Infrastructure cash splash: does Australia have a social licence to operate?

The importance of a community-centric approach

Sara Bice, Kirsty O'Connell

Government and governance, Trade and industry | Australia

27 August 2019

To avoid further delays, cancellations, and costs partly attributable to public backlash, Australia must adopt an evidence-based approach to managing community relationships when it comes to infrastructure projects, Sara Bice and Kirsty O’Connell write.

Infrastructure Australia’s recently released 2019 Audit calls for a massive increase in infrastructure spending to an estimated total of $600 billion over the next 15 years.

But given that more than $20 billion in Australian infrastructure projects have already been delayed, cancelled, or mothballed over the past decade due, at least in part, to community opposition, will greater spending readily be accepted by communities?

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In other words, does an infrastructure cash splash have a social licence to operate?

Stakeholder and community pressures undoubtedly influence delays and increase costs. If Australia’s increased infrastructure spending is to be delivered with the least amount of cost, opposition, and delays, then communities must be front-and-centre of planning and delivery.

This is borne out by research from the Next Generation Engagement Program based at The Australian National University’s Crawford School of Public Policy. A world-first research initiative, the program focuses on the relationship between community engagement and successful infrastructure delivery. The ongoing research is co-designed and delivered through support of partners from all sectors of the infrastructure value chain.

The program’s recently completed 2019 State of Infrastructure and Engagement Survey found that infrastructure sector professionals rank the twin challenges of ‘stakeholder and community pressures’ and ‘regulatory and planning issues’ as equal firsts among the most influential factors affecting project delays or cancellations. The survey, in its second year, demonstrates that the most impactful – read, costly – stakeholder pressures occur during planning and delivery phases.

This is important because the majority of Australia’s current $200 billion pipeline of infrastructure projects is in the planning or delivery phase. Without proper attention to communities, these projects may be exposed to costly opposition that equates to project delays and increased costs.

In short, if Australia wants to deliver even more infrastructure in increasingly congested areas, then communities must be along for the journey. Three key actions can support successful infrastructure delivery.

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Firstly, government and industry need to adopt a community-centric approach to the planning and delivery of projects. Communities are experiencing the most intensive period of infrastructure delivery in Australia’s history, and the cumulative impacts of this need to be acknowledged.

Secondly, governments and project developers need to improve their understanding and ability to put a real price on social risk and mitigate accordingly.

Finally, the sector must foster and maintain a cohort of appropriately skilled engagement professionals.

Without these steps, the cost of conflict with communities may continue to rise.

This year’s State of Infrastructure and Engagement Survey reveals that stakeholder pressure remains a leading contributor to project delays and cancellations. That situation is exacerbated when communities experience the delivery of a number of different projects at the same time – what researchers call ‘cumulative impacts’.

Project delays and policy back-flipping have implications well beyond local communities. These factors also negatively influence global infrastructure investor confidence. Research from the G20 Global Infrastructure Hub, for instance, shows that social and environmental issues are at the heart about one in five contractual disputes.

What’s important here is that communities are not to blame. These statistics show that government and industry have work to do to understand community needs and concerns, and to respond in a meaningful way.

Infrastructure Australia’s 2019 Infrastructure Audit concludes that engagement with communities is critical and that government must consider their views when planning and investing in major infrastructure.

An evidence-based approach to managing partnerships with the public would involve adopting a community-centric approach that reduces costs. Instead of developing infrastructure for communities – and certainly not in spite of them – planning must be done with them.

The government must select the most appropriate timing and approach for engagement based on evidence, not politics. It should incentivise good community outcomes starting with appropriate contract terms with major contractors, while measuring the value created through best practice engagement and more accurately record and manage the costs of poor practice.

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It also needs to better consider the real cost of cumulative impacts for communities – particularly in terms of community resilience and wellbeing – and start to reduce those impacts through a planning and delivery process that reflects the experience of the citizen.

Better relations will come from putting a real price to social risk as well. Anecdotal evidence suggests that social risks feature in the top 10 risks for many projects, yet there is little documented evidence surrounding the precursors of social risk and the success, or otherwise, of current social risk management practices.

The precursors of heightened social risk need to be clearly identified and the efficacy of existing risk management methodologies assessed. Social risk models, including a robust risk pricing model, are needed.

Finally, Australia must foster and maintain a pipeline of appropriately skilled engagement professionals to succeed in community partnerships. The skills of engagement professionals are in higher demand than ever before, but issues concerning how engagement practitioners are regarded by their non-engagement peers and the career pathways open to practitioners continue to be problematic. These concerns need to be addressed.

In order to meet the needs of Australia’s growing population, evidence-based decisions in infrastructure planning and delivery are critical, including evidence to support decisions about how government and industry work with impacted communities. Without them, the country risks running into some extremely costly challenges.

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