Building resilient infrastructure: ensuring assets delivered in Australia’s infrastructure boom will endure

Nick Thomas, Lina Fischer and Jason HooperWednesday 6 April 2022

Construction activity near Riverside Expressway, Brisbane, Australia. Credit: Shutterstock/my_ photos

As Australia grapples with the threats of climate change, pandemics and cyber attacks, greater emphasis must be placed on achieving resilience during the planning phase of infrastructure projects, and using available tools to deliver resilience in infrastructure.

Australia is in the midst of one of the greatest infrastructure booms in its history, which reflects a global trend. The nation’s infrastructure boom covers a wide range of sectors, such as transport, energy generation and distribution, water capture, purification and distribution, telecoms, social sectors (eg, health, education, social housing, aged care, social and justice) and waste management.

Nevertheless, the events of the last three years have highlighted Australia’s vulnerability to natural and non-natural threats, including a global pandemic, catastrophic bushfires nationwide, crippling droughts (including in major cities), widespread floods and a variety of cyber threats.

These events not only threaten the safe and effective continuation of communities and the Australian economy, but also have an enormous financial cost. By 2060, the annual cost of natural disasters in Australia is expected to more than double – from AUD38bn per year to more than AUD73bn.

Inevitably, these and other threats will continue to occur. To address this, Australia’s infrastructure bodies are advocating greater resilience in its infrastructure. Their key messages include that Australia needs more ‘systems’ thinking to deliver resilience for infrastructure, and it is critical that thorough planning occurs to ensure that new infrastructure assets are both resilient themselves and support more resilient communities.

On 3 December 2021, Clayton Utz convened a panel of experts to address the importance of infrastructure resilience. Lina Fischer, a partner in our Major Projects and Construction team, chaired a discussion with Romilly Madew AO (CEO of Infrastructure Australia), Rory Butler (Associate Director Sustainability and Resilience, Infrastructure Australia), Simon Draper (CEO of Infrastructure NSW) and Nick Thomas (partner in our Environment and Planning team).

The discussion followed the release, in August 2021, of the joint report from Infrastructure Australia and Infrastructure NSW titled A Pathway to Infrastructure Resilience (Pathway Report).[1]

In this article, we highlight some key points from the Pathway Report and the discussion.

Prioritising resilience during the planning phase of an infrastructure asset offers the greatest opportunity to achieve resilience

A pathway to infrastructure resilience

While, over the past decade, there has been increasing focus on sustainability in both the delivery and operation of infrastructure, discussions around the resilience of assets have only more recently taken hold. The interest in resilient infrastructure is becoming increasingly urgent.

Infrastructure Australia’s and Infrastructure NSW’s research project reflected contributions from over 600 participants in government, industry, non-government organisations, academia and civil society organisations. Its aim was to ‘build expertise, momentum for change and set a strategic direction for how we plan infrastructure to respond to natural and non-natural threats’.[2]

Infrastructure Australia’s and Infrastructure NSW’s vision is that future Australian communities will ‘be able to anticipate, resist, absorb, recover, transform and thrive in response to shocks and stresses, to realise positive economic, social and environmental outcomes’.[3]

Importantly, the Pathway Report emphasises that achieving resilience is not limited to the resilience of the asset itself, but also the ability of the asset to contribute to the overall resilience of the system in which it is placed. In effect, this approach requires an emphasis not only on the strength of the asset, its network and its sector, but also the place, community, precinct, city or region in which it operates.

The planning phase is key

Prioritising resilience during the planning phase of an infrastructure asset offers the greatest opportunity to achieve resilience. The planning phase establishes the trajectory for the remaining phases of an infrastructure asset’s lifespan and is critical in determining fundamental decisions such as the location, design and management of the asset, its integration into the community which it serves, and interdependencies of the asset with existing or other soon to be constructed assets.

The Pathway Report outlines ten directions for systemic change in infrastructure planning:

1. Improving strategic alignment of resilience governance

Systemic change is only possible if there is alignment and coordination across various levels of government, relevant industry sectors, specific government agencies and the governments in participating or affected jurisdictions. Fragmentation is a serious barrier to achieving resilience.

2. Managing uncertainty through scenario planning

Consistent, fit for purpose scenario planning would result in more collaborative planning and improved identification of potential impacts on infrastructure assets.

3. Improving data collection and sharing for informed planning, action and decision-making

Data that is good quality, standardised and accessible can be effective in coordinating responses to, and recovery from, inevitable crises. This includes data which are relevant to the circumstances driving the proposal for the infrastructure asset, and data relating to statements which are being used to support the case for the infrastructure asset.

