There was a time when I would be in and out of an art gallery in 30 minutes, bored. I looked, but did not engage. Then at a Picasso Exhibition, i found paintings that I really liked, but also many that turned me off completely. After viewing all, I went back and studied these two groups and asked Why? Now galleries are no longer boring. I apply the same process to conference talks. I note all the new ideas, the new linkages that really please me and write them down so that I can think more about them later, and I also note those statements that drive me nuts, and I think about these as well. No prizes for guessing what category the ‘heretical questions’ in the last post fell into.
But the IPWEA Congress this week, ‘Communities For the Future, Infrastructure for the Next Generation’ was far richer in yielding good new ideas, thoughtful linkages, and new ways of expressing accepted ideas so that they come to life and are taken out of the realm of platitudes. These deserve a far wider coverage, and so, with the support of our podcast partner, the IPWEA, we will be bringing you these ideas, and many others, in our forthcoming podcast series. Watch for it!
Or better still, join the Talking Infrastructure Community (click here) (its free!) and you will be the first to know when we launch.
A closing note: At an after lunch session in Parliament House many years ago, the talk was so boring I found it a hard job to keep my eyes open. Yet my colleague was riveted! He was listening intently and taking notes. At the end I sighed and said ‘That was a really boring talk’. ‘Absolutely’, he agreed. Surprised I responded ‘But you were riveted, paying great attention, taking notes, how come?’
His reply? ‘To make so boring a presentation, there must be many things he was doing wrong. I just wanted to figure out what they all were!’ Be engaged!
A heresy is a belief or opinion contrary to the orthodox (usually for religion, but applicable more generally) Here are some heretical questions in the asset management/infrastructure decision making field.
Heretical Question 1. Spend better or spend faster? An economist speaking at the IPWEA Congress in Canberra recently, argued that a greater spend on infrastructure was better ‘performance’. But is it? Jeff Kennett, former Victorian Premier, complained that 26% of funding allocated for capital construction had not been spent. He blamed over cautious bureaucrats. Both are focused on the size of the spend – and not what the money is being spent on. Is this really in the community interest? Or is this attitude (not confined to Australia) a contributing factor to the increasing evidence that infrastructure funds are poorly planned and many demonstrably lacking in justification? (cf Joseph Berechman ‘The Infrastructure we Ride On’ 2018)
Heretical Question 2. What is the purpose of infrastructure? And what should it be? Wearing our ‘better angels’ halo we say we are building for the future, but is this really true? If we were, would we not have a well developed vision of the future that we wished to create, and an infrastructure decision process that enabled us to plan to achieve it – and to adapt those plans as changes occur? Where is that vision? Where are those decision processes?
Heretical Question 3. The pipeline. An economist spoke of waves of capital expenditure and was concerned at the lack of a pipeline of projects that would maintain construction activity in the near future. Another speaker commented to the effect that Australia should ‘prioritise infrastructure’. But should it? Why? A pipeline of construction projects will ensure work in the construction industry. But the construction industry represents only about 10% of total employment. Why should we spend massive amounts of capital to ensure the jobs to privilege such a small section of the economy?
Heretical Question 4. Multipliers. You might argue that construction expenditure generates much more by way of multipliers – three times as much according to one speaker. Really? Where is the evidence for this? Many people blithely quote figures such as this, but cannot justify them. Construction expenditure does create jobs. ANY expenditure creates jobs. If the people who receive the income go out and spend it, other people benefit. This much makes sense. But how much of a large construction contract goes to the rich who may save rather than spend, and how much of the rest goes to workers who do not know where their next job is going to come from, and thus will tend to save more than spend? Wouldn’t a permanent maintenance job do more good for the economy than a short term construction contract. Or the same amount of money spent on nurses or teachers?
