A roadmap for reform

Peter Colacino, Chief of Policy and Research, Infrastructure Australia.

In September, Infrastructure Australia launched the 2021 Australian Infrastructure Plan. Roads & Infrastructure sits down with the infrastructure advisor’s Chief of Policy and Research Peter Colacino to talk about the key priorities identified for Australia’s infrastructure sector.

The first week of September marked the official launch of the 2021 Australian Infrastructure Plan, the third in a series of practical roadmaps developed by Infrastructure Australia since 2013, providing recommendations to the Australian Government to help deliver better infrastructure for the nation.

Infrastructure Australia has prepared the 2021 Australian Infrastructure Plan in response to its 2019 Australian Infrastructure Audit, which identified the major challenges and opportunities facing Australia’s infrastructure over the next 15 years and beyond.

Expansive in both scale and scope, the 2021 Plan comes at a critical moment in Australia’s history. It is a time when Australians are recovering from the still-unfolding COVID-19 pandemic and the bushfires, drought, floods and cyber-attacks that tested the nation’s individual and collective resilience during 2020-2021.

As Peter Colacino, Chief of Policy and Research at Infrastructure Australia points out, the Plan’s launch is also timely for the opportunities it provides for sectoral reform and adapting to technological changes, particularly around adoption of electrical vehicles.

“It’s fortunate that we were due for this five-yearly review now,” he tells Roads & Infrastructure.

“With the findings of the 2019 Audit, we now have an opportunity for sectoral reform and responding to changes in energy technology, changes in transport technology, and the coming together of the transport and energy around electric vehicles,” he says.

“It also allows us to use the Plan to provide a roadmap for reforms that will support economic recovery in our response to COVID to build back better.”

Adapting to change and uncertainty

Underpinning Infrastructure Australia’s agenda, as detailed in the 2021 Plan, is a focus on population growth, adaptation to climate risk, building resilience, stimulating employment, driving economic productivity, embracing a diversity of places and social equity.

As Colacino points out, the need to adapt to a faster pace of change all around the sector was clear even before the pandemic – but become even more critical after.

“The first sentence in the 2019 Australian Infrastructure Audit said: The pace of change is increasing, and the uncertainties are growing. Of course, we didn’t have a crystal ball to see a pandemic and its impacts on the sector, but we did identify rapid changes occurring around seven key trends, including those around geopolitical shifts, changes in consumer preferences, demographical changes and of course changes in climate and weather conditions,” he says.

“Now, we have also added the COVID-19 pandemic as one of those threats, and so we have used the Plan to not only respond to what has changed since COVID, but also to think about resilience more broadly and how the infrastructure sector can build community resilience overall.”

According to Colacino, recent events have highlighted that recovery might be even more challenging than Infrastructure Australia assumed at the time of drafting its 2021 Plan.

“I have to say since we did the work on the Plan, we have seen recovery be more challenging than expected.” he said, noting the impacts the COVID Delta variant has had on the Australian states.

Luckily, Infrastructure Australia had prepared for various degrees of uncertainty by testing outcomes of each reform against a range of future scenarios, including: speed of recovery from the impacts of the COVID-19 pandemic, adoption of technological change, the role of an emerging regionalised Australia, and a destabilised world.

“What we are trying to do is to use scenarios to test the central case for reform. Our reforms are based on the work that sits within the Australian Government’s budget. For example, we looked at a faster and a slower rate of COVID-recovery, and I have to say, that view around scenarios was prudent given the latest challenges with the delta strain of the virus.

“What we’ve also done is to think about rates of technological change, think about geopolitical uncertainty and also think about a regionalisation of population so that we can help ensure the reforms that we propose are effective, regardless of the future.”

Adopting technology by default

‘Harnessing transformative technology and digitalisation’ is the second theme around which the 2021 Plan’s recommendations are produced.

As Colacino reminds us, the sector does not have an impressive track record when it comes to technology adoption.

“The infrastructure sector, and the construction sector most particularly, has one of the lowest rates of digital adoption in Australia. Traditionally it’s even been slower than agriculture and as we know agriculture is not broadly seen as the most technology nimble sector. Yet, construction has lagged behind,” he says.

To tackle that, Infrastructure Australia is encouraging government and industry to adopt a ‘digital by default’ mindset rather than a ‘digital by exception’ approach.

“We have suggested three key areas of reform. The first one is around better processes, better systems, better approaches and better skills. It’s about building capability within our industry to embrace innovation and digital adoption.

“The second one is about embedding digital approaches up-front and avoiding retrofit, as well as identifying approaches that can be scaled and repeated, so as to become practice rather than having each digital solution be bespoke.

“And the third area around digital is valuing data. We need to fundamentally value data and digital products as we value physical products. So, we need to be clear about how we’re going to collect, store, save, reuse and ultimately make open to other users data to inform decision making,” says Colacino.

Delivering public value

Infrastructure Australia asserts that to ensure major infrastructure investment delivers public value, governments must work with industry to drive long-term productivity, innovation and sustainability.

This is a recommendation that was also brought up by Infrastructure Australia in its May report, which examined the progress of infrastructure reform made since the release of the 2016 Australian Infrastructure Plan.

“One of the areas where we saw limited reform was around competitive markets and procurement reform,” says Colacino.

“We see a large opportunity in looking at the way we procure and deliver infrastructure and to drive reform, in areas such as better coordination of the project pipeline, improved front-end planning, engineering and design, more collaborative engagement between government and industry, embedding ‘digital by default’ rather than ‘digital by exception’ and also governments acting as a mature client.”