4. Adopting place-based approaches for resilience

In the planning phase, consideration should be given to the benefits, place-level interdependencies and vulnerabilities of the place in which an infrastructure asset is proposed to be located.

5. Embedding resilience into land use planning and development decisions

Typically, planning systems across Australia do not establish resilience as a key policy objective. Explicit and coherent policy is required to achieve resilience in land use planning which is applicable at all levels.

6. Improving infrastructure investment decision-making

Examples of infrastructure failure highlight the need for better practice in infrastructure investment decision-making. Valuing resilience of assets would enable governments and agencies to leverage private capital more effectively by pursuing good-quality infrastructure investments and demonstrating their value to the market.

7. Collecting and sharing information on asset and network vulnerability

Due to the interdependent nature of infrastructure systems, being able to share information on real-time service disruption is essential in improving cross-sectoral planning and collaboration, allowing infrastructure networks to respond in a crisis and identify different service deliveries.

8. Valuing blue and green infrastructure

The ability to leverage blue and green infrastructure (such as waterways and green spaces) can reduce risk and result in resilience benefits in response to crises.[4]

9. Building trust with communities through more inclusive decision-making

Communities have lived experiences on the impacts that natural and non-natural threats have had on their place, and will also have views and comments on infrastructure proposals based on their experiences. These are critical in ensuring effective decision-making in planning for, and delivering, infrastructure assets.

10. Embedding traditional ecological knowledge in decision-making

Ineffective land and resource management has the potential to have a detrimental impact on infrastructure assets and communities. The use of Aboriginal and Torres Strait Islander land management processes can enhance the resilience of infrastructure assets in the Australian environment.

What tools are available to help deliver resilient infrastructure?

Place or systems level

Planning system reforms such as the following in the State of New South Wales (NSW) provide a platform for the integration of resilience in strategic planning:

• the establishment of the Greater Sydney Commission and the introduction of statutory requirements for strategic land use plans in 2018;

• the planning minister’s release of nine key planning principles (one of which is resilience) in December 2021, to inform strategic planning and local and State planning controls; and

• the current process of reforming the State’s infrastructure contributions scheme for development projects.

In addition, the collaborative response from the NSW Government, together with industry and other stakeholders, to Covid-19 in a rapid review of planning law constraints to allow more effective operation of infrastructure during the pandemic, demonstrated that there is capacity to adapt thinking and practices when necessary to improve resilience.

Embedding sustainability, and resilience as a core component of sustainability, are fundamental for resilient assets

Asset level

Embedding sustainability, and resilience as a core component of sustainability, are fundamental for resilient assets. This currently occurs in various ways, as illustrated by the following examples:

• The adoption, across many infrastructure classes, of sustainability rating schemes such as the Infrastructure Sustainability (IS) rating scheme, and Green Star rating system for some social infrastructure, is becoming increasingly common. These rating schemes specifically incorporate evaluation categories such as climate change adaptation, which is a key indicator of an asset’s resilience.

• There is increasing sophistication in the incorporation of sustainability and resilience in procurement and infrastructure delivery contracts. Contract terms are moving beyond vague references to sustainability plans and ‘set and forget’ requirements, to specifications which deal with specific resilience issues, the inclusion of sustainability in procurement evaluation criteria, and incentive schemes for specified design and environmental outcomes.

• Technological advances such as digital twins are allowing more interconnected modelling and analysis of data and systems to produce more resilient asset outcomes. Governments in the states of NSW and Victoria are investing heavily in this technology. While still relatively early in its development, the technology has the potential to transform the planning and delivery of infrastructure, and the governments are focused on ways of ensuring the environment is data rich and accessible to those engaged in the industry.

• Many delivery agencies and private infrastructure owners are focusing on risk planning for potential threats and measures to ensure resilience is built into assets from the start. There may be more opportunities in the future to harness the experience of the private sector in long-term public-private partnership (PPP) or design, build, operate, maintain (DBOM) arrangements, to ensure better alignment between procuring and delivering bodies for whole-of-life resilience outcomes.

• There is growing awareness of the potential for savings in operation and maintenance costs for more resilient assets, and growing recognition of this in project contracts. An example is the inclusion of ‘risk and reward’ sharing provisions for demonstrable reductions in maintenance costs.

• Resilience is driving approaches to the evaluation and pricing of insurance risk. This is affecting the availability of insurance, and the variability of its terms and premiums, according to factors such as the location and environmental circumstances of the asset to be insured.

