatt hours of storage that’s driving around in our energy system

If Bloomberg’s forecasts are correct, by 2040 EVs could provide 350 gigawatt hours of storage that’s driving around in our energy system. To put that in context, that’s the equivalent of Snowy 2.0. This offers an enormous amount of potential for services to be provided back to the grid. That’s good for consumers because their vehicles will be a source of revenue, and it’s also great for us because it means we can provide our services more cheaply in the future. AD: Allison, this is an area that Infrastructure Victoria has looked at, as well as the nexus between transport and energy.

potential for a new source of energy that can be supplied to

AS: Yes, it is an area we have looked at. The thing I can

grid operators, like TransGrid. For example, we have a project

add to Fiona’s helpful explanation is on the study we recently

in New South Wales called Powering Sydney’s Future. For

completed, which looked at several factors regarding the

the project, we’re using demand management to delay more

uptake of electric and autonomous vehicles. What we found

investment to ensure that consumers save money.

is that if we have an entirely electric fleet in the year 2046, we

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Electric vehicles – panel discussion

think that could require 50 per cent more energy than the base demand than would otherwise exist in 2046. That’s a significant requirement for additional energy generation, alongside the transmission and distribution capacity that would be needed to support it. We also found that significant change can come about from demand management. We need to try to understand what we can do to enable and support demand management for individuals, to understand more about what impacts consumers have when they plug in their EVs and turn their air conditioners on when they get home at 6 o’clock. The impact on the overall infrastructure investment needed to support that is important. We need to manage and think about the additional investment, because it’s in the billions. Over the coming years, more focus needs to be on educating people and preparing the system correctly. This could help us avoid unnecessary infrastructure spending. AD: If, in the future, people have solar on the roof, a battery in the basement and an EV in the garage, that could have profound impacts on energy networks. It will also have an impact on our road networks with the decline of fuel excise. Is that something that features in your thinking about this disruptive change we’re seeing? PC: There’s no doubt that fuel excise revenue will decline into the future. It will decline under an existing internal combustion engine environment, just through fuel efficiency. The introduction of EVs will see it decline more rapidly. However, we need to remember that we don’t have a system where fuel excise is hypothecated specifically to be spent on roads. It hasn’t been hypothecated to roads since 1959. Currently, the level of revenue generated by the transport industry is greater than what’s spent on roads. There are different levels of revenue and expenditure, and infrastructure needs will continue to increase in the future. That will require more general government revenue, and the decline in fuel excise may leave a gap that needs to be filled. However, as a sector, we need to think holistically about a sustainable transport network in the future, not just about the impact of EVs. AD: Allison, is this something you’ve looked at, as well? AS: Absolutely. We need to consider fuel excise within the broader context of how much is being collected, how we’re funding roads and how they will be funded in the future – from a fairness and financial perspective. Focusing too heavily on declining fuel excise revenues as the problem could lead to solutions that may not be optimal overall. Currently, fuel excise isn’t an efficient way of sending price signals to consumers, and it presents an opportunity to revisit the ways we’re collecting those taxes.

There are numerous opportunities and changes that the uptake of EVs will bring. For instance, it will result in changes to things such as payroll tax as potential industries expand. At Infrastructure Victoria, we see that EVs and autonomous vehicles are likely to merge in parallel. As that happens, there’s a big opportunity to rethink and reset a model that isn’t necessarily working efficiently. There’s an opportunity to have an open dialogue about how we can reform for the better as we go forward. AD: Have we all just been distracted by the hype around autonomous vehicles and is the real disruption EVs? AS: Yes. There’s no doubt that EVs are already on the roads and will come sooner than autonomous vehicles. However, some of the work we’ve done considered how autonomous vehicles could come much sooner. One of the big unknowns about autonomous vehicles is whether people will buy their own, or whether they’ll be an on-demand service, like Uber. Which of those models prevails, or the degree to which they combine, will make a big difference to how autonomous vehicles will exist on our roads. We will also need to discuss what social licence will come around autonomous vehicles. EVs are here, and people are familiar with them. The question for EVs is ‘when’ rather than ‘if’, whereas the ‘if’ question still surrounds autonomous vehicles. In terms of focus, it’s important that our eyes are on the here and now, while keeping an eye on how these two future technologies could change our applications and our understanding about what’s happening in the future. PC: I will highlight some significant changes affecting the transport industry at the same time. The first is sharing. Uber has disrupted the transport sector. When considering that, we can’t forget about congestion, which is an absolute show stopper for the transport sector. Sharing is the biggest step change for the sector, and if we can get more people in each car, that’ll have a positive impact on congestion. The second is connectivity. Historically, Australia hasn’t been great at responding to change. For example, we implemented integrated ticketing five or six years after it was adopted in Europe, Kuala Lumpur, Singapore and other places. We were also slow to accept things like autonomous emergency braking for heavy vehicles. The Inquiry into the National Road Safety Strategy found that we are about five to 10 years behind our international competitors in adopting connectivity. Now, those technologies already exist and are commercially available. There’s no reason that Australia isn’t better at sharing and that we don’t have a more connected transport sector.

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Electric vehicles – panel discussion

“

or most EVs, you can F only use the batteries in the vehicles until they are at about 80 per cent of their manufactured capacity, leaving potential capacity once their useful life in the vehicle has ended

Now, EVs are already here and will arrive in a bigger way over the next five years. Autonomous vehicles may start to emerge in a more significant way in around five years’ time. However, our regulatory environment in Australia is behind when it comes to automation. For instance, there’s technology like the AI traffic jam pilot in the Audi A8. This is a vehicle that is available on the market – the first with Level 3 autonomy technology. In Australia, this car will have that technology turned off because we don’t have a regulatory environment that supports it. AD: Questions from the floor? Maybe an EV owner in the crowd has a view? Lance Glare (LG): Is there any thought going into what’s going to happen to the batteries at the end of their life? AD: Lance is from Western Australia, so they’ll be providing lithium for the batteries. LG: We’re very interested in making all the batteries. AD: Views on where the lithium goes once you’ve used it? AS: Infrastructure Victoria has done some work looking into the waste implications in moving to an entirely EV fleet. There’s a need to start looking at what the waste streams will be as we transition to an EV fleet. There will be significant changes to how we need to approach battery recycling. For most EVs, you can only use the batteries in the vehicles until they are at about 80 per cent of their manufactured capacity, leaving potential capacity once their useful life in the vehicle has ended. Thinking holistically about how we change our current assumptions around waste, how we recycle and reuse is an important consideration. Thinking about how we might contribute more to distributed energy is critical in terms of the broader ecosystem resulting from EVs. FO: There is a real opportunity to re-use batteries after they’ve had their first life in vehicles to provide services either for households, businesses or grid operators.

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AD: Is the knowledge about what these batteries will do after a few years in the car an impediment to consumer uptake? Not range anxiety, but battery anxiety? PC: There are two main concerns that I have heard from industry. The first is model availability. We’ve spoken mostly about electric cars, but there’s the implication for electric trucks, too. Although there are new models that are planned, and there are companies – like BYD out of China – that, interestingly, are focusing more on electric than autonomous. I think you’ll see a lot of Chinese companies leading in this space. Number two is the long-term value of the vehicles and the pace at which they’ll need to be replaced. Thinking about what happens to a battery is really critical, especially for governments. The Western Australians are an obvious example, because of the local lithium industry that already exists – including the largest lithium facility in the world. There is an opportunity for Australia – because of the volume of batteries – for a new industry to be created. Reprocessing and repurposing could be an industry that may develop and provide new technology jobs. AD: Further questions from the floor? Scott Charlton: Thanks Adrian. As an EV owner, in most other countries, states offer incentives for all of the benefits that EVs provide. In Australia, you’re penalised through a luxury car tax because the capital cost is higher than the equivalent. How do we incentivise EVs and deal with the road funding issue? There is no leadership from the Federal Government currently, which should be going out and trying a pilot programme or doing something. We have seen very little leadership in this space. PC: There are incentives in place, but it’s patchwork. If you’re in South Australia, you get more incentives relative to other Australian jurisdictions. The Australian Capital Territory is progressive in the incentive space too. In Queensland, they have started building charging stations on the ‘electric superhighway’. But there’s no doubt that financial incentives are the most significant factor in driving behavioural change when people are purchasing vehicles. When Scott Morrison was Treasurer, he observed that the Government was ‘eyes wide open’ to the idea that EVs not paying fuel excise was an implicit incentive. Investment in EV-charging infrastructure is also important. Non-financial incentives like prioritised parking, or access to bus lanes or transit lanes for EVs, are measures that some other jurisdictions have found effective. We need to be conscious of our broader policy objectives – whether we want to increase EV uptake and reduce congestion in parallel. Some incentives might not help with other problems we face.

Electric vehicles – panel discussion

AS: I think it’s important that governments start thinking about how they approach EVs and manage the transition effectively. The transition is not in dispute like it was a few years ago. Thinking through what that process will be (alongside what subsidies or incentives will be in place) is worthy of open and honest conversation. However, there are numerous other things that need to slot into place to ensure that it is going to deliver the best benefits for Victoria and Australia. We need to ensure that the energy network is prepared to address the potential uptake when it comes. There could be a scenario where you have a significant incentive, and everyone is moving to EVs, causing issues for the energy network. Decarbonisation is another thing we need to consider. We need to ensure that the environmental aspects of encouraging uptake aren’t just moving emissions from the city to the Latrobe Valley, for example. There needs to be a broader conversation about what we are trying to incentivise over what time frame, and how we do it fairly without disincentivising early uptake. PC: Ultimately, the cross-sector relationship is a key area to consider. The electricity sector is vital, but so are other sectors such as health. It’s a little-known fact that more than or equal amounts of people die each year in Australia from noxious emissions associated with vehicle use compared to those who die from road accidents. If you consider the attention on national road safety, it is always at the front of people’s minds. However, making the transition to EVs will deliver other health benefits. We need

to ensure that those benefits are considered when making decisions around incentives and optimal uptake – a lot of that work hasn’t been done yet. That type of thinking could be done through a national plan for EV adoption. AS: Infrastructure Victoria has just completed some work on the health benefits of moving to an electric vehicle fleet. If we move from our current fleet to an entirely zero-emissions fleet by 2046, the health dividend would be about $700 million a year in terms of ‘disability adjusted life years’ – the avoided health impacts of emissions-related problems. That’s just the economic benefit of people being healthier, and it doesn’t consider savings from avoided hospitalisations. AD: Fiona, did you want to add to that? FO: There are some important regulatory reforms that can happen in the electricity system to prepare us for the uptake of EVs – types of reforms that would make the energy sector more resilient to uptake scenarios that are faster than, slower than, or different to what is currently forecast. For instance, ensuring that the right incentives are in place to encourage charging at off-peak times will be the biggest challenge in ensuring that the energy system can withstand the uptake of EVs at any pace. Secondly, creating markets for owners of EVs, or distributed generation, to provide services back into the grid or system operators is critical, too. That could help EV owners understand that there may be other ways to monetise their investment. AD: Any other questions from the floor?

