Premier’s keynote address | Then New South Wales Premier, The Hon. Gladys Berejiklian MP

Interviewer:

► Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia

Key points:

• New South Wales is leading the country on vaccination rates, which will help enable a faster return to normality and deliver a boost to the state’s economy. • Continuous and honest engagement between government and industry during the construction shutdown – to work together, implement safe work practices and get worksites back up and running – has the potential to be a lasting legacy of the pandemic and improve productivity moving forward. • The New South Wales Government remains committed to delivering a record pipeline of projects and is confident infrastructure will be a key driver of economic prosperity in its recovery from the pandemic. Then New South Wales Premier, The Hon. Gladys

Berejiklian MP (GB): I would like to start by acknowledging the traditional custodians of the land on which we stand, and pay our respects to elders past and present. I also acknowledge Infrastructure Partnerships Australia, and all of your members, who have stood by us during what has been an incredibly challenging time.

Until this most recent Delta outbreak in New South Wales, we prided ourselves on not having a single day lost in terms of infrastructure and construction. As you all know, for a period of two weeks we had to temporarily halt all construction in Greater Sydney, which was a very difficult decision. In hindsight, when we look at the period and the number of cases we had at the time, you can’t put your finger on exactly what worked and what didn’t, but certainly for a long period of time we’ve been able to prevent exponential growth until we had our vaccination rates where they needed to be.

In response to that pause, we’ve also allowed weekend work – and 24/7 work – on some sites through our regulations. While there’s a cap on the number of workers on any site at the moment, we are looking to address that in the very near future. Now, more than ever, the New South Wales Government is committed to delivering on its $108-billion infrastructure pipeline over the next four years. And even pre-COVID and pre-Delta, we’ve seen that

investment in public infrastructure provides business confidence and encourages private investment, and that’s exactly what we need to see as part of our COVID recovery.

We’re approaching that magic 70 per cent double-dose rate, when we can go back to doing the things we enjoyed previously. And we are looking forward to leading the way in terms of living with COVID and resuming international travel, and hopefully, in due course, encouraging all the states to eliminate internal borders throughout Australia, which is so critical.

The New South Wales Government sees infrastructure and public investment in infrastructure as part and parcel of our recovery. Following the previous lockdown, there had been various forecasts made as to what the recovery might look like and the worst fears did not eventuate. So, I’m confident that the pent-up demand, the ability for us to resume those productivity levels, and also for us to renew our working relationship with all of our partners in a COVID recovery phase, will see us resume the momentum we had previously. I’m absolutely confident that infrastructure will be a key driver of our prosperity and of our recovery moving forward.

It’s always a pleasure addressing all of you because infrastructure delivery in our nation, and in New South Wales in particular, is a partnership. It’s a collaboration between the private sector and government. Those interfaces have become stronger and stronger over the years, and in no small part because of the great efficacy of Infrastructure Partnerships Australia. Because when the private sector and government have good people working together, we’re unstoppable in what we can achieve. Some of the things we’ve achieved in New South Wales in the public transport space, in the way we’ve delivered schools and hospitals, and in social infrastructure, have been firsts for our state and, we believe, firsts in Australia in terms of scale. So, we’re looking to the future with hope and optimism.

We’re looking forward to October (2021) being the month when everything resumes and when we have a new approach – a new vigour in living with COVID, but also ensuring that our citizens have the greatest level of freedom, that our economy continues to be able to grow, and that, of course, the benefits of the infrastructure we’re building will mean a greater quality of life for our citizens. While we can sometimes get bogged down in the detail of a project we’re delivering, we forget that the whole basis of delivering good infrastructure is for our great quality of life to improve, and to enhance opportunities for our citizens. That’s what motivates us every day. So, thank you for being partners on this journey.

Thanks very much, Adrian. I’m happy to take questions.

Adrian Dwyer (AD): Thank you very much, Premier. I’m a big fan of hope and optimism, so long may we see it continue. I wonder, just as a kick-off, if you might just opine for a moment on the importance of the National Plan and opening up, and New South Wales’s role in leading the nation towards a reopening.