Heretical Question 5. Supply driven infrastructure. Jeff Kennett argued that we would do well to follow up projects with more projects to take advantage of the, now unemployed, workers completing the first job. In other words build infrastructure to provide jobs. Is this sensible? Tasmania in the late 1980s came to grief over this. With little employment in the North, infrastructure projects were created to provide jobs. The projects not only provided work for the unemployed in the north, but they attracted others from around the state so that when the project finished, there was now a bigger pool of unemployed, demanding a bigger project – and so on. Now most of the Tasmanian population is in the South so the infrastructure was largely underutilised. As a result of this expenditure, the state came close to bankruptcy. So, is this really a sensible idea?
Heretical Question 6. Vision/Plan. We have a tendency to use these words interchangeably, but is this sensible and safe? A plan is a set of actions designed to secure a goal or objective. A vision is an idea of some future state that we would like to achieve. Affordable healthcare could be a vision. A set of projects including asset and non-asset solutions could be in a plan. As technology, demographics, environment, governance and public attitudes change and information is acquired, we would have a succession of plans, all adapting to the current circumstances but addressing the vision. The vision may be a 50 year vision (even a 7th generation vision) but we would surely not wish to commit ourselves to a 50 year set of projects conditioned by only what we know now.
Feel free to add your own heretical questions.
Media articles often leave infrastructure questions dangling. QUESTIONS ARISING is an opportunity for those of you who read widely and keep their eye on what is happening to identify these articles and the questions that need to be answered. These can then be addressed in our forthcoming podcast series, so get involved – add your questions to those listed here, suggest possible lines of development, add new media articles along with the questions they raise. Sources may be the daily journals, the web, podcasts, radio, TV. Plenty of scope!
Here to introduce our first QUESTIONS ARISING are two items identified by our Business Development Manager, Ian Spangler.
1. The Economist’s Intelligence Unit’s recent report on “Preparing for Disruption: technological readiness ranking, 2018”, places Australia in the top ten for the historical priod (2013-2017) BUT it forecasts that in the next five years, Australia, Singapore and Sweden will take over as the top-scoring locations. The ranking is based on the number of mobile phone connections and internet access.
Questions arising.
- Is this enough to ensure technological readiness?
- What else should we be looking at to test readiness?
- Australians, who are not easily overawed by authority, may well joyfully take up the idea of disruption, but to what end?
- How can we tell whethe our innovation is well directed?
- What else? Add your comments below.
2. The small homes project was recently launched in Melbourne. The RACV reports that “from the 1950s, Australia’s average house size more than doubled to 248 square metres at its peak in 2008-09. Then last year something strange happened: the size of new builds dropped. Over the past 20 years, median house prices across the country have gone up by more than 300 per cent while weekly wages have only increased 121 per cent. Rising cost-of-living pressures are also draining our bank accounts, with the average annual energy bill in Victoria now around $1667. Building and running a big house is not cheap and it is not great for the environment.”
Questions arising
- The ability of the demonstration small home to provide so much convenience in such a small space is its use of 4G and 5G connectivity. How do you see this affecting futur constructions?
- Will we continue to reduce the size of our dwellings? If so, what factors may come into play? If not, why not?
- If our dwelling size does decline markedly, what impact might this have on other infrastructure?
- Other Questions
Three great days in Melbourne in which I met with many asset managers for talks over coffee (or the hard stuff).
The benefits of a podcast series addressing future change and its impact on infrastructure decisions today was readily recognised and the ability of the podcast to draw from the perspectives not only of those who are responsible for the supply of public infrastructure, (decision makers, analysts, managers and advisors) but also those who rely on infrastructure to achieve community and commercial outcomes was seen as something that people wanted to be involved in. Think those who supply and those who rely!
I was able to meet with Anne Gibbs, the current CEO of the Asset Management Council, who has been extremely helpful in providing follow up material, and with Sally Nugent, the former CEO, as well as a number of active AMC members including Andrew Sarah, Greg Williams and Kieran Skelton. I also had a very positive meeting with Jaimie Hicks, Business Development Manager of the Water Services Association, Australia.
