Why the Australian Business Foundation?

Let me make it clear from the outset that the Australian Business Foundation makes no claim to expertise on infrastructure, unlike my fellow presenters at this AusCID Conference. The Australian Business Foundation's expertise lies in its contemporary and far-sighted research into innovation, new business models and forms of competitiveness and the opportunities emerging from the information revolution and the knowledge economy.

The Australian Business Foundation is an independent private sector research think-tank, founded and sponsored by Australian Business Limited, the prominent business services organisation that started life fifteen years before Australia's Federation as the Chamber of Manufactures of NSW.

The Australian Business Foundation was established in 1997 in response to concerns about Australia's declining position on world competitiveness benchmarks and the urgent need for informed debate and fresh ideas for how Australia could take its place in global markets and in the high growth, high return industries and business activities of the future.

We believe that the body of credible, leading-edge research we have delivered sustains the pride we take in our innovative approach to research, our ability to foster new thinking, and our achievements in advancing knowledge likely to make a real difference to Australia's capabilities, prosperity and growth.

For more information, I invite you to visit our website at www.abfoundation.com.au.

Economic Infrastructure project

What brings us to this conference on Renewing Australia's Infrastructure is our latest and most ambitious research project exploring how more imaginative and coherent approaches to infrastructure could boost the economic prosperity of three of Australia's established industrial regions, namely the Hunter, the Illawarra and Greater Western Sydney.

The Australian Business Foundation has its suspicions that Australia has a latent economic powerhouse, represented by the considerable infrastructure investment already made in the Hunter, Illawarra and Western Sydney regions, which is not being used to its optimum.

This project is designed to bring together those who know this infrastructure best – the public and private sector infrastructure managers, users and stakeholders – to be an integral part of this study's investigation and problem-solving.

The project seeks to generate fresh ideas on how to better harness and complement this infrastructure investment to produce economic benefits beyond single regions, beyond professional specialities, and beyond portfolios of government.

It is our intention that this project's investigations should be robust enough to be a demonstration project, not only for inland and rural regions and the rest of NSW, but as a model for Australia as a whole.

This project is a deliberate attempt to shift our mindset and consider the infrastructure of Western Sydney, the Illawarra and the Hunter as a single economic asset, thereby identifying unrealised potential and opportunities. In this process, we hope not only to suggest new ways to build economic capacity in those three regions, but also to devise ways of better serving regional aspirations elsewhere in NSW and in Australia.

The Australian Business Foundation's project has chosen to focus on the three regions of the Hunter, Illawarra and Western Sydney not because they are any better or worse than anywhere else when it comes to infrastructure development.

Rather, these three regions represent a credible test bed. They are three of Australia's longest established industrialised regions, with significant infrastructure investment over generations, and all experiencing the forces of change in terms of globalisation, new technology and shifts in employment and economic activity.

They represent a significant percentage of the population and the economy of Australia. They are illustrative, not representative, of Australia's regional economic landscape and so can provide a sound model for reconsidering approaches to infrastructure to boost economic development for other regional hubs around Australia.

The end goal of this project is not better infrastructure management per se, but making Australia a global economic force, revitalising regions and ensuring Australia captures emerging opportunities from an increasingly connected, speedy and knowledge-based economy.

The approach

Nothing about the Australian Business Foundation's economic infrastructure project is neat.

Definitions of infrastructure itself are not clear cut. The scope of the project is diffuse. The boundaries of the regions under study are somewhat permeable. Its methodology focuses on engagement of diverse stakeholders and encouragement of divergent thinking; rather than more traditional approaches of literature reviews, surveys, scholarly analysis and detailed technical reports and recommendations. Similarly, there are multiple researchers with a range of disciplines and expertise working on the project, rather than a single expert consultancy firm.

The respectable name that the Australian Business Foundation uses for this approach is an action research project.

It is fitting, therefore, that I am addressing this conference about the findings of this economic infrastructure project, when in fact, we are only at the half-way mark and it is still very much a work in progress.