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Electric vehicles – panel discussion

Tony Hayward: I was just reflecting on the fact that we’re now going to have cars that don’t have drivers in them, and we’re going to change the fuel source. Is the construct of the vehicle itself going to be different in 30 years? What is the average car going to look like in 2050? What does that look like? AD: Paint us a picture. AS: There are many opinions on that question in terms of what kind of service there may be when moving ourselves and goods from point A to point B. We will see a very different mix of vehicle types and types of transport on our roads in the future – we might even have aerial vehicles by that point. In terms of the next wave, there will be variability in terms of the size of vehicle. For example, there may be smaller vehicles and smaller buses if there are more on-demand services although, large buses will stay on main trunk routes. There will be a variety of changes. A recently released concept vehicle was basically a hotel room on wheels. When we start thinking about how services will be delivered, it could take many forms. Will you have an on-demand gym that will pick you up, that has a shower in it so you’re ready for work? Will EVs start to compete with rail freight? Will they compete with airline industries, if you could take an overnight automated hotel room from point A to point B rather than flying? Would that be a more comfortable way to travel, or more cost-effective?

Peter Colacino – Executive Director, Policy and Research, Infrastructure Australia Peter Colacino leads Infrastructure Australia’s Policy and Research team, and is tasked with identifying the greatest challenges and opportunities facing the delivery of infrastructure for Australia’s growing cities and regions. He brings his experience working in positions across both the public and private sectors on some of Australia’s largest infrastructure projects, including NorthConnex, Transport for Newcastle and Gold Coast Light Rail. More recently, as a member of the NRMA executive, Mr Colacino was at the forefront of a generational change in transport services, championing the adoption of connected and autonomous vehicle technology, electric vehicle adoption and new models of transport service provision. Fiona Orton – Future Grid Manager, TransGrid Fiona Orton has more than 12 years’ experience working in Australia’s electricity, gas, climate change and sustainability sectors, focusing on the evolution of Australia’s energy markets. As Future Grid Manager at TransGrid, she is responsible for electricity transmission system planning for New South Wales over a 50-year time horizon. She considers how technology, regulation and consumer preferences are likely to influence the development and operation of power systems into the future. Prior to joining TransGrid, Ms Orton held several positions at AGL Energy, managing energy policy, scenario planning, strategy and carbon compliance. She has also worked as a climate change and sustainability consultant. Ms Orton has published several articles on the need for energy policy, market design, and business models to respond to the changing energy system and consumer requirements.

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Over the coming years, the ways in which goods and services get to us will change. AD: Pete, Tesla’s vehicles look like any other car to me from the outside... PC: Yes, they do look just like any other car from the outside. That makes it clear that it’s less about the steel box moving around, and more about the door-to-door journeys that people have and their expectations about the type of service they’ll receive. That touches on the social licence theme. As people become more time-poor and connected, they will value their time differently. As a sector, we need to ensure that people are using the most efficient modes of transport to minimise their impact on the community and congestion. Infrastructure Australia has recently done some work looking at outer-urban public transport, and thinking about ways to provide public transport in low-density areas. We’re looking at things like on-demand transport and making better use of some active transport modes. This work also acknowledges that there will be an ongoing role for private transport. So, what will the future vehicle look like? The old adage is that no-one wanted a car – they wanted a faster horse. Look how that ended up. Thinking about that and where we are today, perhaps it’s not a new car that we want. We may want something that makes better use of our road and rail networks, which are fundamentally just real estate.

Ms Orton has an Honours degree in Chemical Engineering from The University of Sydney, specialising in energy and the environment, and a Diploma of Management from the Australian Institute of Management. Dr Allison Stewart – Project Director, Infrastructure Victoria Dr Allison Stewart is the Project Director for Infrastructure Victoria’s Automated and Zero Emissions Vehicles Infrastructure Advice. Dr Stewart is an experienced capital projects leader, strategist and academic. She is a recognised expert in the theory of mega-events, and her work has been cited by The Economist, the BBC, the Financial Times, and the Wall Street Journal, among others. She completed her doctorate in mega-project management at the University of Oxford’s Saïd Business School, and has experience working in the infrastructure, energy, defence and mega-events industries. 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. Mr Dwyer served as Infrastructure Partnerships Australia’s Head of Policy from 2011 until 2015, where he led major studies on road pricing reform, contracting and financing models, among others. In 2015, Mr Dwyer left Infrastructure Partnerships Australia to serve as the Executive Director of Policy and Research at Infrastructure Australia – the Commonwealth Government’s statutory infrastructure body. He was appointed as Infrastructure Partnerships Australia’s Chief Executive Officer in March 2018.

MONASH INFRASTRUCTURE

DELIVERING IMPACT Partner with us to leverage the best of our infrastructure research capabilities. TRANSPORT

INFORMATION AND COMMUNICATION

Public transport, railway engineering, modelling and optimisation, intelligent transport systems, safety, mobility design, connected and autonomous vehicles.

Data systems, cybersecurity, robotics, machine learning, artificial intelligence, data visualisation, immersive analytics, modelling and optimisation, telecommunications technologies.

STRUCTURES Construction technologies (bridges, ports, rail, mining etc.), new materials, corrosion mitigation, structural health monitoring, modular construction.

WATER

PLANNING AND MANAGEMENT Architecture and urban design, designing infrastructure for diverse communities, environmental and social impacts, public-private partnerships, finance and investment, workforce development.

Green technologies, membrane technologies, wastewater management, integrated water modelling, remote sensing soil moisture, water pipe asset management.

Find out more at monash.edu/infrastructure

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15/10/18 11:53 am

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Helping steer the global future of public transport A Monash University research group is taking the lead in providing transit solutions to the challenges of soaring urban populations.

developing the next generation of public transport leaders.’

overseas cities have embraced the have achieved similar savings.

PTRG is Australia’s leading research group on public transport, and ranks in the world’s top three of its type, according to the Journal of Public Transportation. Group Founder and Director Professor Graham Currie is the world’s most published researcher in this field.

PTRG’s global focus is one of its three key strengths. Through PTRG and its earlier incarnations, the group has undertaken hundreds of applied research projects worldwide. Clients include London’s Olympic Delivery Authority, the US Federal Transit Administration, the Center of Research Excellence in Hajj and Umrah in Saudi Arabia, and the Land Transport Authority in Singapore.

‘PTRG is having a significant impact in public transport,’ says Professor Currie. ‘Our researchers are developing innovative transport solutions as urban populations grow, and our teaching programs are

PTRG’s work on fare evasion is a highlight. Research on the psychology of fare evaders has saved Melbourne and Sydney transit authorities approximately $105 million annually since 2015, estimates PTRG. Several

Delft University of Technology on a

Monash University is solving public transport problems for governments and industry through its worldrenowned Public Transport Research Group (PTRG).

group’s award-winning research and International teaching is another focus. Transportation Systems, a flagship engineering discipline at Monash, is taught in China through the Southeast University–Monash Joint Graduate School. Most of the program’s 48 master’s students are based in China. Monash’s teaching extends to Europe. PTRG has partnered with the one-week Planning Public Transport Services Industry course in Amsterdam. Professor Currie co-delivers the course, which attracts transport planners from across Europe.

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Professor Currie, who is also Chair of the Standing Committee on Light Rail Transit at the US Transportation Research Board, hopes to expand PTRG’s teaching into the United States and other countries.

transport authority/university research and teaching initiative. PTRG has a proud history at Monash, having operated in different formats since 2003, when Professor Currie joined the university.

‘Governments and industry need people with state-of-the-art transportation skills and an ability to apply them to complex problems,’ he says. ‘And they know that Monash is the world’s leading provider of these skills.’

PTV and the group’s other partners co-fund and collaborate with PTRG through the Sustainable and Effective Public Transport – Graduate Research Industry Partnerships (SEPT-GRIP) initiative – an advanced, industry-based, professional development program.

PTRG’s World Transit Research (WTR) clearing house service enhances its global capability and audience. Launched in 2010, WTR has collated almost 7000 journal papers from Australian and overseas researchers. More than 250,000 people across 170 countries have used the site. ‘WTR has helped PTRG to become a global hub for researchers, industry practitioners, policy advisers and other public transit stakeholders,’ says Professor Currie.

Collaborative model Extensive industry engagement is PTRG’s second strength. Professor Currie, a prominent former management consultant in public transit systems, is known for his ability to link industry, government and academia through applied research. ‘PTRG is a funnel for industry and governments to work with Monash,’ says Professor Currie, who, in 2005, recommended the $11-billion Metro Tunnel underground rail project in Melbourne.

PTRG currently has 18 PhD students – the world’s largest PhD cohort in this field – involved in SEPTGRIP. Monash’s GRIP program is designed to help researchers to develop industry-ready, interdisciplinary skills and to work with external partners on globally significant problems. ‘SEPT-GRIP is delivering exceptional results,’ says Professor Currie. ‘It enables emerging Monash researchers to work with industry and governments on real problems in public transit systems. Their work continues to have an impact on industry and on the community.’ SEPT-GRIP projects have explored passenger falls in trams; rail carriage interiors for Melbourne trains; multipurpose buses; place making and streetscaping design, and its transport impact; urban rail design and vandalism; gender diversity in public transport workforces; and big-data mining and visualisation, among a range of issues.

PTRG has attracted significant industry support. Partners include Transport for Victoria, Public Transport Victoria (PTV), the Department of Economic Development, Jobs Australia, Transport and Resources, Metro Trains Melbourne, VicRoads, Yarra Trams, Transdev and BusVic.

Multidisciplinary approach

PTV provided half of the $5 million in funding for PTRG when the research group formed in March 2015, and became the world’s first joint public

In addition to SEPT-GRIP, PTRG has 56 research associates across Monash, international universities and external groups.

PTRG’s third strength is its ability to draw researchers from across Monash disciplines on public transport projects. Through SEPT-GRIP, the group has experts in engineering, psychology, design, healthcare, policy and other fields working on transport problems.

‘PTRG is the place where Monash and academics engage in research on public transport systems – including users, planning and policy – and they collaborate,’ says Professor Currie. ‘I don’t know of any university in Australia or overseas with such an interdisciplinary approach to public transport.’ He says that a single-discipline or ‘hard engineering’ approach will not solve public transport problems alone. ‘Complex transport problems require a multidisciplinary approach. We need to understand the changing needs of public transport users, and better connect cities and people through innovative planning, policy, technology, design and vehicles.’ Professor Currie is excited about public transport’s future. He believes that autonomous vehicles, such as self-driving trains and buses, will transform public transit systems in time. ‘Self-driving trains are already used extensively in parts of Asia, and self-driving buses have much to offer. Public transport has more to gain from automation than private passenger cars.’ He sees a transport future of ‘ondemand services’ integrated with mobile technology and consumed like a public utility. ‘We have to think differently about the notion of “public transport”. How can we have smarter transport systems when cities are much larger? How can we redefine the transport experience for millennials, as well as an ageing population? How can we get more people sharing transport rather than having cars with one person in them?’ Professor Currie is buoyed by Victoria’s public transport approach. ‘Melbourne will become the size of London, so we must think bigger than ever with transport projects, and adopt a multi-decade planning approach. The Melbourne Suburban Rail Loop project (announced in August 2018) is the type of grand transport thinking needed for great international megacities.’ ♦ To learn more about the Public Transport Research Group, visit www.ptrg.info.