GB: The National Plan is significant. Every state premier and chief minister signed up to it. The National Plan essentially says that once each state hits the 70 per cent and then the 80 per cent double-dosed targets, we will see internal borders come down and we will see our nation function again as one. Now, critically, New South Wales will hit those vaccination targets before the other states, so we don’t envisage others opening their borders to us until they’ve reached those targets. But given what our state’s been through, we intend to make sure – within the national framework – that we provide those freedoms to our businesses and our citizens, even if other states don’t reach those targets. Once all the other states reach those targets, it’s incumbent on them to follow the National Plan.

New South Wales and Victoria, the two largest states, accounting for at least 60 per cent of our nation’s population and probably a bit more of the economy, will be in very similar situations. I think it will be heartening to see greater cooperation between the two largest states on how we navigate that phase.

New South Wales is very happy to be the first state that welcomes the thousands of Aussies coming back home, as well as international students and skilled labour. We know that a lot of our projects rely on good expertise, which we do have here, as well; but for infrastructure, staff moving between nations is important. So, we’re happy to be the first state that opens up internationally. We’re also keen to make sure, within our nation, that we don’t have those economic hindrances, or the social disconnection where families can’t see each other.

AD: That issue of domestic and international borders is clearly important for the economy and for the infrastructure sector. Do you think we’ll see international borders coming down before we see all domestic borders opened?

GB: There’s a chance that Sydney Airport could start welcoming thousands of Australians soon. In fact, New South Wales citizens may move freely to some overseas destinations before they can travel interstate – depending on what some state premiers choose to do. That could be a real possibility. I hope that’s not the case. I hope everybody follows the National Plan.

I think South Australia has shown a keenness to join New South Wales and Victoria, and to stick to the National Plan. I think there is a prospect that some of us might have an opportunity to go overseas before we head to Perth. I hope that’s not the case, because I think it’s really important for us to move forward together and that’s certainly what we’ll be working towards. I’m always someone who believes in working

together and working in consensus; but we’re not going to hold back our citizens if some state premiers choose not to follow the plan.

AD: We’ve had a question from Scott Power, CEO of BMD Group, who says, ‘Thank you, Premier, for your leadership throughout the pandemic. Consultation between government and industry has never been stronger than we’ve seen during this crisis. What’s your view on the steps that can be taken to embed this level of engagement as we move towards delivering a huge infrastructure pipeline?’

GB: When we had to make that difficult decision about putting a halt on construction, we were absolutely floored by the understanding the industry showed us. Small, medium, large – your sector appreciated the difficulty of the situation and said, ‘How can we work on this together?’ And then reopening happened quicker than we expected because we worked so well with the industry. So, we’re really up for what we can make business-as-usual practice, because we should never let a crisis go to waste.

Within the New South Wales Government, we’ve been able to improve our technology, our back-office operations, and the way we do things, because when you’re in a crisis, you need to manage things differently and you’ve got limited resources. So, we’ve been able to become more efficient and we’re keen to hear any suggestions Infrastructure Partnerships Australia or its members have on how we can embed those consultation processes moving forward.

It has not only been me, but also key ministers who’ve been given the responsibility to have regular consultation with the sector to make sure we take on board your concerns. The most recent concern, which we’ll be considering soon, is the number of workers on a worksite. We have to resolve that favourably in the very near future.

We’re looking forward to productivity even exceeding what we had before because with the high rates of vaccination and the good COVID safety plans, it really does allow us to ensure business continuity, less disruption, greater productivity and certainty, and no more lockdowns. Once you have 80 per cent of your population fully vaccinated, that gives you a great prospect for business continuity and that’s what we’re looking forward to.

But if you have any legitimate suggestions on how we can make that consultation process more permanent – any standing groups or any permanent forums – we would be more than happy to consider those. That closeness of collaboration has been great for us and I’m sure useful for your sector in being able to have input on policies as we announced them.

AD: We’ve been involved in a lot of those, Premier, so thank you to your ministers and government for that. I’m sure our members will keep feeding through to us the small things that can make the return to normality better. I wouldn’t expect you to make any announcements this morning on it, but there are a lot of questions coming through around the workforce caps increasing in line with vaccination rates. And I think from what you’ve said, you would expect them to increase as vaccination increases?

