With the recent awarding of the Nobel Prize in Economics to two specialists in Economic Governance, Elinor Ostrom and Oliver Williamson, the topic is now all the rage as a popular discussion point. I’ve got to admit that I have only discussed it a couple of times at dinner parties since the announcement, but that is a couple of times more than it had been mentioned in popular discussion beforehand.
I must say however that it is a topic that has interested me for many years. The necessity for a governance framework to underpin the economic sustainability of any new community is, to the trained eye, almost obvious. Sadly, such a framework is almost non-existent or at best quite poor in most new urban projects.
Until now, that is!!
Lately we have seen a number of urban projects (both brownfields and greenfields) requiring the establishment of a governance system or delivery mechanism as one of the priority orders of business.
We have seen numerous examples of a strong emphasis on governance in urban developments. Good examples are the delivery mechanisms for Chatswood in NSW, Docklands in Victoria and Milton Keynes in the United Kingdom.
A working definition of Urban Governance has been provided by The Governance Working Group of the International Institute of Administrative Sciences (1996):
Governance refers to the process whereby elements in society wield power and authority, and influence and enact policies and decisions concerning public life, and economic and social development.
A number of key points are noted in this definition. Firstly, the definition states that governance relates to public life, and economic and social development. This is clearly limiting the definition. Noted however that the definition does not restrict itself to public entities – it refers to “public life”. Hence governance must be that which relates to a wider life than the closeted private life.
It also refers to “elements of society”. In this regard, governance bodies can consist of public or private entities, or a combination of these. In addition, more recently, governance has also involved a range of affected stakeholders. In relation to public infrastructure, this includes the community.
The role of the governance body is to “influence and enact policies and decisions”. As such the role of governance usually rests with the Board of Directors/Commissioners or the highest level of management.
Ultimately, economic and social development are enhanced by the presence of strong governance structures and systems. The options for these governance structures are many and varied, but ultimately depend upon the objectives of the parties involved.
One thing is for sure, however. If there is no governance, the project will certainly fail.
Posts Tagged ‘infrastructure’
Economic Governance – The New Black
April 9th, 2010 by Brian ColePlanning change for the better
May 20th, 2009 by mknightAnyone familiar with the classic Westerns knows that when the big guns come riding into town, that town is in for a real shake-up. Whatever the outcome of the inevitable shootout, come sun-up life will have fundamentally changed.
Things might be a little more civilised in 21st century Western Australia, but outsiders can still wreak havoc if townsfolk are not prepared for the onslaught of change.
Broome is a town at the crossroads after the State Government announced James Price Point, 60km north of the tourist hotspot, as the site for the Kimberley liquefied natural gas (LNG) hub.
As big guns go, this is right up there — a multi-billion dollar driver industry that will have a profound impact on the communities of the Kimberley, and Broome in particular. Just how these communities emerge when the construction stage dust has settled depends on the planning for the arrival. Town planners and policy makers cannot be reactive, they must be proactive.
There is no doubt that with such a major piece of infrastructure on its doorstep Broome will experience a massive demographic change. The nature of the project attracts a far more diverse workforce than is currently the case. The industry and employment base of the town will expand substantial, as will the resident population with the incoming people likely to expect more particular lifestyle options and amenity levels than has been the case up to this point.
Some town planners tend to think, ‘well, have we got enough land to cater for this influx of workers’, and once they’ve sorted where they’re going to put them, and whether the utilities are adequate, they move on.
But land is only part of the equation. If a town like Broome is to profit from the arrival of the big guns it is essential to adopt an integrated planning strategy that considers everything from the changing employment base and residential requirements to environmental sustainability.
The scale of this project will position Broome as the major centre of the Kimberley well into the future, but only if the planning is done properly. For lessons in how not to do it, planners, governments and community leaders need only look a little further south, to the Pilbara town of Karratha.Karratha is dominated by the resources sector, indeed it is the reason for its existence, but the general planning for the town across the board has tended to be reactive and ad hoc. One of the negative results of this approach is the fact that the tourism sector in Karratha is virtually non-existent, a situation that will take a long time to rectify.
And Broome has more to lose. It has a strong tourism base, the impact of an overheated local economy could be catastrophic long term. The planning strategy must consider how it can retain what is good about the town without losing sight of the need for change. This doesn’t just happen, it has to be planned.
Whatever the shelf life of this driver industry, planning must not only factor in how to accommodate the changes it will bring over the duration, but how the community will cope once it’s gone. When the big guns move on to the next town, as they inevitably do, those left behind want to be able to celebrate the changes they brought, not mourn what might have been.
The rules of attraction
February 23rd, 2009 by mknightA regional city needs to have a lot going for it to grow in an economically and socially sustainable manner.
Communities populated entirely by miners, for example, are not going to be attractive for a whole lot of other people.
So how do you attract different professionals, particularly those in knowledge intensive industries, to a regional city?