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Data and technology disrupting public transport The future of public transport will be more efficient, sustainable and autonomous. Customers will be in control, booking multimodal journeys to suit their needs by determining when and how they want to travel. Technology will integrate all parts of a city’s transport system for a seamless commuter experience. These are some of the key findings from Transdev, operator and global integrator of mobility, in its latest MultiCountry Barometer, a survey of key transport decision-makers from five countries – the United States, Canada, Australia, New Zealand and Sweden – about the trends, challenges and opportunities shaping the sector. For Australasia, the 2018 Barometer identified growing demand for public transport in our increasingly populous and congested cities as the primary challenge. When asked about the most important goal for improving the system, 87 per cent of respondents cited better customer experience as the priority. The majority (77 per cent) believe that using data science to understand preferences and usage patterns will deliver more efficient and reliable transport solutions, and increase patronage. Modal integration also emerged as a priority, with 87 per cent of respondents committed to improving modal integration in the next three years, and implementing alternative modes, such as rideshare and bike share, to create seamless end-to-end journeys for commuters. The majority of Australasia’s public transport leaders (65 per cent) are also interested in on-demand transport services to create better connections and close what’s known in the industry as the ‘first and last mile’ gap. Research shows that needing to walk more than 0.8 kilometres to a public transport stop

Transdev autonomous vehicle

reduces patronage by 90 per cent. This first and last mile gap can be addressed by integrating carpools, ridesharing, bike sharing and shuttle services. One day, on-demand services might be provided by autonomous vehicle and shuttle systems. The state of autonomous vehicle technology right now means that it is ideal for short trips and closed communities, such as university campuses, hospitals and business parks, or to transport people to and from transport hubs. Sixty-one per cent of 2018 Barometer respondents expressed interest in testing autonomous vehicles in specific locales as a first and last mile solution, and a further 53 per cent would like to see autonomous vehicles operating in closed communities. Technology will play a critical role in these integrated networks of the future. Transdev sees mobility as a service (MaaS) promoting both a better customer experience and modal integration by delivering a genuinely

customer-focused means of using public transport. MaaS technology enables commuters to plan and pay for their journeys, seamlessly connecting them with the different modes they need to get where they want, when they want and at the cost they want. While interest in MaaS among decisionmakers is comparatively low in Australia right now (at 48 per cent), Transdev expects this to change over the next few years, given the enthusiastic uptake of MaaS overseas. At Transdev, we’re excited to be at the forefront of the revolution in public transportation. As our 2018 MultiCountry Barometer Survey shows, data and technology are reshaping the way we operate transport systems, and delivering more reliable and costeffective services, and a better customer experience. Investing in innovation means more timely, personalised journeys for our customers, and enhanced livability and sustainable development in our cities. ♦

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As an operator and global integrator of mobility, Transdev empowers your freedom to move every day. We are proud to transport 11 million people around the world every day thanks to efficient, easy to use and environmentally-friendly services that connect people and communities. Our approach is rooted in long-term partnerships with businesses and public authorities, and in the relentless pursuit of the safest and most innovative mobility solutions. We are a team of people serving people, and mobility is what we do. www.transdev.com.au

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15/11/18 9:40 am

How to avoid a water crisis – panel discussion

L–R: Dr Jim Bentley, Karen Shippey, Sue Murphy, Terri Benson, Michael Wandmaker

How to avoid a water crisis: lessons learned from Cape Town Key points: • • •

Cape Town’s recent water crisis illustrated how access to water is fundamental to a functioning society and economy climate change and climate variability mean that water utilities must be constantly improving the way they plan and operate water assets, and improvements in technology and the changing expectations of consumers are creating challenges and opportunities for water utilities.

Panellists ►► Terri Benson, Managing Director, South East Water ►► Sue Murphy, Chief Executive Officer, Water Corporation of Western Australia ►► Karen Shippey, Chief Director: Environmental Sustainability, Department of Environmental Affairs and Development Planning, Western Cape Government, South Africa ►► Michael Wandmaker, Managing Director, Melbourne Water

Moderator: ►► Dr Jim Bentley, Managing Director, Hunter Water Corporation

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How to avoid a water crisis – panel discussion

Pre-panel address Karen Shippey (KS): I’m from the Western Cape Government in South Africa. I live in the city of Cape Town. Some of you may have heard of a little crisis that we had recently. It was dubbed Day Zero by the media, and we became rather globally famous for being potentially the first city to run out of water. What I’m going to talk to you about today is basically the anatomy of that drought, and some of the key factors that came into play in avoiding Day Zero. For those of you who don’t know South Africa, we’re right at the bottom of Africa, and my province stretches to the southernmost tip of the continent. We’re right at the bottom on the west coast. In some ways, Cape Town is like a third-world Melbourne. It is a port city, and we’ve got 4.5 million people – about 11 per cent of the total South African population. Unfortunately, we have a very high unemployment rate – about 24 per cent. We have a huge indigent population, and a Constitution that says we must provide basic services by law. Municipalities must provide water and sanitation to all citizens, whether or not they can pay for them. This creates an interesting issue for municipal financial sustainability. So, what was the problem? Historically, we’ve depended on surface water storage and surface water supply. We had three successive years of declining rainfall – three years in a row in which we had 50 per cent of the previous year’s rainfall, year after year, after year.

drought. At the beginning of 2016, the city introduced a series of water restrictions that increased in 2017. Historically, we had only ever had four levels of restriction in the city, which worked well. We had a roughly seven- to nine-year drought cycle, and in every drought those restrictions had managed to see us through. There are six dams in the Western Cape Water Supply System: three owned by the city, and three owned by the Department of Water and Sanitation. The water is shared between five municipalities, including the metro and agricultural regions. As you can imagine, as the water got less and less, the fight between sectors over who should get the water became much more pronounced. When it got to mid 2017, it became quite clear that we weren’t going to get the water we needed. In fact, 2017 was our worst winter rainfall on record, and we started making new levels of restrictions after that. There’s a level 5, 5B, 6 and 6B – those never existed until 2017. We had to keep coming up with new ways to encourage demand reduction. There wasn’t enough time to build infrastructure that would solve this crisis. Instead, we became the first city in the world to halve its demand in nine months, going from 1.2 billion litres per day to just under 500 million litres per day. That’s enormous behavioural change. We had to tell our users that we couldn’t build enough capacity, and that we needed a whole-of-society response.

Climate modelling in this area is a challenge for us. We’re the only portion of the country that has winter rainfall, so we have a Mediterranean climate. For those of you who are botanically interested, we have the smallest floristic kingdom in the world in our region – the Cape Floral Kingdom. That’s the only place in the world that it occurs.

While we could get an emergency desalination plant in that would have only produced 10 megalitres or three megalitres. A more permanent plant could perhaps produce 100 megalitres. But we needed 600 megalitres. By late 2017, after a really dry summer, we were at a target of 87 litres of water per person per day, wherever you were. It didn’t matter if you were at the office or at home – 87 litres in total. We started having all sorts of interventions to make people aware of what it was that they were doing.

However, we have relatively poor climatological modelling for this region. We have a huge amount of variability, and that is one of the things that played a big part in the crisis. Every year, the modellers would tell us that statistically, next year should be a better rainfall year – and then it turned out to be the worst in history.

By the beginning of 2018, we were at a target of 50 litres per person per day. We were in a declared national disaster. There was the very distinct possibility that we were going to run out of water. Thankfully, this year we got average rainfall, and our dams are at 70 per cent. We’ve just reduced water restrictions from level 6 to level 5B.

The last time we had that kind of pattern was in the 1950s, when Cape Town had a population below one million people and had less industry. Climate change is leading to much more variability, heat and wind. This is something that is enormously challenging for the water sector.

Day Zero was an interesting concept for us. Unlike what you see on social media, it wasn’t drummed up by a group of marketers or politicians. It was thought up by the Head of Disaster Management.

During the 2014–2015 season, we started to see a belowaverage rainfall, and we were officially in an agricultural

In 2016, the city started talking about how many days of water we had left in the dam. Our Head of Disaster Management asked, ‘What happens when we get to Day

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How to avoid a water crisis – panel discussion

Zero?’ This was such a sexy term that the media grabbed it and ran with it. Once they’d done that, we then really needed to start defining it. Originally, it was defined as when the dams hit zero per cent. But as those of you in the water sector know, you can’t get all of the water out of a dam. The last 10 per cent is difficult – it’s basically sludge, or mud. Pumping it into the system becomes a real problem, as does treating it. Over time, Day Zero was defined as 13.5 per cent collectively across the dams serving the City of Cape Town. What that meant for city officials and to people was that at that point, as a resident, you would have to physically go and collect your daily water allowance. Under that scenario, water in residential areas would be turned off, and you would physically collect 25 litres per person in your household and carry it back to your house. That scared people witless, and that’s when we got a lot of the demand change. There were three important factors in the Day Zero variables: ►► whether or not we’d received any rainfall ►► what the water usage was that day, and ►► whether or not any new augmentation had come online (and there were several million litres that were brought online during this time). However, the problem with the date moving was that people started mistrusting it. Initially, it was, ‘We’re going to run out of water in March’. Then those variables started shifting. People dropped their usage, so the date moved later, then when people relaxed a bit, the date moved forward, then the date moved again. That became a nightmare from a communications perspective, because people started thinking that they were being toyed with, when it was a legitimate engineering equation that had fallen into the public domain. As a provincial government, this wasn’t the only crisis that we were looking at. The world was watching Cape Town, and you can’t truck in water for 4.5 million people. Even under emergency conditions, which the United Nations (UN) defines as 15 litres per person per day, we wouldn’t have been able to provide our citizens with sufficient water – a terrifying prospect that opens up all sorts of other issues. Some of the smaller towns came very close to hitting zero – closer than the City of Cape Town did. One town was 21 days away from Day Zero. Nobody in the world cared about that, because it’s not a big city. Fortunately, we could

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truck water there. The other areas were in various states or degrees of threat, depending on what supplies they had. Simultaneous to this, we had one of our largest urban fires in the small town of Knysna. There was also an outbreak of avian flu, which really hit the farmers. Seventeen thousand families were being supported with daily food packages, and 37,000 agricultural jobs were lost. We had much more than a water crisis. It was clear from the economic impacts that we could not afford to get to Day Zero. If that happened, Cape Town wouldn’t be able to pull back or fix itself for years. We had to do everything in our power to avoid it. The other thing that was important for people to understand was that they needed to avoid leaping to the alternative supply without first considering demand management. Start at the beginning. Understand what you’re using, understand where you’re using it, and then gradually get to the point where you add your own additional supply if required. Some companies even put in their own desalination plants, put down their own groundwater boreholes and essentially took themselves off the grid. That’s a very expensive operation, especially when considering that we managed to avoid Day Zero. The business case becomes completely different if you’re not facing a complete water outage. In terms of our behavioural change and communication, there was massive input into this. We weren’t necessarily prepared for the step-up that was needed. Our call centre usually received about 300 calls a day, mainly about the dog barking next door or sewage smells coming out from the neighbour’s backyard. This escalated to 17,000 enquiries a day, many about broken pipes as the city started pressure management across 11,000 kilometres of distribution pipeline. Much of it was over 150 years old and was never designed for that kind of intervention. It was important for government to be a lot more transparent. We really started making progress when we acknowledged that, ‘We don’t have the problem under control. Government can’t fix this. We need everybody. We need a whole-of-society response’. For us, it was awfully close. The rain started when our dams were 16 per cent full. We were 2.5 per cent or three per cent away from our Day Zero. Unfortunately, this is a scenario that is playing out in other Mediterranean zones. We’ve seen long-lasting continuous droughts happening everywhere, and I think that’s the new normal. We need to prepare for it.