GB: That could even occur before then, Adrian. We’re looking at what we can do in the very near future. I feel very optimistic about what we can manage there, because if you have good vaccination rates within your workforce, and good COVID safety plans, there are opportunities for us to look at increasing workforce caps before we get to those vaccination targets.

AD: One of the narratives we’ve heard a lot over the past 12 months has been people making a ‘sea change’ or ‘tree change’ during COVID, and moving to regional areas. What do you think that does for the government’s view on things like faster rail and connectivity to the regions? Does that accelerate an already in-train set of decisions?

GB: I think they’re mutual. Our fast rail strategy is about growing our regions, reducing travel times, and increasing safety and productivity. But I think the jury’s out as to whether there’ll be a correction or whether these are lasting trends. I think the key thing is flexibility and adaptability. COVID has taught all of us that there are different ways of doing things, but we also have to appreciate people’s individual preferences in terms of where they work and how they move, and whether working from home and flexible workplaces are going to be much more prevalent. I think there’s an opportunity for us to look at all of that. Sitting in peak-hour traffic is now beyond the pale because if you can have staggered work times at either end of the day, that improves productivity and reduces congestion, and certainly fast rail improves connections between the regions.

I think what has been a clear identifier or a clear distinguisher is those communities that have good access to the internet have been able to have employees placed anywhere in the state and productivity has remained reasonably good. So, it has caused government to rethink its strategies – but I think what it has done is validate our strategies. We’ve always had a growth plan for the regions. We’ve always had a fast rail strategy that is more ambitious than perhaps some of our other state counterparts. We believe those strategies are completely in sync with what the post-COVID world might look like. We have to accept that the COVID world might be with us for three or four years – we just don’t know. But in any case, there’s no doubt that it has validated those plans we had in place.

I think it’s important for us to be open about what things will look like after lockdown and after we hit the 80 per cent vaccination target, especially in our larger cities. I’m keen to see the Sydney CBD bustle again, but I also accept that people might have different arrangements regarding workplace hours and workplace flexibility. These are all issues that affect our

economy, as well as our social wellbeing, and they are issues the government is looking closely at.

AD: Melissa Chain from the Australian Rail Track Corporation, and a couple of others, have asked questions broadly about taking a longer-term view on skills and expertise. Clearly, borders being closed – domestic and international – has had an impact on that, but are there things government and industry can do to enhance and develop the homegrown skilled workforce to deliver the 20- to 30-year pipeline ahead of us?

GB: Definitely. We have to be open to re-introducing skilled labour to Australia, which we haven’t been able to do during the pandemic. For example, one initiative in New South Wales is establishing a body called Careers NSW, through which any individual – irrespective of their age or background or circumstances – can speak to somebody about a career change or re-skilling. Careers NSW involves industry leaders who have volunteered to support that initiative. I think we have to accept that re-skilling and re-tooling will be part of our career paths moving forward, no matter who we are and what our circumstances are. COVID has seen a huge realignment of skills and the way people work.

Interestingly, we’ve seen some companies actually grow, even when their employees are working from home, whereas others have really suffered because of productivity challenges. These learnings augur well for the kind of skills we need moving forward. In New South Wales, we’ve also asked Professor Peter Shergold AC, a leading education expert, and David Gonski AC to provide us with a footprint for tertiary non-university education, and how qualifications can be both university- and industry-led. So, we’re looking at the tertiary sector in a whole different way.

Often when people have a university degree, they still need to have some kind of technical expertise. How can we allow those micro-credentials to be recognised along the pathway to people re-skilling to be able to move more fluidly between careers and between jobs? I think this is a really important area and governments have to work more closely with industry.

Places like Germany have wonderful models, where industry is much more involved in re-skilling and re-training, and telling government where the skills shortages are – government can then step up and support industry. We’re looking at all those models and we’re really excited by what that means. I think COVID has just accelerated our thinking in providing those opportunities for much more flexible workplaces, and enabling people to upskill or learn different skills, and move between professions.