Before sharing with you some of our emerging thoughts and initial conclusions, let me summarise the main elements of our methodology. These are as follows:

• Convening of an Expert Reference Group to provide guidance for the study, advice on existing relevant research, specialist knowledge on infrastructure and economic impacts, introductions to key stakeholders for participation in the project and expert scrutiny and review of investigations and papers produced through the course of the project.
• Intelligence gathering to help define the matters that should have priority for investigation and action to achieve best results for improved economic capability through filling gaps and re-configuration of existing infrastructure.
• This resulted in the preparation of two background papers, one by Denis Gastin of INSTATE Pty Ltd entitled "Infrastructure for Economic Development – the Issues", which is a framework and issues paper to focus attention on the most crucial aspects of infrastructure as it affects contemporary economic development. The other paper was prepared by Graham Larcombe of National Economics, titled "Economic development infrastructure in the Hunter, Illawarra and Western Sydney – a status report", and provided a summary of the state of play on infrastructure issues and developments in the three regions.
• The central plank of the project's methodology is a series of three action research workshops, involving about 30 selected infrastructure and economic development decision-makers and stakeholders from the three regions and elsewhere. Two such workshops have been held to date and have been expertly facilitated by Dr Kevin Austin of Austin Thompson and Associates, an international facilitator and management consultant largely in areas of customer value, strategic planning and service quality.

The action research workshops are based on the premise that those directly involved in infrastructure decision-making in the Hunter, Illawarra and Western Sydney are in the best position to understand the obstacles, opportunities, trade-offs and strategies to realign the system for better economic outcomes. What is missing are the mechanisms for sharing intelligence and acting collaboratively across regions and sectors and functions of government. Action research workshops bring these stakeholders together to exchange knowledge and ideas and to facilitate the problem-solving and imaginative breakthroughs and recommendations needed to capitalise on the economic potential of existing sunk assets and to identify crucial new areas for infrastructure development.

The workshop outcomes have relied on the structured discussions and electronic voting techniques used by Kevin Austin to manage such a diffuse subject and the diversity of perspectives involved.

• Additional investigation and analysis of the actions, strategies and initiatives emerging from the workshops will be undertaken by the project's consultants. This will result in a draft strategies paper to be used as the basis of a series of consultations with the key decision-makers whose involvement will be required if the project's recommended strategies are to be implemented.
• The project's background thinking, findings and recommended strategies for the more intelligent and creative deployment of established and new infrastructure and assets for the Hunter, Illawarra and Western Sydney regions will be documented in a final report. This report will be launched and promoted, in order to draw out learning to be applied elsewhere in Australia.

It is envisaged that the project will conclude by November 2001.

Emerging Issues

So, what have we concluded so far? Firstly, a scope and definition of infrastructure for the purposes of this project. I quote from Graham Larcombe's background paper:

"Traditionally, infrastructure included the basic installations and facilities that underpin economies…… built infrastructure such as railways, roads, electricity and gas, water infrastructure and social infrastructure such as schools, hospitals and libraries….."

For the purposes of discussion, we need to emphasise the major issues that impact economic development. Here we are defining infrastructure as the foundations and resources that underlay the movement of ideas, data and information, energy, people and goods and services in a regional economy."

In short, we have cast a wide net and defined in: traditional physical infrastructure, social and environmental infrastructure and technology and wider knowledge infrastructure to the extent that they materially contribute to our task of tapping unrealised economic development potential and missed opportunities in the three regions of our study.

The new angle that we have factored in is the recognition that sustained business performance and economic prosperity is increasingly dependent on innovation and knowledge.

Success tends to be characterised by the growing knowledge – intensity of industries where there is more value in intellectual capital, e.g. design, skilled workers, market and customer intelligence, and know-how, than in plant and equipment and the physical means of production.

Therefore, information and telecommunications technology and knowledge and learning infrastructure become important elements of our project. A focus on these aspects of infrastructure recognises the reality of the new knowledge economy. There is a challenge to make the transition from the investments of the industrial age to growth based on new intangible knowledge-based assets.