How to avoid a water crisis – panel discussion

Karen Shippey

Jim Bentley (JB): There are lot of similarities between Australia and South Africa, so let’s go straight there. We’ve got four people here who run water utilities in Australia. Perhaps, Sue, we could start with you. Do you think we face a risk of water crisis like Cape Town’s? Could we be in a similar situation? Sue Murphy (SM): In 2001, our climate started to change dramatically, and in 2004, Tim Flannery predicted that Perth would be the world’s first ghost metropolis because we would run out of water. The governance structure of water in Western Australia is what my predecessor called the ‘one bum to kick’ model. We are a whole-of-state water utility, so we have responsibility for providing water utility services to everybody. This gives us the ability to plan more holistically, and it removes some of those discussions and fights between different agencies and different agricultural, business and residential uses. We had always planned for seawater desalination, but it was planned in the 25 years and rolling category. We had to bring forward those plans, and we were able to run a mantra of climate-independent sources from the beginning. But we banned the word ‘drought’. This year, we had the first average winter we’ve had since 1974. Of the 10 driest years on record, nine were in the last 12 years. Western Australia has seen climate change. We often talk about dry climate and climate change, but not about drought. That means you must change your planning and assume that there will be several years where you get no inflow into your dams. Our plan is that we can deal with that, and if we get water, we use it. That thinking pervades most of the water utilities in Australia – certainly in the capital cities.

In the Millennium Drought, we saw big investments in climate-independent sources. There was political fallout from some of those decisions. We’ve been ‘lucky’ in that we never had rain and our desalination plants have run since the day we turned them on. They now make up 50 per cent of Perth’s water supply. Recycling is another 10 per cent and groundwater provides the rest. Our dams provide between six per cent and 10 per cent. But that sort of planning is essential. I don’t think Australian cities will have a Cape Town situation, because of that strong planning and investment that has occurred. JB: What about the Melbourne team? Michael and Terri, you both have different responsibilities in Victoria. Do you have any thoughts about how Victoria or Melbourne is placed compared to Cape Town? Michael Wandmaker (MW): Melbourne went through our version of what Cape Town went through. It certainly wasn’t as dramatic, but we’ve learnt some lessons through that process. In the worst of the Millennium Drought, Melbourne lost almost 20 per cent of its total water storage in one calendar year. That was very frightening for a lot of people. We got down to about 25 per cent at the back end, and we didn’t have a desalination plant or alternative sources available to us, so it was quite scary. Karen is right – you can’t use the bottom 10–15 per cent of a dam. We had plans of how we were going to pump water from one puddle to another puddle, so we could access what was available to us – it was quite a difficult period. Recently, a delegation came from Cape Town and we did a slide show on all the smart things we did on supply and demand management during the Millennium Drought. They listened

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How to avoid a water crisis – panel discussion

Terri Benson

politely and then they said, ‘Well, that’s all really interesting but what we really want to talk about is the governance and the decision-making, and how to get through some of these issues that they had to struggle with in Cape Town’. Broadly, I think we’ve solved these issues. We still have problems around how we can access and use things like stormwater and recycled water. But we found that our framework and decision-making processes are quite robust, and they allow us to make decisions in a timely and professional manner. Terri Benson (TB): We work closely together in Melbourne, and we plan in one whole system, so it’s very similar to Western Australia. There is that sense that we shouldn’t plan for the averages, but rather plan for the extremes, which probably came out of the experience here and in Cape Town. JB: When the Millennium Drought was going on, I was living in Auckland. We have slightly more rainfall in Auckland than you have in Perth. I was coming over for meetings with my Australian counterparts, and it was always raining in Auckland and it was never raining here. That was as much as my experience with the Millennium Drought came to. But it would be interesting to compare, not just the water experience, but the social, economic and political experiences of that time in the drought. KS: From our perspective, I was interested in one of the earlier panels, where they were talking about trust and who people listen to. In the sense that firefighters are the most trusted, we found that disaster management in our case was the most trusted. When you have a three-year disaster, unfortunately all the politicians want to jump in because they feel they’ve got to prove their worth and earn their salary, so they tend to get in the way. But when there’s a fire, everybody steps back and lets the firefighter do what they need to do. We’ve found that the governance structure created quite a bit of difficulty for us. We were unable to move as fast as we’d

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Sue Murphy

have liked to. This is because the national government has responsibility for bulk water, and the state level doesn’t have any role other than pollution control. It really became quite a fight in terms of who was going to save everybody from the drought, as opposed to everyone pulling in the same direction. It took us getting to the stage where it was a real disaster before people started all pulling in the same direction across political parties and different sectors. TB: I was not in the water sector when the Millennium Drought was happening. When I joined Seqwater in 2012, it was just after the 2011 floods, so that’s the irony. All the infrastructure being built in Queensland when I got there was coming off the back of floods – that’s probably typical Australia. But I still remember the stories. There were people complaining about running around in the shower with buckets and people talking about timers in the showers. People were very aware. I think the similarity in terms of comparing to Cape Town is to not underestimate the power of the community. In Melbourne, they still talk of Target 155 – it’s still in everyone’s vernacular. People know what that means. Even though they’re starting to talk about the drought in New South Wales, there are still people in Melbourne who are putting buckets in their showers. Total demand for Melbourne is still lower than it was in the 1980s. That has meant we’ve been able to build resilience and capacity in the water supply system just from community action. We shouldn’t underestimate the power of bringing the community with us – that supply side is important. JB: What about the social experiences as opposed to the water or institutional experiences? What was it like for people? MW: When we talk about supply and demand, the community really wanted to be engaged on the demand side. While it was a problem that needed to be dealt with, they felt that they were part of it and had contributed something towards reducing water consumption. Things like reducing the hosing of

How to avoid a water crisis – panel discussion

concrete pathways, putting in water-saving showerheads and yelling at teenagers to not have half-hour showers; they’re still built into what we do now. But one of the biggest problems that we had right across Melbourne occurred as we ratcheted up water restrictions. I should point out that I wasn’t a part of the water sector then either, but we certainly have a lot of history professors who tell me all the stories of what went wrong and what went right. There was a huge impact on the morale and productivity of Victoria. We talk about simple things like brown playing fields, which meant kids couldn’t play their sports on the weekend. But it had an impact on industry, it had an impact on the whole productivity of the state itself, and that is lasting. It takes a long time to rebound, and that affects the way we manage supply today. In Victoria, we have the desalination plant. The idea is not to leave it there as an ‘in case of emergency break glass’ option when we’re down to 20 per cent or 30 per cent. The idea is that we run it on a regular basis to maintain our storage at over 60 per cent and create a buffer so people don’t have to be concerned about those issues. It also means that industry doesn’t have to be concerned about the longterm sustainability of the state. In Victoria, we’re running the desalination right at this very moment. That’s the way we’ve worked out our strategy, so that we can maintain a long-term sustainable future for the water supply. KS: In Cape Town, for the average person there was a lot of fear when facing that kind of critical scarcity. What I saw was almost a grief cycle–like response. People were initially very angry, and they wanted to blame somebody. They eventually then accepted that the rain didn’t fall, and the dams weren’t full, so now they had to do something about it. It’s that process of internalising what you personally can do to change things, as opposed to expecting other people to do it. Once people start joining the dots, they realised it was food security, and even the logistics of delivering food. We started realising that we use water everywhere. For example, with the cooling systems on our data centres, if the data centre goes down because it gets too hot, banking shuts down. If banking shuts down, your economy shuts down. You start getting a knock-on effect. But nobody thinks about it, because every time you turn the tap there’s water there, until there isn’t. Some of our university campuses and some buildings started doing ‘dry runs’. They literally turned off the taps and checked to see which systems broke, because it isn’t like electricity where you have a very clear sense of what relies on that switch. Water was in areas that people would never think about. It was a whole lifestyle that was threatened, and that was terrifying for people.

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I think the water sector has been protected from a lot of change because most people don’t want to deal with their own sewage, and they’re very happy for someone else to deal with it

JB: When I worked in Turkey, I ran the water supply for the city of Izmit. A big earthquake hit there in 1999. We normally supplied about one million people. When the earthquake struck, our water supply was perfectly okay, but no-one was living in their houses. The logistics of getting water to a million people, day in, day out, and providing all their sanitation needs, is incredibly difficult when you’re trying to do it en masse. Let’s look to the future. What sort of disruptions and innovations do you think could come to our sector? What do we do to either understand them or take hold of and encourage them? SM: The disruption is going to be massive in every sector. There’s a lot of change coming that we don’t understand. I think the water sector has been protected from a lot of change because most people don’t want to deal with their own sewage, and they’re very happy for someone else to deal with it. While everybody’s very happy to have solar panels on the roof, putting your own rainwater tank in doesn’t necessarily lead to good health outcomes, and dealing with your own sewage is horrible. We’ve been protected a bit. Digital disruption in the way that we run our networks is massive, and will help us save a lot of water. One of the big issues as we go forward is the way that digital systems will allow us to work more closely with our customers. This will make it easier for us to help our customers understand their water use and encourage behavioural change. Although the drier climate and drought issues have changed a lot of people’s personal behaviour, a lot of the long-term changes we need to make can’t be made in a drought. In Perth and in Western Australia, we now have indirect potable water recycling for 10 per cent of our water supply. In Queensland, they did a very similar set of schemes with indirect potable water, but they were implemented without enough consultation because they’d been installed in a crisis.

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How to avoid a water crisis – panel discussion

The community rejected them, whereas in Western Australia, we had 10 years of discussion with the community while not in a crisis to get it up and running. One of the big disrupters is the ability to easily and safely recycle wastewater, recycle sewage – to go from toilet to tap in a safe way. The challenge is in bringing your customers along on that journey. While we should ‘never waste a good crisis’, there are elements of change that, when not at crisis point, you can embed forever. JB: Terri, your organisation’s known to be a leader in the industry on technology. TB: We talk about digitising our business all the time, but probably it’s too simple to say we’re digitising. As a sector, we are at a very exciting point because there are many challenges coming out of population growth, climate change and the pace of technological change. We’ve nearly got the perfect storm for the right outcome. There is a real problem to solve in terms of population growth and a valuable resource, and we’ve got available solutions right at the same time. Communications technology has come down in price, and sensors are also coming down in price. They’re affordable solutions. South East Water’s digital journey started a long time ago. We tried to solve septic replacement systems, and it was too expensive to run sewer solutions to parts of the Mornington Peninsula. We started with a solution called ‘One Box®’, which was a low-pressure sewer system. The whole idea was that you could control the flow. No-one likes to talk about it, but we get to talk about it all the time. We capture the sewer in a tank at each property, and we can control all of those. Anyone who works in energy here, and understands peak lopping, knows it’s the same. We hold sewage in that tank until we can control the flow, because it is just like energy. Everyone’s consuming it, everyone’s flushing their toilet and having their showers first thing in the morning and of an evening. If you have to fill the pipes and you have to dig them for gravity, you need big trenches and pipes to cope with the peak. A low-pressure sewerage system allows you to have very small pipes and pumps, and we can control that, and there’s different modes of operating. Our control unit has now found its way to a solution called ‘Tank Talk®’, which is being used in a subdivision called Aquarevo. There’s low-water-consumption housing going in there. There is a combination of recycled water and rain tanks for that community. We’re working closely with the Department of Health and Human Services, and we’ve now got a rainwater to hot water solution going into the homes. That’s taken two years of testing, trialling and working with the university to try new technology. With rainwater to hot