AD: Premier, that’s the end of the time we have for questions. Thank you so much for joining us today.

Premier: Thanks, Adrian. Thank you again to all your members for their support, their understanding, their cooperation and their input. We look forward to working with you as we recover together through this challenging time.

AD: Thank you. I think it’s a testament to your leadership that in the midst of a pandemic, you’ve taken the time to engage with senior business and public sector leaders this morning. So, thank you, Premier.

Then Premier of New South Wales, The Hon. Gladys Berejiklian MP

Gladys Berejiklian was first elected to the New South Wales Parliament as Member for Willoughby on 22 March 2003. She served as Leader of the Parliamentary Liberal Party and the 45th Premier of New South Wales from 23 January 2017 until 1 October 2021. Following the election of the O’Farrell Government in March 2011, Berejiklian was appointed Minister for Transport and served in that role for four years. In April 2015, Berejiklian was appointed Treasurer and Minister for Industrial Relations as part of the Baird Government. She is a Master of Commerce graduate from University of New South Wales and prior to entering Parliament worked as a general manager for one of Australia’s largest financial institutions. Gladys has also completed studies in Government and Public Administration via a Bachelor of Arts from the University of Sydney.

Innovation in social value advisory

RPS forms practice to assist clients in capturing social value from infrastructure.

A new approach to social value creation in infrastructure will help companies by identifying the true value of projects. It will also help communities by better understanding their needs.

That is the view of Vanessa Pilla, National Lead of the new Social Advisory and Research Practice at RPS. She believes Australia’s infrastructure sector should collaborate on a social value agenda that becomes embedded within project analysis and delivery.

‘Social value creation is the future of infrastructure,’ says Pilla. ‘If our industry wants to deliver more projects, we will need different thinking on how social value in infrastructure is defined, measured and communicated.’

This begins with building industry consensus on a definition of social value and the assumptions behind its measurement, says Pilla.

‘RPS believes social value in infrastructure is ultimately about individuals’ wellbeing and quality of life. An agreed definition would standardise measurement of social value creation and feed into project cost-benefit analysis.’

Pilla sees two main benefits from social value creation. The first is project design. ‘At its core, social value creation requires a deeper understanding of how people value infrastructure. That means wider engagement with communities up-front, and more opportunity for them to co-design projects. The long-term result will be infrastructure that better serves communities.’

The second benefit is economic. ‘Defining and measuring social value could have a profound effect on project economics,’ says Pilla. ‘A lot of social value creation from new infrastructure projects is not being sufficiently recognised because our industry doesn’t measure it properly.’

Project economics

Pilla’s colleague Lee Jollow, National Lead – Economics at RPS, uses transport infrastructure as an example of social value capture. ‘Typically, economists look at commuting time saved from a new road and what that means for employment. Then we use average weekly earnings to put a value on that job creation. But that only tells part of the story.’

Jollow adds: ‘What if the new road is in a community with high long-term unemployment? And the road enables someone to move to a full-time job? Also, what if the new road helps people to live a little further out, and reduces their debt and housing stress? We need to capture this value in project economics.’

Social value creation recognises the interplay between infrastructure elements, says Jollow. ‘Imagine if that road makes it easier for young people to go to university, or makes it easier for older residents to access hospitals. We need to ask more questions about how a project will support the value and sustainability of other infrastructure in a community.’

Jollow says the economics of social value capture are significant. ‘RPS has worked on projects where identified social value has been worth up to half a billion dollars over 30 years. On major projects, social value can change the dial on investment decisions.’

Jollow says social value creation is particularly important in regions. ‘We know infrastructure is an enabler in the regions and can help address community problems by better connecting people to services, work and each other. We also know that only around 30 per cent of projects on Infrastructure Australia’s priority list are in the regions. Capturing social value is the missing piece of the puzzle in regional infrastructure.’

Long-term approach

Pilla emphasises that social value is not a new concept, and that Australia’s infrastructure sector has done considerable work in this area. ‘It’s not about starting from scratch. Rather, it’s about building on current thinking on social value creation and taking it to a new level. Most of all, it’s about stakeholders working together on this issue to help communities.’