Next, the action research workshops of stakeholders have identified twelve key issues, blockages or success factors that if addressed, will lead to better economic outcomes from infrastructure for the Hunter, Illawarra and Western Sydney regions.

In no priority order, these are:

Effective collaboration, cooperation and co-ordination

This captured several related themes:

• The need for effective partnerships and alliances between government, the private sector and community interests for joint action and priority setting.
• Recognition of the lack of collaborative spirit, where egos and competing interests outweigh any commonalities, both within and outside regions.
• Opportunities available for harnessing synergies for change and thereby creating new industries and capabilities, e.g. clustering of like industries for critical mass and global reach; a network of complementary technology parks and incubators; or strategic alliances for marketing the three regions as an international investment and business location.

Need for clear leadership and vision

This encompassed a plea for strategic, coherent, visionary big picture leadership, fuelled by a sense of urgency and the courage and boldness to champion fresh revolutionary infrastructure ideas and to do things differently.

It was also tempered with a recognition of the more mundane challenges of leadership – making and communicating tough decisions; doing the detailed homework on the costs and benefits of specific infrastructure projects and activities; and working a path through the politics, time horizons and decision-making processes of government.

Information technology and communication constraints

The need for improved access to information and telecommunications technology and bandwidth were seen to be a particular infrastructure priority.

Infrastructure for connectivity

This is a wider angle that includes the above IT & T issue, but extends to integration of transport assets, making electronic commerce and connection readily available and creating knowledge hubs and centres of excellence for information and communications technology.

Redefining government as an enabler

The main themes raised under this key issue area cover:

• re-engineering government mindsets from being risk averse, process-driven, regulatory and aloof to the effective management of outcomes and achievement of shared gains through trust and partnerships with the private sector;
• the ambiguity, inadequate coordination and lack of integrated governance at Federal, State, regional and local levels; and
• questions of political will and accountability and better understanding and satisfaction of community expectations by government decision-makers.

Integrated transport systems

Modern, inter-modal, needs-based, rationally priced integrated transport systems were identified as a specific priority for infrastructure development.

Identifying and addressing self-interest

Overcoming parochialism and subverting entrenched fiefdoms and institutionalised self-interest were seen as vital for the three regions to make quantum leaps in economic development.

Absence of benchmarks and metrics

This was seen as a barrier to developing new opportunities from better use and management of infrastructure.

Achieving sustainability

This referred to the need to balance economic development with social and environmental sustainability, and the importance of integrating environmental objectives into infrastructure planning.

Knowledge formation and learning communities

The key themes emerging under this issue were:

• Recognising the significance of human capital and skills and rapidly available technical training as vital pieces of infrastructure.
• Creating new commercial opportunities from the generation and use of knowledge.
• A key priority for infrastructure should be the development of new skills for as yet uninvented jobs, and fostering knowledge creation, innovation, enterprise and learning communities.
• The ability to create, store and disseminate ideas and learning should be an infrastructure goal in the new knowledge economy, particularly for education infrastructure.

New paradigms

Captured under this title were calls for new economic tools and models, enhanced planning processes, a focus on actions that were infrastructure enablers or multipliers, (e.g. effective use of information and communications technology) and on priority projects with high impact (e.g. a second Sydney airport).

Increasing investment and financing

This was a straightforward request for more – investment, finance, partnerships, incentives – to enhance infrastructure in the three regions.

These twelve key issues were short-listed, discussed and voted on. This resulted in the selection of the following four key focus areas that our stakeholder workshop participants believed to be crucial to the task of thinking about infrastructure differently in order to maximise economic opportunities for the Hunter, Illawarra and Western Sydney regions collectively.

• Need for clear leadership and vision.
• Knowledge formation and learning communities.
• Effective collaboration, cooperation and coordination and Identifying and addressing self-interest.
• Redefining government as an enabler.

Towards strategies

The Australian Business Foundation's project is at the stage where these four key focus areas are the subject of more substantial analysis and investigation on two fronts. Firstly, to deepen our understanding of how each issue affects the goal of realigning infrastructure for better economic outcomes. And secondly, to devise specific infrastructure options, initiatives and strategies most likely to unleash new economic opportunities for the Hunter, Illawarra and Western Sydney.

