Future Building 2022

futurebuilding The Australian Infrastructure Review

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Contents

futurebuilding The Australian Infrastructure Review

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Contents 2 Chairman’s Foreword | Sir Rod Eddington AO,

29 Panel discussion | Respected leaders –

Chairman, Infrastructure Partnerships Australia

3 Partnerships – 2022 sponsors 8 Keynote address | The Hon. Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government

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Keynote interview | Shemara Wikramanayake, Managing Director and Chief Executive Officer, Macquarie Group

24 Keynote address | The Hon. Rob Stokes MP, Minister for Infrastructure, Cities and Active Transport, New South Wales

Managing Editor: Brendan Pearce Infrastructure Partnerships Australia E: contact@infrastructure.org.au Future Building is published by: Executive Media Pty Ltd ABN 30 007 224 204 PO Box 256 North Melbourne VIC 3051

Australia’s infrastructure bodies

40 Panel discussion | Super-sized super: Where to now on infrastructure?

50 Panel discussion | Delivering a pipeline under pressure

60 Fireside chat | Common challenges outside infrastructure

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Panel discussion | Do PPPs need a rebrand?

DISCLAIMER: The editor, publisher, printer and their staff and agents are not responsible for the accuracy or correctness of the text of contributions contained in this publication, or for the consequences of any use made of the products and information referred to in this publication. The editor, publisher, printer and their staff and agents expressly disclaim all liability of whatsoever nature for any consequences arising from any errors or omissions contained within this publication, whether caused to a purchaser of this publication or otherwise. The views expressed in the

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Foreword

Chairman’s foreword I am delighted to present the 2022 edition of Future Building, Infrastructure Partnerships Australia’s annual journal of insights from Partnerships, Australia’s most prestigious gathering of infrastructure leaders.

Ahead of you is a comprehensive examination of how respected industry leaders believe the infrastructure sector can refocus its proven capacity for innovation and delivery against a backdrop of continuing economic and geopolitical uncertainty, surging labour demand and supply chain pressures, and the challenge of delivering the decarbonisation of our sector.

This year’s program saw Australia’s leading political, public service, and business figures share their insights on how the infrastructure sector can meet these challenges and opportunities to deliver a record infrastructure pipeline, and provide ongoing economic and social benefits to Australians.

New South Wales Infrastructure Minister the Hon. Rob Stokes MP opened the conference with an address on the role infrastructure must play in decarbonisation. Respected leaders Jim Miller, Tony Shepherd AO and Nicole Lockwood, in their capacities as i-body chairs, shared their reflections on the impact of current macro-economic settings on project delivery, how we can make the most of Australia’s new emissions reductions targets and the potential outcomes from the independent review of Infrastructure Australia.

Federal Minister for Infrastructure, Transport, Regional Development and Local Government, the Hon. Catherine King MP, made her first significant address to the sector as the new Federal Government finalised its forward agenda.

Managing Director and CEO of Macquarie Group Shemara Wikramanayake presented her thoughts on the outlook for the Australian economy, the state of the infrastructure

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investment market, and how Australia is placed to achieve its decarbonisation agenda.

This year’s Partnerships conference also saw senior leaders consider crucial topics ranging from Australia’s growing superannuation investment pool and the opportunities for deployment in infrastructure, to delivery of a pipeline increasingly under pressure. Discussion also covered the role of private capital and whether Public Private Partnerships need a rebrand. Our colleagues in the property and business sector also joined us to share on the common themes and challenges across our respective sectors.

With a multitude of insights and ideas contained in these transcripts, my hope is that they contribute to the collective efforts we must make to meet common challenges and to seize shared opportunities.

Sir Rod Eddington AO Chairman Infrastructure Partnerships Australia

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Partnerships – 2022 sponsors

PARTNERSHIPS 2022 INFRASTRUCTURE AND IN

EST ENT CONFERENCE

SPONSORS

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ACCIONA urges fresh thinking on infrastructure innovation New processes for project delivery can quicken the decarbonisation of economies.

State governments must urgently unlock the innovation potential of infrastructure construction if Australia is to meet its carbon emission targets.

That is the view of Bede Noonan, CEO of ACCIONA Australia. The infrastructure leader has called on governments to overhaul its pricing and procurement processes for major projects, and to expand its collaboration with construction providers.

‘Australia is missing groundbreaking opportunities for carbon reduction,’ says Noonan. ‘Our country will never meet its 2050 net zero target, let alone the 2030 emissions-reduction target, if current practices in infrastructure procurement continue. Too many projects run over time and budget, and deliver suboptimal carbon outcomes. We can’t afford that with climate change.’

Noonan has considered views on this issue. ACCIONA is a global pioneer in sustainable infrastructure solutions and renewable energy projects. The

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Spanish infrastructure giant has delivered projects in more than 60 countries on five continents.

In Australia, ACCIONA is building major projects. These major projects include Australia’s largest wind farm, the MacIntyre Wind Energy Precinct in South East Queensland; the Western Sydney Airport runway; tunnel projects for WestConnex and Sydney Metro West; and the Level Crossing Removal Project in Melbourne.

Noonan says that Australia is falling further behind in infrastructure delivery.

‘In Madrid, ACCIONA is working on a tunnel project that has half the cost and half the carbon emissions of a like-for-like tunnel project in Sydney. Australia’s maze of planning requirements and lack of carbon pricing are holding back innovation,’ Noonan says.

These impediments are also slowing the delivery of projects essential to decarbonise our economy.

‘We will need three times as much renewable energy for Australia to even get close to its 2030 emission targets,’ says Noonan. ‘That means incredible investment in new transmission lines that will have to run across farms, parks and other environments. That alone will take years just for approvals.’

Noonan does not want lower governance on projects. ‘We must maintain strict standards on the environment, safety and other areas.

But we also need a serious discussion on what are acceptable trade-offs given the urgency of the response required for climate change mitigation. We have to ask why Australia continues to design infrastructure far more conservatively than many other nations.’

New approach to collaboration

A recurring problem in infrastructure delivery is the timing of collaboration with construction providers. Typically, governments engage in costly and

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time-consuming design work and planning approvals before appointing a construction firm.

‘It makes no sense that the people best placed to do things better on an infrastructure project – the construction engineers – are not in the room at the start,’ says Noonan.

‘By the time we get involved, it’s too late to make major changes.’

The result, says Noonan, is missed opportunities. ‘On one project, ACCIONA identified a way to save $700 million on a $4-billion spend. The client acknowledged we presented a superior option, but didn’t act on our advice because the project was too far down the planning and approval processes.

Had we been involved earlier, we could have delivered a better outcome for taxpayers and the environment.’

ACCIONA’s work on level crossing removals in Melbourne shows the benefits of involving construction firms earlier in the project design phase.

In 2018, ACCIONA’s specialist rail infrastructure business was awarded the Southern Program Alliance on the Frankston railway line. ACCIONA has now worked on six packages, having been awarded extra contracts.

‘To its credit, the Victorian Government has worked closely with contractors on the level crossing projects,’ says Noonan. ‘ACCIONA has found ways to save money and improve community outcomes. So far, the level crossings have got through the design and approval process efficiently. They should be a template for other projects.’

Need to price carbon

Lack of carbon pricing in infrastructure projects is another impediment to innovation, says Noonan.

‘Governments talk about embedded carbon in infrastructure materials and a project’s future operations. But it’s just tinkering around the edges on the “feel-good stuff”. We are yet to see a comprehensive commitment to measure carbon outcomes in infrastructure projects, and incorporate that into project selection.’

Governments continue to choose providers mostly on price, says Noonan.

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‘That stifles carbon-reduction innovation because competition boils down to which firm can dig a hole slightly cheaper or faster. Firms should be incentivised to compete on carbon-reduction innovation and outcomes in infrastructure.’

Noonan says that this cannot happen without a carbon price.

‘Whether it’s a formal carbon price or some other mechanism, there must be a way to measure, value and compare carbon in Australia. We need better ways to account for carbon outcomes and enable rational decisions in infrastructure projects. We need to incentivise construction providers to continue finding ways to lower emissions on projects.’

ACCIONA has focused on sustainability innovations for 40 years.

In 2016, the business became carbonneutral and continues to invest in technologies in Australia that enable year-on-year reductions in its carbon emissions.

Rethink approval processes

Governments also need to ‘disrupt’ traditional processes in infrastructure procurement, says Noonan.

‘How can we condense five years of planning and approvals into one year, while maintaining an appropriate level of project governance? How can our infrastructure checks and balances become more agile and robust, so that we deliver projects faster to help meet our emission targets?’

Noonan says that Australia’s bureaucratic infrastructure processes are nobody’s fault. ‘It’s a system problem. We’ve just had layer after layer of approval processes build up over time. Today, we have to comply with 700 pages of specifications, and the community wonders why projects inevitably take longer and cost more. I question if procurement approaches are still fit-for-purpose, given the urgency to decarbonise economies.’

Noonan acknowledges the challenges of changing current infrastructure approval processes.

‘It will take courage, foresight and trust. It’s not easy for governments to change the way things are done in infrastructure. But if we don’t change, Australia won’t even get close to its emission targets.’

The key, says Noonan, is revolutionising the relationship between governments and construction firms.

‘ACCIONA is incredibly passionate about sustainability in infrastructure.

We have the people, knowledge and experience to improve carbon outcomes on projects. But like other construction firms, we are constrained by endless layers of infrastructure bureaucracy. It’s time to peel back that process and unleash innovation that addresses climate change.’ ♦

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To learn more about ACCIONA in Australia, visit www.acciona.com.au.

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Rookwood Weir, QLD.

EXPERTS IN DESIGNING A BETTER PLANET. ACCIONA is incredibly passionate about sustainable infrastructure.

And when we talk sustainability, we’ve got decades behind us.

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MacIntyre Wind Farm, QLD.

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We have the people, experience and Sustainability Master Plan to improve carbon outcomes on every project.

www.acciona.com.au

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Keynote address – The Hon. Catherine King MP

Keynote address The Hon. Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government Key points: •

•

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Federal infrastructure investment should be clear in its purpose, and directed in a way that is mindful of current capacity and fiscal constraints.

Infrastructure has a key role in achieving net zero emissions by 2050, and there is a strong interest in developing a consistent approach to accounting for carbon embedded in major infrastructure projects.

The current skills shortage is in large part due to a lack of strategic focus on developing the domestic skills capability; the sector also needs to embrace strategies that attract and retain women in the industry.

Moderated by: ►

Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia

The Hon. Catherine King MP (CK): I’ll start by acknowledging the Gadigal people of the Eora Nation, the traditional custodians of the land that we’re gathering on today. I pay my respects to elders past, present and emerging, and I

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extend my respects to First Nations people participating in today’s event.

I do want to thank Adrian and Infrastructure Partnerships Australia, not only for the invitation today, but for the level of engagement you’ve had with me over the course of the past few years. It was actually really important as we developed our understanding of where the sector was up to and where some of the opportunities were. Relationships are incredibly important, and being able to build those at an early stage and carry those into Government is very important. I also want to acknowledge Mark Birrell AM, founding Chairman of Infrastructure Partnerships Australia, who’s here with us today, and Adrian Kloeden, Kerry Schott AO, Tony Shepherd AO, Jim Miller, Mike Mrdak AO, and a number of other people who’ve been involved in this space for a very long period of time.

Despite many of the challenges we have faced as a nation – and I don’t think you all need a reminder of those (we are still going through many of them) – infrastructure investment and development remains very strong. The delivery of infrastructure projects played an incredibly important and large role in Australia’s fiscal response to COVID-19, and to catastrophic bushfires and flooding, and it continues to do so. Our investment has rebuilt communities, created jobs and kept the economy going. Public investment and transport infrastructure alone has increased 17.5 per cent over the past two years from $20.6 billion in 2019 to $24.2 billion in 2021.

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Keynote address – The Hon. Catherine King MP

The scale of this investment has caused its own stresses for the industry. Last year, I addressed Infrastructure Partnerships Australia’s Queensland symposium as shadow minister, and then I posed a number of questions, identified a number of issues and outlined where we would go as a government. I spoke about how we had to work far more collaboratively with the states and territories, and the process to take some of the politics out of infrastructure spending. I spoke about how we had to get inland rail to a place where its benefits better accord with our entire national freight task. And I considered how we can invest to get the most out of our regions. I spoke about how we needed to invest in the projects that make our cities more productive and livable, how we plan and deliver smart infrastructure, and how we ensure our investments help tackle the challenges of climate change while contributing to growing the skills of Australian workers. It’s been a pretty busy few months.

We have been in government for just over 100 days, but we’ve done a fair bit in that time. The most topical challenge to industry at the moment is skills shortages. Our closed international borders reduced migration opportunities, and intermittent restrictions across state borders compounded resources and workforce shortages. But it isn’t COVID-19 alone that contributed to those. In our view, it has actually been a lack of strategic focus on actually developing those skills in this country that’s been a missed opportunity. These challenges are being faced across the economy, and they’ve been a key focus of the early days of our Government.

You would’ve seen what happened in Canberra at the Jobs and Skills Summit, with our Government bringing together unions, workers, business, industry, and the not-for-profit sector to chart a new path forward when it comes to jobs and skills. We do want secure, well-paid jobs across the economy. And we want to work with unions and industries to actually secure them. It’s in our interests to do so. The announcements around fee-free TAFE and the shorter-term measures of increased skilled migration are examples of this. It’s a pact between sectors. As a Government, we are keen to understand how we can work together to mitigate the key risk factors impacting market capacity, and work with states and territories to deliver our significant infrastructure co‑investment. We’re engaging with industry and state, territory, and local governments in response to these challenges, including how to build and sustain a skilled and diverse workforce. I’m acutely aware of an untapped workforce that our construction and infrastructure sectors could lean on: women.

Women currently make up less than 12.7 per cent of construction occupations and less than two per cent of related trade jobs. It’s always going to be hard to overcome skills shortages with statistics like that; we’ve all been trying. We all know that there are insufficient pathways for women into the industry, and a lack of strategies to actually help attract and retain women. I know many of you are working on these with plans to address that shortfall. I’m keen to work with you to actually bring those together.

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Keynote address – The Hon. Catherine King MP

I’ve heard your voices through the Jobs and Skills roundtables, and the Summit itself, and I would encourage you to participate in the employment white paper process being run under Treasurer Jim Chalmers. One of the key outcomes of the Jobs and Skills Summit is the Government’s decision to establish a National Construction Forum. The forum is to consider key issues facing the building and construction industry, such as mental health, diversity and gender equality. The forum will assist government to develop policies and programs to address challenges, and to actually support the industry. As the minister responsible for delivering billions of dollars of Australian Government investment in infrastructure, I’ll participate in the forum, and I look forward to consulting closely with industry, unions, and state and territory counterparts through this mechanism. It will be an important initiative to help set the sector up for the future, and I look forward to participating in that.

When we’re talking about challenges facing the sector and the economy across every facet of our lives, we can’t ignore climate change. I know that has been central to many of the discussions you are having today, including the contribution particularly that infrastructure can and should make towards achieving net zero. One of the surprises to me in coming to government was to find that there was no dedicated unit within my portfolio specifically tasked to look at how the infrastructure and transport sectors could contribute to the net zero target.

That’s despite those sectors being some of our largest sources of emissions, as well as some of the greatest opportunities to transition to net zero. A dedicated unit has now been established within the department, reporting directly to new Secretary Jim Betts, to look at ways to help infrastructure and transport, and innovate the ways you are working to achieve net zero.

This is one of the issues in which industry has moved far ahead of where government has been over recent years. Many of you are well down the path of determining how you can cut your emissions and are actively achieving those goals. We want to do this because not only is climate change a threat to our way of life, especially to already stretched supply chains, but because it’s a great opportunity for jobs across our sectors.

By tackling climate change, we can create a new generation of clean, green, sustainable and well-paid jobs. Tackling emissions in building resilience won’t be easy, but it does need to be done.

At the heart of tackling climate change and making decisions about where the Commonwealth invests money is the way we do make decisions. It’s incredibly important, and it’s why I have asked Nicole Lockwood and Mike Mrdak AO to undertake a review of Infrastructure Australia. I’m happy to take some questions about that. Government investment needs to support the vision we have for Australia and deliver better outcomes for our people. With this in mind, I have been sitting down with my state and territory counterparts to identify those projects

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that are transformational within each jurisdiction, and looking to ensure the current investment pipeline is actually sustainable and meets those goals. I want to see and ensure that we have a coherent, transparent pipeline of infrastructure investment from the Commonwealth. In New South Wales, the Commonwealth is currently investing $18.9 billion in 43 different transport infrastructure projects over the next decade. In our partnership with New South Wales and local governments, we are also funding $1.7 billion of smaller projects, from bridge renewals to Roads to Recovery, to Black Spot programs. Being very clear about what that Commonwealth investment is seeking to deliver, ensuring the pipeline is fit for that purpose, and ensuring it is sustainable in the current capacity environments is a key task for me.

To guide future investments, we’ve already commenced work to revitalise and restore Infrastructure Australia as the expert adviser to the Commonwealth on nationally significant infrastructure priorities. That is what it was set up to do, and I think many of you, as you talked to the reviewers, will have been talking about how it may have changed a little over time.

Seven weeks ago, as you know, I asked Nicole and Mike to look at Infrastructure Australia, and I couldn’t think of two better people to actually do that. I thank them very much for the work and the anticipation of their recommendations to me. I know many of you have already engaged with them, and I do want to thank you for that.

It is very important to me that we do restore and change the role Infrastructure Australia has, and make sure it actually does provide the Commonwealth with the advice we need to make those investments. Ensuring a coherent, targeted, strategic and transparent pipeline of Australian Government investment in infrastructure is critical. It means focusing on building things like Metronet and Western Sydney Airport, and also sealing those important freight routes in remote and regional Australia, particularly in the Northern Territory. It means getting Inland Rail right to deliver for our regional communities, and contributing to the national freight task. It means starting work, as I did, on high-speed rail. I’m eager to get on with delivering our election commitments in partnership with the states and territories, including investing in the Suburban Rail Loop in Melbourne, upgrading key road corridors in Tasmania, and removing level crossings in Adelaide and Brisbane. I also want to thank you for the work you have done throughout COVID-19. I look forward to working with many of you individually and collectively through Infrastructure Partnerships Australia in the months and years ahead. I’m delighted to be here with you and am very happy to take any of your questions. Thanks for having me.

Adrian Dwyer (AD): Thank you very much, Minister King.

You very kindly agreed to take questions. I’ll kick off by asking you to expand a bit on your reflections from the Jobs and Skills Summit.

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Keynote address – The Hon. Catherine King MP

CK: I think the fact that it happened in and of itself was actually really telling. I think there was a real sense of this actually being how you have to work as Government. This is what governing is about. It’s about understanding the different and contested positions that exist on a range of issues.

Obviously the focus was jobs, but really it was about skills and the way in which we actually train more people. We have the opportunity to make sure we’ve actually got the workforce that’s needed today and into the future. That’s really what governing is about. It’s actually trying to bring people together, looking at those contested positions, and trying to come up with a pathway forward. To the Treasurer’s credit and the Prime Minister’s credit, in particular, they weren’t seeking a consensus statement out of this, because that’s not realistic. We know there are people who are never going to change views about particular things. What we’re trying to do is find a pathway that we can actually move forward together on.

So, those 36 outcomes that came out of the Summit are concrete things, such as an increase to permanent migration for next year to 195,000. We’ve been talking about the pathways to permanent residency to actually get more people living in this country, extracting commitments around fee-free TAFE, training more Australian workers here and setting that up for the next decade, and some of the industrial relations issues, which are still going to be contested as we work our way through. I think that this is what Government should look like. Even if things are hard, we should talk about that. They’re hard, but we should try to make a pathway forward. I don’t really want to be overly political at this forum, but that’s something that’s been missing from our Federal discourse for a while now. To me, that was the real outstanding part of the Jobs and Skills Summit – actually seeing what government should look like.

AD: Thank you. There has been a lot of talk about the review of Infrastructure Australia. That’s ongoing, but what do you want from that review? What do you want it to give you?

CK: I don’t want to be predictive with both Nicole and Mike in the room, but I’ve had early conversations with them. For me as an incoming federal infrastructure minister, there are big questions. I look at the billions of dollars of investment we are making. As I said, I didn’t know we were spending $18.9 billion in New South Wales on 43 different projects. There’s a couple of websites you can look at, but how is that pipeline worked out? How is it contributing to our national freight task?

How is it making our roads safer? How is it actually providing regional communities opportunities for better connectivity? I don’t get a sense about what that strategic direction is when I look at that investment. When I have questions about the problems of resilience on our freight network, how do I actually help communities in transition as an infrastructure minister?

I’ve got a narrow scope. There’s energy, energy and water infrastructure, and other pieces. What are the investments I

should be making? I don’t get that information from the reports of Infrastructure Australia today.

A couple of things have happened. The first is that when it was set up, the state bodies weren’t in existence. So, it had to cover some of the state jurisdictions, as well. I’ve got a view, it’s the Commonwealth’s body, it’s the Commonwealth’s infrastructure that’s really got to advise me, in partnership with the states and territories. It really is about that Commonwealth investment. There might be opportunities for other sectors, but it’s really about where those big billions of dollars from the Commonwealth go. The other is attempting to find some relevance. It broadened itself out to the extent that there’s not a local council in the country that does not come to me saying that their project is on the Infrastructure Australia priority list and is therefore going to get money. So, there’s been this massive expectation created that because it’s on the priority list – which is almost 170 projects long – Infrastructure Australia is able to, A, be a funds holder and Infrastructure Australia is going to fund it, and, B, if they don’t, then the Commonwealth’s just going to give them money. That’s a terrible thing for local councils to be thinking because it’s beyond the means of most levels of government – local, federal or state – to fund all of those 170 projects. Are they the projects we should be concentrating on? I really want to see it lifted up to those of larger scale. Two or three big-scale strategic investments that are transformational need to be made in each state and territory so that governments can invest in them.

There has to be a separate pathway, and probably not through Infrastructure Australia, whether it’s our Regional Development Australia networks or something like that, for those local government, social and regional projects.

I think there needs to be a different pathway for those.

Then, in terms of other infrastructure, whether it’s water or telecommunications, it’s about finding another pathway through Infrastructure Australia for those. That’s sort of how I see it, but I shall await advice and not pre-empt and see if it occurs. You may be telling me something different. The reason I’ve asked for it is, as infrastructure minister, I need advice. I get it from my department. I get it from other bodies, but I really need Infrastructure Australia to be able to say for the next budget, for the next decade, this is where you need to be investing Commonwealth money in nation-building projects.

AD: But we’d all agree, it’s a hell of a swimming pool in Geelong. Jim Miller?

Jim Miller (JM): Jim Miller from Infrastructure Victoria. Well done; you’ve hit the ground running and it’s great to hear. So fantastic. Following up on Infrastructure Australia and, more broadly, the Federal Government, you mentioned the investment the Federal Government is already making and that’s very significant; but the needs – be it with the Infrastructure Australia

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Keynote address – The Hon. Catherine King MP

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priority list or just more generally – keep growing because of all the things that we know. Where it’s a little bit different now is the fiscal constraints the Treasurer is talking about, and so forth. So, you are going to be right in the middle of those discussions as the first budget comes through, and with subsequent budgets.

Obviously it’s early days and there is a lot to do, but I am just interested in how you’re thinking about that over and above the work that Infrastructure Australia will hopefully be doing.

moment. It’s costing all of you, as taxpayers, as much as it costs

CK: Well, there are a few things happening at the moment.

One is about assessing the quality of the spend and making sure that what we’re actually spending money on is actually delivering on the Government’s outcomes. So, running an eye over that is important. The capacity constraints that are in the sector at the moment are real. I think the absolute reality is that the timelines and budgets on all of the projects are going to blow out and we’re already seeing states trying to get on top of that. You’ve seen it in Western Australia and New South Wales; they have been trying to smooth that pipeline of investment out so that we can actually deliver it.

The Commonwealth is not digging up the soil; we’re relying on states, territories and local government to do that. If we don’t do something about the underspends that occur each and every year, that will just continue. I don’t want to see that.

That’s wasted money. It’s money that should be going out. It should be being delivered, and if it can’t be delivered, then we need to make sure it’s delivered in a way that is coherent.

We’re not looking to cut. The previous Government made a whole range of commitments, so we are looking to try to deliver on those and obviously we’ll look at the time frames for those.

What I’ve got to do is look at future investment, and then look a bit further at the Commonwealth’s strategic investment in infrastructure, as opposed to down in some of the weeds in terms of the elections and electoral cycles. That’s part of my job, but it is certainly a challenge.

the outcome?

Treasurer Chalmers talks about the trillion dollars of debt.

When you look at what the Commonwealth has to spend money on, it’s demand-driven debt like Medicare and the NDIS, age pensions, our social security budget, and overall defence spending. The thing that is growing the quickest is government payment on debt. That’s the largest government expenditure – or the quickest-growing government expenditure – at the

and high-speed rail financing, as well. So, I think there’s lots to

The Hon. Catherine King MP, Federal Minister for Infrastructure, Transport, Regional Development and Local Government

King previously served as Minister for Regional Australia, Local Government

The Hon. Catherine King MP was first elected in 2001 to represent the electorate of Ballarat in the Australian Parliament. Following the 2022 Election, King was sworn in as the Minister for Infrastructure, Transport, Regional Development and Local Government.

Territories; Minister for Road Safety; and before that as Parliamentary

King held a similar portfolio in the previous term of opposition, while also serving for six years as Labor’s Shadow Minister for Health and Medicare.

Policy. Prior to entering Parliament, King was a senior manager at KPMG’s

to fund the age pension at the moment, so we’ve got to get that debt down. Looking at the realistic delivery and capacity constraints is one of the ways we’re intending to do that.