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water, the houses will consume about 30 per cent of what a traditional house would in terms of drinking water. That’s taking 70 per cent load off the central system. The other benefit of the rainwater tank that we hadn’t thought about when we started it is in a stormwater sense. We can now look at the weather apps and we can control those tanks. The same control unit that we developed for our pressure sewer system is sitting in the rainwater tanks. We’re looking at the weather. If there’s a big storm front coming, we can empty the rainwater tanks before it comes, and it can flow through the storm system in an ordinary way. Then, when the storm front hits, we’ve got maximum capture of that stormwater. When there was only 3G around, it was super expensive to have that many devices out there in the system. With recent developments, the cost of sensors and other devices is cheap. We can now overlay that in our system and change our business. I don’t think the digitisation of our business is about efficiency; rather, it’s about a different business model altogether with different revenue sources. JB: What about you, Michael? You have responsibility for all the bulk planning in Melbourne. How is this affecting you? MW: There is a greater level of cooperation in trying to look at these end-to-end solutions, and we’re looking at the use of technology. People tend to think of water utilities as oldfashioned, but that couldn’t be further from the truth – especially regarding our sewerage treatment and water treatment and how we transport the products around. You’ll notice that we call the products resources, not waste, and we’re looking at better utilisation of those. We’ve added artificial intelligence into our SCADA control systems, and that will change the whole way we set up and run these organisations. But the big changes are the standard ones that you would expect. Melbourne is facing huge population growth, and there is a change of climate that we need to deal with. There are no obvious new dams in this region, so we’re going to have to be able to cope with a large increase in population with the same amount of water available to us. One of the things that is occurring on the journey we’re on now is a healthy discussion around what we call ‘integrated water management’. We would look at these as individual resources – things such as recycled water, potable water and stormwater – we’re looking at that whole thing as one circle. There’s a great opportunity for us now with the changes in dynamics and the costs of these services. Stormwater has been a poor cousin. We’ve put more stormwater in Port Phillip Bay than potable water that we use for the whole region. It’s a great opportunity to start to capture and re-use that – hopefully we can, as we have a long-term sustainable solution, but hopefully we can also avoid huge cost augmentations down the track.

How to avoid a water crisis – panel discussion

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n organisation A like Infrastructure Partnerships Australia is incredibly useful to make sure that the private sector, the public sector and your civil society are on board and having a conversation together

KS: We found it very interesting that as we required people to cut back on water usage, it created a completely different financial model. We don’t have a utility – our municipalities provide the water. But for them to keep financially viable was a real challenge, because people are actively using less water. But they’re also using decentralised processes. As much as people don’t want to deal with the sewerage, they can use rainwater and various other things. That means we’re not delivering a service, and therefore not charging for it. The municipal business case becomes very different. What we’ve just moved to is a network charge, it’s an availability charge. Whether or not you’re connected, whether you use a lot or a little, you must pay a basic amount every month, simply for living in the city. This is to ensure that the infrastructure is maintained and expanded as required. It’s a completely different model. The financial sustainability discussion for the sector needs to change, as well. JB: Give me one thing in policy or regulation-wise that you would change either in your state in Australia or in South Africa. SM: Politicians and policymakers should never take anything off the table. There are myriad things we can do to address a drier climate, to address population growth and to keep people well supplied with water. However, when politicians and other groups say, ‘You can’t take water from a regional area to a city,’ or, ‘We’re not going to put up with direct potable or indirect potable,’ or even, ‘We don’t like desalination,’ all of those things limit the suite of options. What we need is for all options to be on the table and debated with an understanding that they may not all make sense now, but they will at some stage. JB: Even though we don’t have a crisis now, it sounds like we have a lot of characteristics that South Africa has from a natural point of view. Outside of a crisis, how do we make sure we’re bringing about the change that, if we ever got into crisis, we’d wish we would have thought about?

Michael Wandmaker

MW: That’s a very large and complicated question to answer, but, simply put, we went through our near-death experience and we’ve learnt a lot of lessons – although, there’s always a risk, and we need to keep people ever-vigilant about the problems that we face. But we do have good, well-thought-out, long-term strategies in place to take advantage of all the new technologies that are coming through. Given that we do plan around a population of 10 million in Melbourne, I’m confident that we will be able to meet the challenges of population growth. JB: In the water sector, we’re at an interesting point of longterm planning to give people security and confidence. I think it’s a challenge for us to blend those things together so we get the best of both worlds. TB: We’ve just got to get on and do it. We need to deliver, and not worry about regulatory environment. There will be hurdles and things that will have to change. We just need to stay focused on the solutions, keep delivering all those things and adapt to rule changes as we go. SM: Plan for the worst and deliver on what we get. KS: For me, it’s around the partnerships. An organisation like Infrastructure Partnerships Australia is incredibly useful to make sure that the private sector, the public sector and your civil society are on board and having a conversation together. Resource scarcity is not something that affects any one sector; it affects all of us, and we must deal with it together, in partnership with each other. JB: Is there a bigger role for the private sector in what we do? MW: Yes. TB: Absolutely. JB: That was a positive response. MW: It was mentioned before that we shouldn’t take any solutions off the table. We all use the private sector quite extensively to provide our construction activities, and in various other ways. We are all expecting the private sector to play a bigger and better role as our industry continues to grow and develop. TB: There’s not one challenge in our business – whether it be climate pledges or alternative water sources – where

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How to avoid a water crisis – panel discussion

we’re not working with the private sector. We haven’t got all the answers, and I don’t think anyone has yet.

KS: Absolutely. It’s really good-quality water.

SM: No-one has a monopoly on good ideas. We need everybody working together, and the private-sector profit driver is often an earlier source of inspiration than some of the political drivers.

using it, and South Africa did long-term pilots on it, and it’s

KS: We’re seeing a very interesting move into much more innovative non-climate-dependent water sources. Water from air has become a major discussion point in Cape Town. I’ve got one of those units in my house now, and it’s where all my family’s drinking water comes from.

that if it rains over Perth, it doesn’t rain in the Wheatbelt. That’s

Terri Benson – Managing Director, South East Water Terri Benson was appointed Managing Director of South East Water on 29 May 2017. She has held a range of both executive and non-executive director roles in the government utility and private infrastructure sectors. She is a former CEO of Seqwater, a water wholesale utility in south-east Queensland; a former Managing Director of Essential Energy; and also a former Chair of the Energy and Water Ombudsman NSW. Prior to joining South East Water, Ms Benson was the Managing Director of Birdon, a diversified engineering and services business providing innovative solutions to the military and marine industries with operations across Australia, the United States and Europe. Dr Jim Bentley – Managing Director, Hunter Water Corporation Jim Bentley was appointed Managing Director of Hunter Water Corporation in July 2016. Hunter Water is a State Owned Corporation of the New South Wales Government, supplying water, wastewater and stormwater services to nearly 600,000 people in the Greater Newcastle and Lower Hunter areas. Before coming to Australia, Mr Bentley was based in New Zealand for 10 years. During this time, he held a number of roles including being the inaugural Director of the Centre for Infrastructure Research at the University of Auckland, and CEO of a boutique infrastructure services consultancy through which he led a number of major transport projects, as well as leadership development and project management programmes for a range of clients. Sue Murphy – Chief Executive Officer, Water Corporation of Western Australia Sue Murphy graduated as a Civil Engineer from the University of Western Australia in 1979. After winning a Clough Scholarship as an undergraduate, she joined Clough Engineering in 1980, commencing what would be a 25-year career in that organisation. Twelve years in the field as a site engineer and project manager led to corporate roles with a focus on human resources, safety and engineering design management, and her appointment in 1998 as the first woman on the board of Clough Engineering. In 2008, Ms Murphy was appointed Chief Executive Officer of the Water Corporation. She is a member of the University of Western Australia Senate, and a board member of the UWA Business School and the Water Services Association of Australia (WSAA). Ms Murphy is also a board member for the Fremantle Dockers. In each year from 2009–2015, Ms Murphy was listed in the top 100 most influential engineers in Australia by Engineers Australia. In 2013, she was honoured with the prestigious Sir John Holland Civil Engineer of the Year Award by the board of the Civil College of Engineers Australia. Murphy was also elected as an Honorary Fellow of the Institution of Engineers Australia. In 2014, Ms Murphy was presented with the International Water Association’s Women in Water Award, and listed at number eight of the 2017 ‘Top 25 Global Water Leaders’ by Water and Wastewater International magazine.

MW: We’re doing trials on that. Can you send us data?

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Even things as unusual as rainfall enhancement. California’s technically feasible. We can see it paying off. Will that be the future of the water sector? SM: We’ve done a lot of work on making it rain, but it showed not good. JB: I think our time is up, so thank you very much

Karen Shippey – Chief Director: Environmental Sustainability, Department of Environmental Affairs and Development Planning, West Cape Government, South Africa Karen Shippey has a Master’s Degree in Environmental and Geographical Science from the University of Cape Town, and more than 20 years of work experience in her field. Whilst her postgraduate studies focused on sustainable development, her work experience took her into the world of infrastructure development, working as an Environmental Assessment Practitioner. Ms Shippey has spent much of her career undertaking work in the water sector, especially on the Western Cape Water Supply System. This work incorporated environmental impact assessments on surface and groundwater infrastructure, as well as community and stakeholder engagement for the Western Cape Water Reconciliation Strategy Study and project oversight on the Olifants-Doorn Ecological Reserve studies, among others. She also undertook the stakeholder and impact assessment work for the Table Mountain Group Aquifer Feasibility Study, which focused on the deep hard rock aquifer below the Cape Fold Belt and underlies much of the Western Cape region. She considers one of her most unusual and interesting projects in her career, however, to be the South African Rainfall Enhancement Project’s Strategic Environmental Assessment, which considered the likely impacts of weather modification within South Africa. Ms Shippey joined the Western Cape Government in 2011 and became Chief Director: Environmental Sustainability for the Western Cape in 2015. This role saw her providing oversight and leadership across the Provincial Climate Change, Green Economy, Sustainability, Biodiversity and Coastal Management portfolios. Between 2015 and 2018, the Western Cape experienced a severe drought and, due to her extensive knowledge of regional water supply systems and associated role-players, Ms Shippey was seconded to the Provincial Disaster Management Centre (PDMC). During 2017 and 2018, she provided technical support to the drought relief and disaster management efforts for the region. Her drought-response role focused on engaging with the economic sector and supporting, specifically, business continuity planning. Since the immediate ‘Day Zero’ crisis was averted in May 2018, Ms Shippey returned to her core focus areas, which underpin the provincial efforts to strengthen ecological infrastructure and develop resilience through improved climate change response. Michael Wandmaker – Managing Director, Melbourne Water Michael Wandmaker has extensive senior leadership experience across several industries, both in Australia and internationally. He was previously President of FT Services, CEO of Silcar Maintenance Services and Vice President at Siemens Canada, and held various executive positions with Tyco Services and Transfield Holdings. Prior to becoming Managing Director at Melbourne Water, Mr Wandmaker was Group President and Acting CEO of UGL Limited.