Pilla says the United Kingdom shows the potential of new approaches to social value creation. After the 2008–09 global financial crisis, the United Kingdom cut spending on social services, public health, social infrastructure and housing. That increased poverty and inequality in some areas.

With funding constrained, the UK government introduced the Social Value Act 2012 to ensure that social, economic and environmental benefits were included in decision-making for public-sector contracts. In July 2021, the legislation required all major procurements to explicitly evaluate social value rather than just consider it.

‘The UK Act is not perfect, but it shows how other countries are moving towards social value creation – and where Australia needs to head,’ says Pilla. ‘There are good signs with Infrastructure Australia starting to lead this conversation.’

Launched in July 2021, Infrastructure Australia’s refreshed Assessment Framework requires proponents to demonstrate the merits of each proposal across three overarching assessment criteria: Strategic Fit, Social Impact and Deliverability. On Social Impact, companies need to show the value of their infrastructure proposal to society and the community across quality of life, productivity, environment, sustainability and resilience.

‘For the first time, the Assessment Framework is saying that even if you can’t monetise social value in costbenefit analysis, it will be counted in the decision on a project,’ explains Jollow. ‘Until now, our industry has tended to treat social value as binary: if it can be monetised, it’s included; if it can’t, it’s excluded. That’s led to a lot of social value not being captured.’

Supporting clients

RPS recently launched its Social Advisory and Research Practice to help clients position for this change – and to harness the firm’s Australian and global strengths. RPS is one of the world’s leading infrastructure advisers with around 5000 consultants working across 125 countries and six continents.

Operating in Australia since 2003, RPS has advised on many of the country’s largest projects: Brisbane’s Cross River Rail; Sydney’s Metro, Parramatta Light Rail, Great Western Highway Upgrade Program and Western Sydney Airport; and Melbourne’s Metro Tunnel Project, Level Crossing Removal Program and Airport Rail Link.

‘RPS has done extensive work in social value capture through our economics team,’ says Pilla. ‘The new Practice builds on that and provides a structure to bring together RPS economists, social researchers, community-engagement practitioners and other infrastructure experts.’

Pilla says the Practice aligns with RPS’s purpose and values, and its goal to provide the best advice. ‘We see an opportunity for RPS to help clients better define, capture and communicate social value in their projects – and for that analysis to help urban and regional communities get the infrastructure they need.’ ♦

To learn more about RPS, visit

www.rpsgroup.com.

ANZ prepares for the emerging ‘hydrogen economy’

A forward-looking approach is helping institutional customers transition to the fuel of the future.

ANZ’s John Hirjee believes that commercialisation of green hydrogen technology in Australia will occur before 2030 – well ahead of current market expectations.

Hirjee is spearheading ANZ’s push to become Australia’s leading bank for financing hydrogen projects, through his role as an Executive Director of ANZ’s Resources, Energy and Infrastructure (REI) business.

‘ANZ believes green hydrogen commercialisation is years rather than decades away,’ says Hirjee. ‘Companies will more aggressively cut their carbon emissions by embracing hydrogen and other renewable energies. The underlying driver of this trend is the growing focus worldwide on corporate environmental, social and governance performance.’

Hirjee draws parallels between hydrogen and solar panels. ‘There was rapid market adoption of solar panels as their cost fell 90 per cent over a decade. Today, green hydrogen is not commercially feasible to produce at scale. But that will change this decade as industry drives innovation in hydrogen technology, invests in hydrogen infrastructure, and collaborates to find solutions.’

ANZ’s customers in REI and other sectors are preparing for the coming hydrogen economy, says Hirjee. ‘Our customers recognise that hydrogen is a potential game changer in renewable energy due to its unique properties.’

Hydrogen’s benefits are well known. Each kilogram of hydrogen contains about 2.4 times as much energy as natural gas. Environmentally, hydrogen is unique among liquid and gaseous fuels because it emits no carbon dioxide (CO2) when burned; however, hydrogen is virtually non-existent in its free form on Earth.