AD: One final question: there’s a lot of talk today about net zero. You spoke in Parliament about the carbon base case idea, what do you think the Commonwealth’s role is in driving CK: So, at the last infrastructure and transport ministers’ meeting, there was an absolute desire, particularly from infrastructure ministers. We tend to focus a lot on the transport side as it’s a very complex regulatory environment, particularly around heavy vehicles. So, we are trying to think about how we can lift the infrastructure side back onto the agenda and we’ll be discussing that at the end of this month. There was a commitment to start talking about how you count embedded carbon in infrastructure projects and how we get some more consistency across the country on that. There’s been a lot of work done already, so that’s really important.

I think, looking at the role of infrastructure in net zero, I was really delighted to look under one of the city deals. Launceston has moved the University of Tasmania and combined all its sites in Launceston, and has really built some extraordinary buildings with very low-carbon footprints. That’s allowed them to actually fund their entire move of the Hobart Campus into Hobart on green bonds. They’ve raised $300 million in literally two days and will use that to fund infrastructure by building these really incredible buildings. I’m very interested in how we do that. I’m interested in how that might work in relation to high-speed rail do, and I’m really delighted that infrastructure ministers across the country all want to focus on this issue, and they’re all talking about it.

AD: Brilliant. A great note to finish on. Please join me in thanking the minister. Thank you very much.

and Territories; Minister for Regional Services, Local Communities and Secretary for Transport and Parliamentary Secretary for Health.

King holds bachelor degrees in social work and law, and a Master in Public consulting practice.

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Keynote interview Shemara Wikramanayake, Managing Director and Chief Executive Officer, Macquarie Group Key points: • • •

Australia continues to be an attractive investment destination, and infrastructure as an asset class is proving to be resilient in the context of inflation and monetary tightening.

Australia is adding four to five times the solar and wind generation of the European Union, the United States, Japan or China, with that pace expected to accelerate further as investors focus even more on these projects.

Australia continues to lead the way on recycling both existing assets and structures for drawing private capital into new assets.

Interviewer: ►

Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia

Interviewee: ►

Shemara Wikramanayake, Managing Director and Chief Executive Officer, Macquarie Group

Adrian Dwyer (AD): When we did this a year ago, we were discussing the prospects for national recovery off the back of COVID-19. We face a much more mixed set of challenges now.

Small question: how did we get here?

Shemara Wikramanayake (SW): Yes, it’s amazing that last time we spoke, that was the world. I guess then we were facing something none of us had ever dealt with, where basically we had to shut down economies to protect people’s health. I think central banks and governments did the right thing in providing fiscal and monetary stimulus to help us get through it. But what surprised us all, happily, is how quickly the health profession was able to come up with vaccines to get us now to physically being together again so quickly. We had demand already increasing on the way into the lockdown, and now we’ve opened up with fuel to the flames in terms of the huge stimulus that has driven a massive increase in demand. Then, a range of supply shocks came through. I

know people have been saying central banks should have moved sooner, but I do think the supply issues were hard to anticipate in terms of China and the lockdowns there, which are hurting supply chains. The Russian invasion of Ukraine has really impacted the energy system, and, domestically, the tight labour market; it’s tight everywhere in the world, but the border closing means that we now have a much tighter supply of labour, as well.

All of these things have led us back to – and we haven’t had this for four decades – the days of double-digit inflation and interest rates. Central banks are now having to put the foot on the accelerator hard to rein in inflation and prevent a period of stagflation. So, yes, it’s amazing to think none of us would have thought even a year ago, let alone two years ago, that this would be the new environment now.

AD: I guess the obvious questions are: Can we break the back of inflation without breaking the economy? And in that

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scenario, how well do you think Australia is placed to navigate those choppy waters?

SW: It takes a brave person to say they know the answer, especially given the huge amount of uncertainty we have just been through already. I think it’s looking like certainly that the US economy is proving to be incredibly strong, but the central banks all around the world are really showing conviction in terms of trying to rein in inflation and prevent stagflation. Everywhere in the world (here included), we had the 50-basis‑point step

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. ..central banks all around the world are really showing conviction in terms of trying to rein in inflation and prevent stagflation

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up. The view is to go hard to rein this in, even though that may mean a mild recession. Chances are that in the United States, the economy just seems so strong that if they have a recession, they should be able to land it reasonably softly with a mild recession. Europe is a different kettle of fish altogether.

The energy impacts there are huge.

The United States is self-sufficient in energy, and Europe hasn’t got there, so it will potentially face a bleaker recession.

Here in Australia, we’re ever the lucky country coming into this, with a pretty good economic backdrop. Our household debt balance sheet – net debt – is actually in a pretty good place as we come into this. Also, our terms of trade, two of our three largest exports are liquefied natural gas (LNG) and coal, which at the moment are going very well. The Reserve Bank has said that it thinks the impacts from rate increases could be lagging, so it might monitor for a bit. But if they do go hard, I think we probably are one of the best-positioned countries to manage a really soft landing, potentially even avoiding a recession. The landing strip is pretty narrow to achieve that.

I think we’re relatively well-placed, but it would be a brave person to call that.

AD: When you talk to your clients, what is this doing to their appetite to invest more broadly, but also specifically in infrastructure?

SW: With interest rates going up, obviously discount rates are going up and for four decades we have not had to deal with this environment. That is making asset prices not just come down, but be more volatile and clients are obviously suffering in their fixed-income and equities portfolios. Having said that, there’s a lot of money still being allocated to infrastructure funds. We are out there raising and are hitting our hard caps on all of the funds we are raising. Even our peers are sitting with a lot of dry powder.

We have released papers showing that infrastructure is a pretty good asset class in this rising inflation and rising rate environment, particularly if it’s nominal rates, because it is an essential service asset class. There is a degree of protection in the revenue line, be it a utility or toll roads, as you can pass on a lot of these. Historically, it is a much more resilient asset class than other classes and we have done a lot of research on this for our investors that we’d be happy to share. So, we are still seeing appetite to invest. If anything, the challenge is finding good, investible projects. I certainly suspect others in the room are finding the same, that this is an asset class that will continue to attract investment through this cycle.

AD: We recently released some analysis on private capital opportunities in the Australian and New Zealand infrastructure pipeline. The analysis estimates that the total value of private capital opportunities of Government projects is at about $71 billion; $62 billion worth of projects and contracts

are strong candidates for private capital across that and the broader pipeline. What is the house view on where the best opportunities lie for private capital?

SW: Well, thematically, there are four areas we have been talking about. First, urbanisation continues around the world in developed and developing countries, so there is a need for investment in things like transportation, infrastructure, and utilities (water, gas and electricity). Another big area is social infrastructure where there’s a need for private capital to help in investment. The Federal Government allocated A$537 billion to healthcare in the 2022–23 budget over the next four years.

Hospital Public Private Partnerships represent an opportunity, with a strong pipeline of potential projects nationally, including in Victoria and Queensland. So, basic urbanisation infrastructure is one area of investment.

Then, something we have been investing a lot in is digital infrastructure. That investment has been particularly accelerated by the pandemic; everything is getting disrupted by technology. People are doing a lot more online now, not just working remotely, but studying remotely and shopping from home. So, there is a lot more investment in things like hyperscale data centres, logistics, warehousing infrastructure, fibre optic networks, towers and telecommunications.

So, urbanisation and digitisation, but also obviously climate change and the energy transition are big areas where we’re seeing a lot of capital flow in terms of infrastructure investment. Apparently, we have four or five times the penetration per capita of wind and solar here already in Australia. We don’t think we are that big, but for the size of our population compared to the United States, Europe, China and Japan, we are. Having said that, the Australian Energy Market Operator has said that if we’re going to meet the growing electricity demand here and the mix that we want, then we’re going to need a massive nine times step-up in wind and solar.

So, it’s about $320 billion of investment up to the 2050 plans.

The last area that is coming up is that the geopolitical backdrop is also now becoming very different. I mean, not since the fall of the Berlin Wall in 1989, or even prior to that, have we had geopolitical factors driving the whole world. We are potentially heading back to that world. For spending in defence, the new Government has said it’ll maintain at two per cent. So, there is about $565 billion there under the national guidelines that we need in defence spending. Investment in cyber is growing at an eight per cent compound annual growth rate.

Also, with the demand for critical minerals, there will be a whole lot of supply chain change and investment there for geopolitical reasons, and those are obviously things like lithium, cobalt, nickel and graphite that are used in everything (batteries, solar panels and wind turbines). That’s just four big sectors off the top of my head. Frankly, when there’s change going on in the

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ll of the asset recycling A that was done here is a very smart way to sell mature assets and draw new capital into development…

community, infrastructure investment is needed to support that change across a range of sectors. So, there’s no end of places where we can all be responding to support that.

AD: It’s interesting, that sovereign resilience piece. That is conspicuous because we’ve not spoken about that at any point over the last few years, so it is a pretty marked change in the last 12 years or so.

SW: It will impact a lot of what’s going on, and alliances will develop.

AD: On the government side of the pipeline, how do we ensure governments are routinely exploring and considering the opportunities of using private capital to deliver against that pipeline?

SW: This backdrop is going to drive them to do that more.

I was reading about the all the measures that are going to be taken in the United Kingdom and Europe in terms of energy. They are going to have to look at subsidising retail, and maybe some of the industrial and commercial as well, in energy demand. So, fiscal debt is going to go up a lot. It was already up at crazy levels in many of the big countries around the world, but they’re going to have to rely on private capital more and more to deliver on some of these community needs for infrastructure investment. Here in Australia, we’ve had a good track record of doing that. I think the New South Wales State Infrastructure Strategy does look to basically partner with private capital already in areas like social housing, trains and electricity. At a national level, the guidelines are for any project over $100 million to consider Public Private Partnership options. In Victoria, the VicRoads Modernisation joint venture, which Macquarie is part of, is a 40-year partnership providing A$7.9 billion in upfront proceeds for the state to invest in the new Victorian Future Fund and strengthen its budget position. I think, certainly here in Australia at the federal and state levels, they’re continuing to draw private capital. Globally, we’re a big investor in the United Kingdom, and they are going to need private capital with the new Prime Minister’s approach of cutting taxes, helping the community with funding a whole lot of things – the money is going to have to come from somewhere and I think private capital has a bigger role to play.

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AD: What’s your sense? Is Australia still leading the way in this space or have we got some catching up to do?

SW: Yes, and maybe we have a biased view, but we all here pioneered infrastructure as an asset class during the early 1990s recession, and the privatisations that happened, have taken it now to be a global asset class. People here get it. The big pension funds have huge allocations like the Canadians. In the United States, investors are still allocated only one or two per cent to infrastructure. When I was working there between 2004 and 2008, we used to jokingly call the United States the ‘emerging market for infrastructure’, because they still hadn’t got into either allocating or bringing private capital into investment. Frankly, it still is an emerging market for infrastructure, relative to what’s happening here. All of the asset recycling that was done here is a very smart way to sell mature assets and draw new capital into development that the Government can then take the risk on, and catalyse further investment. All of that should happen in the United States, but still isn’t, and so I certainly feel Australia continues to lead the way on recycling both existing assets and structures for drawing private capital into new assets.

AD: We’ve seen the keys handed over, and a new Federal Government sworn in and setting the pace now. What change do you see from an infrastructure perspective?

SW: Well, Prime Minister Anthony Albanese actually was the minister when Infrastructure Australia was set up, so I think we have a prime minister that really gets the value of working with the private sector on infrastructure. We’re now focusing on a whole lot of small projects happening, and I get the impression there is a focus on trying to prioritise where that focus on new projects is. I know Mike Mrdak and Nicole Lockwood were working on this prioritisation. I think that will be a very valuable thing and getting the commitment is important, and then actually getting the projects prioritised, and putting structures around and getting them done. So, so far, we are seeing good things out of the new government.

AD: One of the big things that happened very recently is the passing of the legislation on 43 per cent emissions reduction by 2030, and net zero by 2050. What practical difference does that make from where you see it?

SW: First of all, it’s fantastic to have a roadmap. It is really important for us when we invest, because we’re trying to deliver for our investors. Michael Carapiet used to call it everything from the deadly boring, right through to the barely interesting in terms of what we offer in infrastructure. But it’s got to be defensive capital, protected income-yielding assets with a degree of certainty around them – which is why people invest with lower required returns. So, having the Government set pathways is really important and the targets that they’ve set by sub-sectors is also good. Ultimately, you then have to

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e’re a country that W understands that infrastructure can drive better growth for the economy if we’re investing well...

get to specific projects and start looking at what can be done, and how you de-risk them and the structures. That’s where we need to break this down and get things done. Now, all the states are doing things. The infrastructure electricity investment plans here in New South Wales, where they’re trying to do 12 gigawatts of renewables, have identified the renewable energy zones that are very important. Queensland is coming out with its plans. The states have taken quite a lead on this historically, but I think now bringing that down to projects is going to be an important next step.

AD: One of the themes in our discussions over the years has been Macquarie’s efforts around fossil-fuel-intensive assets and what you’ve done to reduce exposure in those, and then the transition pathways. My sense is there has been a real maturation of that argument over the past few years. How’s that trending in your own portfolios and investments, and client appetite around renewables versus other assets?

SW: One of the good things the Federal Government has done by setting the 43 per cent target is they have said that we will need gas as a transition fuel. We have been saying for ages that in energy – and in transport, agriculture and industry – we’ve got to have this orderly transition, because until we have solutions of scale, we can’t transition off what we’re doing at the moment. Some of that is exacerbated now because in energy, you’ve got to thread the needle between a trilemma of availability, cost and climate impacts. When people haven’t got access to energy, or their cost of living is becoming untenable, you can sometimes lose the mandate for that transition, so we do need to think this through.

We have said that for our own balance sheet we will get out of coal in the next couple of years. Oil and gas are a teensy portion of our balance sheet. We have about a $200-billion balance sheet, and only a couple of hundred million in these areas, but we have been very much advocating that we will need these transitioned fuels. With super profits being earned in coal, we should try to encourage that to get invested in new solutions.

I would’ve thought it’s in the interest of the coal companies, as well, to be in transportation rather than railroads, and to be in energy and think about where the new sources of energy are.

So, at Macquarie we do a lot of support. All the producers in Europe are going to need huge support in meeting the gap in demand and, now, sourcing supply. So, we do a lot for them, such as risk management, hedging, financing, transportation, and storage, and we will step up to continue to do that. At the same time, we really need a massive step up in investment in solutions and that’s where we’re doing a lot of work. Along with our partners, we have invested $75 billion since 2005 and over $30 billion just in the past five years. So, I think we have 30 gigawatts under construction and in development of renewable projects, and over 15 gigawatts operating. We are passionate about energy, but also transport; we’re doing a lot of things on electric vehicles and sustainable aviation fuels. In agriculture, it’s precision technology or low-methane-emission feedstock, and in industry it’s green steel. But at the same time, we’re very mindful when you ask about gas that it’s got to be a transition fuel for Australia; we need energy independence.

AD: There’s a lot of discussion among ministers around embedded carbon, and not just the transition of the energy sector, but the carbon that’s embedded in the things that we build. What can you and the other investors in this room do to push that argument and reduce the amount of carbon that’s in the projects we build?

SW: Yes, it’s an important area to focus on. I think 39 per cent of our emissions are from industry in that way and 28 per cent of that is from embedded carbon. So, we do need to be thinking about a whole lot of things in terms of procurement standards to try to address that, and we’re doing projects with partners like BP on this. We’re building our new premises at 1 Elizabeth Street that has the highest 6 Star Green Star rating, and we are really focusing on the embedded carbon in that building. It’s costing us a bit more to deliver that, but we’re getting higher rents for it. I think people in the property sector here doing office buildings will tell you that all the tenant demand is for these sorts of buildings as we come out of COVID-19. Demand has now reduced a bit compared to supply – that’s where the focus is. So, a lot of these things that are good for the community are also smart business.

AD: Over the years, we’ve attempted to end these interviews on a nice, positive note, but we’ve also discussed a lot of challenges today. So, if you cast your mind forward, what are you most optimistic about for Australia and the infrastructure sector?

SW: Look, we’ve covered some of the points that are really good in terms of where we’re positioned. We’re a country that understands that infrastructure can drive better growth for the economy if we’re investing well and ahead of time in transportation, infrastructure, utilities and communications.

We also really understand working with the private sector. So, for all of us in the private sector who engage with government,

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he offshore wind T projects that we are involved in now in Victoria will require a lot of infrastructure.

I generally feel quite optimistic

it’s a well-trodden path at federal and state level. We are a bit of a lucky country in that our debt to GDP is only between 30 and 40 per cent, relative to some of our global peers. We are really well positioned, and for infrastructure to play a role in the industries of the future that Australia is going to need to think about.

Having been an iron-ore-, LNG- and coal-dependent economy, we’re actually going to have to now think about how we transition to the industries of the future. New infrastructure is going to be required; just like when the Pilbara was built, there was infrastructure required there. The new industries, if they’re in critical minerals, will require investment, infrastructure, transportation and grid investment as we move to renewable energy. The offshore wind projects that we are involved in now in Victoria will require a lot of infrastructure.

I generally feel quite optimistic; I’m an optimist anyway, generally, but I feel quite positive about it.

geared to basically get more money to support investment in asset classes that John will be looking to invest in. He will be bringing the great Public Private Partnership technology that has been developed here in Australia, and they need it. You really have to go to every state, as John knows, to drive this for us all.

So, I’m sorry that it’s not win-win; it’s a lose-win for us.

John is a great culture carrier and he’s wonderful at developing people, so there’s going to be a lot of team development over there, as well. On the win side for us, we have Tom Butcher and David Porter taking over on the infrastructure side. So, you’ve got really capable people that have been taking over from John here. We have also got Jo Spillane and Jeanette Royce on investor engagement, and Ivan Varughese, who’s now based in Singapore doing our Asia-Pacific investing. So, we will be looking after you.

AD: Well, thank you, Shemara. That brings our conversation to a close. Thank you for joining us today.

SW: Thank you, Adrian. Thanks, everyone.

AD: I don’t want to bring the tone down, but you’re sending my Deputy Chair, John Pickhaver, to the emerging market of New York for a few years. What’s the market opportunity there?

SW: Well, John is going to head up our infrastructure and energy investment business there, so he’ll be much more on the investing side and that is a huge opportunity for us.

I talked about the United States being the emerging market in infrastructure. There’s huge opportunity for private capital to come in. In anticipation of his arrival, I think Biden has put in place a few changes like the Infrastructure Investment and Jobs Act 2021, and the Inflation Reduction Act 2022, all

Shemara Wikramanayake, Managing Director and Chief Executive Officer, Macquarie Group Shemara Wikramanayake has been Macquarie Group’s Managing Director and CEO since late 2018. Wikramanayake joined Macquarie in 1987 at Macquarie Capital in Sydney. In her time at Macquarie, she has worked in six countries and across several business lines, establishing and leading Macquarie’s corporate advisory offices in New Zealand, Hong Kong and Malaysia, and the infrastructure funds management business in the United States and Canada.

Wikramanayake has also served as Chair of the Macquarie Group Foundation.

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As Head of Macquarie Asset Management for 10 years before her appointment as CEO, Wikramanayake led a team of 1600 staff in 24 markets. Macquarie Asset Management grew to become a world-leading manager of infrastructure and real assets, and a top 50 global public securities manager. In 2018, Wikramanayake was appointed a Commissioner of the Global Commission on Adaptation, a World Bank–led initiative to accelerate climate adaptation action and create concrete solutions that enhance resilience. In 2019, Wikramanayake was appointed by the UN’s Special Envoy for Climate Action, Michael Bloomberg, to the Climate Finance Leadership Initiative, which seeks a sixfold increase in climate mitigation investment from the private sector.

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Up and Ovingham Motorists are now travelling on the newly constructed Torrens Road Bridge as work on the Ovingham Level Crossing Removal Project nears completion.

The project, just north of Adelaide’s CBD, has seen the level crossing replaced with an overpass.

Traffic was switched onto the overpass for the first time in June 2022, allowing motorists to drive up and over the train lines, as part of the $196-million project, jointly funded by the South Australian and Australian governments.

The project has resulted in a road bridge over the Adelaide Metro Gawler line and Australian Rail Track Corporation Freight line, with improvements also being made to the

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Churchill Road intersection to increase walkability and create a new community open space.

Jon Whelan, Chief Executive of the South Australian Department for Infrastructure and Transport, explains the difference that the overpass makes.

‘The overpass has removed the need for traffic to stop to allow for passing trains, reducing travel times and congestion for motorists,’ he says.

‘It has also improved public transport usage to north-west Adelaide, as buses will no longer need to stop at the boom gates. This has cut travel

times and increased both reliability and safety.’

Removal of the level crossing has also increased freight productivity and boosted safety for all road users – motorists, cyclists and pedestrians alike – by removing a road/rail crossing point.

The crossing sees an average of 21,300 vehicles pass through each day.

Prior to the removal, the boom gates were down for approximately 22 per cent of the time during the combined morning and afternoon peak periods, significantly impacting passing traffic. This delay is now a thing of the past.

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The South Australian Department for Infrastructure and Transport is delivering the project as part of the Public Transport Projects (PTP) Alliance with McConnell Dowell Constructors, Mott MacDonald Australia and Arup, meaning a collaborative approach has been taken to complete the works.

The consortium has previously completed major infrastructure works in South Australia as part of the PTP Alliance, including the Oaklands Crossing Grade Separation Project, and the Regency Road to Pym Street Project as part of the North–South Corridor.

Road users and the community have been watching the progression of the bridge construction during the build, as 16 South Australianbuilt, 100-tonne girders were craned into place.

The girders – the first of which was lowered into place in November 2021 – were constructed by South Australian company Bowhill Engineering. Bowhill also constructed the girders for the Regency Road overpass for the North–South Corridor.

Bowhill Managing Director Jeremy Hawkes says that moving the 100-tonne, 50-metre-long girders was a major exercise in logistics.

‘We have developed good systems on our manufacturing site, and great

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relationships with heavy transport companies that can safely move these large elements along the public roads – from Bowhill, over the Murray River at Blanchetown, and into Adelaide from the north,’ Hawkes says.

These projects have allowed the company to hire 10 new apprentices, and to invest in upgrades at its plant in the Murray Mallee.

The upgrade at Ovingham also involves the elevation of the western end of Churchill Road, which intersects with Torrens Road, approximately 100 metres from the Ovingham level crossing heading towards the city, so that it meets the elevated height of Torrens Road.

As part of the project, the PTP Alliance has delivered an upgrade to the Ovingham Railway Station.

The upgrade has improved the user experience and station access.

It includes: ► new shelters, seating and bins ► improved fencing, platforms and access paths ► improved communication equipment and lighting ► new CCTV ► landscaping and new on-street car parks nearby.

The Ovingham Railway Station reopened to passengers in November 2022. The station is

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on the Gawler line, which services Adelaide’s northern suburbs.

With construction on the overpass complete, the area beneath the bridge is being developed into open space for community use, with the following features: ► a futsal court and a half basketball court ► Kaurna cultural heritage artwork ► a nature play area ► public artwork ► landscaping and revegetation ► pedestrian and cycle paths.

As part of this project, new landscaped areas are also being created. The garden bed landscape surrounding the area will comprise more than 21,000 individual plants.

The PTP Alliance has also engaged artists to paint murals on the bridge abutment walls and piers.

Among them is Mike Makatron and Harley Hall, who are painting the Kakirra ‘moon’ mural on one of the bridge abutment wallS. At the other end, Elizabeth Close, Shane Cook and Thomas Readett have painted the Tindo ‘sun’ mural.

Makatron is a full-time muralist with more than 20 years of experience, and will be collaborating in a mentorship with Hall, a Kaurna, Ngarrindjeri and Kokatha man who is an artist and social worker that is new to creating largescale public artworks.

Close is a Pitjantjatjara and Yankunytjatjara woman who is a contemporary Aboriginal visual artist based in Adelaide.

Cook is a Guwa (Koa) and Wulli Wulli man who grew up in Adelaide, and is internationally and nationally recognised as a prominent First Nations aerosol artist, as well as a youth and cultural mentor. Readett is a Ngarrindjeri and Arrernte artist based in Adelaide, who previously worked as the Tarnanthi education officer at the Art Gallery of South Australia prior to being a full-time artist.

According to Makatron, his and Hall’s striking mural showcases ‘the moon phases, but they’re looking down on top of the red landscape. The

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totem animal for Kaurna is Tundra, the red kangaroo’.

He says that the process has seen him learn as much from Hall, as Hall has learnt from him.

‘You start with sketch lines, and then just a constant back and forth of making a mess, polishing it, making more mess, polishing it – and just constant push and pull with that,’ Makatron says.

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Community engagement has been a core priority for the project team.

Throughout the construction phase, students from local schools have been invited to become involved.

In March 2022, the project team and environmental consultants fauNature ran a bird box building workshop with students from Brompton Primary School. Ten boxes were built, and later painted,

before being installed in trees around the overpass.

According to one of the children involved, ‘There’s going to be 200 trees planted, so hopefully a lot of birds will make the bird boxes their new home. We’re really looking forward to seeing all the wildlife move into the bird boxes when we’re on our way to school in the morning.’

Other school programs included a First Nations Cultural Artefacts workshop in conjunction with the Kaurna Education Program, and a Butterfly Garden session.

Students from Bowden Brompton Community School also contributed artworks by painting on recycled corflutes to decorate the fence around the site office.

The project has been supporting 265 full-time jobs per year during construction.

One of the challenges the project faced was dealing with the ongoing COVID-19 pandemic. Despite the global situation, hard work meant the majority of South Australian infrastructure projects, including the Ovingham Level Crossing Removal Project, were able to deliver key milestones on or ahead of schedule. ♦

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companyfocus

ANZ Banking Group supports Queensland’s clean energy vision The 2032 Olympic Games in Brisbane will leave a valuable legacy in renewables investment.

For ANZ’s Darren Bradfield, the Brisbane 2032 Climate Positive Games will do more than deliver a carbonneutral event and energy-efficient infrastructure. It also has the potential to drive cross-sector collaboration and quicken the state’s decarbonisation.

Bradfield believes the Brisbane Olympic and Paralympic Games in 2032 will encourage innovation and investment in renewables that will benefit Queensland for generations, and position the state as a leader.

