NSW’s Future Growth Event Summary

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“Key Role for Infrastructure and Urban Renewal in NSW’s Growth”

At the recent Watermark Executive Search executive luncheon held in Sydney on Thursday 30 March 2017, we invited a panel of three experts to discuss the State’s current Infrastructure and Urban renewal program – and its impact on NSW’s economic growth.

Our panel members were Jim Betts, the current CEO of Infrastructure NSW and previously Secretary for Transport in Victoria, Sandra Dodds, the Chief Executive for Urban Infrastructure at Broadspectrum and previous CEO of Downer Asia, and Marg Prendergast, currently the CBD Co-ordinator General and previously the General Manager of the NSW Centre for Road Safety.

Highlight Points for NSW Infrastructure and Planning:

  • A first – infrastructure integration is coming: there has never been a wholly integrated plan in NSW before
  • Rapid change – expect disruption across NSW whilst the plan is delivered
  • New work practice – shifts in work practice and culture required to get the infrastructure to support the working population
  • Demand drivers – a scarcity of funding (not financing), raw materials and people talent to deliver on the plan will create pressure.

Overview:

The panel members were in strong agreement that we are living in a time of unparalleled opportunity and a chance to ‘get things right’ across NSW. It was noted that the spend in NSW over the next four years – at close to $75Bn – is larger than the GDP of 134 of the world’s countries. Indeed, Jim made the point that the budgeted spend in NSW was larger than that of Canada and that Infrastructure NSW currently has oversight of over 400 projects. Importantly the spend is not just being directed in the Sydney Metropolitan area. Restart NSW was set up by the government and 30% of its committed projects are in regional NSW. One of the big programs there was focused on improving the quality of town water supplies for regional NSW.

A key point emerging through the discussion was NSW’s lack of both strategic and integrated planning in NSW post the 2000 Olympics. However, what exists now is not only a comprehensive plan but a plan that between Infrastructure, Planning and the Greater Sydney Commission was, at the end of 2017, to be fully integrated….and that is the first time this has ever happened.

Key Infrastructure Messages from the Panel:

“We have an unparalleled opportunity.” Marg Prendergast said. “Sydney is in catch up mode and there has been more done in the last six years than in the previous 30.” This reinforced the point that there has been a sort of planning and infrastructure famine and in NSW and that the current harvest is now testing the limits of the system. Jim Betts underscored the challenges facing local infrastructure when he emphasised that, “It has been said that is cheaper to get goods from Port Botany to China than it is from Dubbo to Port Botany.”

From the private sector perspective, Sandra Betts articulated the aim as being to minimise the Total Cost of Ownership (TCO) and maximise the value to the State. She made the point that “the design phase is where you can minimise the TCO.” Sandra argued that better integration with government and the various departments involved was the key to not only lowering the TCO but also, to some extent, future-proofing the design. It also created a lower cost to the whole tendering process which, in its current form, was often a significant impost on companies.

There was much discussion about the way the nineteenth century City of Sydney was now on the larger city’s eastern edge. The model of the population coming into the current city was not only shifting but would continue to shift markedly over the next five to ten years. The point was made that 1.6M people were currently living to the West of the M7; in the 1950’s the total population of Sydney was fewer than 2,000,000 people. Apart from the geographic shift to centres such as Parramatta, the South West corridor around Sydney’s second airport and areas like Macquarie Park there was also a demographic shift with people living and working longer. As a result, people are going to occupy their houses for longer and travel to work for longer. Add to this an estimated population growth of over 2,000,000 people in the next 20 years and the conclusion was there needs to be a fundamental shift in the way that people and businesses view work.

To illustrate the rapidity of change, Marg made the point that her department has moved to ‘no fixed hours’. That retiming of work, combined with the ability to work remotely and re-use the current infrastructure, better provided some of the answers to metropolitan growth. “You cannot build enough infrastructure to cope with the growth…you have to use what we have better,” she said. This involves quite a cultural shift for companies in that spreading the peak and getting in earlier (or later) and leaving work earlier (or later) has to be acceptable from a performance perspective. It begs another question about how much of the time you actually need to be present in an office to complete your work.

Key Questions:

There was a question from the floor about the financing of the scale of current projects. The point was made that it was not about financing but about funding. The challenge is more about how to service the debt on an ongoing basis rather than the availability of the initial financing for projects. There was some discussion about the impact autonomous vehicles might make on the current planning. Broadly speaking, the view was that this was still dependent on having a serviceable road infrastructure to provide access, regardless of whether there was anyone physically driving the car.

Will politics kill the integrated plan? One can never say never but there was a degree of optimism that bodies like Infrastructure NSW and Infrastructure Australia were independent statutory bodies and operated on a non-political, non-partisan, evidence-based approach that had a good chance of withstanding the vicissitudes of Australian politics.

Areas of challenge for the plans are in the areas of continued disruption for the life of the plan. As people see the benefits they will be more willing to put up with the disruption but at the front end of the plans, it is largely about disruption. Does the public grow weary of the changes to the extent that this alters the plans? Is there physically enough raw material to fulfil the current plan and is there enough talent currently available to staff the current projects. Panelists thought this was not just about staffing at a more senior level but of truck drivers and site foremen as well.

Watermark’s View:

From an executive level, Watermark is actively attracting talent from overseas to fill the current round of requirements…and the builds are only expanding.

In summary, we are living through a unique time for the planning and delivery of an integrated infrastructure plan for NSW aimed at delivering over the next 40 years. The projects only make sense if integrated into a master plan and in turn, that plan only makes sense if it is and integrated plan in its own right: that, for the first time in NSW, is what appears to be happening!