Left to right: Kathy Alexander, Albert Goller, Kate Brennan

27 July 2011 – Australia’s urban congestion costs including wasted time in traffic, maintenance, fuel and emissions costs are forecast to be $20.4 billion by 2020 unless cities undertake a major review of their infrastructure, according to a review commissioned by Siemens.

The report was the basis for a public forum in Melbourne, Picture Melbourne in 2030 held as part of the Light in Winter Festival with panel speakers including chief executive officer of the City of Melbourne, Kathy Alexander, CEO of Federation Square Kate Brennan, Siemens CEO Albert Goller and chairman of local company Textor Technologies, Phillip Butler.

Senior researcher for the report Matthew Sundberg, said the country needed to address its declining productivity rate, which has fallen by one percent per annum since 2003-04.

“If left unaddressed, these pressures will hit cities hard and could impact on jobs, affordability, congestion and the overall liveability,” Mr  Sundberg said.

“For example, today, we have five people working to support each retiree. By 2030, our ageing population trend suggests that there will only be three workers per retiree. To address this, we could work longer hours, or, we could increase our productivity to ensure we maintain our quality of life.”

Mr Sundberg said 80 per cent of today’s buildings would still be in use in cities in 2030, so retrofits and smart technologies could prove to be the solution for reducing the footprint and improving the efficiency of the built environment.

“If we implemented some of the technologies available today, we could reduce current energy consumption in commercial buildings by 40 percent,” he said.

The report’s key points about Australia include:

  • Despite being one of only three advanced economies to record positive growth during the global financial crisis, productivity has declined at 1.2 per cent a year since 2003-04.
  • The success of the mining industry is masking productivity decline. Innovative sustainable industries that prosper beyond the mining boom. The mining boom is boosting our exchange rate, making imports cheaper, exports more expensive and creating real challenges for other industries
  • Australia is still relatively protected, ranking 55th in the world for trade tariffs, which discourages efficiency and competitiveness. Local industries need  to improve productivity.
  • Australia emits the third highest emissions per dollar of gross domestic product in the Organisation of Economic Cooperation and Development which is above the world and OECD averages. A carbon price will increase the cost of energy and reduce competitiveness unless we invest in cost effective alternative energy sources and energy efficient technologies.
  • Australia is falling behind in innovation, ranking last in industry collaboration with universities within the OECD, 18th in the global innovation index and below the OECD average for expenditure on research and development. We are struggling to commercialise our ideas locally, and losing the battle to retain our innovation talent.
  • Compared to the Asia Pacific region, the cost of labour in Australia is very high. There are major skills shortages, especially in technical fields.  By 2015, the mining industry will have a a shortfall of 36,000 skilled tradespeople.
  • The cost of domestic freight in Australia is high compared to countries in Asia Pacific. Improving the productivity of freight and logistics will significantly increase the competitiveness of Australian industries. This includes:
  • Correcting the imbalanced use of rail and road transport by investing into rail infrastructure and improving the interface between the two and establishing a common pricing framework for all freight modes
  • Standardising the national rail industry
  • Investing in bulk and container ports to meet future demand
Host, Mr Rob Gell

The report warned that capital cities needed to become more efficient if they are to accommodate at least an additional 4.5 million people by 2030.

The small Australian market must be export focussed to achieve economies of scale.  Markets are also highly dispersed and separated by vast distances amplifying the issue of an inefficient and high cost freight network.

Small and Medium Enterprises that make up 73 per cent of Australian businesses, find it difficult to fund innovation. Therefore, industries must collaboratively innovate to reduce the cost and increase  output from innovation.

Productivity performance and management quality are strongly linked. Australian managers are ranked “average” in the OECD with only 44 per cent possessing a tertiary qualification. Improving management practises is one of the most cost effective ways of increasing productivity and output, the report said.

Public forum on Melbourne’s future

The  public forum in Melbourne discussed the importance of leadership and innovation in combating the challenges identified in the report

“The task of achieving water availability, sustainable energy, security and accessible mobility will be fundamental to realising sustainable cities of the future,” Siemens’ Mr Goller said.

Federation Square chief executive, Kate Brennan, said her organisation had heavily invested in clean and efficient technology that has set the square apart from other world-wide attractions.  It is expected to become carbon neutral by the end of 2012.

“In addition to our commitment to energy efficiency from the beginning, we have also focused on retrofitting our building assets over their lifecycle to further reduce water consumption, energy use, waste, air pollution and noise,” Ms Brennan said.

“Our innovative passive air cooling system, the Labyrinth, was a world first when we developed it and is now only one of two in the southern hemisphere.

“With our feasibility study complete, we are looking to implement new initiatives such as a bio-gas plant that can turn our waste into an alternative energy source.  This will increase our environmental credentials and help us achieve our 2012 carbon neutral target.”

Similarly, the City of Melbourne is educating and engaging the community to understand the impact of productivity and sustainability. Its 1200 Buildings program is an innovative vehicle to help the city achieve zero net emissions by 2020.

Chief executive, Dr Alexander said the city had  partnered with key stakeholders to help building owners obtain finance for retrofit works to reduce energy use, save water and lower carbon emissions.

“There is a potential to reduce 383,000 tonnes of carbon dioxide very year from building retrofits and we’re keen to capitalise on this to make Melbourne one of the cleanest and most liveable cities in the world,” Dr Alexander said.

In an age where textile manufacturing in Australia is almost unheard of due to increasing competitive pressures, Textor Technologies is proving to be the exception according to chairman, Phillip Butler.

“It’s a fallacy that labour costs are preventing us from being competitive because better infrastructure and manufacturing processes can alleviate such pressures, “ he said.

“To make this work, we need better collaboration between industry, government and research organisations to bring about the changes we desperately need for productivity growth, particularly in the areas of transportation, communications and innovation,” Mr Butler said.

“As a business owner, I take an approach of leadership where I invest heavily in my people. I believe that a healthy respect for your employees breeds business success”

Despite the challenges facing cities today, Mr Goller told the forum that it was an exciting time where cities and the people within them, could work together to shape a new sustainable future.

“Australia is a lucky country with a wealth of natural resources, a high level of skills and a culture of innovative thinkers.

“Harnessing these attributes will allow us to become more competitive and sustainable, ensuring our future generations have a bright and positive future.

“Technology alone is not enough; we also need people to collaborate and an alignment of processes to create sustainable and productive cities that continue to rank among the most liveable cities in the world, ” he said.