‘Brisbane 2032 is a catalyst for change,’ says Bradfield. ‘It’s an opportunity for people to work together and plan Queensland’s longterm decarbonisation. New thinking in renewables can create jobs and

businesses across the state. The conversations are already happening.

You can feel the momentum starting to build.’

Bradfield is well-placed to comment on sustainable finance in Queensland. As ANZ Queensland’s Head of Corporate Finance and Joint Head of Institutional Banking, he works with organisations across sectors. He is an architect of ANZ’s strategic plan in Queensland, and has been an Executive Director at the bank for 16 years.

He says that Brisbane 2032 is strongly aligned with Queensland’s new plan on energy and jobs. ‘When investing in new or retrofitted assets in the lead-up to Brisbane 2032, we need

to ask if those assets help Queensland deliver on its clean energy plan, and how those assets align with the state’s broader decarbonisation vision.’

Having secured hosting rights last year, Brisbane 2032 is developing strategies to achieve a Climate Positive Games in partnership with the International Olympic Committee.

Brisbane 2032 has ambitious goals, including a carbon-neutral event, additional climate benefits for host communities, and leaving a long-term legacy that aligns with, and accelerates, Queensland’s emission reductions and renewable targets.

In October 2022, the Queensland Government released its Energy and Jobs Plan, which outlines a pathway

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to a clean, reliable and affordable energy system by 2035 – and envisions providing power for generations and creating well-paid jobs.

Queensland has a target of 70 per cent renewable energy by 2032, and 80 per cent by 2035. The government says that private sector investment in new renewable energy generation, batteries and storage will be integral to the plan’s success.

‘A large amount of capital will be needed to fund this transformation,’ says Bradfield. ‘But it’s not just about finance. Banks such as ANZ can use their expertise in renewables to help organisations and encourage new conversations about what is required.

Queensland has much work ahead, but there is so much potential in this state.’

Climate innovation legacy

Bradfield says that Brisbane 2032 will require broader thinking across sectors, particularly in areas such as public transport. ‘For example, local councils might look at electrifying bus fleets.

The next question could be: are the bus depots still in the right place as we move towards decarbonisation? How do we power those depots?’

Stadium retrofitting for Brisbane 2032 could be another opportunity, says Bradfield. ‘When The Gabba stadium is redeveloped to be the centrepiece of the Games, should a giant battery be installed to store solar energy? And how can clean energy infrastructure at The Gabba be designed to be easily upgraded as new technology is developed?’

Social housing should be another priority, says Bradfield. ‘When building Olympic Villages, we must consider their long-term sustainability and how they contribute to affordable housing in South East Queensland,’ Bradfield says.

‘Everything from housing materials to housing design must be aligned with the state’s decarbonisation goals.’

Bradfield believes the benefits from Brisbane 2032 will extend far beyond the city. ‘By using stadiums across South East Queensland, the Games will benefit the Sunshine

Coast, the Gold Coast and other areas. Brisbane 2032 is an opportunity to create new connections and collaborations on renewables across South East Queensland.’

Regional Queensland also has a vital role, says Bradfield. ‘A big part of the government’s energy strategy is about converting coal-fired power stations to clean energy hubs. Much of that work will be in regional towns in Central and North Queensland. As part of planning for Brisbane 2032, we should think about collaborations between urban and regional cities on renewables.’

ANZ at the forefront of sustainable finance in Queensland Bradfield has watched ANZ’s focus on sustainable finance – and its expertise in renewables – grow significantly over the past two decades.

ANZ is targeting $50 billion of lending to renewable projects by 2025.

It has already hit $31 billion. ‘Our customers have a growing demand for sustainable finance, and ANZ is well-placed to supply that capital. We can also use our expertise to help existing and new customers transition towards decarbonisation.’

ANZ’s work in corporate finance and institutional banking in Queensland continues to expand. As an example, this year the bank provided structured asset finance for the Kilcoy Global Foods Australia, a premium beef

processor and longstanding ANZ customer. The finance had facilities to support sustainability initiatives.

ANZ also provided capital for a regional bus operator to electrify part of its fleet and upgrade charging at its depot. In Queensland agriculture, ANZ supported a customer in replacing diesel generators on water bores with solar batteries.

In commercial lending, ANZ has a $200-million facility to support small and medium-sized businesses in buying assets in the clean energy transition.

This is a joint national initiative with the Clean Energy Finance Corporation.

ANZ is also involved in two new large sustainability-linked loans for key Queensland infrastructure assets. ‘ANZ continues to fund more renewable projects and help more organisations across the state,’ says Bradfield. ‘That’s a result of ANZ’s long-term commitment to sustainability and its initiatives in Queensland.’

Bradfield is excited about Brisbane 2032’s potential to help Queensland communities, and ANZ’s ability to contribute. ‘ANZ has the people, expertise, relationships and capital to make a difference. Brisbane 2032 will be something very special, and a new benchmark for Olympic and Paralympics Games.’ ♦ To learn more about ANZ, visit www.anz.com/institutional.

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Keynote address – The Hon. Rob Stokes MP

Keynote address The Hon. Rob Stokes MP, Minister for Infrastructure, Cities and Active Transport, New South Wales Key points: •

• •

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While significant progress has already been made to reduce operational emissions, the sector’s ability to achieve further reductions will depend on success in lowering emissions in other areas that have proven harder to address.

A greater focus on the early options analysis of projects will help develop more sustainable solutions at lower cost to taxpayers.

Through the construction standards and certification requirements imposed on projects, governments play a key role in planning and procuring infrastructure more thoughtfully.

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Keynote address – The Hon. Rob Stokes MP

I want to acknowledge the traditional custodians of the land on which we meet and discuss today, the Gadigal clan, and thank elders past and present for their leadership, and their custodianship of Country. I also want to extend those respects to Aboriginal people in the room with us. It is so appropriate that we begin forums like this as a public representative to acknowledge Aboriginal people, because so often through our history they have been acknowledged last, if at all. That’s why it is so appropriate that someone like myself, in the office I hold, acknowledges their custodianship first.

Ladies and gentlemen, my speech this morning will focus on the national and state objective – a shared objective toward net zero. The New South Wales Government is enormously proud of, and focused on, delivering $112.7 billion of public infrastructure investment over the next four years. The scale of this investment is well known to everyone here. It is accountable for keeping more than 140,000 people in jobs in New South Wales and providing untold benefits to citizens wherever they live, across the length and breadth of this great state – and not just now, but citizens who don’t even exist yet. With that in mind – that temporal aspect of infrastructure provision and the idea that we’re providing not just for citizens now, but into the future – we are lead inevitably to a discussion of sustainability.

How do we reach our adopted goal of net zero emissions across the whole New South Wales economy by 2050 and, even more pressingly, a 50 per cent cut in emissions below 2005 levels by 2030? Infrastructure clearly has a key role to play in this transformation due to the embodied, operating and enabling emissions generated throughout a project’s infrastructure lifecycle. It’s an inherent challenge, but it provides all of us with an extraordinary opportunity, particularly in government, to encourage and support the private sector in the progressive decarbonisation of infrastructure supply chains.

Now I’m going to outline three specific initiatives I believe will help the infrastructure sector to achieve this shared objective of decarbonising our economy. I’m going to put forward a thesis, the three things we need to do collectively, and the things government needs to lead on. The first is to build more with less. The second is to procure and plan more thoughtfully. I think sometimes our procurement processes are almost done following the guidebook because that’s what we do, rather than question why we do things the way we have traditionally. The third is to construct more efficiently. So, to build more with less, procure more thoughtfully and construct more efficiently.

Efforts to reduce carbon emissions in infrastructure projects have traditionally focused on the operational energy of an asset.

While significant progress has already been made to reduce the sector’s operational emissions, largely driven by the uptake of renewable energy, our ability to achieve further reductions will depend on success in areas that have proven harder to address.

Decarbonising the infrastructure sector requires a reduction in emissions right across asset stages, including emissions embedded during construction, generated by ongoing asset operations, and left behind through waste. It’s not just the spatial elements, but the temporal elements of infrastructure we need to address if we are going to decarbonise. In that sense, it’s fitting that the theme of today’s event is to refocus, because embodied carbon is the next frontier in our task to decarbonise the infrastructure sector. Embodied carbon in the production of building materials is estimated to be responsible for approximately five to 10 per cent of Australia’s total emissions, a frequently overlooked and under-measured part of the net zero discussion. With concrete, steel and aluminium considered some of the more difficult materials to decarbonise, our record levels of infrastructure investment have created additional challenges in reducing embodied carbon. We have a paradox of a massive infrastructure pipeline at the same time as we are trying to decarbonise – using carbon-intensive materials while at the same time having net zero ambitions.

It poses a massive paradox and throws out a huge challenge for us to embrace.

To ensure embedded emissions are more than just a second‑order issue in our decarbonising dialogue, it’s important that we look at some of the reasons why the issue has been so fraught. The traditional and understandable focus on cost efficiency has stymied progress on decarbonisation innovation in construction. This has been underpinned by a historical stigma surrounding recycled materials, often seen by traditionalists as having poorer engineering characteristics. Fortunately, this concern is diminishing as new products emerge that are both cheaper and more efficient than conventional materials.

Furthermore, the increasing acceptance and adoption of re-use, recycle, and reduce principles are crucial in guiding governments and the private sector to foster a capacity for innovation across the construction value chain. This tension and interplay is having a positive compounding effect on our road to decarbonisation.

There are a number of pathways to address embodied carbon in infrastructure, as I began with, and it’s appropriate that we start at the beginning. The first pathway is obviously prevention – the building less option, to do more but using less. Now, how do we achieve this? Well, principally a greater focus on upfront options analysis can lead to more sustainable solutions at a lower cost to taxpayers. My mantra has been so often we’ve started with the project rather than the problem that the project is seeking to solve. With a greater focus on the problem, that will lead us to choosing more innovative and more sustainable alternatives.

Increasing the use of existing assets – for example, for renovation or adaptive re-use – is an important first step in reducing emissions that would otherwise be created through

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a new build. It’s practical to say that the highest potential for reduction in embodied carbon is generally at the start of a project. The cost, sustainability and effectiveness of a project are largely determined in the design process. Reference designs can lock in an approach that is suboptimal, with little opportunity to reverse that process once formal procurement commences. I think a lived experience for probably everyone in the room is to say we could do it better, but when it’s too late for us to consider those alternatives.

This screams at us; we need to ask those questions at the beginning when we can actually make a difference.

Although market soundings are now common in the approach to procurement, they’re not as consistently applied in design solutions. The quantity and types of material are dictated by our design standards, sometimes resulting in solutions that are perhaps over engineered and subsequently resulting in more embodied carbon, not less.

Of course, there’s an obvious reason to ensure structural standards are upheld, but when it comes to many design decisions, it’s possible and indeed crucial that we attempt to reduce embodied carbon in infrastructure projects. If we can embed the concept of dematerialisation as part of the brief at the start of a project, the subsequent development of an efficient design will require less material.

This leads logically to the next point, that we need to plan and procure more thoughtfully. Governments play a key role in setting the decarbonisation bar through our standards and certification requirements – the things that we impose. Let’s face it, our design assurance processes have resulted traditionally in incredibly conservative design standards. It’s ironic that our discount rates fully depreciate an asset within 20 years even though we are requiring a design life of well over 100 years.

There’s a balance in ensuring our certification requirements don’t impose superfluous environmental costs.

Currently, there’s a lack of established standards and design guides to assess embodied carbon. We must update our code standards and specifications to preference lower‑embodied‑carbon intensities for products with high volumes of materials such as concrete, steel, aluminium, and glass. We know that some existing construction and material standards may not cover materials with recycled content.

Updating our infrastructure and building sustainability standards, ratings, and benchmarks will help improve asset performance, and also investment attraction. It’s encouraging, certainly, that right across the globe infrastructure and building sustainability standards, ratings, and benchmarks have increased the uptake of sustainable and low-carbon building materials, and improved energy efficiency, reduced water use, and limited waste materials.

In Australia, the routine adoption of industry standard sustainability metrics enables the objective measurement

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and consistent reporting of sustainability performance in infrastructure assets, although I do believe there’s probably an opportunity to see if we can standardise some of these different rating tools. Different rating tools are used differently in different jurisdictions, and the tools that we use here may not equate with tools used overseas. I know that’s a vast piece of work, but in the same way we have common currencies in relation to monetary policy, it’s probably sensible that we look at similar currencies or consistent currencies across measuring and reporting sustainability outcomes, as well. These metrics are an important tool for private sector investors to make informed investment decision, the Global Real Estate Sustainability Benchmark is obviously one good example of that.

The next obvious step in improving procurement planning is to update the National Construction Code to include performance targets for embodied carbon. That’s obviously a matter the joint infrastructure ministers will have to consider. It was interesting at the recent infrastructure, transport and ministerial meeting that the public servants all wanted the ministers to talk about trucks, but we wanted to talk about infrastructure. Specifically, what we wanted to talk about was how we drive efficiency and sustainability in infrastructure projects. Almost all ministers said that this was what our communities were telling us they cared about. And this, I believe, is the discussion that will focus those meetings literally over a decade to come. So, in updating the National Construction Code, structured market engagement on things like low and zero-carbon design solutions, with a long list of potential business, can be established prior to setting on a reference case finalising budgets or issuing tenders.

Again, the sustainability requirements and standards early in the process allow us to have more thoughtful discussions about how to achieve more sustainable and decarbonised solutions.

At the same time, we can require government agencies to develop a carbon base case in a project’s business case. This would be an estimate of the carbon that would be embedded in the infrastructure asset during its construction. This is a model that Infrastructure Partnerships Australia has put to government, and one we are certainly very interested in exploring. The way it would work is that once a project reaches procurement, tenderers would be asked to bid a lower carbon option than the carbon base case put forward in the business case.

This would then form part of the agency’s assessment of bids alongside traditional metrics like time, quality and cost.

As I mentioned, I know this is something that Infrastructure Partnerships Australia has recently advocated for, and shown extraordinary vision and leadership on, and I’m pleased to say that Infrastructure NSW – and Simon Draper, who is here today – and New South Wales Treasury are already looking at how we can implement these ideas here in New South Wales. We are also keen to explore with the Minister for Planning whether we should consider mandating a maximum embodied carbon

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rate, as a condition of approval, in relation to State Significant Infrastructure. Earlier in the design process is ultimately the best time to be embedding these sorts of expectations and standards. New South Wales Government infrastructure agencies are also engaging with their supply chains on ways to incorporate sustainability measures as standard practice through contracting arrangements.

The final opportunity I wanted to talk about is how we construct more efficiently through modern and efficient methods of construction. Prefabricated and modular construction approaches, for example, help to reduce material waste, reduce build times and energy usage, and improve building flexibility, utilisation, and ease of refurbishment. The modularity improves the way in which buildings can be re-used and adapted over time. Prefabricated and modular designs are well suited to facilities requiring identical repeated spaces and have already been used in cost-effective procurement of new public housing and public buildings, including schools, hospitals and social housing. The aesthetic of their design, for those who have seen some of the recent school builds, has improved remarkably.

A great example is the NSW Department of Education’s new pavilion model, enabling high-quality school buildings to be designed and constructed off site, and assembled on campus in a matter of weeks, saving time and money, and minimising disruption in campuses that are often very busy.

Another opportunity is in the fabrication of actual construction materials, such as innovations in energy-efficient manufacturing, which creates less waste during manufacture, and utilising lower-emission materials, including engineered timber, green steel, and precast greener concrete panels. I

hesitate to call concrete green; I don’t think there’s anything particularly green about it. In delivery, the major source of reduction is material substitution, where carbon-intensive materials such as cement and asphalt are replaced by low‑embodied-carbon solutions, such as supplementary cement materials and concrete mix, geo-polymer concrete, and recycled asphalt pavement in asphalt mix. We know that increasing the use of lower-emission construction materials can grow new industries to meet the future demand for infrastructure in New South Wales, while decarbonising our built environment and using waste materials such as fly ash, used in coal burning, for example.

In New South Wales, we are seeing the benefits in action already of efforts to reduce the use of traditional Portland cement. We recognise this opportunity for the Sydney Metro City and Southwest – I want to acknowledge the great leadership of Peter Regan, who is also here today. In City Metro and Southwest tunnelling works, an average of 42 per cent of Portland cement has been replaced with a low-emission alternative, translating to a significant reduction in greenhouse gas emissions. We are proud we’ve decarbonised the way in which these assets are operationalised; the challenge now is decarbonising the way they are built. The Parramatta Light Rail project is another example of where we’re projecting a 36 per cent reduction in embodied carbon emissions during construction and operations, and they’ve been achieved by designing a catenary wire-free system using supplementary cementitious materials and macro synthetic fibres in concrete, using reclaimed asphalt pavement, and re-using existing rail sleepers and ballast across the alignment.

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In Grafton, New South Wales, the Wells Crossing to Glenugie Pacific Highway Project has replaced 15 per cent of the sand in the concrete lean mix for pavements with recycled crushed glass, using more than two thousandths of locally procured crushed glass for that project, replacing the need for unnecessary or superfluous use of unsustainably sourced concrete.

We have made similar progress when it comes to green steel, with huge opportunity in New South Wales to decarbonise our infrastructure while creating an exciting new export industry. Green steel produced from direct reduction with hydrogen could decarbonise steel production, with a global market estimated at almost US$600 billion by 2050. Because of our comparative advantage in renewable resources, we can make this hydrogen, and therefore green steel, cheaper than countries such as Japan, Korea, and Indonesia. Doing this at a global scale will require big industrial workforces, and in our Six Cities Plan, recently released by the Premier, we identified areas like the Hunter Valley and Illawarra in New South Wales as obvious locations that can house these new industries.

Particularly, noting the export focus of the Hunter, hydrogen for export could be a focus of hydrogen production in the Hunter, whereas at Port Kembla, a real focus could be hydrogen for domestic use, recognising that the steelworks is a huge part of the industrial workforce in that region.

So, they’re similar industries directed to different purposes to ensure that there’s tension and appropriate levels of competition directed towards serving different national aspirations. While green steel and green concrete are rightly the focus of the decarbonisation of infrastructure, also substituting steel and concrete with timber and engineered wood projects can reduce the emissions intensity of construction. There’s a mature market and supply chain for engineered wood products in product manufacturing and low-rise residential housing construction, but advancements in wood engineering technologies to improve durability and consistency now mean these products are suitable to replace concrete and steel in medium-rise commercial and residential buildings.

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wood products can improve energy efficiency and increase lifecycle value through greater potential for re-use, recycling, and bioenergy as compared to an unsustainable product like concrete. Timber is a renewable and recyclable building material, which frankly also gives much more organic and less austere architecturally and aesthetically pleasing attributes than some of the more manufactured products of concrete, steel, and glass.

To wrap up, progress is being made in reducing embodied carbon in infrastructure, but there’s still a long way to go. A lot of strides have been made in relatively easy areas. Tackling embodied carbon in our infrastructure projects is the hard bit; but, as with everything, where there’s a great risk there’s also great reward. Ultimately, this action establishes new industries in local manufacturing, provides for innovation through our universities and creates exciting new export industries, as well.

It’s not just addressing a shorter-term urgency in relation to climate change, but is also offering tantalising new opportunities for export markets.

Ecological economist Daniel Bromley once said that sustainability is all at once a fine idea and a hopeless concept. It’s a fine idea because it points us to the plight of future generations, but it’s a hopeless concept because it’s devoid of any operational content. We like to talk about it, but when it comes to doing it, that’s an altogether more difficult conversation to have. Hopefully today I’ve outlined a few practical ways in which we can and are working together to reach what is, for every one of us, a shared objective. Our desire to do things more thriftily and efficiently, to save time and money, and to save the planet for ourselves, for our children, and grandchildren is why it’s such an important objective. We started by talking about reconciling with one another, but this is also about reconciling with future generations and with the planet itself – it’s a pretty important piece of work. While we’re building things, at the same time, we are restoring things.

Increased use of timber and engineered wood products in construction offers multiple economic benefits that are probably well known to those in the room, including faster construction times, greater potential for prefabrication, and supporting a sustainable plantation forest, as well as our forestry wood processing and manufacturing industry here in New South Wales. Furthermore, modern approaches using engineered

So, to conclude, my three messages have been about how we do this. We build more with less, we procure more thoughtfully and we construct more efficiently. Hopefully, I’ve put some clear flesh on the bones as to how to achieve this, and I wish you all the very best as you take up this challenge and help government to find new and innovative ways of reaching these shared objectives that are so important for the future of our environment, but also our society and economy.

Thanks a lot.

The Hon. Rob Stokes – Minister for Infrastructure, Cities and Active Transport, New South Wales

Spaces, Minister for Transport and Roads, Minister for Education, Minister for Environment, Minister for Heritage and Minister for the Central Coast.

The Hon. Rob Stokes is the New South Wales Minister for Infrastructure, Cities and Active Transport. Stokes has been a member of the New South Wales Parliament since 2007 and has served as Minister for Planning and Public

Stokes is an Honorary Fellow with Macquarie Law School, and holds a double degree in arts and law from Macquarie University, a Masters of Science from the University of Oxford, and a PhD in planning law.

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Panel discussion – Respected leaders

Panel discussion Respected leaders – Australia’s infrastructure bodies Key points: •

• •

The long-term and independent positioning of infrastructure bodies enables them to help governments drive efficiencies in infrastructure planning and delivery, and implement reforms against a backdrop of challenging macro-economic conditions.

Independent infrastructure bodies will help drive decarbonisation through the setting of concrete goals and the facilitation of government–community cooperation.

A reformed Infrastructure Australia should have a firm mandate and an ability to integrate with the work of state-based i-bodies.

Panellists: ► ► ►

Jim Miller, Chair, Infrastructure Victoria Tony Shepherd AO, Chair, Infrastructure SA Nicole Lockwood, Chair, Infrastructure WA

Moderator: ►

Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia

Adrian Dwyer (AD): Thank you very much for joining us today.

I might just get each of you to briefly reflect on the achievements and impacts of the respective i-bodies that you’ve been involved with over time, and how they’ve contributed to good projects and good reforms. Nicole, we might start with you because you’ve been on two.

Nicole Lockwood (NL): Thanks, Adrian. I really appreciate the opportunity to be here. We’ve got the benefit of being almost last to the table in Western Australia. I spent a long time on the Infrastructure Australia Board, very frustrated that our state government wouldn’t play the game in terms of long-term planning and working in with the national system. So, it is a big relief to see Infrastructure WA born and now fully running.

I think, as with all of these things, they take time to come to life. And we’ve been through quite a long process to get our organisations set up and complete our long-term planning work. What’s clear is that the i-body approach is critical for the

scale of challenges that we’ve got coming. They’re all system issues, and the problem with any form of government is that they are all about silos. It is very difficult, even in a cabinet structure, to get whole-of-system thinking. What’s exciting for us is that we were able to take the benefit of the lessons of the other i-bodies and what they’d learned. Each i-body has quite different characteristics, but I think they have the same mission, which is really about creating a long-term perspective that allows governments to make good, strong decisions. For us, we are right in the thick of hearing back from our Government on their response, but already we’ve seen them taking account of our recommendations in the recent budget and really thinking about it from a systems perspective. So, it’s quite a shift from what we’ve seen in the past.

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Panel discussion – Respected leaders

Jim Miller (JM): I think my reflections are threefold. One, it works; that’s important. Two, it’s broad; that’s important. And three, it’s having a real impact in the community, and that’s important. What do I mean by that? Looking at it through an Infrastructure Victoria lens, we’ve done two 30-year strategies now. Our first 30-year strategy in 2016 saw 92 per cent of the 137 recommendations progressed by Government. We put out our second strategy last year and 89 per cent of the 94 recommendations have been supported either in whole or in part by government. They’re very helpful metrics to give you confidence it works.

It’s broad. That’s important because it’s not just focused on building projects and transport projects. It’s looking at behaviours and a very broad definition of infrastructure, particularly when it comes to social housing, density and so forth. As for the community, we’re able to engage with people in ways that governments or departments may not be able to, or perhaps would choose not to, and that’s creating real benefits.

We have worked in partnership with groups like Infrastructure Partnerships Australia, which has had some wonderful initiatives that we’ve been able to support and assist in getting delivered – things like social and affordable housing. Victoria now has a $5-billion big housing build program, born off the back of a lot of the great work that Infrastructure Partnerships Australia has done over many years.

Then there are steps to transport network pricing, road user charging or whatever step you want to talk about. Again, that requires some engagement at the community level so politicians can be comfortable that those kinds of initiatives, which haven’t really been done before in the way that’s been contemplated, can be accepted. That partnership, and more people saying the same thing, could indeed be one of the greatest legacies for the i-bodies, both at this point, and hopefully going forward.

Tony Shepherd AO (TS): Infrastructure SA is one of the newer i-bodies and we’re very pleased with the progress we’ve made. It started with the assurance process: How do you evaluate projects? And then when you have approval and you’re funded, how do you deliver them efficiently? That assurance is now widely accepted across all agencies in South Australia. It’s this discipline that is paying off well.

We’ve got a new government in South Australia and that’s always a challenge. The relationship between an i-body and a government is essentially based on trust, and that’s trust you have to work on and build on. The trust, I think, is building in South Australia. We’ve got an excellent relationship with the new Premier, who is very enthusiastic about our work and very keen to get our views on future developments, programs and projects. Jeremy Conway, our CEO, has also got us more deeply involved with industry and business in general, not just focusing on government agencies, but the users and the

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providers of infrastructure, and asking them what they require.

Out of that has sprung a project called the Northern Water Supply Project whereby we’ve gone out and talked to, and developed plans with, major users like resources companies, the agriculture sector, the Department of Defence and SA Water. We’ve come up with a concept for a desalination plant in the Spencer Gulf. The plant would supply water to the northern provinces of South Australia, which are screaming for water, and ripe for investment and development. So, that’s a slightly different approach for an i-body, but it’s certainly one that seems to be working very well and has complete support from the Government.