Deakin Engineering Strength from diversity Did you know that industry-focused R&D is a core activity at Deakin University’s School of Engineering? Industry-specific problems provide context, drive, innovation and challenges for our talented staff and students. Utilising our state-of-the-art facilities within the Centre for Advanced Design in Engineering Training (CADET), we are able to tackle the toughest challenges of Australian industry. We have specialists in many areas of engineering and take a holistic, end-to-end approach to problems. Working with industry, we can address the concerns that are of greatest importance to our community and assist in providing the solutions that will help to advance our society and strengthen our economy. Email us at: drinnovations@deakin.edu.au

Find out more

deakin.edu.au Deakin University CRICOS Provider Code: 00113B

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Deakin University leads new thinking on infrastructure Industry engagement central to innovation and impact in infrastructure systems. A multidisciplinary team at Victoria’s Deakin University is working to enhance Australia’s approach to infrastructure management and sustainability.

team is seeking to improve infrastructure

The Infrastructure Futures team aims to position Deakin as a leader in infrastructure systems research – delivering advanced insights, methods and tools to revolutionise decisionmaking on infrastructure systems, and to contribute to a more sustainable society.

interdependent, but decision-making

Supported by Deakin’s Research Network Scheme, which unites Deakin expertise to tackle complex problems, the team’s researchers come from different disciplines across the university. Carol Boyle, Professor of Infrastructure Engineering Design at Deakin, is the project leader. She says that by taking a systems approach, the

decision-making in Australia. ‘Infrastructure systems are increasingly complex and is often made in isolation. We need revolutionary new pathways.’ An interdisciplinary research approach is central to the initiative. ‘We are incorporating social, environmental, economic and political dimensions to understand how systems thinking can improve decision-making across infrastructure systems,’ explains Professor Boyle. She says that the Infrastructure Futures initiative will establish an ecosystem of infrastructure capabilities at Deakin.

‘We are leveraging funding to develop a leading research program that will change how infrastructure is managed for the future. This is the beginning of long-term industry engagement and a long-term research program with invested stakeholders.’ Infrastructure Futures is attracting early industry support. With the backing of Coliban Water, Wannon Water and Barwon Water, Deakin is undertaking pilot projects to apply systems thinking to resolve complex problems. In addition, Infrastructure Futures is also working on projects with industry and local government. As it grows, Infrastructure Futures is expected to become a hub for industry engagement with Deakin in this field, as well as a prominent research network in the Asia-Pacific on infrastructure systems.

Innovation in renewable energy Deakin’s infrastructure systems momentum is being boosted by a $30-million industrial-scale smart microgrid energy system, and integrated research and education platform, developed in partnership with AusNet Services through its Mondo Power advanced energy solutions group.

Artist’s impression – Research, Teaching and Visualisation Centre

The initiative will be Australia’s largest campus-based microgrid system. It involves the installation of more than 23,000 solar panels at Deakin’s Geelong Waurn Ponds Campus, and is a key part of the university’s ambition to achieve carbon neutrality.

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Carol Boyle, Professor of Infrastructure Engineering Design

The Deakin/AusNet partnership will establish a 7.25-megawatt smart microgrid, including a 14.5-hectare solar energy generation farm, one megawatt hour of battery storage capacity, and an integrated research and visualisation centre in Deakin’s Centre for Advanced Design in Engineering Training (CADET). The project is expected to contribute to Deakin’s energy needs by mid 2019. Professor Aman Maung Than Oo, Interim Head of Deakin’s School of Engineering and a research leader in the project, says microgrid data will provide unique insights into the integration of energy-management demand systems. ‘Through the microgrid, Deakin will develop an evidence-based approach to understand how best to integrate renewable energy systems into the existing energy grid. Current analysis on how best to integrate energy forms has been limited, or based on assumptions rather than data.’ Professor Oo says that microgrid data can influence government policy in energy. ‘Deakin can help to inform future policy and standards for the integration of renewable and fossil fuel energy sources in the national energy grid. This work could have a significant community impact through better integration of renewables.’

Professor Aman Maung Than Oo, Interim Head of School – School of Engineering

Professor Oo believes that microgrid research will aid the development of smart cities. ‘Every city would like renewables to constitute 100 per cent of their energy mix; but cities will need fossil fuels for a long time to come, so developing effective mechanisms to optimise the transmission and integration of renewable energy in existing grids is critical.’ The potential outcome is a more precise mix of renewables and fossil fuels, based on a city’s location, wind and sunshine. ‘By providing realtime data, microgrid can improve our understanding of the best energy mix for a given location and time,’ says Professor Oo. ‘Australia’s current energy grid is built for one-directional power flow; we need to understand how to optimise the system when renewables kick in from different directions.’ Professor Oo says the microgrid will feed into Deakin’s Infrastructure Futures initiative. ‘Through the Internet of Things (IoT), we can understand energy demand in different cities and rechannel energy as needed. For example, if Geelong has strong wind flow, we can capture that energy and transmit it through the grid to Bendigo, assuming it needs more energy at that given time.’ Professor Oo expects microgrid data will inform many Deakin energy

systems research projects. ‘We are already looking at a number of research projects with our partner, AusNet Services. The goal is having Deakin researchers working on industry-based energy projects through the microgrid.’ He says the School of Engineering’s research approach adds to Deakin’s infrastructure systems capabilities. ‘Lots of universities are investigating different aspects of infrastructure, but we believe Deakin’s systems focus, which considers the big picture at the system level, is unique. This point of differentiation in infrastructure is attracting industry partners, researchers and students.’ Professor Oo believes that Deakin’s teaching and research strengths in infrastructure have great appeal to students. ‘The integration of renewable energies into infrastructure systems is a growth industry of tomorrow and one of the great engineering challenges,’ he says. ‘Deakin is the place for engineering students and researchers who want to contribute to Australia’s sustainable infrastructure future.’ ♦ To learn more about Deakin’s School of Engineering, visit www.deakin.edu.au/engineering.

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The Hon Anthony Albanese

Key points: • • •

there is a need for real leadership and bipartisanship to overcome infrastructure challenges and decide on a national energy policy infrastructure funding is declining while off-budget investment is increasing, but grant funding cannot be substituted with innovative financing arrangements, and Labor is focused on reforming Infrastructure Australia and placing city policy at the centre of government.

Let me begin with a quote: ‘Infrastructure Partnerships Australia … has been fundamentally about using information and data to better inform the national infrastructure debate, allowing the sector and wider community to better discern infrastructure fact from fiction.’ Those were the words of someone who is very familiar to us: Brendan Lyon. In his decade at the helm of Infrastructure Partnerships Australia, Brendan took a nascent industry body and transformed it into one of Australia’s most respected and effective public policy organisations. Under the leadership of Brendan, and Adrian Dwyer, Infrastructure Partnerships Australia has more than fulfilled the mission expressed in the quote I opened with. In doing that, it has highlighted the virtues of stable leadership. Federal

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politics could take a leaf out of Infrastructure Partnerships Australia’s book. Consider this: during Brendan’s 10-year tenure as CEO, there were six Prime Ministers. And Adrian, who has only been in the role for a short period of time, is already onto his second Prime Minister and second Infrastructure Minister. While the comings and goings in Canberra have not been good for the nation’s body politic, the stability at the top of Infrastructure Partnerships Australia has been a key to its success. This stability has enabled the organisation to recruit a professional, dedicated staff and to develop a strong policy platform and an extensive body of research and build trusting relationships both within the sector, and within the corridors of power around the country.

The Hon Anthony Albanese

But we don’t always agree on everything. Nor should we. The long-term national interest is best served when we debate our differences and challenge each other’s ideas. Any such debate needs to take place within a framework of civility and mutual respect. Sadly, too much of our public discourse these days lacks those two basic elements. The predicament facing modern democracies was best summed up by former President of the United States Barack Obama, who, in his last speech in office, made the following observation: ‘…in the course of a healthy debate, we’ll prioritise different goals, and the different means of reaching them. But without some common baseline of facts; without a willingness to admit new information and concede that your opponent is making a fair point, and that science and reason matter, we’ll keep talking past each other, making common ground and compromise impossible.’ Finding that elusive ‘common ground’ is what makes forums like this so important. Infrastructure Partnerships Australia has managed to bring together some of Australia’s most senior political, public-sector and business leaders to engage with each other and discuss the national reforms that will fix our infrastructure. The need to achieve a consensus around the way forward is more urgent than ever before – particularly after five years of policy drift and complacency at the national level. Simply put, Australia is at a critical crossroads. As noted in a report released in September by the House of Representatives Standing Committee on Infrastructure, Transport and Cities, entitled ‘Building Up and Moving Out’: ‘Australia is undergoing rapid change. Population growth, urbanisation, the ageing of the population and the transformation of the economy towards service and knowledgebased industries are causing profound changes in the urban and regional landscape. The outcome of these changes will depend on how they are managed.’ It is obvious that managing those demographic, spatial and technological changes will not be easy. It will require national leadership with a clear, coherent vision of how we, as a people, can shape a better future rather than allow other forces to shape it for us. There is one more important ingredient to success: real leadership. Real leadership requires a vision and agenda for the future, and the maturity to reach across the aisle and build bipartisanship wherever possible. Overcoming the big infrastructure challenges facing Australia – be they in the areas of energy, telecommunications, water or transport – will simply not be possible in a single parliamentary term, or even the tenure of any one government. Real reform takes time to deliver the desired change.

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eal leadership requires R a vision and agenda for the future, and the maturity to reach across the aisle and build bipartisanship wherever possible

Energy policy in disarray If you want an example of where naked partisanship has wrecked a prevailing consensus in this country and harmed the national interest, you only need to look at energy policy. In 2007, in what, at the time, was a breakthrough, both sides of politics acknowledged that the most cost-effective way of reducing harmful emissions was to put a price on carbon. Both major parties went to the election that year committed to implementing an emissions trading scheme. Unfortunately, that consensus only held for two years before the denialists in the Coalition and the purists in the Greens political party, tore it down. Once in government, the Coalition proceeded to dismantle the market-based mechanism that was working – emissions were falling and investment in the energy of the future was increasing. Since then, we have witnessed a debate, mostly within the Government itself, that has plumbed new depths of the absurd and no amount of spin and denial can conceal that sad reality. We have even witnessed the so-called ‘party of free markets’ arguing for new taxpayer-funded coal-fired power stations, and for governments to have the power to order private companies to divest themselves of particular assets. We have had an emissions intensity scheme, a clean energy target and various versions of the National Energy Guarantee. All proposed, considered and then rejected by the party that proposed them it the first place. As a result, our country is now in its fifth year without a coherent energy policy. That’s five years without the regulatory certainty that investors have rightly sought in order to make the investments that would have increased the supply of affordable, reliable electricity into the national grid. It is little wonder that industry and households are now suffering under higher prices. And when you thought the situation could not get more depressing, the Government has now given up the charade of trying to have an energy policy. It is now official: the Coalition’s policy is not to have a policy. It has thrown its hands up in the air, admitting that governing is

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The Hon Anthony Albanese

Source – Allens

all too hard. This is despite Labor’s repeated offer to work with the Coalition to put measures in place that would be in the longterm national interest. Understandably, the Coalition’s capitulation to inertia has been condemned by the business community. In the words of the Chief Executive of the Business Council of Australia, Jennifer Westacott: ‘Without locking in this overarching framework, investment uncertainty will continue to be unresolved and the national electricity market will remain unfit for purpose.’