Much energy is needed to liberate hydrogen from water, biomass, minerals, fossil fuels and other materials in which it exists. This energy needs to come from renewable energy sources to classify the fuel as ‘green hydrogen’ used to decarbonise energy systems and industrial processes.

Momentum to commercialise hydrogen is building. In 2020, the

Federal Government made clean hydrogen one of its five priorities for low-emissions technologies.1 In 2018, CSIRO launched its National Hydrogen Roadmap, noting there is ‘vast potential’ for a new industry in hydrogen.

Globally, demand for hydrogen is expected to increase substantially over coming decades as Japan and other Asian countries put imported hydrogen at the heart of their economies.

‘Everywhere you look, interest in hydrogen technology is growing,’ says Hirjee. ‘In our discussions with customers, ANZ’s message is that industry needs to move quickly to take advantage of investment in hydrogen technology and infrastructure. Hydrogen is potentially highly disruptive as a renewable energy source, so companies must be ready for this change.’

Hirjee believes Australia’s emerging hydrogen industry will rival liquefied natural gas as an export industry within two decades. ‘There’s huge potential for Australian hydrogen to be exported to energy-intensive countries like Japan and South Korea. Australia has natural advantages in hydrogen through our wind and solar resources, and land mass. With the right financing ecosystem, Australia can become a leading global player in hydrogen production.’

ANZ at forefront of hydrogen finance

ANZ has substantially increased its focus on hydrogen finance in the past few years. Since joining ANZ in 2019, Hirjee has led the bank’s research on the hydrogen economy, facilitated customer discussions, and championed hydrogen’s potential within ANZ.

Hirjee is a chemical engineer by training and a former Senior Energy Adviser to Angus Taylor, the Federal Minister for Industry, Energy and Emissions Reduction. In July 2020, Hirjee was appointed to the Australian Renewable Energy Agency’s Board.

‘ANZ has embarked on an internal program to increase its understanding of hydrogen and educate our frontline bankers on its potential, across industry,’ says Hirjee. ‘This is a marathon rather than a sprint: ANZ is making a long-term investment to help companies make the transition to hydrogen. The feedback from customers on the bank’s hydrogen work is encouraging.’

ANZ is already in discussions with several customers on hydrogen projects in Australia and overseas. ANZ provided minor support to its Japanese and Australian partners on the successful implementation of the Hydrogen Energy Supply Chain (HESC) Pilot Project – Victoria’s world-first hydrogen project. HESC aims to produce and safely transport clean liquid hydrogen from Australia’s Latrobe Valley in Victoria to Kobe in Japan.

Hirjee’s ANZ colleague, Jonathan Evans, says the bank is positioning itself to finance hydrogen projects. ‘ANZ is a leading bank to the resources, energy and infrastructure industries and a long-term supporter of energy and infrastructure development in Australia. We have deep expertise across corporate and project finance, [and] advisory and sustainable finance, such as green, social, and sustainable bonds and loans.’

Evans, also an Executive Director in ANZ’s REI business, says there are synergies between hydrogen, renewable energy and infrastructure finance. ‘Green hydrogen needs a lot of renewable energy to be produced. Investment in infrastructure is critical to transport the fuel through pipelines, and at ports and other transport assets. ANZ’s knowledge of these sectors and record in infrastructure finance positions us well with companies wanting to know what is required to finance hydrogen projects.’

Evans says that the ‘hydrogen economy’ is strongly aligned with ANZ’s purpose to ‘shape a world where people and communities thrive.’ ANZ has committed to facilitating $50 billion in sustainability solutions by October 2025.

‘Environmental sustainability is a key part of ANZ’s DNA, driving our focus on the financing of hydrogen projects,’ says Evans. ‘Hydrogen’s role in reducing harmful emissions and decarbonising economies by 2050 is clearly evident. We are seeing some customers well-advanced on hydrogen planning, and we expect that to translate to a number of hydrogen projects and ANZ-led financing deals later in the next few years.’ ♦

To learn more about ANZ’s work in hydrogen, visit www.anz.com/institutional/industries/ resources-energy-infrastructure/

1 Commonwealth Government (2020),

“Technology Investment Roadmap: First Low

Emissions Technology Statement 2020.”