AD: Analysis of Australian and New Zealand Infrastructure Pipeline data shows there is $499 billion worth of projects in the pipeline. Simultaneously there’s a whole bunch of macro‑economic settings and challenges around. Jim, how are you seeing those global factors play out on the capacity to deliver the pipeline?

JM: It’s a real issue, and I know government is spending a lot of time on it, which is important. As part of our role at Infrastructure Victoria, we’ve looked into how we can help directly in terms of things that flow from those challenges, like resource capacity, escalation and so forth. It’s very clear, certainly in Victoria, that government has got that covered.

So, that’s great. Its a work in progress, obviously, but they’re working on it really hard.

So, then we turn our minds to what else we can do as part of that challenge. One of the things we keep trying to look at is the fiscal constraint that’s out there. We’ve got the Federal Government billions of dollars in debt. So, what do you do?

Minister Stokes spoke previously about doing more with less and that’s going to be a real constraint. We haven’t really seen that for a long time because infrastructure’s been sexy for over a decade and politicians have wanted to embrace that, but that’s the next iteration for us. So, being smarter in terms of how we change, thinking about how we can do things differently, and how we can change behaviours and processes is really important for i-bodies to try and assist in solving those problems.

TS: Jim’s nailed it, really. The first questions you ask when the department or agency comes forward with a new project or build are, ‘Do you need it?’, ‘Do we have existing resources that could be used or modified for use at a much lower cost?’, and, ‘Could we actually get it from the private sector as another alternative?’. And you’ve got to know; there are restrictions on Government, and public debt has grown enormously during COVID-19 and it’s unsustainable. Budgets are already stressed to the maximum, so we really have to look at the alternatives before we start investing serious taxpayer money. Then, if we do decide we need to invest, we’ve got

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to make sure that money is spent wisely, prudently and cost effectively. Innovative ideas must also play a part. New South Wales is now really big on recycling. If you can’t get locally produced steel, recycled steel is a hell of a lot cheaper than buying it from China at the moment. That is the sort of stuff we’ve got to look at, as well.

AD: Nicole, I mentioned a few of the challenges, such as global supply chain disruptions and energy markets. Do you think they change the role of the i-bodies? Do they have to be more agile? Do they have to do something different for Government in the face of all those external stimuli?

NL: I think they do, because again the role is unique in terms of looking across the system. In Western Australia, we have an extra complexity. When you look at the pipeline of infrastructure in every other state, the majority of that is delivered and enabled by government. In Western Australia, however, the government spend is dwarfed by the spend of industry. So, we have an extra element of how to work in with the private sector in their large builds. When you add these other factors on top, that ability for any group, but in our instance an i-body, to be a conduit between government and industry is really important.

Unfortunately, over time, in my experience of working in government and around government, those relationships have become weaker and weaker. Industry conversations with government 10, 15 or 20 years ago were quite strong, and there was a good understanding of the relationship. Due to a range of worries about things like risk and procurement, and other things that get in the way of process, those relationships are not strong like they used to be. So, I’ve certainly found i-bodies can still play that role, because we’re a little bit divorced from the purchasing part of government. That’s a really important role for the i-bodies to play – to inform government of where the opportunities are and where the risks with industry are, and potentially doing some whole-of-system planning.

In Western Australia, we used to just wait until there was a downturn in another state, and we just grabbed from the other states and off we’d go again. We can’t do that now because you’re all firing and, in reality, the whole globe’s firing. So, this is a very different time. We’re going to pay 30 per cent more, which means that for every taxpayer dollar, we’re getting a third less. That is not a good outcome for anybody.

AD: Jim, I’d like to expose the tension between the stability you provide as an i-body with a long-term, 30-year strategy, versus having to react to this changing environment. How are you balancing that in the advice you’re giving to government?

JM: Well, the good news for the i-bodies is that, in a lot of ways, that’s our day job. When things are changing, we’ve got the capacity to be able to stand back and, as Nicole said, have that system-wide view. We’ve got the resources and capacity to be able to say, ‘Okay, what do we do here?’ and to basically

help be part of the solution. Our team did some fantastic work on some real-time advice to Government on COVID-19, which we could do internally and release within a matter of weeks to assist Government. We didn’t have all the answers, but we were meaningfully contributing to the problem-solving process.

Again, our ability to communicate is important – to go out to the community and say, ‘We don’t know what the answer is’.

We can go and ask questions that we don’t know the answer to, and say, ‘Well, what do you think?’ Government does a great job of consulting, but we can go even more broadly and ask tougher questions. We’ve consistently done that, and have consistently been excited and engaged by the quality of responses we get back from all levels.

AD: The Government just passed legislation on its 43 per cent emissions reduction target by 2030 and net zero by 2050. There’s a delivery task associated with meeting those goals and it’s in line with the state’s commitments. I’m interested in how each of the bodies you chair intend to make your work stream and contribution towards that delivery task.

TS: The role of the i-bodies is as an independent reviewer, to have a good look at this delivery task and assess whether the proposed solutions are the best use of the investment.

Is this what’s required? Has it been done efficiently? Has it been looked at in a national context and will it satisfy what the Government’s policies are? So, when we start talking about these massive numbers of investment in each state and at the federal level, I think i-bodies come to the forefront with their independent and careful expert review of the investment.

NL: I think it’s about defining ‘what does 43 per cent mean?’ I think we’ve come up with a number, which is great, because we’ve got a target we can work towards. But what Minister Stokes talked about this morning is spot on. If you don’t understand how to make a change in your design process first and then your procurement process at the beginning, and you don’t fully understand the huge time frame to deliver these projects, then you’ve actually baked in their negative impacts long before they are constructed.

We’re immediately looking for tools, templates and guidance that we can pass through to agencies to say, ‘If we want a carbon base case, you’re going to need to show us these metrics in a business case for us, as an i-body reviewing the project, to be comfortable.’ I think that’s a job we need to do together because everyone needs to know the answer to this. There’s no point us doing that. That’s the benefit of the i-body network, we can collaborate on tools that every part of the industry is going to need.

JM: The big thing I’d call out in addition to that is we need to be super clear. It’s wonderful that the legislation has passed, but we need definition on exactly what it means. Let’s assume that definition is provided and we say it’s going to be really hard. One

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of the big reasons is that the technology is evolving. We talk about green hydrogen, but that doesn’t exist today. It certainly doesn’t exist cost effectively. So, that pathway is going to be one of uncertain technology. There’s going to be a lot of pain as it goes through and we’re seeing this in real time in Victoria. The community wants the emissions target, but with things like the transmission lines in Western Victoria to facilitate renewables, for example, the community really, really dislikes them. So, they’re saying, ‘Yes, I want renewables, but don’t build a transmission line in my backyard.’ There’s a real issue there.

The i-bodies can play a real role here with their ability to engage with the community. We advise, governments decide.

We’ve just given some advice to the Victorian Government on how it goes about attending to the gas transition. About 20 per cent of Victoria’s energy is sourced from gas, which is a challenge for meeting its emissions reduction targets.

TS: I think that’s a great role for Infrastructure Australia. Our electricity system on the east coast of Australia, especially the transmission system, is totally inadequate. The link from New South Wales, by the west of Victoria, back to Melbourne, has taken so long to get off the ground; it’s an absolute disgrace.

We have systems that were set up as independent, almost competitive systems. If we want a transition to sustainable electricity, then interconnection is absolutely at the foundation of it. The HumeLink Project delays are a real issue for electricity supply in Victoria. How do we connect with the new zones in western New South Wales? How do we connect properly to Sydney if we don’t build a transmission line? These are ‘one plus one equals two’ questions. They don’t seem to be debated.

I think that’s a great role for the state i-bodies, but it’s also a great coordinating role for Infrastructure Australia as it’s a national question. That’s one it can take great leadership on, while working with us.

AD: Given that this is a whole-of-government task, every part of every government will be focused on its area of the decarbonisation journey. How do you determine which of the parts your respective organisations can contribute to, rather than duplicate what’s happening elsewhere?

NL: Well, we’ve seen this happen in relation to fuel excise.

States are moving because they need to, but the worry is you then get this inconsistent approach. So, ideally, nationally significant issues need to be dealt with as a network. In which case, you look to the Federal Government to lead on them.

And hopefully a reshaped Infrastructure Australia will have some mandate around national leadership. In the absence of national leadership, states are busy trying to keep up and deal with things as best they can, so they’re not left exposed. Over this last period of government, there’s been a lot of that and that’s not ideal for anybody. So, jurisdictions have been looking at each other and saying, ‘It looks like they’re on the right

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pathway; let’s join them.’ But this means things can become very piecemeal, very quickly.

AD: Jim, you’ll have it in the big documents or you’ll do specific things where you think there’s a gap?

JM: We can go and have a sensible, mature conversation with government and say, ‘Here’s what we think. What do you think?’ And they’ll say, ‘Look, we’re doing it this way.’

And sometimes we’ll say, ‘great’, such as when we talked about construction-related issues. There’s a lot of opportunity where governments say, ‘This is really hard. We don’t know the answer here.’ We can play a meaningful role. We want to keep pushing out into areas where it’s hard, and into areas that have community impacts, as well. That’s a really important role that we can play because of our independence. Again, we’ve already seen we’ve been able to enter into issues that have been politically complex and have complex community implications, such as the location for a second Melbourne Port.

Despite both sides of politics having very different views, we’ve been able to find a solution that is accepted.

So, look, it does work, and there is that framework there.

Hopefully that’s giving confidence that through i-bodies, there is the ability to have a sensible conversation, not duplicate work, be additive and do things a bit differently to government, and hopefully create a better outcome.

AD: Now, I’m just going to ask Tony and Jim this. As you know, Nicole and Mike Mrdak are leading the review into Infrastructure Australia at the moment. What do you want to see come out of that review?

TS: Well, I think two excellent people have been appointed as reviewers, because of their deep experience, both at the national level and at a state level. Infrastructure Australia was created by Anthony Albanese and I assume that he is still equally enthusiastic, if not more enthusiastic, about it.

So, there’s an opportunity here to rebuild it and get it into its proper role. Infrastructure Australia should be represented, or considered, at cabinet. Whenever government is looking at major investments or major developments that might require investments, Infrastructure Australia should be there and should be represented. That would be the first goal I’d have – build that trust with government, be taken seriously and be involved in all major decision-making involving infrastructure or potential infrastructure, or networks and systems. I think that’s really where they need to get back to, as that’s where they started.

JM: I’ll add a couple of things, starting with a very basic concept: make sure it’s sufficiently resourced. The way that Infrastructure Victoria is set up means our funding is locked in.

Government can change it, but if they don’t change it, we get it. So, we get $10 million a year to do what we do. From what I understand with Infrastructure Australia, sometimes they get less than that, and sometimes they get more than that, but each

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year is a journey. How can you do long-term planning in the context of that level of uncertainty? It’s virtually impossible. Full respect to the teams to be able to do what they’ve done in that construct previously.

I’d encourage the Federal Government to be brave. From what we’ve spoken about today, the i-body model works. So, lean into certain iterations of that model that look a bit tougher than others and have the confidence that it works. Having certainty on the model is so important, and being really clear and holding yourself accountable to it, and the Government accountable to responding to it. You don’t want more papers or reports to sit on a shelf and gather dust. If the i-bodies do that, we are not helping and we should go away. Fortunately, in a lot of cases, that’s not happening, but that’s a really important one to look in the eye and get a solution for.

AD: Nicole, any surprises?

NL: No, not at all. What’s been really pleasing is that the feedback from the whole system has been that Infrastructure Australia has a really important part to play in the future, and I wasn’t sure we’d hear that. I thought people would see this as an opportunity to grab some space for themselves, but I think people are understanding that the scale of the challenges we’re facing as a country need to be dealt with, one at a national level, Jim Miller, Chair, Infrastructure Victoria Jim Miller is Chair of the Infrastructure Victoria board, Vice Chair at J.P. Morgan and Director at Household Capital. Miller was an Executive Director at Macquarie Capital from 1994–2015 and, with experience across a range of sectors, he led over $120 billion in transactions, and worked with both government and private sector clients. Miller has extensive experience in infrastructure, having worked in the areas of regulated assets, transport, energy, utilities and resources, and social infrastructure. He has both a bachelor degree and a Masters of Economics from Macquarie University. He is also a Fellow of the Institute of Actuaries Australia.

Tony Shepherd AO, Chair, Infrastructure SA Tony Shepherd AO is Chairman of Venues NSW, the AFL GWS Giants and Bingo Industries Pty Ltd, and is the Inaugural Chairman of Infrastructure SA and Chair of the NSW Modern Manufacturing Taskforce. He is also a Director of Racing NSW, Enviropacific Pty Ltd, Virgin Australia International Holdings Limited and Snowy Hydro Limited. Shepherd has had an extensive career in Australia and overseas in the private and public sectors. He pioneered private infrastructure with projects such as the Sydney Harbour Tunnel, Melbourne CityLink and EastLink.

Shepherd was the inaugural Chairman of WestConnex, and oversaw the listing of Transurban, Transfield Services and Connect East. Shepherd was President of the Business Council of Australia, Chairman of the National Commission of Audit and Chairman of ASTRA (the subscription TV association). He is a Member of the Australian Institute of Company Directors and a Patron of Infrastructure Partnerships Australia.

and two at a systems level. We can debate about what parts of infrastructure you think Infrastructure Australia should play with, but the reality is that these opportunities sit between sectors. So, if you want to talk about the future of hydrogen, it’s about power, water and transport. If you want to talk about decarbonisation, it’s about energy and transport. It’s not one sector.

So, what we’re going to come back to the government with is, first, the government needs to give this organisation a mandate. There is a huge amount of support for the quality of the work, but it doesn’t go anywhere and people are not going to engage with something in which they see no outcome. And then there is the opportunity to create something structurally that has a systems capability that allows the states to be part of it, and that allows industry to be a part of it – something that can give government a really clear path on where they go next.

So, net zero and 43 per cent is a great example; what does everybody need to be doing along this journey to get us to that goal? Mike and I have been very grateful. A lot of you in the room have participated, and we’ve had huge engagement and support for the organisation. I think we’re going to come back to government with something quite strong and I look forward to hearing how they want to take it forward.

AD: Well, that was a great note to finish on. Thank you, Jim, Nicole and Tony.

With a background in law and regional economic development, she works with Government and the private sector to develop long-term infrastructure plans to secure the future prosperity and liveability of our cities and regions.

Lockwood has recently been appointed as the Strategic Advisor to the Future of Fremantle Planning Committee, charged with re-imagining the port precinct beyond its industrial life. She also holds board roles with NBN Co, Green Building Council of Australia, the Western Australian Association for Mental Health, Child and Adolescent Health Service, Airbridge, and the Malka Foundation.

Adrian Dwyer, Chief Executive Officer, Infrastructure Partnerships Australia Adrian Dwyer is the Chief Executive Officer of Infrastructure Partnerships Australia – the nation’s leading industry think tank and executive member network, providing research focused on excellence in social and economic infrastructure. Dwyer’s career spans business, policy and public service roles across the private sector, and the New South Wales and Australian governments – with expertise across transport, utilities and social infrastructure markets, and wider public administration.

Nicole Lockwood, Chair, Infrastructure WA

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, Adrian left Infrastructure Partnerships Australia to serve as the Executive Director of Policy and Research at Infrastructure Australia, the Commonwealth Government’s statutory infrastructure body. At Infrastructure Australia, Dwyer led the development of the first Australian Infrastructure Plan – a 15-year reform map for Australia’s infrastructure markets, alongside other major reports and studies.

Nicole Lockwood was appointed Chairperson of Infrastructure WA in October 2021. Lockwood is passionate about the creation of engaged and thriving cities.

Dwyer was appointed Infrastructure Partnerships Australia’s Chief Executive Officer in March 2018.

In June 2012, Shepherd was named an Officer of the Order of Australia.

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Infrastructure industry trends: Brown to green – sustainable aviation fuels Multiple disruptions are shaping the infrastructure sector, including the global net zero focus, and funding shifts driven in part by government stimulus packages and digital transformations.

In IFM Investors’ recent Infrastructure Outlook report, the company highlighted some of the areas that it believes investors will hear a lot about. This article details one of those areas – the role of sustainable aviation fuels in the energy transition. biofuels, with a European Union–wide mandate expected from 2025.4 A number of crossfunctional coalitions across various regions are also forming to support the take-up of SAFs, with various airlines announcing commitments, as well.

Figure 1. Global transport – consumption by fuel type (2020–2050) British Airways, for example, as part of International Airlines Group, has committed to powering 10 per cent of flights with SAF by 2030. Ryanair is targeting 12.5 per cent over the same time Figure 2. International Air Transport Association’s Schematic CO Emissions Reduction Roadmap frame. American Airlines has announced SAF commitments governments and producers. But totalling more than 120-million gallons, doing so has the potential to create signalling the integral role that SAF will wideranging, long-term benefits. ♦ play in its sustainability strategy this 1 www.iea.org/reports/net-zero-by-2050 decade. Similarly, Australia’s national carrier, Qantas, recently announced 2 www.iata.org/contentassets/ that it has signed an agreement to d13875e9ed784f75bac90f000760e998/safpurchase 10-million litres of SAF in fact-sheet-2019.pdf 2022, with an option to purchase up to another 10-million litres in 2023 and 3 www.iata.org/en/programs/environment/ 2024 for flights from Heathrow Airport. sustainable-aviation-fuels/ This represents up to 15 per cent of its annual fuel use out of London.

4 www.iata.org/contentassets/ Successfully scaling up SAF will d13875e9ed784f75bac90f000760e998/factrequire a step change in the level of sheet---us-and-eu-saf-policies.pdf collaboration between airports, airlines, 2

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To achieve global net zero ambitions, the energy mix for the transport sector is expected to shift over the long term to employ clean and renewable sources of energy. A scenario developed by the International Energy Agency is useful in highlighting the directional step change that is required across the sector over the coming decades (Figure 1).1 Much focus has been on the electrification of road transport; however, significant effort is also being made to decarbonise the aviation industry. While new aircraft technologies have a role to play, keeping pace with expected longterm demand for air travel will require additional solutions.

Alternative fuels, including sustainable aviation fuels (SAFs), have been identified as a potential solution for helping to meet the industry’s climate targets (Figure 2). Part of the broader category of biofuels, SAFs can be safely mixed with conventional jet fuel, use the same infrastructure and do not require aircraft modification.2 The International Air Transport Association expects that production could potentially be in the billions of litres by 2025 under optimal conditions and with appropriate policy support.3 Countries across Europe, for instance, are looking at supportive policy changes with various governments, having defined and implemented SAF 2030 mandates to support the shift to

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We are global infrastructure specialists IFM Investors was established more than 25 years ago by a group of Australian superannuation funds to protect and grow the long-term retirement savings of their members.

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Committed to delivering strong returns over the long term, we focus on sustainable investments that generate social and economic benefits for the wider community, including essential infrastructure assets, such as toll roads, ports and airports.

As at 30 September 2022 we invested on behalf of 631 like-minded institutions worldwide. The A$206 billion entrusted to us by these investors incorporates the retirement savings of more than 120 million working people.

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Past performance is no indicator of future performance. This information has been prepared without taking into account the investment objectives, financial situation or needs of any particular person or entity. This material does not constitute an offer, invitation, solicitation or recommendation in relation to the subscription, purchase or sale of securities in any jurisdiction and neither this material, nor anything in it, will form the basis of any contract or commitment. IFM Investors Pty Ltd recommends that before making any investment decision, each prospective investor should consider whether any investments are appropriate in light of their particular circumstances and refer to the appropriate information memorandum for further information. IFM Investors Pty Ltd ABN 67 107 247 727, AFS Licence No. 284404, CRD No. 162754, SEC File No. 801-78649.

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Dr Samiya Tabassum, Professor Michelle Leishman and Dr Muhammad Masood measuring plant performance at Macquarie University’s Plant Growth Facility

Macquarie University fosters collaboration through Smart Green Cities The renowned research hub is developing sustainability innovations to address climate change in urban environments.

Michelle Leishman, a Distinguished Professor at Macquarie University, believes that the world’s cities are at a pivotal moment.

She says that a reimagining of city planning and construction is needed to help the planet transition to a low-carbon future, and mitigate climate change impacts.

In this scenario, smart green technologies will create new ways of incorporating, managing and engaging with nature in cities. Green-blue cities (urban areas that incorporate natural systems) will reduce the effects of rising urban heat, lessen pressure on

biodiversity, and alleviate energy and food shortages.

‘Australia can be at the forefront of nature-smart, livable future cities,’ says Leishman. ‘There are enormous opportunities to deliver transformational change through healthy, nature-rich cities that provide long-term societal benefits. But we must act now. Australia risks falling further behind Europe and other developed nations.’

As Director of Macquarie University’s Smart Green Cities initiative, Leishman is part of a team undertaking groundbreaking research – ranging from projects on vegetation

that best suit hotter climates, to urban greening, river health and living seawalls.

‘As complex systems, cities combine the built and natural environments within the context of human society,’ says Leishman. ‘We need to bring together researchers from multiple disciplines to tackle the challenges cities face. This is what Smart Green Cities is trying to achieve.’

The hub’s work is timely. The world faces rapid population growth, extreme heat, increasing climate variability, greater pollution, biodiversity loss, and declining human health and wellbeing.

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These problems will be most acute in cities, particularly in low socio-economic areas that tend to be hotter, further from the coast, densely populated, and have less vegetation.

The figures are staggering. Urban areas occupy less than four per cent of the planet’s land, but are home to more than half its population.1 By 2050, almost 70 per cent of people will live in cities, estimates the United Nations.2 Urban heat islands will become a bigger problem as temperatures warm. These areas experience higher temperatures than outlying areas, due to the concentration of buildings, and infrastructure that absorb and re-emit the sun’s heat. Cities a few degrees hotter during heatwaves could experience catastrophic conditions.

‘Sadly, more people die from extreme heat than from all other climate-related weather events combined,’ says Leishman. ‘Some cities could experience such extreme heat that they become uninhabitable if we don’t introduce more nature-based adaptation solutions into urban areas.’

Leishman says that COVID-19 has created an opportunity to act. ‘The pandemic has revealed humanity’s fundamental need for green (vegetation) and blue (water) spaces, and access to nature in cities. It’s a chance to reset and rethink about smart green cities.’

Longer term, there is growing interest in nature-based solutions and rising investment in smart city technologies. This includes the application of sensors, artificial intelligence, machine learning, and the Internet of Things to manage complex energy and transit systems.

Collaboration central to success

Formed in 2016, Smart Green Cities is a leading collaborative hub connecting industry, government, researchers and the community.

The goal is to create livable urban environments through evidence-based research and problem-solving.

More than 50 researchers, including a vibrant cohort of PhD candidates, are associated with Smart Green

Cities. The hub is based at Macquarie University’s Wallamattagul campus in North Ryde.

Smart Green Cities has a crossdisciplinary focus. In addition to research strengths in conservation, biology, ecology and other environmental fields, it has a growing focus on computing, engineering, and technology. Human health and wellbeing, governance and finance are other emerging research strengths.

‘It’s increasingly clear that environmental solutions on their own aren’t enough to transform cities,’ says Leishman. ‘We also require a paradigm shift in thinking on legal and governance frameworks for cities, and how we invest.’

Industry collaboration is a strength of Smart Green Cities. The hub has research partnerships with Sydney Water, the Australian Renewable Energy Agency, the greenlife industry, local councils, industry bodies and other stakeholders.

The hub’s collaboration extends to other research centres. It has partnerships with the university’s Centre for Corporate Sustainability and Environmental Finance, and the Sustainable Energy Research Centre.

The hub also collaborates with Cooperative Research Centres (CRCs) based at Macquarie University, including the Blue Economy CRC, Digital Finance CRC, and the SmartCrete CRC, which is researching concrete efficiency and sustainability.

‘Through Smart Green Cities, industry and government can access researchers across Macquarie University to work on environment, sustainability and energy-related projects for cities,’ says Leishman.

‘Effectively, the hub is Macquarie’s “front door” for industry in this area.’

Exciting research

Smart Green Cities has three main research themes: Green and Blue Infrastructure, Smart Technologies, and Sustainable Cities, and will extend to Sustainable Energy from 2023 following the merge with Macquarie University’s Sustainable Energy Research Centre.

Dr Noushin Nasiri, Materials Engineer and Head of Macquarie University’s NanoTech Laboratory, with a nanosensor

In Green and Blue Infrastructure, Leishman and Dr Anthony Manea have collaborated with the Australian Institute of Botanical Science to test the performance and provenance of species in contrasting climatic conditions. The research will help ensure the success of future tree plantings for urban cooling and sustainable water use in Western Sydney.

In other research, Leishman is the lead Chief Investigator and part of a large research team across two universities for the landmark Which Plant Where program. As the culmination of five years of research, Which Plant Where identifies horticultural species that will survive in Australian urban landscapes, now and under future climates.

Developed by Macquarie University, Western Sydney University and Hort Innovation, Which Plant Where’s subscription-based service helps green space managers, such as local councils, and landscape architects to choose climate-smart species to facilitate resilient urban green spaces. Subscribers can search by location (postcode) or species to find trees suitable for the climate in 2030, 2050 and 2070.

‘Which Plant Where is a unique resource,’ says Leishman. ‘If we are going to increase the greening of cities, it’s vital we choose species that best suit future climates.’

Through Smart Green Cities, Macquarie University was part of

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Living Seawalls project site at Blues Point, Sydney

another horticultural collaboration with the City of West Torrens, the City of Port Adelaide Enfield, and the City of Charles Sturt (the AdaptWest consortium). The project assessed the effect of trees and other vegetation on reducing heat during an extreme heatwave in Western Adelaide in the summer of 2017.

Also in urban greening, Manea and Professor Damian Gore are leading a Smart Green Cities research team collaborating with Strathfield Council in Sydney. Funded by the NSW Greening our City program, the project identifies ways in which trees can improve the health, livability and workability of harsh urban environments.

In other research, Leishman and Dr Samiya Tabassum have partnered with Sydney Water to assess how recycled water affects different species and soil salinity. The project is conducted in the Australian Botanic Garden at Mount Annan, and will provide a long-term arboretum showcasing green canopy research.