Cities There is now broad political agreement that the national government has a role to play in making our cities work better. It is a consensus that was hard won. One of Tony Abbott’s first acts as Prime Minister was to abolish the Major Cities Unit and retreat from our cities. He also disbanded the Urban Policy Forum, scrapped the annual State of Australian Cities report, and cancelled all public transport projects that were not already under construction, including the Melbourne Metro. Thankfully, the Abbott years were only a temporary setback. While his successors have accepted the principle of federal involvement in building more productive, sustainable and livable cities, their actions have lacked substance. Take, for example, Malcolm Turnbull’s signature policy, City Deals. In the view of the bipartisan parliamentary report I referred to earlier, while the program ‘excited much interest’, it had delivered ‘limited results’. We must – and can – do better. That starts with having the right processes. That’s why we recently announced our commitment to replace City Deals with a City Partnerships programme that will foster more genuine collaboration between the three levels of government.

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To achieve this, we will: ► re-establish the Major Cities Unit within the independent Infrastructure Australia, and task it with recommending and assessing the progress of City Partnerships ► establish an expert panel to update strategic planning guidelines for cities, and develop guidelines for City Partnerships, in consultation with the Minister, which include benefits to the economy, and ► refresh the National Urban Policy, which was released when I was the Infrastructure Minister in the former Federal Labor Government. This would ensure that City Partnerships align with the National Urban Policy objectives in areas like sustainability and smart technology. The challenges facing our cities are complex. But if we are going to unlock their potential, and the potential of those living in them, then we must take a holistic and strategic approach that is underpinned by evidence and good governance.

Infrastructure Australia Another idea long championed by Labor that now enjoys bipartisan support is Infrastructure Australia, and the need for an evidence-based approach to assessing the nation’s immediate and long-term infrastructure needs. This is another example of where the Coalition has adopted the principle, but not the substance. While it is true that the government retained Infrastructure Australia, the independent body has been effectively sidelined. The most recent example of this was the decision to strip it of its role in advising governments on how projects can best be financed – the Coalition handed that responsibility over to its new Infrastructure Financing Unit. This was despite Infrastructure Partnerships Australia and others telling the Government

The Hon Anthony Albanese

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iven recent events G in Canberra and the resulting division, chaos and suspicion that now grips the Government benches, I am sad to say that I cannot see the situation improving in the short-term

that such a body was completely unnecessary. More than 12 months later, the Unit has not brought forward the delivery of a single new project.

Infrastructure financing That brings me to the broader issue of infrastructure financing. It is here that the Coalition has been challenging the longstanding political consensus and collective wisdom (seduced by the idea that you can build things for free) that you can substitute ‘innovative’ financing arrangements, like value capture, Public Private Partnerships and equity investments, for grant funding. Don’t get me wrong, Labor readily accepts that these arrangements can play a role in closing the infrastructure funding gap. When we were last in office, we employed innovative funding solutions to deliver several major projects, including the Legacy Way road project in Brisbane, the NorthConnex road project, the Moorebank Intermodal in Sydney and the Gold Coast Light Rail. If we win the next Federal Election, we will join with the Queensland Government to deliver South East Queensland’s number one infrastructure priority, Cross River Rail, via a Public Private Partnership. We understand that the private sector has an important role to play in building public infrastructure. But governments cannot avoid the fact that they will have to stump up taxpayers’ dollars if they want projects to happen – particularly urban public transport projects. As Infrastructure Partnerships Australia has pointed out: ‘Commonwealth Government funding support is needed for infrastructure – Commonwealth financing is not. ‘If the budget seeks to materially increase the pace, quality and scale of national infrastructure investment, we respectfully submit that Government policy needs to return to real options, which include grant funding.’

The bottom line is that grant funding is vital, and less of it will mean less infrastructure. That’s precisely what the Coalition is promising to deliver if re-elected. As confirmed in the 2018 Budget Papers, federal infrastructure grant funding will fall over the next four years to its lowest level since the early 2000s, declining from $8 billion in 2017–18 to $4.5 billion in 2021–22. The independent Parliamentary Budget Office has concluded that grant funding, expressed as a proportion of gross domestic product (GDP) and based on current budget allocations, will halve over the next decade from 0.4 per cent to 0.2 per cent. That’s a 50 per cent cut. Alongside cutting grant funding going forward, the Government’s infrastructure programme has been plagued by project delays, missed deadlines and botched program rollouts. Too often, grand announcements are made and then nothing happens. Over its first four budgets, this Government has invested $4.7 billion less than it promised. That’s a massive 20 per cent underspend. Thanks to the Senate Estimates process, I can reveal that during the last financial year, 127 projects around the country were running behind schedule, which is largely the product of poor planning and inadequate project oversight. Given the totality of the Coalition’s record, it is not surprising that over their time in office Australia has slipped from 18th to 28th on the World Economic Forum’s Global Competitiveness Index when it comes to the adequacy, quality and efficiency of our infrastructure. That’s my take on where we stand today as a nation. Given recent events in Canberra and the resulting division, chaos and suspicion that now grips the Government benches, I am sad to say that I cannot see the situation improving in the short-term.

Federal Labor’s approach To those who ask what a future Labor Government would do, I would point them to our record the last time we had the privilege of governing this great nation. If we are successful at the coming election, you will have in me a Minister who is experienced and a known quantity. While Prime Ministers have come and gone, there has been one fixture in the Federal Parliament over the past decade, and that has been Labor’s infrastructure spokesman. I have held this portfolio for almost as long as Infrastructure Partnerships Australia has existed. Alongside establishing institutions such as Infrastructure Australia and the Major Cities Unit to break the nexus between the three or four-year electoral cycle and the much longer investment cycle, the former Federal Labor Government also: ►► restored national leadership via my appointment as Australia’s first ever Federal Infrastructure Minister, and the creation of a Federal Infrastructure Department

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The Hon Anthony Albanese

►► built and upgraded 7500 kilometres of road, including completing the duplication of the Hume Highway, accelerating the upgrade of the Pacific Highway to a dual carriageway, and improving the safety and flood immunity of hundreds of kilometres of the Bruce Highway ►► rebuilt one-third of the interstate rail freight network – some 4000 kilometres of track, and ►► committed more funding to urban rail infrastructure than all of our predecessors since Federation combined. Overall, we more than doubled annual federal infrastructure spending from $132 to $265 per Australian, taking Australia from 20th out of 25 OECD countries to number one when it came to investment in public infrastructure as a proportion of national income. We did all of that despite our government being confronted with the most severe and far-reaching global economic downturn since the Great Depression of 1929. It’s this record that will provide the template for what we will do the next time. In short, there will be two key elements to Labor’s infrastructure agenda for the nation. Firstly, if we are to maximise its economic, social and environmental dividends, infrastructure policy must be right. That starts with a genuine commitment to a long-term strategy based on an objective, evidence-based assessment of the nation’s infrastructure needs. In practice, that will involve returning Infrastructure Australia to the centre of the Government’s decision-making process and respecting its advice. We will provide it with the resources it needs to perform its core functions, including assessing projects, producing an infrastructure pipeline and recommending financing mechanisms. The importance of having an effective Infrastructure Australia cannot be overstated. While the quantity of available investment is important, so is ensuring that taxpayers get value for money. It is imperative that funding goes to projects that will fix an identified problem – projects where the planning has been done, and those that offer the highest economic, social and environmental returns. Simply put, more zeros on a project’s price tag do not automatically mean that the project is a better solution than a cheaper alternative.

The Hon Anthony Albanese MP – Shadow Minister for Infrastructure, Transport, Cities and Regional Development and Shadow Minister for Tourism Anthony Albanese was re-elected the Member for Grayndler at the July 2016 election, and is currently the Shadow Minister for Infrastructure, Transport, Cities and Regional Development and the Shadow Minister for Tourism. Mr Albanese has been a Member of Parliament since 1996, and believes strongly in the need for Government to invest in local communities. This includes Federal Government investment in public transport to address the issue of urban congestion. Following

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Secondly, we will reverse the projected decline in federal investment and provide real funding to the real projects that have been identified and properly assessed by a re-empowered Infrastructure Australia. Not only will we proceed with all of the new projects announced in the 2018 Budget, but we will also add to them to create an even more ambitious capital works programme, particularly in urban public transport. A future Federal Labor Government will invest in Brisbane’s Cross River Rail project. In Sydney, we will partner with the state to build the Metro West and ensure that the new Western Sydney Airport is connected to the city’s passenger rail network from the day it opens. Labor understands that as one of the most urbanised nations on the planet, Australia’s continued prosperity will largely depend on how successful we are at making our cities work better. That demands investment in both road and rail infrastructure. On energy, we will end the years of policy confusion and establish a clear mechanism that will drive down emissions. This will provide investment certainty that will lead to lower electricity prices for businesses and households. On communications, we will have a broadband network built on 21st-century fibre, not 19th-century copper. Our network will revolutionise the delivery of essential services, such as health and education, and will unleash the growth potential of our regions. That’s only for starters. We will have much more to say about infrastructure between now and election day. After all, Labor is the party of nation building.

Conclusion Let me conclude by stating a truism: good government is about planning and building for the future. In order to drive long-term economic growth, build inclusive communities and transition to a low-carbon future, it is imperative that we get infrastructure policy right. Achieving this will require collaboration between governments and the private sector. Above all, it will require bold thinking and long-term vision. In short, Australia needs real leadership. Our long-term national interest demands nothing less. I am confident that that is precisely what the next Labor Government will deliver.

the election of the Federal Labor Government in November 2007, Mr Albanese became the Minister for Infrastructure, Transport, Regional Development and Local Government and Leader of the House of Representatives. Mr Albanese was named Infrastructure Minister of the Year for 2012 by London-based publication Infrastructure Investor, and in 2010 he was named Aviation Minister of the Year for producing Australia’s first ever Aviation White Paper. In June 2013, he became Deputy Prime Minister, and also took on additional responsibility as Minister for Broadband, Communications and the Digital Economy.

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Revitalising Darwin Revitalising Darwin’s CBD is a major focus of infrastructure development in the Northern Territory; the Northern Territory Government is committed to investing $100 million in projects that will revitalise and activate the capital of Northern Australia.

Cavenagh Street shade structure – Construction

Two elements of the latest plans say much about the distinctive demands on infrastructure in the region. One is the recognition of Aboriginal heritage. Barneson Boulevard, which is being developed at a cost of $45 million, has been renamed to the Larrakia name Garramilla Boulevard, to elevate Aboriginal identity, language and history. A second distinct challenge is the management of heat in the tropical city. Cavenagh Street – one of the main connection roads in Darwin’s CBD – has been identified as one of the hottest locations in the city. It is to be given a 55-metre cool, green canopy in an effort to mitigate heat, provide shading, and attract more tourists and locals to the city.