• Regulatory agencies are applying stricter and more focused assessments and approval conditions in areas which promote resilience. Examples include their approaches to community engagement and social impact. This, in turn, can assist in developing a stronger social licence for projects. Project proponents are increasingly recognising this and, as a result, some are adopting practices which go beyond regulatory requirements.

• Asset owners and operators are becoming more conscious of the ever-increasing risk of cyber attacks. The Federal Government’s recent reforms to the Security of Critical Infrastructure Act 2018 (Cth) highlight the threat of foreign interference in our national critical infrastructure, which includes significantly expanding the categories of infrastructure assets governed by the legislation and giving the government broad powers to intervene in response to incidents. Managers of critical assets need to ensure they have the technological capacity to guard themselves against, and manage, the risks associated with such attacks.

However, infrastructure development often suffers from silos, across disciplines and between sectors, and between the physical and digital environments. To truly maximise an asset’s resilience, holistic system-wide thinking will be necessary to conduct an integrated analysis of possible threats and develop solutions to minimise and manage risks. This needs to occur not only at the planning stage of a project but regularly throughout the asset life-cycle.

Organisational level

The rise of ESG (environmental, social and governance) concerns globally means that senior executives and boards are more focused on addressing issues such as sustainability and resilience in their policies, their assets and activities. Governments are also increasingly attuned to the reputational risks of not focusing on ESG concerns, as well as the long-term costs and risk of not building in resilience thinking from an early stage of asset development.

The environmental, social and governance consequences of public and private sector organisational decisions now have much greater significance. Consequently, there is more attention on the basis for those decisions, and factors which are not traditionally recognised as ‘financial’ in nature are becoming much more important, such as climate change mitigation and adaptation (or resilience).

Interestingly, this can have a hard financial edge to it. For example, as indicated earlier in this article, a more resilient asset can have lower operating costs, so there can be a financial incentive for decision-makers to adopt more resilient concepts, designs, construction and operation in their infrastructure assets.

Some judicial incentive

The extent of litigation on the subject of climate change in Australia, and, indeed, worldwide, is an indicator of the willingness of a variety of stakeholders to pursue concerns about climate change through the courts.

In two of the most highly publicised examples in Australia: the Federal Court of Australia decided, in May 2021, that the federal minister for the environment has a legal duty to consider the risk of climate change on Australia’s children in deciding whether to grant approval for a project;[5] and in August 2021, the NSW Land and Environment Court ordered the NSW Environment Protection Authority to develop environmental quality objectives, guidelines and policies to ensure the protection of the environment in NSW from climate change.[6]

There is a very real prospect that the courts will, in time, extend similar principles to resilience. In the meantime, the decisions outlined above may well drive regulatory agencies to focus more on concepts such as infrastructure resilience as part of a response to climate change related concerns.

Moving forward

It is clear that resilience is already highly important for infrastructure, and will only become more so. It is also clear that achieving resilience is a shared responsibility that requires a collaborative effort across government, industry and the community. We already have many of the tools required to deliver resilient infrastructure. We now need to find out the most effective ways to use them.

 

[1] Infrastructure Australia and Infrastructure NSW, ‘A Pathway to Infrastructure Resilience’, August 2021, see www.infrastructureaustralia.gov.au/publications/pathway-infrastructure-resilience-0, accessed 15 February 2022. The publication is in two parts ‘Advisory Paper 1: Opportunities for systemic change’ and ‘Advisory Paper 2: Guidance for asset owners and operators in the short term’. This article draws primarily from Advisory Paper 1.

[2] Ibid, p i.

[3] Ibid, p ii.

[4] The Pathway report states: ‘Blue and green infrastructure (that is, waterways and greenspace) is often overlooked and undervalued as infrastructure. However, the ecosystem services it delivers such as water purification, air quality, soil formation, food production, space for recreation, and climate mitigation and adaptation are vital for resilience.’ (p 42).

[5] Sharma by her litigation representative Sister Marie Brigid Arthur v Minister for the Environment [2021] FCA 560. The Federal Government has appealed the Court’s decision. The appeal is yet to be heard.

[6] Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority [2021] NSWLEC 92.

Nick Thomas is a partner at Clayton Utz in Sydney and can be contacted on nthomas@claytnutz.com.

Lina Fischer is a partner at Clayton Utz in Sydney and can be contacted on lfischer@claytonutz.com.

Jason Hooper is a lawyer at Clayton Utz in Sydney and can be contacted on jahooper@claytonutz.com.

Join the IBA

Expand your international network, gain new business and learn about the latest legal developments through IBA digital content and events, with IBA membership. Available for individuals, students, law firms, bar associations and corporations.

Find out more