Lara Morton-Cox of the Victorian Treasury drew my attention to innovative work they are doing to encourage future thinking to be built into agency asset management plans. It was also a pleasure to catch up with new friends and people I had not seen for some time – Roger Byrne, Claudia Ahern of Creative Victoria, Christopher Dupe now Manager, Capital Works Programs at Museums Victoria, Brenton Marshall, Shellie Watkins, Thomas Kuen of Melbourne Water, Steve Verity of TechOne, Roger Harrop, Ian Godfrey, Gary Rykers, Dr Nazrul Islam, David Francis, and Greg Williams,
On Friday morning I was able to catch up with Robert Hood, who is now working with Asia Development Bank developing asset management expertise and believes that our infrastructure decision making podcast may have relevance to their work. I also met Robert’s wife, Cherry, from Capital Works Planning at the University of Melbourne who had some interesting ideas and we will talk in October about student involvement in our podcasts.
In the afternoon, a magic time with Ashay Prabhu and his fantastic team of energetic, imaginative and committed young people at Assetic. And finally, a leisurely and interesting conversation over wine with Tom Carpenter, trainer and CEO of the Institute of Quality Asset Management.
I will be back in Melbourne mid October, so if you missed out this time, let’s catch up in October.
Penny will be in Melbourne this week meeting with those interested in participating in the podcasts, as researchers, publicists, administrators and/ or as on air talent. Later she will be in Brisbane, Canberra and Sydney and more information about those visits will be posted.
NOTE: Blog posts will now be on an occasional basis rather than regular twice weekly posts.
Write to penny@talkinginfrastructure.com if you would like to be invited to forthcoming podcast discussions.
How might drones affect your life cycle?
Understanding the life cycle – from asset creation to maintenance, to disposal and/or rehabilitation and reconstruction, is a fundamental concept that many need to know. But different groups need to know it in different ways. We fail to communicate if the language we speak is not the language the listener understands. So consider some of the different needs.
- Elected members and all political decision makers need to understand the impacts of life cycles in terms that they can relate to – current and future service delivery and risk. They need to know this in broad terms, but they do not need the technical details.
- Policy, planning and finance people need to understand how to measure costs and timing so that they can plan to match future revenues and expenditures, They need to understand that predictions from our models are based on ‘average’ economic life cycles. Here we face a dilemma. More closely specifying our asset groups enables more accurate descriptions which helps to determine more accurate economic life averages. But it also reduces the size of each asset group and the reliabiity of averages diminishes as the numbers in the group diminish.
- Technical people need to understand it in terms of long term optimisation rather than short term. Their knowledge need is not so much dollars as technical intervention events, e.g. maintenance or renewal.
Understanding the life cycle in all these ways is essential to ‘keeping the show on the road’, and all of the above groups have taken this as their objective.
But the ‘day after tomorrow’ requires more.
Those of us advising Infrastructure Decision Makers need to do more, we have to be able to anticipate the nature and impact of changes in the life cycle itself. Along with elected members, policy, planning, finance and technical folks, we are concerned to enable functionality today and tomorrow but, in addition, we also need to ensure that we are able to take advantage of technological options and anticipate demand changes so that we may understand the changes in the life cycle itself, arriving the day after tomorrow*.
*And for more on future change and its impact on us see the coming IPWEA event in Sunday’s weekly round up!
Our podcast partner, the IPWEA, will hold its Asset Management Congress “Communities for the Future, Infrastructure for the next generation” in Canberra, 14-16 August. And Talking Infrastructure will be there – presenting and recording.
Talking Infrastructure will be selecting key topics, ideas and speakers at this congress to appear in our Talking Infrastructure Podcast. The intention, however, is not to simply reproduce the congress in podcast form, as interesting as that might be, but rather to use the ideas presented as the core, and to augment the ideas presented by asset managers, with viewpoints from other specialists and other disciplines, in order to build up a more complex picture. We will be drawing not only from the work of the invited speakers, but also from the commentary by the audience. So be there! Be in it!
This congress has been designed to be highly interactive – see the full program details here
I hope that you have enjoyed thinking about Doug Bartlett’s Four Post series on ‘words matter’. So why not grab yourself a cup of coffee and sit down and write a comment? If you agree with the interpretation that Doug has adopted, do tell him, and tell us why. Equally, if you would have interpreted the words (and the challenge that goes with them) differently, tell us that, and why. If you have useful examples, add them.