In 2020, Macquarie University and Western Sydney University researchers completed a report on New South Wales school microclimates during

summer. The research identified cool and hot zones in schools, enabling development of heat-smart play strategies. The researchers’ recommendations helped schools cope with summer heat.

In technology, Dr Noushin Nasiri, Head of the NanoTech Laboratory at Macquarie University’s School of Engineering, is developing wearable sensors to monitor ultraviolet (UV) levels. A tiny nanosensor in a watch-like device could potentially save thousands of lives by alerting wearers when UV rays are harmful.

Healthy waterways, healthy cities Through Smart Green Cities, Associate Professor Melanie Bishop and Dr Katherine Dafforn have collaborated with the Sydney Institute of Marine Science and Reef Design Lab on Living Seawalls. This highprofile project aims to improve the ecological performance of seawalls and other marine-built structures to create healthier oceans.

The research team has developed habitat modules that can be attached to seawalls to increase habitat areas and add missing microhabitats, such as rock pools and crevices.

The installations are located around Sydney Harbour.

In rivers, Associate Professor Peter Davies is collaborating with local and state governments, and academic and industry organisations, such as the Parramatta River Catchment Group, through the Our Living River project. The goal is to make Parramatta River swimmable again by 2025, and will do so by standardising the policies and practices affecting water quality.

Leishman says these and other Smart Green Cities collaborations highlight the potential impact of its research. ‘Our hub has come a long way in the past six years, but it’s just the start of what can be achieved as more stakeholders work together to create nature-rich cities that respond to the great challenge of our time: climate change.’ ♦ To learn more about Smart Green Cities at Macquarie University, visit www.mq.edu.au/research/smart-green-cities.

1

Endreny 2018 Nature Communications 9, 1160

2

UN 2019 World Urbanization Prospects: The 2018 Revision

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HELPING AUSTRALIA BE AT THE FOREFRONT OF NATURE-SMART, LIVEABLE FUTURE CITIES. THAT’S YOU TO THE POWER OF us

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Panel discussion – Super-sized super

Panel discussion Super-sized super: Where to now on infrastructure?

Key points: • •

•

Private capital will have a key role in delivering Australia’s record infrastructure pipeline.

There is a need to invest in a diversified portfolio to avoid too much risk in one asset class; however, this should be done cautiously in the near term, with an eye to retaining capital for investments as the world emerges from a possible recession.

The Federal Government’s legislated ‘net zero by 2050’ target is essential to providing regulatory certainty around the energy transition; however, the primary task lies in delivering on that commitment.

Panellists: ► ► ►

Deanne Stewart, Chief Executive Officer, Aware Super Nik Kemp, Head of Infrastructure, AustralianSuper Paul Richards, Head of Resources, Energy and Infrastructure, ANZ

Moderator: ►

Kip Fitzsimon, Partner, Sector Leader Infrastructure and Transport, Allens

Kip Fitzsimon (KF): Thanks to all our panel members for joining us today. I would like to acknowledge the traditional owners and custodians of the land on which we are gathered today, and I pay my respect to elders, past and present.

Given that this session is called ‘Super-sized super’, I guess we should start with that. It’s probably a question for Deanne and Nik. We know that superannuation is going to increase to 12 per cent by 2025. Looking at deal flow and opportunities, Sydney Airport comes to mind; is there anything that’s too big? Deanne, I might hand to you first.

Deanne Stewart (DS): To answer that question, it’s probably worth stepping back and considering the context of what’s going on in the superannuation industry. It is currently around $3.5 trillion now, and it’s going to $10 trillion. If you think about that order of magnitude and what’s happening inside the big superannuation funds, you’re seeing a lot of consolidation in the industry. You’re seeing the big funds get bigger. Their ability to absorb large-scale infrastructure is actually increasing every day. It is hard to say what is too big – whether that be standalone or in consortiums – but certainly, super funds’ abilities to absorb large-scale infrastructure deals is increasing daily.

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There are pretty huge trends. When you go back to the basics of superannuation, we’re there to provide the best possible retirement income for our members. That’s where infrastructure plays such a sweet role inside the portfolio of super funds, because, traditionally, and I think into the future, it will have a really good long-term focus that matches the types of liabilities, smoothing from a volatility perspective, and really good diversification. So, I see super funds actually continuing to pour more money into infrastructure and I see it as a real focus within their portfolios.

KF: Nik, what about you? What are you seeing?

Nik Kemp (NK): Certainly the size of transactions has grown. It was only 10 years ago that if you are writing a $5-billion check for a port, it was seen as a very big transaction.

Now, you look at Sydney Airport, which is north of $20 billion, and I think there would’ve been more capital to be able to fund that sort of transaction if it had been required. So, there is a system that’s growing; the opportunities are growing, as well.

And I think, going forward, you’ll keep seeing this occurring more and more, which actually just creates more and more opportunity for private capital to get involved.

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KF: Yes, it’s very exciting. What does this mean for the banks, Paul?

the pandemic provided any upside or opportunities for you? I might start with you, Nik.

Paul Richards (PR): I think it means a lot of opportunity for the banks to arrange and provide the debt capital that’s going to be required to actually finance these projects. I agree with Nik that ticket sizes are getting bigger, but I don’t think anything is too big these days.

NK: At the start of the pandemic, we were looking at a number of transactions offshore. My first reaction when everyone got sent home was to wonder how we were going to complete this support transaction in the United Kingdom.

How were we going to do this toll road in the United States, given we were all locked down? Having moved through the pandemic, we’ve obviously done those transactions, and we’ve done telco opportunities in South America and other opportunities here in Australia. I was surprised that we were able to do transactions while locked down; but there’s one huge missing ingredient. It’s understanding the culture and the values of the people in the business that you’re actually investing in. That is the thing that is so hard to replicate. It’s so hard to understand actually how good the management in these businesses is. And I think that while the whole transactional side is very replicable, the ability to understand what a business is about is really hard to do from home.

I might share a little bit about where we’re seeing the opportunity from a sector perspective. Definitely the energy transition is obviously an enormous opportunity, whether it’s around our renewables generation, or transmission and distribution. At ANZ, we’re also following things like heavy charging stations, carbon capture and storage, and eventually, at some stage, hydrogen, perhaps. We’re also seeing banks allocate really large capital pools for this type of business, as well. Businesses are wanting to align their lending portfolios with Paris objectives, as they support their own customers’ decarbonisation strategies.

Digital infrastructure was talked about earlier: different modes of working and this mega trend around digitisation more broadly. So, I think there’ll be a lot of opportunity in social infrastructure: housing and health care, and transportation infrastructure, including rail. And if that’s not enough domestically, there’s obviously a lot of opportunity offshore, and this industry has been a real pioneer in exporting commercial models and innovating around infrastructure solutions.

KF: As we are emerging from the pandemic, what lessons will you carry forward in your respective organisations? Has

KF: Deanne, are you seeing a similar thing? Is that your perspective or are there any good silver linings?

DS: It’s hard to talk about the pandemic, actually, without touching on the human side. While there’s been devastation on the one hand, certainly the silver lining for me is the degree of flexibility that has now really become so much more commonplace in organisations. The reason I bring that up is that it’s great for both women and men, quite frankly, and the family unit. But, interestingly, we’ve been able to attract

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overall engagement. I think it’s a point of differentiation as an employer, but at the end of the day this is a people business.

So, that flexibility needs to be balanced with face time with clients and colleagues.

We are on a bit of a ‘return to office’ push at the moment.

I think that’s really important for a few reasons. The learning and development of junior staff and new joiners is really important; it’s essential for problem-solving and for new ideas, which is really important for this sector and also for innovating.

I think it’s about finding that right balance, and there’s nothing like getting out and visiting customers and being on site, particularly for projects that are under development or in construction. Obviously, that’s having an impact on how we think about transportation networks and how our cities are designed, and then obviously the digital infrastructure that’ll be required to sit underneath all of that.

a lot more female talent into our infrastructure team with the huge degree of flexibility that’s being offered. So, I bring that up because I do think that has dynamics and I actually think it requires a really different sort of leadership style – a leadership style that can work with someone who is not present right in front of you, and with an ability to inspire. So, I do start with the human side for us, through the pandemic.

We’ve literally doubled in size post a few mergers. So, pre‑COVID, we were about $70 billion; now, we’re currently about $150 billion. So, the world has certainly opened up for us in terms of what we’ve looked at and particularly on infrastructure. I would say the pandemic itself actually highlighted trends that were already there, and it’s really exposed them. Paul, you were mentioning digital infrastructure – that is huge and has really accelerated through this period of time. And you are definitely seeing the super funds, like Aware Super, being really interested in that. We’ve just taken Vocus private together with Macquarie, as an example. But secondly – and this is the intersection of property and infrastructure in the real-assets world – we’ve owned Sydney Metro Airport, and the Camden and Bankstown airports. Through the pandemic, how you actually use some of your infrastructure, like our airports, to really build out the industrial side really played well for us and for our members. While not necessarily about the pandemic, I think you’ll see increased focus in agritech through this period, too, and certainly Ukraine and what’s going on there.

KF: That’s a really interesting point. Paul, what about for ANZ? Any lessons learnt or opportunities you can take forward?

PR: I like to think we were supporting flexible working before the pandemic, but certainly the pandemic has really entrenched it at ANZ. A recent staff survey really highlighted flexible working as something that’s really key to driving

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KF: Yeah, I think that human connection point is something that all organisations are struggling with. There are no rules around how strongly you can encourage your employees to come back. So, it’s certainly something I’m sure everyone in this room can relate to. I want to talk about inflation and interest rates; we know they’re heading north. Infrastructure’s inflation link revenues provide some protection, compared to other asset classes. Are you seeing an uptick in interest in infrastructure as a defensive position? I’m assuming yes is the answer to that and, if it is, what particular asset classes are you seeing where there’s a higher degree of inflation‑proofing?

Deanne, I might open that one to you.

DS: Yes, it’s unprecedented, what we’ve just observed with the five interest rate rises in a row – four of them being 50 basis points. We have not seen this here in Australia, so that’s been quite an incredible shift in a really short period of time. On one hand, that obviously impacts the discount rate, but on the other there are some really natural elements to infrastructure that makes it a really attractive asset class right now. You mentioned the inflation hedge element in many of our infrastructure assets, so I’ll come onto where we’ve really benefited from that. Secondly, that smoothing from the consistency of returns really helps as a diversification to, say, our equity side. So, it’s definitely really attractive and even more so through this type of period of time, even with the higher discount rates.

What we’re seeing in the types of sectors that we’re really interested in is they’ve got those two features. We’ve been a heavy investor in registries that have a nice builtin inflation hedge. We are a part owner of the NSW Land Registry and we own the Victorian land registry. We’ve just partnered with Macquarie on taking VicRoads, together with the Victorian Government. They’re really great assets that have really long‑term returns, but are hedge-based as a type

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of asset class. Digital infrastructure is another one we feel is very positive through that period of time. So, there are a couple of examples.

KF: Great examples. Nik, what about you? Any particular asset classes?

NK: In the last 12 months, we have invested a lot in digital and telecommunications. We’ve invested in Australia Tower Network and Axicom and, more recently, AnyHub. So, we think that thematic around fibre and towers is still very strong. If you look at the Australian fibre network, it’s actually more than 20 years old and it’s getting very close to capacity. So, there’s a huge amount of work to do and a huge amount of money that needs to be spent in that sector. In terms of the continual interest in infrastructure, it is strong and it is an inflation hedge, but the one thing that we are a bit cautious on is the fact that the world is probably heading into a downturn, and probably a recession. When you come out of a recession, you want as much money as you can to invest into it. And so trying to make sure you’re getting that balance right between deploying into it and making the most of some of the opportunities today versus the opportunities that are probably going to come around in 12 months’ time is a fine balance.

KF: Paul, what are you seeing in the debt markets?

PR: Look, first I’m going to agree here from a bank and a debt investor perspective. Infrastructure remains a really attractive asset class, notwithstanding inflation interest rates.

Essential assets, assets that have these nice long‑term profiles, are not exposed to cycles like you see in other parts of my resources and energy portfolio. And infrastructure owners are typically quite prudent capital managers, so that’s a really great starting point. From a debt perspective, interest rates are getting higher, so infrastructure owners are facing higher interest rates on the debt component. But there’s still plenty of liquidity both domestically and offshore, albeit with a little bit of uncertainty and volatility in the capital markets with the geopolitical situation and war in the Ukraine.

What we’re seeing among our customers is a real focused and disciplined approach to debt management, and they’re being quite proactive in that regard. Customers are bringing forward refinancings of debt facilities, sometimes 12 months ahead of time. They are really conscious of putting in place really diversified funding programs across a mix of bank loans in capital markets, domestic and offshore, and public and private. Second, we’re seeing and want to ensure an investment-grade credit profile just to ensure ongoing access to debt, right through the credit cycle. And third, we are seeing a more prudent approach to interest rate risk management.

So, we are looking at fixed-rate debt solutions and/or risk interest rate hedging. Without question, there is volatility and capital markets.

“

...there are some really natural elements to infrastructure that makes it a really attractive asset class right now The last six months has been a good time for the banks, but I think the capital markets will come back. Our more sophisticated infrastructure owners are readying themselves for when those markets open, which I think is quite important.

On inflation, from a bank and a portfolio point of view, it’s underlining the importance of having a diversified portfolio of different types of assets for us across resources, energy, infrastructure, risk profiles, patronage, some regulated profiles, and other assets with fixed Power Purchase Agreements and offtake. So, that diversification is quite important for us.

KF: I guess the role of super is a pretty critical one. And the Federal Treasurer has recently come out saying there’s a big role for you to play in delivering the infrastructure pipeline.

I think we all are looking at the pipeline quite differently to how we have in the past five to seven years; it’s changing. What that looks like is very different with the energy transition, but also in areas such as housing and others. How do you see the role of the super sector in delivering on that, particularly within energy and housing? Nik? NK: Deanne touched on it before, but it’s really important to remember that the number one focus of superannuation funds should be their members and trying to generate the best possible outcomes for people in retirement. That should be absolutely number one. Having said that, we invested $7 billion last year into Australian infrastructure. So, there is a way that you are able to help your members, while at the same time doing things that are going to be great for the community and the economy more broadly. When you have 2.9 million members, that’s actually a good portion of Australia. So, there is this nice way to benefit them in retirement, but also try to help them today. Our focus, without doubt, is always on retirement.

DS: I would say there’s been a lot of media attention on this recently, and having been in the room listening to the Treasurer as he said it, I think there’s a degree of him having been misquoted. I definitely agree with Nik; we are all really clear that the number one goal for super funds is to get the best possible retirement outcomes for our members, but it’s not mutually exclusive with participating in the energy transition and in housing. In fact, there’ve been two really strong investment theses that we’ve had for a very long period of time. We’ve been

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investing in the energy transition – in renewables, and we’ve become a cornerstone investor in a pumped hydro business and in batteries. We’ve got a real role to play in this energy transition. It’s the biggest game in town over the next couple of decades, for sure. So, we are working with the Government constructively on the role super funds could play, and how to participate in a funding sense. That is what they’re trying to work out – how do you actually be a systems thinker and get the funding model so that big capital players can provide some of the capital needed.

Housing has been a huge area of focus for us, too. We call it the living sector, and we think build-to-rent is very nascent here in Australia – it has huge room for growth, given the housing crisis, retirement and our aging population. So, there’s a lot we’re already investing; we have more than $1.5 billion in our pipeline for build-to-rent, for example. It’s really pleasing to hear that the Government is focused on those sectors. Then it’s working out what is the right intersection point between how the Government can support and what the role of big capital is. But we are, and I state again, very clear that the number one goal is to get really good returns for our members.

KF: Touching on the energy transition, we’ve got the Federal Government currently considering legislation around how we actually put targets on our emissions. What do you want to see to ensure the transition is orderly and promotes investment?

Are there any risks on the horizon, and how are you managing those within your own organisations? I might open to you, Paul.

PR: Putting aside what people might think about the target itself and 43 per cent, we think it’s been positive because it does provide that regulatory certainty or roadmap in a world that has largely seen voluntary initiatives so far. We’ve seen a lot of our customers put in place really ambitious emission reductions, energy transitions and decarbonisation strategies.

But it’s great that we’ve got that roadmap or that framework at a government level now. I think that’s a really important piece. Now it’s all about the execution, which is an enormous challenge, without question.

I’m going to talk about the trilemma of decarbonisation, security instability and affordability. I’m not sure that there’s a mathematical equation to solve that one. So, it is super tricky. We still see the biggest part of the emissions challenge as the greening of the energy sector. That’s going to require enormous coordination, not only domestically, but nationally. I was recently in Canberra for Minerals Week and there was a lot of conversation there about the quantum of investment that’s required – $4 trillion worth of investment just to produce copper for the wind turbines; silver and zinc for solar panels; and lithium, nickel, and cobalt for batteries. That’s quite a task, let alone our reliance on China around the processing of these minerals and their dominance when it comes to the production of solar

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panels. Then you’ve got this ever-present geopolitical overlay.

That potentially represents an opportunity for Australia, as well.

Everybody wants to decarbonise, so we’re competing globally for these suppliers all at the same time. That supply chain issue or challenge is a real one. The other critical ingredient that’s been spoken about is the skilled labour shortage. We would like to see policies that address, head on, those challenges and opportunities around supply chains and skilled labour.

KF: It’s such a challenge, isn’t it? It’s not a matter of flicking off a switch and turning on another one. What does 43 per cent look like and mean for your organisation? Are there any risks that you are seeing?

NK: I was stunned when I read Infrastructure Partnerships Australia’s recent pipeline analysis that $268 billion of energy projects are in the pipeline. The first thing I thought was, ‘How is that going to be built?’

KF: Do you know where we can get that type of money?

NK: The money’s actually less of a concern – it is actually getting people out to build it. That will be that the real challenge.

We have a huge map that’s got every bit of the energy chain, and it’s just got bits and bobs everywhere. You need to make sure this whole map moves along together. Historically, it’s been transitioned; that’s been really hard. Now some of the state governments are doing what they can to try to uplift that. But if you go through this map in different parts, whether it’s hydrogen or renewables or waste to energy, every one of them relies on something else to make it work. Just getting the coordination to make it all work is going to be so important.

KF: Even at that grassroots level, we’ve already got a construction industry that’s saying it’s on its knees because of the pipeline that’s currently in front of them in terms of delivery.

So, it’s a huge task. Deanne, what about for you?

DS: There are massive opportunities and massive risks that lie ahead. The order of magnitude is staggering; when you think about it, we really are only at about 25 per cent in renewables and we need to get to 80 per cent by 2030. So, the order of magnitude is huge when you think about the components of it, whether it be the renewable side, transmission or the 10,000 kilometres of grid that needs to be built. Then there is the actual storage components or carbon capture, and then all the suppliers and all the resourcing. I think it was fantastic to see the legislation go through, but it’s almost like now it really begins in earnest. You really need systems thinkers here, because joining all the dots and getting it done in a really orderly way with supply chain issues, people issues, and talent issues, makes this absolutely core.

The systems thinking – the coordination at federal and state level, and then from a corporation and capital level – is immense. And then how the funding models actually get structured requires huge capital up front, with huge uncertainty.

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Those sorts of funding models are really critical; but so, too, is bringing the community along, particularly those four really big regions that are affected, and how to really bring the community along and make sure you’ve got the skills and new jobs in place.

That’s a mammoth asset.

KF: Yes, it is, and even the skills gap at the level of systems thinking is a gap in this Australian market, on the government side and the private side, so it’s a huge challenge. Deanne, Your Future, Your Super reforms will be reviewed by Treasury after the second-round super performance tests are complete.

What do you hope to see come out of this review, and do you think they’ve made the superannuation system more robust and transparent as intended?

DS: There’s a couple of big elements to Your Future, Your Super. One is obviously the performance test that all the default super funds in the first round really needed to actually be measured against our indexes. Ultimately that’s when the 13 super funds – which we called the ‘naughty funds’ that fell 50 basis points below that performance test – were really called out. What you’ve actually seen is that most of those funds have actually merged with other funds through this period of time. So, is it working? Well, in many ways the transparency and having a really clear yardstick is a really good thing for the industry. It is a privilege to manage members’ money in a default setting.

Being a really good performer is important. So, I would actually say it is doing its job.

quite blunt how it was put in. Take something like infrastructure, and things that we’ve been talking about like digital infrastructure and renewables, and the energy transition. That really doesn’t show up in the infrastructure benchmark. It’s more tolls and poles, and that side of things. So, there probably needs to be some adjustment there to make sure there’s not perverse incentives of where to invest. So, I think there are adjustments, but it’s really at the edge.

The other element that came in under Your Future, Your Super was what’s called ‘best financial interest duty’. They put a reverse onus of burden on trustees, which no corporate has.

If you look at who has reverse onus of burden, it’s terrorists and drug lords really; that’s really the only place where it comes into play. We’d like to see that reversed and normalised, and then a materiality threshold. What it actually means as a super fund is you’ve got a massive burden to actually demonstrate every single little expense you’ve had, versus what a normal corporate would need to do. So, there are the couple of areas, but they’re more at the margin. The majority of it is really positive and a really good step up for the industry.

KF: Thanks. That’s it for me on questions. I think our discussion today has showcased that it’s a really interesting time. It’s an exciting time for people in the room and it’s a

Now that it has been in for a period of time, we would love to see if there are adjustments on the performance test. It was

challenging time ahead for most of us. Thank you all for joining

Deanne Stewart, Chief Executive Officer, Aware Super

Kemp has spent time working in the United Kingdom for Henderson Global Investors and started off his career as Management Consultant at the Boston Consulting Group in Melbourne.

Deanne Stewart joined Aware Super as Chief Executive Officer in 2018.

Aware Super is one of Australia’s largest super funds, and Stewart has led the company’s drive to be a force for good through its responsible investment philosophy, and focus on providing its members with the best guidance and advice for retirement. She has more than 25 years’ leadership experience in financial services in wealth, superannuation, and insurance sectors in Australia and internationally. This includes time as Managing Director with Merrill Lynch Wealth Management in New York, and as Engagement Manager with McKinsey and Company in London.

Before joining Aware Super, Stewart was Chief Executive Officer of MetLife Australia, and also held senior roles within BT Financial Group, including as General Manager for Superannuation, Marketing and Direct Channels. A hallmark of Stewart’s career has been a passionate commitment to building and maintaining a strong culture, and clearly defined purpose to drive business success.

Nik Kemp, Head of Infrastructure, AustralianSuper Nik Kemp is Head of Infrastructure at AustralianSuper and has over 20 years’ experience in investing in the infrastructure sector. The portfolio he oversees has over $30 billion of funds under management and includes assets in Australia, North and South America, Europe and Asia. Prior to joining AustralianSuper in 2013, Kemp was Founding Director at Capella Capital, and before that he was a member of the infrastructure teams at Babcock and Brown, and ABN AMRO.

us on the panel today.

Paul Richards – Head of Resources, Energy & Infrastructure at ANZ Paul Richards is Head of Resources, Energy and Infrastructure at ANZ. Richards was appointed to his current position in January 2022 having worked for ANZ for more than 20 years. Richards began his career in Sydney in 1993 and has had an extensive career working in structured finance in London, Tokyo, Singapore and Australia.

Kip Fitzsimon, Partner, Sector Leader, Infrastructure & Transport, Allens Kip Fitzsimon specialises in major projects and construction. She leads the Infrastructure Sector team at Allens and is widely recognised as a leading infrastructure lawyer. Fitzsimon is experienced in the infrastructure, property, and energy and resources sectors, and has advised sponsors, lenders, government, and a broad range of contractors/operators on various aspects of project development on some of Australia’s most iconic projects. Fitzsimon also has a comprehensive understanding of Public Private Partnerships, having acted on both the Government and consortium side of these projects across Australia for more than 14 years.

Fitzsimon’s practice includes advising on the origination of new infrastructure (including competitive bid processes, unsolicited or market-led proposals, private developments and other forms of procurement), and advising on the delivery and operational aspects of major infrastructure projects.

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companyfocus

Iplex deepens partnerships to tackle water security and aging infrastructure Having started the delivery of the $51-million pipeline supply contract for Stage 2 of the Haughton Pipeline Duplication Project, Iplex knows all too well the importance of tight collaboration with its partners and customers.

Iplex Australia General Manager Paul Lavelle says that Iplex is pleased to continue its role as the chosen water infrastructure partner for large infrastructure projects across Australia, including the keystone Haughton Pipeline Duplication Project.

‘When we partner with a community, we don’t just want to do business,’ says Lavelle. ‘We want to help our employees, contractors and, by extension, the local communities to prosper.’

Iplex will continue its long-term partnership with Adelaide-based RPC Pipe Systems to supply the Australianmanufactured FLOWTITE glassreinforced polymer (GRP) pipe and fittings technology for the project.

The proven and trusted GRP technology, while used widely across Australia, is the first of its kind to be used in the North Queensland region.

‘The GRP pipe manufacturing technology is lightweight, safe, easy and fast to install when compared with some alternative options, and will deliver installation and running cost savings over the life of the project,’ says Lavelle.

Iplex is well known for its major project delivery capability, and has participated in hundreds of major infrastructure projects throughout its 84-year history. The business is also credited for introducing several new pipeline technologies into the Australian market.

One example is the introduction of the Iplex EZIpit, a polypropylene

maintenance and inspection system for gravity sewer networks. The plastic structure is lightweight yet durable, and has a high chemical resistance to the harsh environments often found in sewer systems and throughout coastal locations. These attributes make the EZIpit fast to install, and reduces the need for ongoing maintenance of the structures throughout its service life.

The manufacture and supply of pipe and fittings systems has long been Iplex’s bread and butter, supporting a wide portfolio of products used throughout the potable, waste, recycled, storm and irrigation water sectors. With asset owners facing the ever-growing challenge of supporting aging infrastructure networks, as well as operating to meet increasing

demand, Iplex is working to ensure its portfolio of solutions is ready to help meet these challenges.