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General Manager of Infrastructure, Investment and Contracts for the Northern Territory Government Department of Infrastructure, Planning and Logistics John Harrison says that Cavenagh Street is often referred to affectionately as ‘the river of fire’. ‘What we are doing along a 55-metre section of the hottest stretch is building an innovative pergola-style design.’ Harrison says that the innovative structure is a combination of steel and timber to support the growth of green vine plants. ‘Obviously, within our tropical environment, it is hard to grow vinelike vegetation over steel structures because of the high temperatures. So we are cladding the structure with Arnhem Land–sourced stringybark

timber, which is one of the strongest hardwoods available in Australia. This will lead to great Aboriginal employment outcomes in Arnhem Land, as well as on the ground through delivery of the $2.7-million project. ‘The designed structure will be a lattice-type construction over the top of the steel framework. The timber lattice itself will be quite an impressive structure to look at, but over time the vines will develop and provide additional shade to the street. That will see a considerable drop in temperature for certain times of the year; effectively, it will extend the comfortable period of our dry season. ‘We are also looking at installing some reflective treatments to the road service on Cavenagh Street in order to

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reflect the heat – but not to do so in a way that creates uncomfortable glare. ‘We are working closely with the City of Darwin and local businesses to upgrade laneways and arcades throughout the CBD to support more pedestrian activity in the city,’ Harrison says. ‘We hope some activity will grow organically in the laneways: little boutique coffee shops, cafes and popup shops and eateries. We are already starting to see some tropical night markets and special events happening in the laneways.’ Another CBD revitalisation initiative is the construction of the $19.4-million State Square underground car park. ‘We are revisiting the master plan for the State Square precinct and removing the bitumen car parking,’ says Harrison. ‘There is quite a number of car parks in the precinct that are utilised by government and the private sector within Parliament, the Supreme Court and a number of other surrounding buildings. ‘We are in the process of constructing an underground car park that will be landscaped above ground, so that it will appear as a park on the surface, but there will be car parking underneath,’ says Harrison.

Barneson

The initiative will provide 150 additional car spaces and also include end-of-trip facilities to support active modes of transport into the city.

Garramilla Boulevard General Manager of Transport and Civil Services for the Northern Territory Government Department of Infrastructure, Planning and Logistics Louise McCormick says that Garramilla Boulevard will become an iconic third arterial entry into the Darwin CBD. Construction, she says, began last May. ‘This project has been in planning since 1996 as a third arterial entry into the Darwin CBD,’ says McCormick. ‘From a traffic perspective, the CBD is actually sitting

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Cavenagh Street shade structure – Concept

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Planning for a vibrant future Senior Director of Planning for the Northern Territory Government Department of Infrastructure, Planning and Logistics Douglas Lesh says that the Greater Darwin Regional Land Use Plan ‘sets out a horizon for a quarter of a million people’. ‘Rather than saying what it should be in 20 years, 50 years or 100 years, it is based on the current population, so that we can respond to land release on a needs basis,’ says Lesh. The government recently released its Planning for a Vibrant Future document, which takes this one step further and presents a vision for the Darwin CBD and the Darwin region as a whole. ‘It makes that important connection between infrastructure provision and how places develop.

Barneson – concept

‘The vision document supports infill development first and foremost, working sequentially outwards and utilising existing infrastructure where possible, then investing in infrastructure as we roll outwards.

Barneson – concept

on a peninsula, and there are currently only two key arterial links. ‘Garramilla was always planned as a third link. Within the last couple of years, we have undertaken network-wide traffic modelling, and this modelling identified that Darwin needed a third entry point into the CBD, simply because of the amount of traffic that was travelling into the city. So, we are building that entry point now. It will take you into the geographical centre of the peninsula, so that we also have the opportunity to make an entry statement.’ McCormick says the construction of the road is ‘not particularly challenging’ from a technical perspective, but there

are some urban design elements. ‘We are looking at art pieces to be part of that streetscape. There is a heritage-listed park right next to it called Frog Hollow Park. An outdoor amphitheatre will be constructed into the road embankment to accommodate outdoor performances during certain times of the year, such as the Darwin Festival.’ The boulevard is designed to incorporate extensive landscaping and dedicated spaces to pedestrians and cyclists. Wide, shady tree canopies will be planted along the route, dispersing a cooling effect as you make your way into the city. The project is due for completion in 2020.

‘With a population of 250,000, obviously if you sprawl out across the Darwin region, it will be very different than if you focus development on existing infill activity centres. The idea is that you get that vibrancy in the urban areas and you keep the rural areas rural.’ Lesh says that the Northern Territory Planning Commission is completing a Central Darwin Area Plan, which will set out a framework for the CBD and surrounding areas, including: Larrakeyah, Cullen Bay, Frances Bay, the old tank farm site, the Darwin Waterfront and the formal core of the CBD. Lesh says that it is really a tool for the development authority to make decisions on development applications. ‘It will really integrate well with all the work that is being done on the greening and the activation of the CBD.’ ♦

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Invested in infrastructure that creates a prosperous Queensland Earlier this year, Queensland’s population surpassed five million people, and by 2041 it’s predicted to grow by an additional two million. To ensure prosperous communities and the ongoing creation of local jobs, infrastructure investment is needed to support this population growth.

Interchange works on the Bruce Highway at Caloundra Road and Steve Irwin Way

Developing robust and visionary infrastructure is one of the most critical functions of government. Infrastructure facilitates the movement of people in our cities and towns, and it better connects Queensland by expanding export markets and helping to generate more tourism dollars. The Queensland Government outlines its infrastructure investment strategy in the State Infrastructure

Plan (SIP), which is improving the way that infrastructure is planned and coordinated across the state. The SIP has two parts: Part A Strategy, which is updated every five years (the next due by 2021), and the Part B Program, which is updated annually (most recently in July) and details what is being planned alongside the delivery program for the next four years.

These infrastructure investments will support jobs, economic growth and regional development. This clear pipeline provides industry stakeholders with transparency about investments, assists with workforce planning, and provides confidence about long-term job security across Queensland. Minister for State Development, Manufacturing, Infrastructure and Planning Cameron Dick says that

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Artist’s impression of the $1.1-billion Herston Quarter Precinct

industry stakeholders are showing their support for the new approach. ‘Our government has worked hard to ensure that there is a solid pipeline of infrastructure proposals for businesses to invest in,’ he says. ‘We’re continuing to improve our approach to infrastructure planning, and by placing a greater focus on what customers want and how people will use infrastructure, we can guide our development to meet those needs and demands. When it comes to numbers, the 2018 SIP Part B update outlines Queensland’s infrastructure investment of $45.8 billion over the next four years. In 2018–2019, an $11.6-billion capital program will be delivered, which includes $3 billion for social infrastructure and $8.6 billion for economic infrastructure.

Minister Dick explained the different infrastructure needs for Queensland’s coastal, rural and remote areas, and the south-east corner. ‘For our coastal areas, it’s about keeping communities connected, facilitating access to export markets, and improving resilience to natural disasters,’ he says. ‘For our rural, remote and Indigenous communities, infrastructure is needed to maintain livability and community spirit, and ensure that our agricultural and resource sectors can quickly and safely ship goods to market. ‘Meanwhile, the south-east corner needs infrastructure that will keep pace with a fast-growing population. That is one of the key focuses for the rapidly expanding region. ‘And right now, there is a lot of effort being put in about how

we can best connect the different parts of South East Queensland to accommodate that growth.’ One such infrastructure initiative is the $5.4-billion Cross River Rail project, which is designed to unlock a bottleneck in the transport network, and to double capacity across the river from the south-east into the CBD. This transformational project will unlock capacity in the system so that up to 40 additional services (around 18,000 passenger seats) can be provided during morning peak period, with 47,000 commuters projected to shift from car travel to train travel. Another project is the $1.1-billion upgrade of Gateway Motorway North to increase the road to six lanes. ‘Both projects will contribute to moving people and freight quickly,

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while supporting growth and enhancing livability,’ he says. Queensland’s Coordinator-General has also announced several projects that will support economic development across Queensland, including the $1-billion Gladstone Energy and Ammonia Project, the $120-million upgrade to the Port of Cairns, and the $583-million redevelopment of Lindeman Island. In Brisbane, construction of the Queen’s Wharf integrated resort development is well underway, which will deliver a $1.69-billion annual increase in tourism spend and 8000 operational jobs once complete. Other key urban renewal projects include the $1.1-billion Herston Quarter development in Northshore Hamilton – the largest waterfront renewal project in Queensland – and the Carseldine Urban Village Development, where upgraded sporting facilities will be open for the public in early 2019. Looking ahead, Minister Dick believes that technological change is altering the thinking in many areas of infrastructure. ‘And what that means is we’ve got to reimagine the role of government in all of this,’ he says.

Logan Hospital redevelopment will increase capacity by 192 beds to a total of 640 beds and expand the maternity ward

‘We want to look at how we can be more innovative in the way we approach our existing assets, as well as how we look at building new infrastructure.

The Queensland Government has targeted a number of emerging industries – such as manufacturing, aerospace, defence industries and bio-futures – that all have different infrastructure requirements.

‘There are interesting technologies coming through that can change the way we futureproof new builds, and better track and understand how infrastructure is performing – such as putting sensors in concrete and monitoring performance. ‘Improving the resilience and capability of large infrastructure assets is vital – as is reducing their maintenance costs in both the short and long term.’ Another element in Queensland’s infrastructure planning is to support

emerging industries and the diversification of the economy.

‘We are planning now to ensure that the infrastructure needed to support these emerging industries is in place at the right time,’ he says. ‘The Queensland Government is facilitating a discussion about what infrastructure problems need to be addressed, but not jumping to the solution until we are closer to the time the community needs it. This is why the State Infrastructure Plan Part B includes future opportunities.’

Economic Development Queensland is also progressing opportunities in partnership with councils. For example, the Mackay Waterfront Priority Development Area declaration will enable Mackay Regional Council to pursue its plan to transform the city’s waterfronts and CBD. ‘This declaration will be a catalyst to stimulate the region, create jobs, increase investor confidence, and deliver more community infrastructure and public facilities,’ he says. ‘Investment in infrastructure helps strengthen our economy, and provides lasting benefits – creating prosperous communities, local jobs and a more livable Queensland for everyone.’ ♦ For more information, visit dsdmip.qld.gov.au.

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INVESTED IN QUEENSLAND INFRASTRUCTURE Supporting better places to live, work and play The Queensland Government’s infrastructure program is underpinned by the State Infrastructure Plan and Building Queensland’s infrastructure pipeline. • Cross River Rail will deliver more jobs and better public transport in South East Queensland. • $45.8 billion infrastructure program over four years—delivering essential infrastructure for Queensland. • $9 billion has been allocated to 18 projects that progressed through the Building Queensland Pipeline since June 2016. • $226 million from Building our Regions and Works for Queensland programs will help local government fund key infrastructure projects in 2018-19.

GrowingQld

Keep up to date at www.dsdmip.qld.gov.au

Authorised by the Queensland Government, William Street, Brisbane.

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One purpose. Shared prosperity.

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Future Building 2018

Articles inside

The Hon Anthony Albanese | Shadow Minister for Infrastructure, Transport, Cities and Regional Development; and Shadow Minister for Tourism

Social licence | panel discussion

The Hon Michael McCormack MP | Deputy Prime Minister, and Minister for Infrastructure, Transport and Regional Development

How to avoid a water crisis: lessons learned from Cape Town | panel discussion

Respected leaders | panel discussion

Electric vehicles and road funding model failure | panel discussion

Waste to energy | panel discussion

Tim Pallas | Treasurer of Victoria

Chairman’s foreword | Adrian Kloeden, Chairman Infrastructure Partnerships Australia