Embracing a diverse geography

There’s also a big emphasis in the Plan on the changes to demographic distribution across major Australian cities, partly accelerated by changes to work patterns and education patterns during the pandemic.

“Our research shows that one in 10 people who would have been working in the office prior to COVID will work from home each day post-COVID. So, there will be 10 per cent fewer people in workplaces,” says Colacino.

“Equally, we’ve seen an increase in regional migration, with people moving to regions far from where they worked previously. We’re also seeing people stay longer in regions. For example, across the Pilbara, we’ve seen fly-in-fly-out workers bring their families to the Pilbara. In places like coastal communities in New South Wales and Victoria, we’ve seen populations grow as people have left big cities for the beach house and they’ve taken their jobs with them.”

The big question, however, is how lasting, or ‘sticky’ as Colacino puts it, this regional population change will be.

“What we’re seeing is people making decisions to buy to particularly seek out bigger houses with a home office space. So, we think there will be a degree of ‘stickiness’ in that regional population change.

“Also, there’s another group which is younger people who are staying in regions rather than moving to a university campus and they are accessing their education online. So, there’s a question about what form university education continues to take, and whether that trend of people staying in the regions longer will continue post-COVID.”

The result of this change will be reflected in people’s expectations around local service access, he adds.

“As people shift away from the central business district (CBD) into local suburbs, so too there will be a shift in demand for infrastructure such as for education, shopping and health. This will in turn impact requirements around transport connection, internet use, water and of course energy.”

According to Infrastructure Australia, emphasis should be on linking smaller cities and regional centres to the larger cities, while maintaining a high standard of living within the major cities.

“We will need to re-think those suburban connections in a transport sense, so we need to think about cross regional routes, as well as access to local service centres within the town centre. Also, there will still be many people that do work in the office, and we’ll need to continue to see investment in trunk transport routes to support access to the CBDs.

“So, the importance of local connections will increase and the focus on large mass transport options will remain. CBDs themselves will become collaboration spaces rather than people working in cubicles, as it was predominant in the 90s.”

EVs as source of energy?

Under the changes in energy sector, Infrastructure Australia’s 2021 Plan suggests that customers can combine technologies such as smart meters, rooftop solar, batteries and electric and zero emission vehicles with energy efficiency strategies to reduce electricity bills and drive transformation in the sector.

An example, Colacino notes, is through greater adoption of electric vehicles and connecting electric batteries with existing grid services.

“Transport electrification will play a critical role in achieving the 2050 net zero target committed by the Australian Prime Minister. Transport has growing emissions and is the second largest emissions source in Australia. So, we’ve identified electric vehicles (EVs) as a key area for action that’s critical for achieving net zero.”

The interface between the transport electrification and the energy sector is equally important, he notes.

“EVs can change the dynamic of the electricity sector. EVs are essentially batteries-on-wheels, so they can provide a new way for energy to move around the grid by potentially providing vehicle-to-grid services and putting electricity back into the network. This is particularly important when you consider the potential draw on the distribution network through charging stations.

“So, we’re talking about the need for further deployment of smart meters, tariff reforms and a register of electric vehicle so that EVs can be added to the distributed energy resource register. This will allow us to have a much more coordinated view in planning for EVs, all with the view to minimising the impacts of the transition to EVs on the distribution network. It’s really important that there’s coordination between the transport and electricity industries to support that transition.”

Another area concerning electric vehicles and other low emission vehicles in the Plan is around changes to transport itself.

“As EVs approach cost parity, they are becoming a real choice for transport. EVs are likely to be more widely commercialised and used than fuel cell electric vehicles powered by hydrogen. So, we think it’s important that the transport industry sees EVs as part of the future and starts to consider how EVs will be supported on the road network.

“So, in terms of things like distribution of charges and the provision of a charging network that provides national coverage and thinking about a range of other things like how curbside space is used to support EVs, electric vehicles will be a platform for broader change in the transport industry.”

The four key transport trend changes envisioned in the Plan circle around ride sharing, connectivity, electrification and autonomy. Here, Colacino says autonomy is more likely to be delivered on electric vehicles rather than on petrol-fuelled vehicles.

“As Australia goes on this journey to new mobility, we can expect to see more electric vehicles, more connectivity, more sharing and eventually automation.”

What next?

Infrastructure Australia’s vision for 2036 is to have infrastructure that improves the sustainability of the country’s economic, social, environmental and governance settings, builds quality of life for all Australians, and is resilient to shocks and emerging stresses.

This, Infrastructure Australia proposes, is achievable through the practical and actionable reforms proposed in the 2021 Plan’s agenda.

The 2021 Plan has been developed principally for the Australian Government. As such, over half of the total reform effort is within its remit. However, as owners of many of the most significant infrastructure networks in the country and the most substantial clients for infrastructure delivery, around a third of reforms require action or ownership from state and territory governments. Additionally, Colacino says, industry, individuals and community are other stakeholders whose actions can be guided by the roadmap.

“Without everybody playing their part, change won’t happen,” he says.

“The Australian Government has given a commitment that they will respond to the recommendations outlines in the Plan. We therefore look forward to their response and then, in theory, if they indicate their support for our recommendations, we will work with the Australian Government to support [the Plan’s] adoption,” he says.

“We will also work with states and territories and local governments, as they really hold the levers around infrastructure ownership. Industry, community and individuals all have roles to play and our recommendations will shape their actions as well. These are not challenges that the government can solve by itself, so we all need to play our part.”

This article was originally published in the October edition of our magazine. To read the magazine, click here.

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