So, it's early days, but here are some initial ideas that we will be testing further over the next few months.

1. Regional identity and commonality

One dilemma emerging from our work to date is how important is it for the Hunter, Illawarra and Western Sydney regions to have a common purpose, a shared vision, a consensus on a single infrastructure wishlist and perhaps even a common enemy in the form of the CBD and established Sydney.

Do they need to operate as an identifiable entity to receive adequate resources and effective political attention? Does their current political representation through designated Ministers give them sufficient voice and clout?

Should they run the risk of polarising debate by creating deliberate divisions with mainstream established Sydney? Or is there more mileage in capitalising on proximity to arguably Australia's only global city? And in either case, what are the implications for their infrastructure choices?

2. Central / local balance

Regional governance issues and the balance between critical mass and centralisation on one hand and local autonomy for infrastructure decisions on the other receives good coverage in Denis Gastin's key issues background paper.

Some strategies being suggested include the concept of "place management" in a move towards greater devolution of resources and responsibilities to regional and local levels. This suggest a hybrid of centralised policy and strategic directions, and local direct control, delivery of services and management of assets.

An example of this could be the devolution of funds for regional infrastructure projects, subject to the region having in place a mechanism for sign-off on a substantiated regional infrastructure strategy by all affected communities and stakeholders.

Another angle, paradoxically, is the proposed creation of a mega Department of Infrastructure, combining transport, planning and local government. The intent is for a vehicle capable of the boldness and daring that large scale visionary infrastructure projects require, and with the legitimacy and resources to take decisions and simultaneously, to protect the public interest and build community consensus.

In considering this proposal, we are mindful of a comment made by one of our participants that there is such a thing as too much infrastructure co-ordination which stifles and kills innovation and diversity.

3. Political and community accountability

With the motto of "on the table, not under the table", our project seeks more information and measurement of infrastructure impacts. This aims to put the facts, trade-offs and dilemmas squarely before communities and lends itself to more rational and less politicised infrastructure decision-making.

Among the proposals suggested are Auditor General's reporting of the cost of not doing things and a series of triple bottom line Key Performance Indicators for infrastructure projects.

Such an approach aims at addressing two key problems that Denis Gastin's paper details – the expectation that infrastructure is a "free good" to be equitably distributed in all locations, and the conflicting economics and investment requirements that make public private partnerships so problematic.

4. Capability building and global reach

This is where regions and communities learn to grow their own capability and to take on the world. This is a story of strange bedfellows, where community groups and the private sector forge alliances and only then, engage government to help realise their aspirations through investment in specific infrastructure initiatives.

Infrastructure is used to create critical mass and capability and to form new industry clusters, linked geographically or virtually, that secure a place in global markets and international value chains.

One participant shared his vision of a knowledge crescent from Wollongong's Brandon Park development, reinventing skills and infrastructure based on heavy industries to the new economy growth hub in the Moorebank/Liverpool area with strengths in skilled workers and world class innovative enterprises.

This is where the concept of learning communities leaves the text book and finds a home in the organised linkages and knowledge sharing established between the Hunter, Illawarra and Western Sydney.

This is where these regions, in Graham Larcombe's words, share in the benefits of globalisation by increased investment in "gateway infrastructure such as ports (and) support for local businesses to become part of globally competitive supply chains, continually upgrading skills and tapping into new sources of learning".

Obviously, the Australian Business Foundation's project needs to flesh out these ideas and embryonic strategies. We need to subject them to critical scrutiny. We need to road test them with those who make and influence infrastructure decisions in the Hunter, Illawarra and Western Sydney. Then, we will unleash our ideas into the world.

The Australian Business Foundation realises that we have embarked on a chaotic and ambitious path with this regional economic infrastructure project.

But, we comfort ourselves with the sentiment Denis Gastin used to end his background paper. It is a quote from the movie, The Dish:

"Failure is never quite so frightening as regret".