There is plenty of scope here for comment and now there are TWO reasons for doing so.
- As a thank-you to the blog poster, a courteous acknowledgement.
- As potential for ideas, topics and speakers for our coming Podcast series
If you have not yet caught up with our news on our coming podcast, see our Weekly Roundup, Sunday July 1st. – and watch for updates in our coming Sunday round-ups.
Note:
Latest comments show up in the right hand side bar here on the front page, as well as being attached to the post itself. So add comment to any post. It doesn’t have to be the most recent to be seen.
‘Talking Infrastructure’ is about to produce a podcast series. Its focus is “rethinking infrastructure decision making for the 21st century”.
Partnership
We are delighted to welcome the partnership of the Institute of Public Works Engineering Australasia (IPWEA) in this venture.
Thinking IDM
Public infrastructure investments typically have a long life, affect large populations with diverse needs, extend over large territories, and are not only difficult (and sometimes impossible) to change or undo, but have high capital and ongoing costs, and substantial (and often insufficiently recognised) opportunity costs. For all these reasons, public infrastructure decision making has always been challenging. In other words, we have always had to think!
Rethinking IDM
But there is now an extra dimension. Change is always with us, so why do we consider 21st century change more critical? (Apart from the fact that it is where we are now!)
First there is the magnitude, rapidity and scope of change occurring simultaneously on many fronts – technological, demographic, environmental – as well as in public attitudes towards our key decision makers in government, institutions, science, finance and education.. There is a major political shift occurring across the world increasing the sense of fear and scarcity, just when technological change is increasing the opportunity for us to have hope and abundance. To which must be added the need to address cyber terrorism and the communication difficulties introduced by a post-truth world.
If ever rethinking was necessary, it is now.
Our intended audience is all who want, or need to, understand and shape the future of public infrastructure.
This includes academics, bureaucrats, politicians, and political advisors, as well as investors, financiers, and, of course, asset managers.
Keep watching, more information to come!
‘Just the facts, ma’am’ – was a catchphrase made popular by Detective Joe Friday in the TV detective show, Dragnet. The implication was that it was he, the detective, who would interpret the facts, for we do not make decisions based on the facts, but rather on our interpretation of the facts.
Interpretations can vary widely. In 1987 when the PAC revealed for the first time, the full extent of the cost of replacing all of South Australia’s public infrastructure in South Australia, I interpreted this as a liability to be planned for so I was unprepared for the State Treasurer to thank me most sincerely for ensuring that the State retained its triple A rating! A triple A rating when it was facing a quadrupling of its asset renewal within the next 15 years and had no idea of what to do about it, how was that possible? Simple: the ratings authority had been persuaded (as, unfortunately, so had the government itself) to interpret the replacement cost of assets as the ‘value’ of the assets and, since this value exceeded the measured value of the debt (ignoring future replacement considerations), all was considered to be well.
At least if the facts are clear, we can debate the interpretation (see Evidence based decision making). But what if the facts are wilfully distorted?
The ABC reported last Thursday (June 14) that 40% of infrastructure spending is now ‘off-budget’. This translates to being invisible for most. Even Saul Eslake (the former ANZ chief economist and member of the Parliamentary Budget Office’s panel of expert advisors) is reported to have ‘only noticed the scale of such spending days after the budget lock-up, as he went through the finer details in hundreds of pages of Treasury papers”. The ABC says that he isn’t the only one now paying attention – and perhaps we all should!
The Government is effectively treating this infrastructure as a ‘financial investment’ which implies a financial return. A case of wilful blindness since most of its infrastructure spending not only will not provide a financial return but will require further commitment of resources to manage and maintain.
We need to see the facts as they are, not how they have been massaged to appear. This can happen in major cases such as the above, but also in smaller ways in our own organisations.
With infrastructure, what we choose to see – and choose NOT to see- may have serious impacts for many generations to come.
This is a case to follow.
See
The Budget 2018 Sliced and Diced.
The 2018 Budget contains hidden investment time bomb
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