It’s not simply a matter of having the jobs. It requires an understanding of the relationship between economic and population growth and areas such as social amenity planning, land use and spatial planning, transport and utility infrastructure, and environmental sustainability.
A professional earning $100,000-plus a year will be looking for a certain quality of life before considering a move to a regional city. For the city’s planners forging ahead, this requires a big picture approach:
- What’s the community going to look like?
- How well is it going to be serviced by infrastructure (not just utilities)?
- What level of social infrastructure is there?
- What is the level of cultural planning and infrastructure?
- What educational opportunities are there? Will prospective residents need to send the kids away to Perth based schools? Is there a university campus there and, if not, can one be established?
Regional centres such as Karratha have battled severe growing pains because the necessary planning for a certain quality of life for a residential population was not considered at the front end.
In Broome, the prospect of a gas hub located at James Price Point for the Browse Basin development will, if it proceeds, trigger billion dollars worth of infrastructure investment which will significantly change the nature of that town whether people like it or not.
How will they plan quality of life and amenity issues around a project of such magnitude? What are the transport needs? Can major changes be made in a sustainable fashion? What is the employment profile going to be – fly in/fly out or residential? If it’s the latter, how can changes be made to attract various professions?
There is an emerging acceptance of the importance of demography, an approach that says: “This is what we want to do and our community will ultimately look very different because we are shifting from a business as usual, incremental population growth model to one of facilitated development.” It is a model that incorporates:
- Infrastructure planning
- Social amenity planning
- Land use and spatial planning
- Cultural policy planning
- Environmental sustainability planning
And it can be applied to any regional city anywhere in Australia. The fundamentals don’t change – graduating from a large town to a city has to be done in a facilitated way.
Knowledge transfer: The getting of wisdom
January 15th, 2009 by MichaelAs you sit at your PC typing away, looking up details on the Internet, sending and receiving emails to and from clients and colleagues, you could be forgiven for thinking we don’t need personal contact to do business anymore.
But while these technological advances have changed the way we work irrevocably, they are no substitute for person-to-person transactions.
The Information Age has been a boon for the transmission of data and other information. You can go online and research something in detail. There is now a wealth of material at your fingertips. But this process does not necessarily translate into knowledge.
Knowledge is the use of data and information for an outcome. And interestingly, in the literature that we’ve been working through for Pracsys clients, knowledge still very much requires human interaction.
If knowledge were a person-less transaction then you wouldn’t need physical university sites. Everything could be done via the Internet and everyone could learn at their own pace.
But there are certain efficiencies in a physical entity that brings people together. And unexpected knowledge spillovers occur when you have concentrations of certain groups of people discussing problems and transfering their knowhow.
This is the basis for a new type of infrastructure, the post Industrial Age, post Information Age infrastructure – knowledge infrastructure for the Knowledge Age.
This is infrastructure that assists people to come together to exchange knowledge for commercial reasons, not just for its own sake. To take significant problems, such as a cure for cancer or viable renewable energy, and come up with solutions.
Knowledge transfers occur not over the celebrated Information Highway, but when you get people from different backgrounds together in physical locations where they can discuss solutions to these big problems.
If you want to go online and find out specific information or access experts in a particular area you can go to a forum and post a question, participate in a discussion or observe a discussion. And that’s about as close as you get to knowledge transfer without physical contact.
What is clear is that physical contact actually accelerates the innovation and discovery process.
If you enter an economics forum on the Internet you get economists coming together who are more concerned with refuting the arguments that others are making. And that has a place. Similarly, if you go to a chemistry or physics forum, you don’t find a bunch of economists hanging out there. Like attracts like in the World Wide Web.
But what you get with universities, or any other research and development knowledge transfer physical entity, is a real mixture of backgrounds – technical, non-technical, financial, non-financial etc. And what we find is that this mix of skills often brings about a solution more effectively than a group of, say, economists ever could on its own.
The reason for this is – and this is the intangible thing – is that knowledge spillovers from one area to the another occur not in linear ways, but in unexpected ways.
The Knowledge Age requires different types of infrastructure to the Information Age. If our policy makers don’t get their heads around the sort of infrastructure – something they currently term “soft infrastructure” for want of a better description – required to bring the necessary groups of people together, the crucial transfer of knowledge simply won’t happen.
On the outer: The real cost of fringe dwelling
November 28th, 2008 by Jason McFarlaneIt’s time to challenge the notion of what constitutes affordable housing.
We need to look beyond the quick fix, short term solution of releasing more land further out on the urban fringe, to the long term implications of such a myopic development strategy.
It may seem cheaper to build on greenfield sites on the outskirts of the city than in the inner suburbs, but it is simply a false economy.
When you consider, for example, that 75 percent of people who live in Perth’s sprawling North-West corridor have to commute to work outside of the corridor – their weekly fuel bill soon casts a greater shadow than their mortgage. How is this affordable?