To do this, Iplex invests in research and product development, and works closely with technology partners from around the world to drive its innovation pipeline. In addition to developing new products that meet customers’ quality, installation and service life expectations, it is also focused on reducing the environmental impact of its products and operational footprint.

Iplex proudly holds third-party certification as a Best Environmental Practice manufacturer of PVC and, in 2015, became one of the first plastics manufacturers to publish a suite of verified and registered International Environmental Product Declarations. ♦

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companyfocus

Now is the time to become a renewable energy engineering professional

By Alistair Sproul, the University of New South Wales Australia has always been high among the geographically ideal places on Earth for a renewable energy revolution to lead the world. And lead the world we have. At the University of New South Wales (UNSW Sydney), the solar cell technology that is found in more than 90 per cent of the world’s solar panels was invented in 1983 – the PERC solar cell. That homegrown innovation came from the mind of Martin Green and his research team, working away in a very small lab at UNSW Sydney, in the face of almost total indifference.

Today, Green remains on staff with us as a Scientia Professor, and the global solar industry, which began in that small room, is now worth upwards of US$250 billion. Green is one of many international talents in the field of photovoltaic engineering, who our students and world-leading researchers get to work alongside as we continue to accelerate the transition of the global economic system away from fossil fuels and towards renewable energy.

While Australia’s geography and abundant sun and wind resources have long been there for the right decision-makers to invest in, it is only now that it seems that political tides have also finally caught up to the environmental and economic benefit of solar and renewables. Government at all levels – from councils, to state and federal – now understand not only the environmental urgency, but also the smart business sense in investing in solar power. You need only look to the Northern Territory – where Sun Cable

Image courtesy of the Australian Renewable Energy Agency

will install the largest solar infrastructure installation on Earth, sending power from the sun to Singapore – to see the most ambitious example.

Beyond that, there is much work to do in overhauling our outdated grid system to be maximised for renewables. There is decarbonising manufacturing through deploying renewable power sources, smarter building practices to curb emissions, and principles of sustainability to be incorporated into every level of the built environment, including the electrification of transport.

None of this, though, will be possible without a fully accredited workforce of renewable energy engineers who will be the people who actually build and maintain this clean energy future. Already, we aren’t producing enough graduates to fill the jobs that are advertised for projects in this country, with that demand growing 30 per cent year on year. A career in this space is going to set you on a path of not only great

Alistair Sproul

personal satisfaction in having a measurable impact on the future of the planet, but it is also employment that will see you through decades of innovative work.

We invite you to join us at the School of Photovoltaic and Renewable Energy Engineering, and to find your place with us in the renewable energy future of Australia. ♦ Alistair Sproul is the head of the School of Photovoltaic and Renewable Energy Engineering at UNSW Sydney.

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Panel discussion – Delivering a pipeline under pressure

Panel discussion Delivering a pipeline under pressure Key points: • • •

Climate change and projected population growth are creating challenges and opportunities for the deliverability of the current infrastructure pipeline.

Risk management and allocation in the sector are bringing challenges that require the need to continually balance and calibrate on a project-by-project basis.

To decarbonise Australia’s infrastructure sector, procurers and developers need to take a more agile and flexible approach to developing assets, and challenging the status quo.

Panellists: ► ► ► ►

Simon Draper, Chief Executive Officer, Infrastructure NSW Dale Connor, Chief Executive Officer Australia, Lendlease David Clements, General Manager Delivery Australia, Transurban Roch Cheroux, Managing Director, Sydney Water

Moderator: ►

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Eva Wood, Vice President and Executive Director of Operations South-East Australia (New South Wales, Victoria, Tasmania, Australian Capital Territory) and New Zealand, Jacobs

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Eva Wood (EW): Welcome. I will start with an acknowledgement of our elders past, present and emerging, and in light of talking about a pipeline under pressure and emerging leaders, we are also talking about the emerging elders as well, because we build this for a reason, for our future. So, that is something to keep in the back of our minds. The first question is about the range of external pressures beyond our control, which means that the sector is in a hurt locker to deliver an unprecedented pipeline of infrastructure on time, on budget and on scope. I’m going to start with you, Dale. Given that we’re from all sectors of the economy and the market, could you outline the core challenges and pressure points in delivering the outcomes and the upcoming pipeline from your perspective?

Dale Connor (DC): Thanks. That’s an easy question with no easy answer, that’s for sure. It is hard out there, absolutely.

Everybody knows it’s hard in terms of supply chain, materials and getting a skilled workforce. It’s hard to deliver on the projects that we currently have. One aspect that can hopefully be a response to the hurt locker in times like this is focusing on the culture of your organisation. We are in construction and development, where the pool of resources that we draw from can actually be quite small if you look at all of the industries around the country. So, how can we expand to bring in more women? How can we expand for First Nations individuals?

There’s a whole range of skilled people that we don’t have to rely on migration first, to identify. We can bring more people, skilled people, into our organisations. The only way to do that is to focus on the culture of your organisation, to make sure you are attractive, you are focusing on their career, and you have an increased focus on skills and training. Apprenticeships are going to be key moving through this. Everyone knows about the supply chain, but culture’s an important piece at the moment.

EW: Agreed. Roch, do you have anything to add to that?

Roch Cheroux (RC): Yeah; for the water sector, you were talking about a pipeline of projects, and we do have a bit of a pipeline in the water industry. For us, climate change is there and has been with us for some time, and we need to change the way we’ve done water in the past into something completely different. Population growth is one of the key pressures we have because we need to increase the size of our assets and provide new services. Looking at it as pressure is one way, but if you look at it as an opportunity, it’s actually a much better way.

It gives us the possibility to think about the way we have done things in the past 100 or 150 years and do it in a completely different way – a more sustainable way that will be resilient to the future and that will be different. That’s really where the opportunity is, because without this change, we would still be stuck with our 100-year-old assets and ways of doing things.

It’s really about taking it as an opportunity to change what we’ve got and how we’re doing things, and doing it in a much more resilient way.

Simon Draper (SD): Yes, clearly this has been a terrible year we’ve just been through, but I actually think the bigger challenges were there before COVID-19 started, and before the war in Ukraine and all the rest of it. In not only New South Wales, but other states, the biggest challenge we had was the scale of the program we’ve got and the composition of that program: more and more really large, really complex projects.

I recall, a bit over a year ago, speaking to a forum similar to this. At that point, we had 17 mega projects to go to market, with 27 packages to go to market between 2021 and 2023. We had a lot of conversations with head contractors and others to ask, ‘Can you do this?’ Of course, everyone says they can, but there are moments of candour in which we all face up to the fact that this is actually quite hard. These projects have a lot of integration risks, they go through a lot of communities, and they’ve got a lot of exposure to in-ground risks and brownfield risks. More recently, we’ve discovered they’re also very exposed to industrial relations risk. Probably beyond what you think of in the construction industry, the prolongation costs associated with missing windows to possessions and those sorts of things has been really profound.

Overlaid on that, we now have things like input price risk: escalation. We have quite a shift in the appetite of many of the contracting firms. A lot of firms have said they can’t do what they used to do. That’s perfectly understandable and is simply people working off the experiences they’ve had over the past decade. I still think we are facing that situation we had before COVID-19, and we’ve got to digest the projects we’ve announced and we’ve committed to, and deliver them well, which sets a path for doing more projects. We have delivered great projects, we are delivering great projects and we will deliver more.

EW: David, what are the pressures and opportunities that you are seeing?

David Clements (DCl): Oh, a number have already been mentioned. To elaborate on some, the skills shortage for our business is absolutely crucial at this time. Risk management is something that’s not really emerging for us. I think it’s been emerging over time and we are going through a bit of a transition in the industry at the moment where risk allocation is changing. The health and capacity of the construction sector is absolutely fundamental. We have seen exponential growth in mega projects. Projects over $5 billion have increased tenfold over the past 10 years or so. The risks themselves haven’t substantially changed, but the complexity and the size of the consequences that come to bear when they come to fruition have grown exponentially.

Risk management contract and delivery models need to adjust and change, and move to a more equitable outcome.

We’ve seen a bit of a consolidation, particularly in the Tier One

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construction market. All these things are coming together at the same time and, certainly from our perspective, there needs to be a movement towards a more equitable distribution of the risks. There needs to be a far more collaborative approach between all sectors of the market in mitigation and management of that risk. We are starting to see some of that transition take place now, particularly in Victoria and New South Wales, and we are starting to see some really deliberate discussions about it in Queensland, too.

EW: A subtle transition to the next question for you, Simon: earlier this year, the New South Wales Government agreed to your recommendation to delay major infrastructure projects due to rising costs and constraints. Is there anything else to share about addressing these issues?

SD: Yeah, Minister Stokes gave a great exposition of that earlier. I must say, we’ve had a great collaboration working with the minister since he was appointed as the infrastructure minister in December, but there are a number of things we are focused on. One is decarbonisation and its ability to re‑sequence and retime some of the projects not yet in delivery. It gives us time to take stock and make our program more durable. Decarbonisation is one of those things that’s going to take a little bit of time and thinking, and you’ve got to make space to do that. Our procurement models were already shifting and we’ve published the way that we procure them. We’ve had a series of new commercial principles that we’ve issued. Marina van der Walt – one of my colleagues – has done a lot of work on that, and recently published some changes to the way we procure, to adjust the scale of the work we’re doing and the complexity we face. We’ve got a big focus now on programs of work; smaller and medium-sized projects.

We actually need to do a lot of work to develop our disciplines and our methodologies around those. We’ve been focused on these mega projects, so some of those routines have sort of taken a back seat.

That focus on programs is going to really include a focus on climate change adaptation. I know we’re talking about net zero, but we’ve got a huge task in infrastructure on adaptation. Our forward estimates show $112 billion dollars of capital investment over four years, but we’ve got nearly half a trillion dollars worth of infrastructure assets in the state and all of those are exposed through changing climate. We saw that in the Northern Rivers this year, and the Hawkesbury and Nepean, and that’s going to be a big focus for us – the role of technology and infrastructure, not just in the way we design and plan infrastructure, but also considering whether there are technology solutions better suited to providing the service that we require, rather than actually building new hard infrastructure. New South Wales Minister Victor Dominello has really pushed that, and Minister Stokes spoke about the way we conceive and design projects. First, that refocusing

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on the problem and the options analysis up front is where, once you’ve made those decisions, these processes get a momentum in Government. Sometimes it’s very hard to turn around once you’ve made some of those early decisions on options and projects you’re going to pursue.

We’ve got a big focus on early, structured engagement, as the minister said, both with industry to make sure what we are proposing to do makes sense in a delivery sense, but also with stakeholders. We’ve also found that a lot of our projects are highly exposed to communities, to landowners and to the workforce. Being able to deliver the benefits of those projects means getting people on board much, much earlier. It also involves change to the design standards, and challenging and testing some of those design standards we’ve used in the past. Our focus is on culture in the construction industry and infrastructure sector, and that goes to the type of people we’re bringing into the industry.

EW: Roch, the next question builds on that conversation around resilience and climate change. You’re currently in the market and about to build a massive advanced water recycling centre to serve the Aerotropolis and Western Sydney Airport.

Is there anything that you’d like to share that you’re doing differently in how you’re going to deliver that project?

RC: Yeah, it’s a really good example of how you can do things differently. So, there’s probably two aspects to that.

One aspect is very much about the asset itself, which is not a traditional water treatment plant – it’s very much seen as a circular economy hub. And that’s about taking advantage of the nexus between water and waste, and water and energy, and water and foods. We’ve got this opportunity to create this circular economy hub in Western Sydney and connect industries we are very close to: the electricity, gas and waste industries. Obviously there’s an agriculture precinct in Western Sydney in the future, so this project was very much about not thinking about the project as a water treatment plan, but as a hub for the different industries. And that’s exactly what’s going to happen. We’re about to start construction and it’s going to have a massive impact on Western Sydney. The other aspect is the way we’ve gone to market and how we’ve engaged with our partners on this project. The conditions are difficult in the market. We know there is a lot of competition to access resources and companies. And there are not a lot of companies that can build this sort of huge asset. So, for us, it’s been very much a journey, working with the private sector on being clear about what we’re trying to achieve. After that, we actually invited the partners around the table and really worked with them to develop a solution that was not only technically the best value for our customers, but that, at the same time, found a balance in terms of risk management between us and our private sector partners.

It’s been a journey; there’s been a lot of discussion around the table, but we’ve come out with a fantastic outcome and some of

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the senior water team members are here with us today. We’ve done a fantastic job making sure that, at the end of the day, we’ve got a commercial framework that is going to deliver value for our customers, but also deliver value for all our partners.

EW: Dale, building on that, you’ve talked about culture and Roch spoke about doing things differently from a delivery perspective. And David, you talked a little bit about the risk allocation side of it. How does that resonate with your part of the supply chain? What are your thoughts from the comments said so far?

DC: What Roch and Simon said is spot on regarding where the market is at the moment. For us, it’s about where can we add the most value in an opportunity that’s coming up. How can we target that and think about that early? How can we make sure we believe we can deliver, and that we’ve engaged with all of the necessary stakeholders and can make their feedback work? The earlier we can come into that conversation, we feel, the more value that we can provide. It isn’t necessarily about coming in early and doing things the same. We are doing the Powerhouse Museum at Parramatta for Simon. We’ve got a disaggregated steel approach where we are doing all parts of the supply chain in structural steel.

For other projects, we actually look at the market and go, ‘Where could we find a contractor that can take a whole piece of work?’ We feel they’ve got the expertise, they’ve got the capability and it suits their time in the market. It’s really looking early to then have design specifications – as you said, Simon.

It’s about really thinking about what’s important and therefore guiding the project in the right direction for success.

That will end up in a risk allocation that I think makes sense because you identify those risks early. Who can control them? What’s the best value for the project as to who controls them? How do we share in that? How do we eliminate it early? I would never want us to be waiting for 100 per cent documentation and we are just tender mode, and our effort is in tenders, as opposed to our effort being in making a project a success. When departments really look and bring you in early, you can then manage those results.

EW: I’ll open this up more broadly for those who want to respond. Minister King spoke earlier about the restructure of Infrastructure Australia. The question is in terms of the themes we’ve talked about, linking back to some of the conversations this morning around cost escalation and decarbonisation – thinking about how we could solve that. What is the balance of Government needing to answer these questions versus leaving it to the industry to work out? Where should it sit in terms of trying to solve these complex challenges and being able to capitalise on the opportunities you’ve mentioned?

Who’d like to go first?

DCl: I think the decarbonisation element is like all other

elements in the early engagement of contractors and all other critical stakeholders in a project. It’s all about trying to drive innovation and better outcomes. From Transurban’s perspective, we are really supportive of the Infrastructure Partnerships Australia proposal to start integrating the quantification of carbon in the evaluation of projects. The sooner we can have a more consistent approach to measuring carbon and decarbonisation, the sooner we will drive competitive tension and innovation. All these challenges can’t be left to any one party. It’s not a government issue and it’s not a private sector issue. All stakeholders have a part to play. There’s a couple of different aspects to it, too. The innovation in terms of new materials, new construction methodologies and new efficiencies that can be brought into the industry absolutely should be a focus.

The other focus is that our industry has a very robust approach to design standards, specifications, quality processes and assurances. It sometimes makes it very difficult to move and change, and get decisions made to facilitate innovation. Sometimes it’s a little easier just to stay with the status quo. All sectors of the industry, including Government, need to really challenge themselves on how they can drive better outcomes. One real opportunity for decarbonisation is looking at elements of the scope and seeing how we can reduce it by reducing performance requirements; by reducing some of the conservative approach that’s adopted sometimes and actually limiting the amount of scope that’s built. If we can build something with less concrete, less steel, less asphalt and less cabling, then it’s obviously embedded less carbon in the outcome. I think that’s a really important area we should be focusing on.

SD: Yes, David made the point that there’s a great complementarity here. First, which project should we build?

Should we build them at all? Is there a need for them? There is a hierarchy in dealing with both decarbonisation and escalation. The first questions are: Are we designing it well?

Are we dealing with the quantities of materials we’re putting into that infrastructure? That’s the first level that we need to think about. And that works in savings in terms of material costs in an escalation environment, but also in terms of decarbonisation. Then we think about the types of materials we can introduce and then waste. Working through that hierarchy serves the purposes of both decarbonisation and thinking more carefully about the cost of materials as they’re escalating.

EW: We talked about that before in terms of standards that you’re expecting. Dale, do you have anything to add?

DC: Well, it does need mandates and benchmarks. That’s where government can have a strong leadership role. It needs private organisations to make strong steps. As Shemara mentioned, we are building Macquarie’s new headquarters – a

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fully electrified building. At Lendlease, we’ve mandated all our new developments of office space. It’s fully electrified, taking gas out of the project. So, it’s about those steps. Equally, on the ground, we’ve just got our first shipment of renewable diesel, to power the tower cranes at the Powerhouse Museum project in Parramatta. Unfortunately, you’ve got to take that all the way from Europe, but hopefully once you make a start and it’s encouraged across other projects, it becomes economical enough that someone decides to actually manufacture and produce that product domestically to suit a market and a demand that is there. I think it needs all parts of the supply chain, the Government and industry to take those steps forward.

EW: The supply chain will respond.

RC: Having clarity from Government is really important.

At the end of the day, when we listen to our customers, this is also what they are expecting from us. It’s very, very clear in all the engagement that we’ve got with our customers that they are expecting us to provide exactly that. We take it as an opportunity for creating value with a circular economy because, in all the things we do, there’s a possibility to include the circular economy. We are talking about recycling material and more, but it’s also about using the traditional processes that we’ve got to generate something different. An example of that: all our biology process are generating gas. We are now feeding this gas back into the network and that’s something that we’ve not done in the past. That’s something new, generated by this request from our customers to do things differently, and to generate value out of things that, in the past, we would’ve considered as waste. There is the expectation that we will do that from a customer perspective.

EW: Dale, I’m going to start with you to answer the final question, but it is open to all. Boosting productivity, reducing barriers to employment and increasing participation, skills training and migration, along with future industry opportunities, all came through as priorities at the recent Jobs and Skills Summit. Do you think these begin to address the issues we have been discussing today and, as a sector, what do we collectively need to do in the trenches? In the trenches, some of us are walking the streets to navigate the next five years.

DC: Certainly, I think there’s a cultural responsibility for our industry to ensure we are focused on all individuals from a safety and mental health perspective, and are growing their skills and capability so that we are attractive to a wider range of talent than we currently have. We also believe in further immigration to the country, but you can’t just bring more people in if you don’t have an industry that is really thinking about the attraction, retention and protection of people. I think a lot of organisations in this room, and government organisations, are moving in this direction. So, we just need to keep it up and not just focus on production.

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EW: David, do you want to add to that?

DCl: Scott Charlton, our CEO, had the opportunity to attend the recent Jobs and Skills Summit. We really appreciated the opportunity to be part of looking at what is obviously a critical issue facing the industry. Some of the topics that came out are really positive steps in the right direction. We’re very pleased to hear some of the steps taken by the Federal Government on releasing some of the opportunities on the immigration side of things, particularly the focus on 6100 placements for skills required for critical infrastructure. I think there were 4100 placements announced specifically for the technology industry. Our business is hugely reliant on technology skills and resources in that scenario where we really are struggling at present to attract and retain the right sort of people. It sometimes can take months for us to fill important roles, and 40 per cent of our workforce within the business is focused on customers and technology.

From our perspective, we have some good initiatives ourselves. We think it’s absolutely incumbent upon all sectors – the private sector and the Government – to work together in this space. We’ve had some long-term and really effective relationships with universities and educational institutions that have fed our workforce. We’ve had some great successes out of the Female Excellence in Engineering Technology Program and a close collaboration with a Victorian university in Melbourne where we have a range of interns come into the business every year. Typically, a number of them just start to roll through into the business through the end of their studies and then move into permanent roles, which has been fantastic. It’s a challenge for all of us.

The other area that needs focus is creating greater opportunity to draw more of the under-represented sectors of the community into the workforce. To that end, a positive coming out of COVID-19, I think, is the embedded flexibility that has been incorporated across all sectors of the economy.

Our industry has benefited with regard to creating greater opportunity for that under-represented sector of the community.

We’re all competing for the same resources. You’ve got contractors poaching from contractors. You’ve got Government drawing a lot of private sector resources into Government with bigger and better-resourced project authorities and development teams. All sectors need to present an attractive opportunity and proposition to the employee market because it’s an employee’s market right now, and we need to work on the opportunities to give them growth, training and potential.

We also need to look at how we can take the younger, less experienced cohort and really provide the training and facilitation of them to grow into our industry.

EW: We are definitely competing with other markets, too.

RC: Absolutely, I think looking at the job summit, they are

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all good measures and that will help us to solve the problems we have today. What was really good to see is federal leadership in a number of different spaces. I’m thinking here from a water industry perspective; we’ve been asking for a new National Water Initiative or renewed National Water Initiative. One of the key reasons why we’ve been asking for that is because we’ve got a lack of consistency in terms of training and attraction of people into the water industry. So, seeing some federal leadership on initiatives like this one is really encouraging because that’s what we need to do. It’s what we have to do.

EW: Yeah, I agree. And finally, Simon?

even as apprentices, before they’re finished. And that goes to some really basic things – I can’t believe some of them we’re still talking about in 2022 – like the provision of facilities, the sometimes hostile environment of construction sites, and the treatment of people in the workplace. All of those things need to be dealt with. If you don’t do those things, then we are going to get nowhere. Creating a desire and an appetite for girls and women to enter the industry, and stay in the industry, and then making that easy for them by providing those pathways and the facilitation, is important. A lot of that work is going on, but

SD: Yeah, look, a lot of the things the minister spoke about and I spoke about are all focused on productivity. The cost of delivering capital assets into service is influenced by all those things, starting at the very beginning: decisions, options, analysis, all the way through to the procurement methods. In terms of the culture, I know the industry has a really big focus on cultural change and particularly supporting women in the construction sector. The way we think about that is, there are probably three levels. One is dealing with the objections and obstacles to women coming into construction, and staying in construction. A lot of people do come in and then leave,

we’ve got a lot more to do and Infrastructure New South Wales

Roch Cheroux – Managing Director, Sydney Water

worked in a number of senior roles across the business in Australia, the United Kingdom, China and the United States. His most recent role was Chief Operating Officer of Construction and Infrastructure in Australia. He has also held executive positions in Lendlease America’s operations, including Managing Director of Project Management and Construction, Managing Director of Military Housing and Executive Vice President of Investment Management.

Connor has broad experience in project management and construction, design, development and privatisation. He believes that a successful business is a safe business, and places a priority on operating incident and injury free.

Connor holds a civil engineering degree from the University of Queensland and is a Board Member of the Australian Constructors Association.

Roch Cheroux commenced with Sydney Water as the Managing Director on 2 September 2019. In Cheroux’s past role as Chief Executive of SA Water, he led the transformation of South Australia’s largest water utility to embed technology, culture and systems changes to deliver improved experience for the corporation’s 1.6 million customers. Prior to joining SA Water, Cheroux was Chief Executive Officer of SUEZ for the South-East Asia region and SUEZ‑Degrémont Australia and New Zealand; Managing Director of United Utilities Asia and Pacific (TRILITY); and Chief Executive and Chairman of Tallinn Water in Estonia.

Cheroux is active across the industry and is currently Director of the Water Services Association of Australia, and a member of the Commonwealth Government’s Australian Water Partnership Advisory Committee. A dual French and Australian citizen, Cheroux holds formal qualifications in engineering and business management, and seeks to champion innovation and workplace diversity in the organisations he leads.

David Clements – General Manager Delivery Australia, Transurban David Clements is the General Manager of Delivery Australia at Transurban, having held that role since April 2021. Clements is responsible for delivery of major projects and asset capital works projects across the Australian market.

Clements joined Transurban in 2014 following an extensive career working in project management roles in Thailand, Vietnam and Melbourne. During his time at Transurban, Clements has served as the Program Director for the CityLink Tulla Widening, Program Director for Major Projects Victoria. Clements is the Project Director for the West Gate Tunnel Project, in addition to his responsibilities as General Manager Delivery Australia.

Dale Connor – Chief Executive Officer Australia, Lendlease Dale Connor was appointed Chief Executive Officer of Lendlease Australia in July 2021 and is based in Sydney. He joined Lendlease in 1988 and has

has been given a job to help coordinate that, to some degree, in our state and work with industry. So, you ought to change the culture of the industry to get women in the industry, but I also think getting a much bigger representation of women into the industry will change the culture of the industry in itself and that’s something we really look forward to.

EW: Great. Thank you very much. This has been a great conversation.

Simon Draper – Chief Executive Officer and Co-ordinator General, Infrastructure NSW Appointed in March 2018 by virtue of his position within the New South Wales public service and consistent with the Infrastructure NSW Act 2011, Simon Draper was reappointed in April 2019.

Draper joined Infrastructure NSW in April 2019. Within Government, Draper has previously served as Secretary of the Department of Industry, Deputy Secretary of the Economic Policy Group at the Department of Premier and Cabinet, and as a Tribunal Member at the Independent Pricing and Regulatory Tribunal.

Prior to joining Government, Draper had extensive senior executive management experience in infrastructure and utility companies. He is a former Chief Executive Officer of Lumo Energy, Chief Executive Officer of Wellington Airport in New Zealand, General Manager Commercial at Integral Energy and Chief Executive Officer of Northern Territory Airports. Draper has a Bachelor of Economics (Honours) from Sydney University and a Master of Business (Finance) from University of Technology Sydney, and has completed the Company Directors Course of the Australian Institute of Company Directors.

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h

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Aesthetic, sustainable and recycled tools for a quieter railway It must also be bolted to its own foundations, such as mini piles or ground screws into concrete foundations.

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DLR = 41 dB

EN 1793-2

Sound absorption value

DLα = 10 dB

EN 1793-1

Absorption group:

A3

Benefits at a glance

2.

