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7/27/2019 Why we invest in infrastructure, published in September 2013 Consulting Matters
http://slidepdf.com/reader/full/why-we-invest-in-infrastructure-published-in-september-2013-consulting-matters 1/2
56 Consulting Matters Features
7/27/2019 Why we invest in infrastructure, published in September 2013 Consulting Matters
http://slidepdf.com/reader/full/why-we-invest-in-infrastructure-published-in-september-2013-consulting-matters 2/2
Consulting Matters 57
Why we invest in infrastructure
Current discussion about the national
importance of infrastructure investment
ought to have at its foundation the
implications for national economic prosperity.
But all too often these factors are overlooked
or misunderstood. In addition, there isinsufficient attention to engagement with
stakeholders: the community, the voting
public and shareholders, generally to the
detriment of project progress.
In considering models of stakeholder
engagement it is imperative that the debate
is not too heavily skewed toward those
that already have access to infrastructure
or indeed stand to gain the most from
infrastructure investment. The silent
stakeholder who is not represented in the
conversation is one of the more important
parties to the decision. We need to be
cognisant of how the silent stakeholder is
affected by our infrastructure decisions, bethey from a low socioeconomic group, a
future generation, unrepresented minority or
simply the under-informed.
The context
By 2020, Asia’s economic output will be
larger than Europe and North America’s
combined. If Australians are to maintain a
relatively high standard of living we must
either find additional products [or resources]
to sell to the world, mainly Asia, or increase
the efficiency at which we produce our
output. Without globally competitive
infrastructure assets that are more efficientthan those available at present, to increase
our productivity and our standard of living, we
are likely to lose some of the economic gains
of the last two decades.
Infrastructure Australia has noted that there is
a deep disconnect between the infrastructure
Australians want and the infrastructure
we are prepared to pay for. As a mature
economy we need to recognise the benefits
of paying directly for the infrastructure that
we use, rather than expecting that it be
provided at no ‘cost’. The engagement of
INFRASTRUCTURE COMPRISES BASIC PHYSICAL AND ORGANISATIONAL STRUCTURES NEEDED FOR
THE OPERATION OF A SOCIETY OR ENTERPRISE, OR THE SERVICES AND FACILITIES NECESSARY FOR
AN ECONOMY TO FUNCTION. IT CAN BE GENERALLY DEFINED AS THE SET OF INTERCONNECTED
STRUCTURAL ELEMENTS THAT PROVIDE A FRAMEWORK SUPPORTING AN ENTIRE STRUCTURE OF
DEVELOPMENT. IT IS AN IMPORTANT TERM FOR JUDGING A COUNTRY OR REGION’S DEVELOPMENT
AND CAN BE DEFINED AS ‘THE PHYSICAL COMPONENTS OF INTERRELATED SYSTEMS PROVIDING
COMMODITIES AND SERVICES ESSENTIAL TO ENABLE, SUSTAIN, OR ENHANCE SOCIETAL LIVING
CONDITIONS.’
stakeholders is key to explaining not only the
benefits of investing in our infrastructure, but
also the consequence of not investing or not
leveraging our assets better.
At the same time a lack of transparency in
infrastructure decision making often leadsto inefficiency, community distrust and
limits informed debate about the trade-offs
(e.g. which projects, service outcomes,
prioritisation, funding, and so on) that are
implicit in infrastructure planning. Stakeholder
engagement through publication of strategic
plans and project business cases (or at least
their key findings and assumptions) will
improve the public’s ability to understand
these projects. Further it will provide an
environment which is conducive to an open
debate about investment priorities and
increase the public’s understanding of the
need to pay for the infrastructure used.
Going forward
We need to better utilise our existing
infrastructure assets where possible, rather
than relying on construction of additional
infrastructure to meet demand. Increasing
the utilisation of our existing infrastructure
relies on one of two things occurring:
1. We increase the usage of the assets
by smarter management, by balancing
‘directional’ demands and by managing
peak periods.
2. We increase the density and the land
use of our city blocks to improve the
utilisation of existing infrastructureassets.
There are considerable additional benefits to
be had from this second approach, as without
densification of our cities heterogeneity may
be lost, with older and wealthier inhabitants
living in the inner circle of suburbs, while
younger and economically disadvantaged
citizens are restricted to the outer suburbs.
Some of our children may be denied the
opportunity of living in the communities
where they grew up and may be forced out
to the boundaries of our cities.
Infrastructure investment and
intergenerational equity
Infrastructure investment decisions need to
consider the needs of our community both
today and tomorrow. We should invest to
achieve outcomes in the future – the assetshould meet the needs of current and future
generations. We can consider such assets
as vehicles for intergenerational wealth
transfer, as our current day investments in
infrastructure appropriately facilitate use
by future generations to achieve a higher
standard of living.
In taking a longer term view of infrastructure
investment we must be vigilant that our
investments facilitate lasting and positive
legacies for future generations. There is
therefore a need for patient capital to be
invested in assets that may be border line
today but whose returns in the future aresignificant and enable greater prosperity. In
an environment of scare capital, consultation
with stakeholders is vital as there is an
appreciation that as they pay for the
infrastructure so they will wish to ensure
that are getting the infrastructure that they
want. At the same time this will require
robust cost benefits models and even more
robust business models to protect any capital
allocated to what on the surface may appear
a risky asset.
Doing more with less, investing in smarter
infrastructure and designing our cities
as systems rather than focusing on the
development of specific projects is vital toleaving behind infrastructure that enables
future generations to continue to increase
their standard of living.
David Singleton
Global Planning Leader
Arup
Mark Vassarotti
Regional Leader, Economics Group
Arup
Features