There are also big social ramifications. With longer commutes, there is less time for family or for building a sense of community; with rising transport costs, there is little disposable income to go around. People in outer suburbs become increasingly marginalised.
In a recent address to councils, planners and transport experts in Melbourne, Curtin University’s Professor Peter Newman argued that governments needed to look at the real costs of building on the fringes, including the burden of commuting and associated emissions of greenhouse gases.
“The old economy based around cars and extending further out has been a proven failure,” he said, maintaining that governments could save up to $85,000 per new housing lot over 50 years if they instead built in existing suburbs close to public transport.
We need a paradigm shift in our attitude to housing. Governments need to start articulating the benefits of higher density living – lower transport costs, access to better amenities, proximity to knowledge generating employment, greater sense of community – at the same time as generating the means by which all socio-economic groups can access it.
Some people choose to live further out because they want a certain kind of lifestyle, but many are simply forced out into the boondocks because they see it as the only way they can enter the housing market.
We need to give people options and this means making high density attractive and affordable. It means creating good public space that meets the demands of all members of society. In a sense, we need to give them the same sense of security that comes with a backyard – a safe, clean space to walk their dog, go for a run or take the kids to the park.
The redevelopment in Stirling is a great example of forward thinking in urban regeneration. It’s based around urban density and a train station and Stirling itself is becoming a fairly major employment zone.
However, given the way the area has evolved, with industrial and higher density concentrations, it has significant advantages over other inner ring centres. It will take a fair amount of political willpower to enable similar developments in the western suburbs where ratepayers have a vested interest in preventing high density.
High density is not going to please everyone. There will always be a demand for land, for a backyard, for a place to park the boat. It’s part of who we are. But there needs to be a strong understanding by the powers that be that if they continue to release land on the outskirts of town it is only a part of the overall equation.
Any development must also factor in the other key driving factors of any economy – labour, capital and enterprise. This means transport networks, as well as investment in significant infrastructure that encourages strategic industries and generates knowledge intensive employment.
The onus is on our leaders to drive the market and to provide attractive, affordable options. The majority of the population may still be thinking short term, but we need the political will to make decisions that are sustainable for the long term.
Regional infrastructure: Dynamic model drives further
November 24th, 2008 by mknightDevelopments in remote and rural areas present their own challenges. A new mine, for example, brings more people into the area. More people means more houses. More houses means better infrastructure. Better infrastructure means greater start-up costs.
Infrastructure development is particularly expensive in regional and remote areas, and the standard model of “business as usual” with infrastructure expansion is not always the best option.
BHP Billiton and Landcorp were faced with exactly this situation when planning for the Ravensthorpe Nickel Operations project, in the south-west of Western Australia.
Favouring a residential workforce over the “fly in fly out” model, the small coastal community of Hopetoun emerged as the logical location to house many of the workers.
Working with leading environmental engineers Syrinx Environmental, Pracsys has produced a new approach to regional infrastructure demand modelling that proves the technical and cost advantages of sustainable alternatives.
It is also entirely transportable. This means it can be applied to regional and remote infrastructure development anywhere in the world.
Together with Syrinx, Pracsys compared bundles of technology options for key infrastructure – power, water and waste; all needed to support the influx of workers that would come to Hopetoun with the new mine. The evaluation took into account technical viability, capital and operating costs, net present values and the economic impacts of externalities.
Using a centralised system as the base case, we considered a range of alternative solutions to infrastructure expansion challenges.
We determined the performance of the alternatives against these criteria and asked whether or not they would be better from an economically sustainable standpoint. The process examined issues such as:
- The impact of demand management strategies on water consumption using household based rainwater tanks and water reuse systems;
- The use of decentralised modular wastewater treatment plants servicing groups of houses rather than the whole town;
- The provision of household based sustainable power technologies, such as photovoltaic cells, wind turbines and solar boilers;
- The need for, and timing of, larger centralised infrastructure such as diesel generators and large wind turbines as a result of power demand management at the household level.
The results consistently came down in favour of a more flexible and sustainable approach to infrastructure.
Apart from the demonstrable environmental and technical benefits, the sustainable model indicated a saving of more than $20 million over the standard centralised model. In addition, there was a $74 milllion advantage in net present values over 20 years.
What we have been able to demonstrate is that a sustainable model can be superior not only from a technical point of view, but from an economic standpoint.
And it’s not just us saying so. The peer review process for the model involved an Australia-wide panel, which included another national economic firm, as well as leading sustainability and technical experts and academics. After careful consideration of this approach, it was generally agreed that the depth of analysis and the level of rigour were a first for Australia.
The real value of our approach lies in the fact that because it is so flexible can be applied to any remote or regional community anywhere.
This is dynamic modelling, not a “black box” solution. We equip our clients with the tools to fully exercise the model’s capability and then drive it on to the next project.
Landcorp is now looking to apply the costing and economic model we have developed to other similar developments throughout Western Australia.