¬ No foundation required for installation ¬ easy and quick installation ¬ Short delivery times > noise hot spots can be supplied with products quickly ¬ Closer to the noise source than any other sound protection ¬ Break-proof due to fibre-reinforced rubber compound with a cover layer of virgin rubber > UV and ozone resistant

4.

3.

¬ No material fatigue caused by vibrations or pressure and suction forces ¬ No problems with oversized loads

STRAILastic Australia Pty Ltd // STRAILastic track damping systems 350 Botany Road | Beaconsfield NSW 2015 Sydney | www.strailastic.com.au

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companyfocus

It’s time to make the ‘20s roar again

By Rebecca Pickering, Inland Rail Interim Chief Executive, Australian Rail Track Corporation The 1920s didn’t get off to the best of starts. Emerging from the devastation of the Great War with the Spanish flu pandemic quick on its heels, Australia faced the enormous task of rebuilding from the ashes amid a level of uncertainty never seen in the country before.

And as we suffer through another pandemic, it’s tempting to ask whether history will repeat itself.

Once the virus passes, will the 2020s roar the way the 1920s did? Will this 10-year period be seen from a historical perspective as a decade defined by change?

At the Australian Rail Track Corporation (ARTC), we believe the Inland Rail project will deliver the potential to reform the way freight and logistics are undertaken in this country as Australia reshapes its priorities amid a changing world.

Over the past three years, the resilience of Australians has been severely tested, just as it was back in the Roaring Twenties.

Meeting challenge after challenge and adapting as businesses adjusted to a new paradigm, nowhere has this resilience been more evident than in those working across freight, logistics, and supply chains.

Suddenly thrust into the spotlight, normal everyday people began to become aware of the tremendous amount of work that needs to occur to move freight across the nation so that our supermarket shelves are stocked, ready for consumption.

And let’s not forget the natural disasters that have been part of our lives since the start of the decade, with bushfires and floods dominating the headlines like never before.

ARTC is immensely proud of the Inland Rail project and the role it will play in the future.

Inland Rail has already delivered more than 700 contracts worth more than $2 billion as we begin this massive nation-shaping endeavour – a 1700-kilometre rail line from Brisbane to Melbourne, which will not only reshape the national freight network in terms of delivery times, but will also build resiliency into our network like never before.

Inland Rail runs through 13 federal electorates, 35 state electorates, 36 local government areas and 26 traditional owner areas.

This once-in-a-lifetime piece of infrastructure, which has been more than a century in the making, has come at a time when it can most benefit the nation into the future. The construction will provide the initial stimulus, but the ongoing benefits will

result in more competitive supply lines for generations to come.

There will be more than 21,500 jobs during peak construction, boosting the Australian economy by more than $18 billion – and much of this spend will be in regional communities.

Inland Rail is a world-class project that is delivering enormous economic and social benefits to our country at a time when we need it most.

It will complete the backbone of our freight rail network, and it will help businesses move freight safer, faster, cheaper and with a lower carbon footprint. It will reduce our reliance on busy roads and highways, and it will continue to create thousands of jobs for years to come.

Ultimately, it will reinvigorate regional Australia while bolstering our national economy. It’s time to make the ‘20s roar again! ♦

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In it for the long haul

CALVERT

BRISBANE

HELIDON GOWRIE GRANDCHESTER

NSW/QLD BORDER GOONDIWINDI

INGLEWOOD

ACACIA RIDGE KAGARU

BROMELTON

YELARBON

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NSW/QLD BORDER MOREE

Inland Rail is being built now to create a new freight future for Australia.

NARRABRI

It is a fast freight backbone spanning more than 1,700km from Melbourne to Brisbane that’s transforming how goods are moved around Australia.

Learn more about Inland Rail, visit inlandrail.com.au

EAST/W

GILGANDRA

NARROMINE

DUBBO

EST LIN

E

PARKES

NEWCASTLE

SYDNEY ILLABO WAGGA WAGGA

STOCKINBINGAL

JUNEE

CANBERRA

ALBURY

LEGEND

WODONGA VIC

/N

SEYMOUR BEVERIDGE

TOTTENHAM

MELBOURNE

SW

Inland Rail – new track BO

RD

ER

Dual gauge new track Inland Rail – existing track to be upgraded Inland Rail – enhancement works for clearances Existing rail ARTC rail network City Project boundary Town Port

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Fireside chat – Common challenges outside infrastructure

Fireside chat Common challenges outside infrastructure Key points: • • •

Australia’s population growth needs to ramp up to alleviate the immediate skills shortages.

Careful and balanced policy in the current climate of rising interest rates and a supply-constrained economy is crucial.

Planning the right infrastructure for better-functioning towns and cities, having land-use planning systems that lead to better outcomes, and efficient taxation, can lead to increases in productivity.

Panellists: ► ►

Ken Morrison, Chief Executive Officer, Property Council of Australia Andrew McKellar, Chief Executive Officer, Australian Chamber of Commerce and Industry

Moderator: ►

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Meegan Sullivan, Chief Executive Officer – Australia Asia Pacific, RPS

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Meegan Sullivan (MS): Welcome, Ken and Andrew. I know that a lot of people in this room work in the infrastructure sector, but also in other sectors, as well. So, I think this is a fantastic opportunity to hear what’s happening in your space.

You both represent a range of businesses across the country.

What are you hearing from your members at the moment about the key issues facing them? Let’s start with you, Ken. Ken Morrison (KM): I think right at the top is what’s happening with inflation. People are as concerned about what’s happening with inflation as they are about the prospect of central banks overshooting the mark. So, I think there is a narrow pathway, and there’s a lot of pessimism around whether that pathway will be landed or whether we’ll overshoot. Skills shortages, supply-side impacts and what these combined issues do to construction when you put those two things together in real estate means that it’s very difficult to make decisions at the moment. We’ve seen a pause in capital, which has been significant. We’ve seen companies get out their recession plans over the last few months, and we’ve also seen it become quite difficult to manage existing construction projects and commit to future construction projects. So, that has meant that there’s really been a rapid sentiment change since the start of the calendar year, when the dominant view was that we were going to slingshot out of the COVID-19 period and everything was going to be tickety-boo.

Andrew Mckellar (AM): I agree a great deal with what Ken has just said. When we look at the data that we see, and the surveys that we get back, what’s going on out there in business and industry is that skills and labour are absolutely top of the list. That is along with difficulty accessing materials, supply chain disruption and the cost of doing business. It’s not just the cost of living that’s going up, it’s the cost of doing business in terms of the cost of materials in the supply chain, as well as energy – they are big factors.

Coming back to what we see in the data, when we look back over the years, we have one of the longest-running business surveys in Australia, the ACCI–Westpac Survey of Industrial Trends. It goes right back to the 1960s. If you look back to 1974, which was the last oil shock, we see the difficulty of accessing labour at similar levels – though it’s not quite as bad as that – and the same thing with materials. So, these are really pressing challenges. It’s all about the supply side at the moment.

In terms of the policy settings going forward, this is quite a unique conjunction of events. If we think about the last two or three shocks that we’ve been through – things like the global financial crisis – they were demand-side shocks. The way the Government responded initially to the pandemic was to fuel demand with $300 billion in fiscal stimulus, unprecedented in the history of the country. That really underpinned the demand side of the economy. We still have a bit of an overhang of

excess demand. That’s part of what the reserve bank is responding to as it’s now pushing up interest rates, but we have to be really careful. We know that when you’ve got a supply-constrained economy, jacking up interest rates can actually have a counterintuitive effect. So, there has got to be a really careful balancing of policy here. The focus of policy going forward has to be about building capacity in our economy and responding to those labour shortages through an integrated strategy. I’m sure we’ll talk about that in a moment, but I think those are the fundamental ingredients that we’re observing at the moment.

MS: Given that you both represent a range of businesses, are there particular parts or sections of your member base you think are doing it tougher than others, or better than others?

AM: Honestly, it’s across the board. If you look at our membership base, sectors like tourism and hospitality, which were absolutely hammered during the pandemic, are still struggling to recover and to get labour. A big source of their labour force comes through international students and working holiday-makers. They’re only just starting to come back into the country now, so they’re really struggling there.

Building and construction is obviously a sector that a lot of people here would know more about, so I’ll let you talk on that.

I think with regards to demand for skilled positions, whether it’s mechanics, IT or health services, people are crying out.

So, really, we haven’t seen anything like this for decades.

KM: Yeah, I agree. It’s an interesting environment right now because we are all forced to look at this glass as being half empty, but there’s growth in this economy. If you come back to real estate, there was a lot of stimulus put into the housing sector to see us through the lockdowns. That did create a pipeline, which is still working its way through the system. Some big questions were asked in 2020 around commercial property: would anybody ever go to the office again? Would investment stay in the CBDs? Those questions have been asked and yes, absolutely. Businesses are leasing space and investing in our CBDs. It is this funny period where all these risks that we are talking about are real, present and serious. The future is quite uncertain in a number of different areas, but there are also these strength areas of the economy.

So, it’s a challenging period and in challenging periods it’s hard to make decisions. I think we’re seeing some of that.

MS: Surely in challenging periods, there’s also opportunity, as well?

KM: And getting set for opportunity, which is also, I think, what many are doing.

MS: We have spoken a lot about skills, and there was obviously the Jobs and Skills Summit recently. I’m sure you’re going to tell me there’s no silver bullet, but is there anything interesting or innovative happening in the sectors that you

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represent that we could potentially learn from?

KM: Well, I agree there’s no silver bullet and it was very encouraging to see a focus on migration and population at the Jobs and Skills Summit. I think the announcements that were made there are very positive, such as freeing up visa processing – more money and resources going into that – and lifting net overseas migration. But it would also be nice to see more focus on the ramp-up. I think the disappointing thing is that the Australian economy needs a fast ramp-up back to a more normalised population growth level. There’s been a lot of debate about what the right population growth is, and how that integrates with long-term skills training and development. That’s a good discussion and debate to have, and we certainly support the Government looking at that, but we have to get people back into this country as quickly as we can. If we take a 12-month ramp-up here, that’s a lot of lost opportunity. And if we’re talking about the supply bconstraints, the closest thing you could find to a silver bullet would be a fast ramp-up to a re‑normalisation of our population flows. That would address a lot of the immediate skills shortages we’ve got, so we’d encourage the government to have lots of urgency about that issue.

MS: And you were at the summit, Andrew, I understand?

AM: That’s right. There are a couple of familiar faces in the room.

MS: Any particular highlights from your perspective or any missed opportunities that didn’t get covered?

AM: I have to say, from a political and an optical point of view, it was a success for the Government. I do think that they set it up reasonably well. I’m sure that for many people it would’ve appeared very orchestrated, and that is probably true. But, nonetheless, there was a degree of dynamism and a degree of consensus in the room that I felt was very positive. I think we’ve got some short-term measures on vocational education and training places where they’ve made some commitments, and that needs to be resolved for the longer term. There are migration measures and some other points around industrial relations. I mean, the concession to start working on things like the ‘better off overall test’ is a good thing, but we’ve got huge risks in the longer-term agenda there, which we’re just starting to grapple with now in the industrial relations space.

AM: I’d agree with that; it was good to see at the Summit some immediate measures being proposed and migration a part of that. Certainly it was important to see the increase in the permanent skilled migration intake. So, pushing the overall permanent migration intake from 160,000 places a year up to 195,000 places a year is a good measure. Importantly, as was throwing in resources to speed up the visa processing time frame at the moment, because that’s been very slow. We are seeing cases of six to nine months. We have to make up for lost time. There are other things that can be contemplated, as well.

There are things we talked about at the Summit, such as multi-employer bargaining – this is a real unknown. We don’t know the details of what’s proposed there. It’s a bit of a thought bubble that’s coming out of the Australian Council of Trade Unions, but there are real risks from a business point of view.

What we don’t want to see is a situation where we’re going back to something that transforms into industry-wide sector bargaining. Productivity is driven at the enterprise level and at the workplace level. We have to make things like enterprise bargaining work effectively. We know where the problems are and we have to address those problems, not create a new problem by opening up another front that really isn’t going to lead to a solution. I think there’s real risks in that space.

At the moment, for business to bring somebody into the

MS: How do you think we can move the needle on

MS: It’s an interesting experiment, isn’t it? Shut the borders and throw a lot of money at it.

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country, we have to negotiate a web of different bureaucratic hurdles. There are the priority lists that you’ve got to be on, and if you’re not on those, you can’t come in. There’s the income thresholds – that is a challenge – and the visa costs, the processing delays and the Skilling Australians Fund levy.

These things are making it very difficult to respond in that space. I think we did see some progress on that last week and that will be helpful, but there’s a lot of other things that go onto the list now, and the agenda that we’ve got to work through. It includes investment in skills and other very important things that need to be done there to keep that pipeline flowing, including encouraging participation in things like the childcare incentive the Federal Government has as part of its platform.

It might mean advantaging or encouraging other areas of demographics to come back into or stay in the labour force.

I think these all have to be part of the solution we’re working towards if we’re going to address some of those challenges.

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productivity issues? Has there been anything that’s come out of, say, the pandemic that you think might enable us to drive greater productivity in the Australian economy?

AM: Well, there are two areas. Labour force is one, and we’ve talked about that extensively. I think the other area is business investment; the productivity of our infrastructure is absolutely critical. The efficiency of ports is a key area. We’ve seen reports from the Productivity Commission highlighting some issues in that space. Not one major Australian port featured in the top 250 most efficient ports anywhere in the world. So, we know that workplace practices in our ports is a big issue and has to be addressed. Does the Government now have the appetite to start looking at those things? I think, really, it’s got to be seriously on the agenda and this will be the challenge. We have a government that had the courage to pull people together for the Jobs and Skills Summit – an absolutely great start. If they want to channel the reform agenda that we saw from previous governments, like the Hawke and Keating Government in the 1980s, then they have to have the courage and the ambition to follow through. They have to start to create an agenda for reform, which will include addressing some of the efficiency of our infrastructure, like our ports, if we’re going to go forward.

KM: Productivity is the next big thing to really unpack with the new Federal Government. It’s good to see that it’s part of their language pre- and post-election, and many of the reforms from the Jobs and Skills Summit were coached in or pitched in the productivity framework. This is what it’s all about. In the economy now, we’ve got this massive disruption post‑COVID-19 that we’re working through, but then, longer term, it’s about productivity that’s going to drive the country.

Productivity has an urban dimension. The sort of gold standard blueprint is the previous work of the Productivity Commission, Shifting the Dial. What are the big things that are going to shift the dial on productivity? Well, one of them is better-functioning cities and towns. That’s about infrastructure and getting the planning right. It’s about having good housing policy and efficient taxation. It’s about having land-use planning systems that get to good outcomes without adding loads of cost and time uncertainty. And there is a lot of work to do in a lot of those different areas. The review of Infrastructure Australia is an important piece of work in productivity. We want governments putting money into infrastructure projects that are going to be the best infrastructure projects. The Government also has a commitment to ramp-up and deepen the previous government’s cities agenda. When you are thinking about infrastructure and cities’ policies, those two things absolutely go hand in hand, and are a huge productivity drive if we can get those right. So, we are very keen to be part of that conversation with the Government over the next six months.

“

Artificial intelligence and increased automation is part of the future. This is part of creating jobs...

MS: I guess a related issue with the labour side of productivity is the role of innovation and automation in the industries and businesses that you represent. So, I am interested in some views that you might have on that.

AM: Well, it’s not something that we should be afraid of at all. Artificial intelligence and increased automation is part of the future. This is part of creating jobs that are going to deliver much greater fulfillment. They’re going to be the jobs of the future, with much better living standards. So, I think we’ve got to grasp that opportunity in Australia to see how that can fundamentally change so many of the ways in which we do things, whether it be in transport, infrastructure, manufacturing, or in almost any walk of life. Those sorts of processes are going to have an influence. We do see examples where there’s still pushback on that, and resistance to things like automation, but it gives young people so much more opportunity to be able to get into the STEM fields, to be looking at science, and to be looking at things like engineering and software. I think these will deliver jobs that create higher living standards and greater opportunity, and improve lifestyles. We should be very excited about it.

KM: It can also be a big drive for the productivity agenda.

Look at what the New South Wales Government has done with its service delivery model and using digital technology to enable better-quality service there; it’s world leading. I mentioned land-use planning systems before; well, we’re doing that pretty much the same way we did it in the 1980s.

We’ve invented PDFs since then, but that’s about it. So, there’s a huge productivity agenda here, which is not a small issue.

It’s actually a very sizeable issue and goes fundamentally to economic outcomes, but also quality of life as our cities evolve and grow.

AM: If you’re going to encourage this kind of investment innovation by business, it’s not necessarily about Government spending big dollars. Before the pandemic, I was fortunate to be able to go and have a look at what’s happening in California and Silicon Valley, and around San Francisco, in the space of vehicle automation. At that time, there were around 60 different companies working on exploring, developing and bringing to the market vehicle automation technologies. What they’d done there is just provide a safe space for business

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to innovate and test those technologies operating out in the community, in a safe way, so their confidence could be built and the investment could go forward.

I had the opportunity to drive with Zoox and Waymo out on the open streets, but in very controlled conditions, in a vehicle that was driving itself, fully automated. You could see the computer operating, recognising that 100 meters down the street there was a pedestrian coming to the curb behind a telegraph pole. You can see that on the computer before you, just as a driver could see it. I think, if you give the opportunity for business to invest, create and undertake that innovation, then that’s how it will really work. It’s not about going in and having big, old-fashioned industry policy support; it’s about enabling business to take the lead and to invest with confidence.

MS: So, if I take us from digitisation back to human factors, there’s a lot of conversation around skilled migration, but also boosting domestic skills training. Sometimes it is being positioned a little bit as an either-or situation. I am interested in your views on whether it is an either-or proposition, or if we need both.

KM: Well, it’s not either-or. We’ve run the experiment of switching off migration. We know we had to do that with the pandemic, but we know the dislocation impacts and we are

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living with those now. So, we need both. Yes, you need to invest in the future. It’s good that the Government is focusing on the policy frameworks that could encourage more investment in future skills development. We are a migration country.

We need that population growth. It’s been an important part of the Australian success story. We actually do it very well, overwhelmingly, so we need the two things together.

MS: People always ask me what the skills of tomorrow are in the industries that you represent. What do you think the skills of tomorrow are?

KM: The skills of tomorrow? I mean, what you need to be is flexible. Who knows what the skills of 30 years away are? What you need to have is flexible workforces, able to handle complexity and change, and individuals who are able to continue to learn throughout their careers. The old days of finishing whatever your post-school education was and then that was it for life, well, that’s not really the new world. You need to be more flexible than that, and that’s across the whole value chain.

AM: Yes, and to go back to the previous topic, it’s not either-or. Our approach that we emphasise all the time is that there has to be a three-part strategy to respond to our labour force demands. There has to be the fundamental investment

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in skills training and vocational education, and things like apprenticeships. You’ve got to make the business case work for things like that, and ensure that the higher education system is providing the requisite skills and the flexibility so that as people pick up skills during their work life, they’re able to package those up, get credentials that go with those skills, and take them with them as they go forward in the future to get recognition for the training that they’re undertaking and the skills that they acquire. That then becomes something they can value and monetise in the marketplace. I think we have to ensure we’re responding in that way.

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he embedded carbon T story is a shared problem to solve and real estate is very focused on it; there’s some good work going on

Yes, we do need to have a sustainable and ambitious migration program to go with it, and we have to encourage participation, as well. So, there are many demographics in our economy where we’re not optimising that, even if we’re at record levels of participation right now. There’s more that we can do. We can find ways to encourage people to come back into the workforce more rapidly after having children, ensuring they’re not disadvantaged by taking time off. In other sectors of our community, people want to work longer.

People are living longer, so they want to work longer; but they want to have the flexibility to do that. They don’t necessarily want to work five days a week beyond 65 or 70. You want to have the flexibility to work two or three days a week and not be financially penalised when you do that. Make sure those people can still participate and contribute in our economy.

some of the sectors that haven’t been movers in this space. The embedded carbon story is a shared problem to solve and real estate is very focused on it; there’s some good work going on.

Again, the New South Wales Government is leading through the NABERS team, which hopefully will be quite helpful there.

So, I guess the key thing on that sustainability side is that in real estate, we’ve seen drivers, and we’ve seen perhaps more multiple drivers than we’ve seen in infrastructure.

We’ve seen tenant demand for great space and great space means sustainable space. We’ve seen investor appetite for green buildings, green assets, and green precincts for some time now, and we’ve seen governments – not always as consistently as we’d like – taking a leadership position in their real estate positions. So, those things have led to quite a lot of momentum and some really great progress.

MS: You used the word ‘sustainable’; environmental, social and governance (ESG) is something a lot of businesses and governments are talking about. We are quite good at the G element in Australia, but there is still some work to go on the E and S. From the range of businesses you represent, where do you think we could up the ante on the E and the S? Ken?

AM: I think clearly there’s been an evolution sweeping through business and many other parts of society, as well.

So, we are diversifying and broadening the way in which we measure the importance of some of these other indicators. It’s not just financial; we’ll see the Federal Government talking about a ‘wellbeing budget’ this year. I think it’s similar. I think business has got to see the opportunity. Making our operations more sustainable, ensuring that we’re supporting greater diversity in our workforces, providing that sort of opportunity in the way that we go about structuring our businesses at the end of the day will deliver broader benefits to society and the individual business itself.

KM: Real estate’s probably an interesting case study for infrastructure because it’s such an adjacent sector with so many similarities. One of the things we’ve been driving over the last seven or eight years is a big focus on diversity, and partnering with Liz Broderick and the Champions of Change group to really understand those barriers, particularly around gender, but also other forms of diversity inclusion. I think there’s an opportunity to learn from some of the things real estate has done. My observation is that incremental change is not going to get us very far very quickly. So, if you want to have a crack at this, you’ve really got to go all in. On the environmental side, the property industry’s wake-up call was the 2000 Sydney Olympics – we created the Green Building Council of Australia off the back of that. We’ve had quite supportive policies in some places and we’ve got great rating tools in place.

We have a very productive focus on energy efficiency, which is a well-known opportunity area. We are now looking at the opportunities that really exist within existing housing assets and

It’s an inevitable trend that business is learning to grapple with, as are other parts of society. The productivity commission highlighted things like climate change and responding to climate change as an economic reform. It just hasn’t been traditionally measured in that way. It’s been much more about the costs of making that adjustment rather than understanding the broader benefits and how that’s captured in our traditional economic accounting frameworks, versus perhaps some of these broader measures. I think these are important things. We’re building a broader perspective in many of the ways in which we approach these challenges, and that’s progress.

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the job with fresh energy and some fresh ideas, but it’s really going to need the business groups and other groups to really work with Government to land on the right outcomes here. So, I’d encourage this sector to get behind Adrian and the team to make sure that we get some of those right outcomes. I think the decisions made in the next six months are going to be very important and we’re going to be living with their outcomes for quite some time.

MS: Yes, I think one of the important conversations Infrastructure Australia has been having is around capturing social value and environmental value into business cases in a way that is easily robust and defensible. It would be good to continue that debate and potentially learn from jurisdictions like the United Kingdom, with its Social Value Act, and things like that around how we build this into our decision-making for projects and infrastructure. Any last comments?

KM: That’s a lovely free kick you’ve given me there! Thank you, very much. This is a really momentous phase in the economy and I think good policymaking plays a huge role at times like this. We’ve got a new government that has come to Andrew McKellar – Chief Executive Officer, Australian Chamber of Commerce and Industry Andrew McKellar is Chief Executive of the Australian Chamber of Commerce and Industry (ACCI), the nation’s largest business organisation, representing employers of every size and sector in Canberra, across the country, and around the globe. Under McKellar’s leadership, ACCI champions policies that enable businesses to innovate, invest and grow, promoting Australia’s economic strength and international competitiveness.

Previously, McKellar served as Secretary General for Mobility at the Federation Internationale de l’Automobile, based in Paris; Chief Executive of the Australian Trucking Association; Chief Executive of the Australian Automobile Association; and Chief Executive of the Federal Chamber of Automotive Industries. Earlier in his career, McKellar worked in Government, serving as a Senior Adviser to successive federal industry ministers. He also worked in the Department of the Prime Minister and Cabinet, and Commonwealth and Queensland treasuries. McKellar holds a Bachelor of Economics from the Australian National University.

Ken Morrison – Chief Executive Officer, Property Council of Australia Ken Morrison is the Chief Executive Officer of the Property Council of Australia, which champions the industry that employs 1.5 million Australians and shapes the future of our cities. Morrison has played a significant role in shaping cities, tax, planning and infrastructure policy for more than two decades, and sits on a range of Government taskforces and committees. He is also a Director of the

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AM: Yes. I’ll close by saying I think we’ve got a huge opportunity here – once in a generation – to restart an agenda, a discussion and a dialogue around the economic reform priorities for this country. Productivity is at the core of that. Infrastructure plays a key part in that. Here, we’ve got to build real consensus and unity within the business community on achieving some of those goals. Across the major business organisations, we’ve got to stick together. We’ve got to work together. We’ve got to advocate for that because reform is difficult.

Even when it has been successful, there has never been a full consensus behind it. This is why it is so important that business really pulls its weight in this. I think we’ve got the opportunity to do that. I’m sure we can do it. And I think I would encourage everybody in this room to really focus on that, because that’s the way that we are going to deliver better living standards and achieve some of those aspirational goals that we’ve got for the future.

MS: Well, thank you, Ken and Andrew, for sharing your thoughts and showing that there is a lot of aligned issues, but then also some things that are specific to the businesses you represent.

Green Building Council of Australia, a Director of the Australian Sustainable Built Environment Council, a member of the National Affordable Housing Alliance, and a Property Champion of Change working to achieve a significant and sustainable increase in the number of women in leadership roles.

Before taking up his current position in 2014, Morrison was the Chief Executive of the Tourism & Transport Forum, the peak forum for the tourism, aviation and transport sectors. Prior to this, Morrison held several executive positions at the Property Council of Australia, including Chief Operating Officer and New South Wales Executive Director. Morrison holds degrees from the University of New South Wales and the University of Technology Sydney, and has undertaken courses at the Australian Institute of Company Directors and Harvard Business School.

Meegan Sullivan – Chief Executive Officer – Australia Asia Pacific, RPS As Chief Executive Officer for RPS’s Australia Asia Pacific business, Meegan Sullivan leads a team of around 1000 consultants and service providers working across the region. Based in Melbourne, Australia, she has held business and people leadership positions for 20 years, with significant experience in government agencies, privately owned and publicly listed companies. Within RPS, Sullivan has held various executive positions in business operations, growth and strategy, including corporate acquisitions and integration. She has extensive consulting experience across transport, water, government and infrastructure projects, such as Western Sydney Airport, Melbourne’s Level Crossing Removal Project, and Sydney Desalination Plant.

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Panel discussion – Do PPPs need a rebrand?

Panel discussion Do PPPs need a rebrand?

Key points: •

• •

The Public Private Partnership (PPP) model has developed beyond its original format, and any model that incorporates debt and equity into the delivery of public infrastructure may be viewed as some version of the Public Private Partnership model.

Flexible private capital models have overcome the perception that privately financed projects with long‑term concessions are unable to accommodate technological change over time.

Flexibility should be built into privately financed project contracts, as uncertain market conditions have reduced the significance of a fixed-price contract.

Panellists: ► ► ► ►

Jason Loos, Deputy Secretary, Victorian Department of Treasury and Finance Sonya Campbell, Deputy Secretary Commercial, New South Wales Treasury Malcolm Macintyre, Managing Director, Capella Capital Iain Melhuish, Executive Director, Head of Debt Capital Markets ANZ, Macquarie Capital

Moderator: ►

Kim Curtain, Partner, Deloitte

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Kim Curtain (KC): Thanks to the panel for joining us. Our topic, Do PPPs need a rebrand?, is definitely an appropriate topic for a Partnerships conference. I still have conversations with people who say, ‘Oh, Public Private Partnerships are too expensive,’ and even if the people in this room understand, there are a lot of people out there who have a very basic understanding of Public Private Partnerships, so I am really keen to explore this topic. To kick off, in the past we’ve recast privatisations as asset recycling and long-term leases, so is it time, do you think, for a rebrand of Public Private Partnerships?

Jason Loos (JL): I’m going to start by saying I don’t think that’s the right question, and I’ll say why. There is $18 billion of infrastructure that Victoria is getting out the door, and New South Wales is doing exactly the same. We’ve got a whole lot of delivery models, alliances, dual target out-turn cost, single target out-turn cost, engineering procurement and construction management contracts, design and construct (D&C), collaborative design and constructs – you name it!

Every one of you will have a different definition of what a particular risk allocation is and you call it a name. There’s only one delivery model that involves private finance, and that brings debt and equity as an active player in the delivery of public infrastructure, and that’s the Public Private Partnership model.

So, I think all models play a role and it really gets back to the characteristics of the projects. We’ve been saying this for a very long time. The messages are exactly the same. You’ve got to look at the risk allocation and the characteristics of the projects, break the projects up into sections that make sense, and apply the right procurement model.

So, what’s changed? The environment has changed in terms of where we’re delivering projects. We no longer have A-teams on every project because we’ve got mega projects across the eastern seaboard, in particular. So, it’s about getting the right skills, the right culture, the right people and the right project managers in. That’s really what the discussion needs to be. There’s always private debt and equity that wants

to invest in our projects. That’s not the challenge, either. The challenge is when it comes to public infrastructure, how do governments pay? Someone has to pay. So, super funds want to invest, absolutely, but they also want a return. Someone has to pay that return, and that’s the challenge of the funding versus financing debate. Again, it’s been a very similar theme for 20 years, but the scale of the projects has got so much greater now, and more complicated.

So, it’s really a question about risk allocation and how do we change. And we have changed. Look at projects like North East Link, where we’ve changed the way we’ve gone about that project, with an incentivised targeted cost embedded in a Public Private Partnerships. That’s an acknowledgement that with the way we run tenders for big tunnel contracts, you can no longer put out a tender for 16 weeks and get a fixed price. So, there are learnings we’ve taken and things we’ve had to change.

KC: We’ll let Sonya give the Government view, then we’ll give Iain and Malcolm their right to reply.

Sonya Campbell (SC): Thanks, Kim. So, not surprisingly, I’m with Jason. I don’t think it needs a rebrand, but I do think it needs redefinition because it has evolved. The Public Private Partnership model has evolved. Jason’s right, there is a place for all sorts of different delivery models; it’s about picking the right project. With the Public Private Partnership model, it’s about being able to advocate for the benefit of what private finance brings to that project, and we can do a better job of that. The typical criticisms have been around the inflexibility of the model. And Jason’s right, we have responded to the feedback from the market that we can’t necessarily have a ‘price unknown’ scope. However, the model has the flexibility for dealing with that and we are doing that at the moment, so that’s not a reason to avoid the model.

And then we have to talk about the value that the private sector brings. Government doesn’t have all of the capability.

There is a certain set of projects where we do have that capability, and we can and do deliver. So, where does the private sector value come from, and how do we educate and articulate that so people understand the benefits of the Public Private Partnership model.

Malcolm Macintyre (MM): I am agreeing with everything that’s been said. I like the way this session was introduced; it’s really private capital. I think that today, Public Private Partnership refers to a narrower subset of the use of private capital, there’s a range of other procurements and projects out there that have private capital in there with state procurements.

They’re not called Public Private Partnerships and they reflect an evolution of the model. Renewable energy zones and housing are examples of that at the moment. Sometimes the discussion about the Public Private Partnership rebrand is

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caught too narrowly in the challenges faced in the construction phase. These projects are not delivered just to transfer the risk that arises in the construction phase; they’re procured in this way to drive innovation and whole-of-life costs. Rather than ‘risk transfer’, maybe a better term today is ‘risk management’.

Understanding risk is less about binary risk and winner takes all, and much more about actually working together collaboratively on risk. The incentivised target cost (ITC) on North East Link is a great example of that. The other thing is that, as an industry, I don’t think we do a very good job of marketing those other elements and projects that run 99.9 per cent on time – projects like North East Link, and Sydney Light Rail, which is only just behind Sydney Ferries, but obviously everyone loves getting the ferry.

I remember, many years ago, taking a touring group from Canada around New South Wales schools. You think of schools as a very simple Public Private Partnership. I remember the lady from Canada asked the head mistress, ‘What does the Public Private Partnership mean for you?’ She said, ‘Well, it means my staff and I have actually been able to get back to teaching. We’re not dealing with facilities management issues through the school. If something goes wrong, we dial the 1800 number and it’s fixed within 30 minutes or we know somebody incurs a penalty.’ Those are the real advantages the Public Private Partnership actually delivers.

SC: It’s a good question because we’ve seen an evolution of different variations of the model from those early schools projects Malcolm was talking about, where it was quite a simple scope and a defined service delivery. Yet, even with those projects, we’ve learnt over time that when we want to augment those schools and we don’t have the flexibility built into the long-term contract, it becomes problematic. So, we need to respond to where the model needs flexibility to continue to deliver high-quality services over time. We need to look at the capability that does sit with Government to do it, rather than looking for capability in the public sector. The way that Government funding works is that we put the capital in and deliver an infrastructure project, but we haven’t actually thought about the service delivery and the recurrent funding required to deliver a high-quality service over time. That’s one of the key benefits the Public Private Partnership model brings. Additionally, there’s a whole lot of opportunity in the regulated asset base and how we integrate it within the Public Private Partnership model. We’re moving towards renewable energy assets, where you can have a pricing regulator that gives a lot more certainty in when you do need to upgrade the asset or adjust to changes in cost due to different market conditions. That’s something we’re certainly interested in, particularly as we have an enormous task ahead of us in the transition to renewable energy.

In the analysis that Infrastructure Partnerships Australia did a couple of years ago on operational Public Private Partnerships, 95 per cent of people said the contracts were delivering the performance that was sought over time, and 95 per cent of people said they’d rather work in a facility that was procured as a Public Private Partnership than a traditional government-run facility. So, there’s some fabulous stories there, which do a very good job of selling the model.

KC: And the technology and methodologies are changing so fast now.

Iain Melhuish (IM): Part of the issue is we always look backwards from projects that perhaps have not gone well and, when it comes to model selection, we wonder whether projects should go down this path. What is the right risk allocation?

To Jason’s point, and when you look backwards, it may not always have been the right choice, but when we’re going into them, I think that there’s always the best of intentions. If the Public Private Partnerships model is selected, we shouldn’t be harsh on ourselves once we’ve actually worked through it and decided it wasn’t the right project. We’re not always going to get that right, but it still is a valuable tool for the reasons the rest of the panel have gone through.

JL: Oh, I definitely think the whole-of-life aspect is the key differentiator between the different models. I bring it back to simple things; there’s absolutely room in the infrastructure pipeline for a single-source alliance where risks are very tricky to identify and allocate. We’re better off having the one contractor in the room with us working up the solution, and trying to get it as efficient and as effective as possible, but that’s not the case across the board. There are times when you want the discipline of an independent financier questioning a D&C contractor with the maintainer in the room, and going through that process with a view on how the asset will perform over 25 years. You’re just not going to get that discussion and trade-off in those other models, and it’s not because the model’s right or wrong. So, it gets back to the characteristics of the project and you want that type of discipline conversation trade-off to actually happen.

KC: Sonya, what do you think is the next iteration of the Public Private Partnership model. I know Jason’s talked through some of the things that we’re doing differently already. What do you see as a Public Private Partnership in the modern day?

SC: We’ve come a long way from the early Public Private Partnerships, where that technical obsolescence concept was something we all struggled with, and the private sector said, ‘Well, we can’t take the risk for what the technology might be in 20 years.’ So, the model needs to find a way to address that.

KC: Jason, anything to add?

It gets back to your project selection, so Infrastructure Australia and Infrastructure Victoria priorities have to happen.

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But then how do you deliver those projects most effectively?

That needs to be a very fulsome discussion. It’s very easy now, with the range of procurement models, for a delivery agency to pick the one that’s really quick. We’re a big fan, at the Victorian Treasury, of the early works package because that allows you to do some things that actually de-risk the main game, and that makes sense to me.

KC: Iain, a traditional part of Public Private Partnerships has been a very sharp pencil and a fixed price. The market and the world is a bit different now than it was 20 years ago. How do you deal with that?

IM: It’s different from three years ago, actually.

KC: True. How do you deal with that now?

IM: It’s a really good question – a really difficult question.

There’s obviously still a lot of inertia around the view that we should be going all towards fixed-price contracts. We should be focusing on making sure we understand all of the risks, and then we allocate those risks efficiently; however, as the market has shown us, this is not always the most efficient way to allocate those risks. And so, people are taking different approaches. The market today is not what it was three years ago, and it wasn’t what it was 20 years ago. Three years from now it’ll be different again. So, it’s making sure we’re always flexible, because the fixed prices we’ve all seen are all fixed priced until they’re not fixed price, and then if you’ve got a contract on the other side that is in difficulty or having problems, it’s not a fixed‑price contract anymore.

MM: I think the Public Private Partnership model does have a reputation for needing a sharp price, but in more recent years, the discussion’s been much more about value for money. What are you actually delivering? My experience more recently is it’s not necessarily the cheapest price that wins. So, there’s price and there’s value, and I think the discussion is perhaps more about value. Notwithstanding that, I think we’ve obviously had a long period with inflation of two to three per cent and escalation not being much different to that, but obviously we’re in a very different world today. I think there’s benefit within the Public Private Partnership model of still having tension on the price, because it’s not just about the price, it’s about how you design to mitigate it. What are the replacement alternatives for particular products?

Ultimately, what we’re seeing is Government responding with, ‘Well, we need mechanisms to deal with uncertain risk.’

If you look at North East Link, it’s a seven-year construction period. Taking that risk and putting a price on that is uneconomic.

So, under the ITC regime, the risk of significant escalation is sort of dealt with. It doesn’t mean all risk is passed back to the state – it is still a risk that needs to be managed between the public and private sectors. So, I think there is a sensible conversation that’s happening, and I think it’s part of that broader discussion

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around these big, complex mega projects. Coming back to the opening question about whether Public Private Partnerships need a rebrand, it’s often the more complex and bigger projects that get done as Public Private Partnerships, and therefore, by definition, they’re more challenging. If you come back to looking at those very large projects, it’s about coming up with risk-sharing mechanisms that are less binary in outcome and align the parties to work collaboratively together to solve issues that are inevitably going to arise.

KC: A few of you mentioned thinking about the whole-of-life cost and the risks across the entire project. Do you think we’ve got the balance and the way projects are assessed right to consider not just the upfront capital cost, but lifecycle costs, services, outcomes and innovation? Maybe we’ll go to Jason first.

JL: That’s an interesting question, Kim. How does any government run their budget? It comes from service delivery.

So, if you’re the health minister and the secretary of health, you look at where the system’s demand pressure is, build up a case for that, and then come with a capital solution to fix it. That’s where the team of treasury people spend a lot of time trying to influence what the analysis should be in terms of the upfront. Does it make sense to be a Public Private Parthership? Should it be something different? You really need a bit of time before any announcement is made and any timeline is set by the Government to actually do that analysis.

Are the trade-offs here important for whole of life? There’s no one answer for that.

SC: Look, historically there probably has been an imbalance.

I’ve worked in multiple Public Private Parthership bids over my career and now I’m seeing it from the Government’s side.There’s always been that focus on the D&C, and the price and the risk, because that’s where a majority of the risk is. In my experience, you’re sometimes dragging the operator and maintainer to the table to really get that best whole-of-life outcome. Equally on the Government side, we’ve been on a journey now for a few years to really increase our asset management capability within government. That’s the thing that the private sector, the equity and the sponsors have always offered from a Public Private Parthership perspective; they are looking at the asset from a whole-of-life perspective. I think part of the challenge for us in Government is how we evaluate that. I’ve certainly seen a shift in procurements that I’ve been involved in more recently that as Government we are thinking about this as a long-term partnership. So, who do we want to partner with? Yes, we need some certainty around delivery, and where’s the innovation, and a lot of the sustainability criteria that we’re now introducing, but at the end of the day, it is a long-term service delivery, and do we have confidence in the quality of that service delivery? So, I do think that is definitely the benefit of the Public Private Partnership model, as Malcolm was saying, and I think we are definitely maturing in that way.

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“

I think there are fabulous examples out there; we’ve just got to elevate them...

IM: How you balance that with the long-term partnership, obviously with the points discussed earlier around the need for flexibility and contracts that need to change, and perhaps some of these projects should be shorter. They should be able to bring those back to Government management earlier to drive some of that innovation, and drive better risk allocation than the 25- or 30-year projects.

SC: Yes, and the flexibility for dealing with changes in technology and innovation from an operational perspective.

KC: That’s interesting. I wonder how much of the long-term contract term is an assumption of Government that that’s what the private sector wants. Maybe it’s not as big an issue as some think it is. I don’t know. Malcolm, what do you think?

MM: There have been examples, such as Darling Harbour, which has an operating phase in there that is subject to reset.

So, I think anything’s possible with a Public Private Partnership.

I was at a luncheon recently with Jason where you gave the example of the reference design that you put in for. Do you want to take it from there Jason?

JL: After the 37 Public Private Partnerships that we’ve done, I always look back at the business case design that we funded the project on. It was based on a more traditional style of delivery agency: going out and getting a designer to come up with a solution for the need they’re trying to fix. And then I look at things after we run the Public Private Parthership, and I look at what we actually ended up going with in terms of the winning consortium and what got actually delivered on the ground. It’s chalk and cheese. You talk about innovation and different ways of thinking. Carbon reduction was the big theme of today. I guarantee you that if we set that competition right in the Public Private Parthership, we’ll get some pretty good responses to how to reduce the carbon footprint at the infrastructure level, and at the ongoing whole-of-life level. I mean, time will tell, but I’m not saying this is the only delivery model. I’m the first one to say you’ve got to look at the project and pick it right. So, we work on all projects. We’ve become experts in alliances, as well.

SC: Part of that transitional shift is this perception that as a Public Private Partnership, you had to fix the scope and you had to have all this certainty. The improvement we should be making is more outcomes focused and not actually specifying, so that we do allow the market to innovate. To Jason’s point,

what we assumed in the business case might not be what we buy, and it might not be what we get, but we need to allow that flexibility to meet those performance outcomes. This allows us, in Government, to do a better job of being able to articulate those, so that the market knows what to expect and where to apply that innovation.

JL: The other one I’ll just mention is that we talk about value capture a lot. If we set the brief in a particular way and allow for a set of commercial opportunities within the delivery of the core infrastructure, that’s the way to offset the cost to the Government, and bring value capture through the process. Value capture is a very hard concept; it’s very hard for governments to go and actually implement. We’re seeing that in the precinct work that we are doing on a number of projects at the moment.

It’s very tricky. So, you need to contain it to a particular project outcome and give the market the opportunity to come up with the innovation. We’ve got to be specific in terms of a master plan, and strategically what we want a precinct to actually look like. We need to have that clear; but then once you do that, you let the market come up with the good ideas and offset the cost.

MM: Not too clear, hopefully?

JL: Not too clear, but at a very high level you need to know what you want done in a particular precinct and what the themes need to be, so you can guide a little bit of that.

KC: A final question so you can all wrap up on a more positive note: What could we be doing better to really get the benefits of the Public Private Partnerships out there to balance out where people are perceiving challenges?

MM: I think discussions like this are helpful. I think the work Infrastructure Partnerships Australia has done – putting material out that actually provides data that supports how successful the approach is – has been great. I think, as an industry, we recognise that it’s only one procurement model, but it’s a pretty good one when it works well, and I think it does work well. Another project I was thinking about was Reliance Rail. It was a project that had real difficulties during the delivery phase, and that train today is one of the most reliable trains in the world. It’s because of the work that was done during the delivery phase up front and the contract ongoing. I think there are fabulous examples out there; we’ve just got to elevate them in the conversation.

SC: Yes, even just on the Reliance Rail point, recently the refinancing is green based. Those are still good stories and we don’t talk about that at all.

IM: It’s a very good point, because these projects and assets are actually doing some of the most important things in our lives. Our children are born in these hospitals. This is how we get to work safely. Our children are taught in these projects. These are the really important things in all of our lives that actually happen, and these are delivered through this method and they’re delivered in a really fantastic way.

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There does need to be more of a conversation around the fact that they are such an important part of our lives and there is a lot of value that’s delivered through them.

KC: Any final words, Jason?

JL: I think the discussion throughout the whole day today has been very topical. In terms of Public Private Partnerships, I think there’s opportunity to talk about them a bit more simply.

Malcolm’s point is right; in Victoria, the big tunnel projects are Public Private Partnerships. They run into some problems and they get branded in a particular way, but there’s a lot of good things that have happened in a lot of the social infrastructure projects, as well. So, I think we need to continue to innovate in that social infrastructure space and get the risk allocation in some of the more trickier transport-type projects. But there’s a place for all different procurement models. That’s my big message.

MM: I’ve got one more that is slightly off-piece, but we talked this morning about the huge infrastructure requirement we have – this massive pool of savings – and I think there’s a Sonya Campbell – Deputy Secretary, Commercial, New South Wales Treasury Sonya Campbell is the Deputy Secretary, Commercial, at the New South Wales Treasury. Prior to this role, Campbell was the Executive Director and Head of the Infrastructure and Structured Finance Unit at New South Wales Treasury. Campbell joined New South Wales Treasury in September 2018 following an extensive career in the private sector, specialising in Public Private Partherships and major project procurement.

Campbell joined the New South Wales Government with a passion for improving the efficiency of infrastructure procurement and delivery. She is a member of the Infrastructure and Project Financing Agency Australia Branch Council, the New South Wales Construction Leadership Group (CLG) and the Construction Industry Leadership Forum. Campbell is at the forefront of work being done by the CLG to implement a program of specific measures to improve collaboration and risk allocation across the construction sector.

Campbell has worked on projects across multiple sectors, jurisdictions and contract models (including roads, rail, tunnels, hospitals, schools, telco, water and energy projects), and has advised both Government and the private sector on commercial and financial structuring, governance, and risk management on complex infrastructure projects for the past 20 years.

Kim Curtain – Partner, Deloitte A commercial and finance professional with more than 25 years of experience across both public and private sectors, Kim Curtain is a Partner in the Deloitte Infrastructure and Capital Projects team. She is passionate about the public and private sectors working effectively together, with a particular interest in social infrastructure and human services.

During her time at New South Wales Treasury, Curtain held a number of roles, including Chief Operating Officer, responsible for legal, finance, IT, HR, communications and banking. Curtain was also Deputy Secretary of Trade, Tourism, Investment and Precincts, where she led the implementation of the Global NSW strategy and $250-million Jobs Plus investment program in New South Wales. Curtain also led the Infrastructure and Structured Finance Unit, where she was responsible for providing specialist advice to agencies and Government on the procurement and delivery of New South Wales’s $89.7-billion infrastructure agenda. Having worked in both the public and private sectors, Curtain is passionate about maximising efficiency and outcomes, while balancing risk and financial impact.

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problem at the moment in actually marrying those two things in Australia. We speak regularly to superannuation investors who talk about the Public Private Partnerships as being too small or just too difficult, generally. And I’m not necessarily advocating for change there, but one area where I think there is an opportunity is we sometimes see the Commonwealth, in particular, throwing money at a lot of the projects that get delivered – grant money, in particular. Whether there’s another way to actually harness super money locally in these projects, and whether it guarantees credit enhancement, I don’t know, but actually looking is of value. I think the risk is that some of that federal money replaces money that would otherwise come from local investors, and there’s a lot of brain power in the room thinking about how we can make that linkage more strong between those investors and the projects we’re all delivering.

KC: Thank you, Iain, Sonya, Jason and Malcolm for joining us.

Jason Loos – Deputy Secretary, Victorian Department of Treasury and Finance Jason Loos is Deputy Secretary, Victorian Department of Treasury and Finance, where he is responsible for providing strategic commercial, financial and risk management advice to the Victorian Government.

Activities include managing the state’s balance sheet, prudential supervision of the public financial corporations, Public Private Partnerships, infrastructure procurement and investment, commercial and property transactions, and the monitoring and governance of the state’s major Government Business Enterprises.

Prior to this role, Loos was Executive Director Infrastructure Delivery (Partnerships Victoria) where he was responsible for providing strategic commercial, financial and structuring advice to the Victorian Government on major infrastructure projects. Loos has been with the Department of Treasury and Finance for 20 years.

Malcolm Macintyre – Managing Director, Capella Capital Malcolm Macintyre is Managing Director of Capella Capital, one of Australia’s leading infrastructure developers and financiers, having financed over $20 billion of projects over the past 10 years. Macintyre brings nearly 30 years’ experience in infrastructure development in both Australia and North America. Recent projects that he has led or been heavily involved with include the Melbourne Metro Tunnel and Stations Public Private Parthership, Sydney Light Rail, Public Private Parthership and the Sydney International Convention Centre.

Macintyre manages a team of approximately 50 infrastructure professionals delivering progress in communities across Australia. Prior to joining Capella Capital four years ago, he headed Babcock & Brown’s North American Transport and Social Infrastructure Group in New York. Previously, he was Local Managing Director in ABN AMRO’s highly regarded Infrastructure Capital Group in Sydney, where he was a member of the team for 12 years.

Iain Melhuish – Executive Director, Head of DCM, ANZ, Macquarie Capital Iain Melhuish was appointed Executive Director and Head of Debit Capital Markets, Australia and New Zealand at Macquarie Group in July 2019. Iain started his career with Macquarie Group in February 2001 and has previously served as a Division Director.

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Delivery and Sustainability at Western Sydney University Western Sydney University (WSU) is continuing to deliver on its large-scale transformative program, Western Growth, to revitalise its campus network.

A number of key accomplishments have been achieved this year. The first was the practical completion of the new Parramatta Engineering Innovation Hub (EIH), on Hassall St in Parramatta. Delivered with a core focus on the streams of engineering, architecture and entrepreneurship, the building is designed to enhance public engagement with work and university life whilst responding positively to its heritage and commercial context. EIH was also announced the winner of the Innovation Development Award for the Urban Taskforce Australia Development Excellence Awards for 2022.

Practical completion has also been reached for Stage 1 of the Westmead Innovation Quarter (WiQ), located directly opposite Westmead Hospital in the heart of the Westmead Health Precinct. WiQ stands as a tangible reflection of positive collaboration and innovation, where strong links between the Precinct and

complementary commercial partners result in stronger and healthier communities, economies and environments across several floors of commercial and education space.

WiQ features retail, childcare, and end-of-trip facilities, as well as private roof terraces.

“The University is extremely proud of the achievements that they have reached this year.” says Peter Pickering, Vice-President (Finance and Resources) at WSU. “In addition to this, we are also on track to deliver on the new Bankstown City Campus at the end of this year, which will provide approximately $140m per year in economic uplift to the Bankstown community. It will be home to over 10,000 students, and 1,000 staff across the health, aging and healthy living, advanced manufacturing and education disciplines.” says Pickering.

This year, WSU has been placed 1st overall worldwide and 1st in Australia for its social, ecological and economic impact in the latest Times Higher Education (THE) University Impact Rankings.

The prestigious annual rankings assess universities on their commitment to the United Nations’ Sustainable Development Goals. The rankings are based on universities’ teaching, research, outreach and stewardship. Also contributing to the ranking success is the University’s decadal strategy, Sustainability and Resilience 2030, which sets out an ambitious roadmap to address climate adaptation and mitigation, and social inequality.“The University is on track with our ‘Race to Zero’ commitment of becoming Climate Neutral by 2023, and Climate Positive by 2029. The Office of Estate and Commercial’s Environmental Sustainability team is engaging with our partners across the University to drive further commitment to action.” says Pickering. Supporting initiatives also include rooftop solar generation, planning towards solar carparks and installation of electric vehicle charging stations.

For more information on Western Growth, visit www.westernsydney.edu.au /western-growth For more information on the University’s commitment to Sustainability, visit www.westernsydney.edu.au /driving_sustainability

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