When thinking about smart cities we need to first ask ourselves what will success look like? The second is how will we get there.
To answer the second question first: by embracing public and private partnerships where government does what it does best in terms of creating the right regulatory environment, cutting red tape and then stepping back and getting the private sector to deliver. This is demonstrably the most effective means of making good on the promise of smart cities.
This is a chance for the nation’s mandarins to accept the fact that government isn’t always best placed to lead this process, but is a key facilitator.
Government has a historic chance to be at the vanguard of this process, facilitating well designed public-private partnerships, which are the key to the success of smart cities.
PPP tension is a good thing
The head of global consulting firm Advisian’s PPP & Procurement Strategy team, Bruce Riddle has clear views based on his experience on what a good PPP looks like and how they are put together.
Riddle says a good PPP is one where the ‘P’ in partnership is truly embodied and where one of the key hallmarks of PPPs — ‘innovation’ — is a prime focus.
“Another key feature of a good PPP is tension,” says Riddle.
“Not between client and consortium, but within the consortium. In a full-service PPP the inclusion of operator, facility manager as well as design and construction teams within a consortium leads to the inevitable balance of cost versus ease of service delivery and, if balanced properly, leads to the most effective solution to meet not only the service outcomes, but the constructability, operability and whole of life requirements.”
It is our observation that while these are equal partnerships, the project lead needs to be private enterprise, not government.
Government is not best placed to take the lead in PPP risk — while the private sector is, because managing the risk drives revenue and more importantly, effectively managing it delivers profit.
Businesses are used to being judged by their quarterly, or at most annual, balance sheets — something essential to successful project delivery — while the deeds of governments are weighed up every three or four years at election time.
Having dealt with PPPs, let’s move on to our first question: what does success look like?
One huge success in the making is New York City Hall’s partnership with private enterprise to create the $US18 billion off-grid city-within-a-city Hudson Yards development.
When finished Hudson Yards will have 17-million square feet of commercial and residential space, including a school, 14 acres of open access public parklands and be powered by its own green electric plant, harvest its own rainwater, and have a purpose-built waste-management system.
In yet another paragon of public private co-operation, City Hall has come to the party by rezoning the Far West side and by extending the 7 Train to serve the vast high rise and sprawling development.
Australia’s biggest unutilised capacity
In financial parlance, firms like Airbnb and Uber are called cap-utes — or capacity utilisation plays.
The biggest unutilised capacity in Australia as far as smart cities go are our various levels of government, and Telstra — our venerable comms and IT giant.
Last month in Barcelona, Telstra announced it was partnering with Ericsson to create a nationwide internet of things, a staggeringly important announcement.
CEO Andrew Penn also revealed that the organisation was already reaping $150 million a year in revenue from its IoT arm.
The Barcelona announcement was complete with a demonstration of technical data from a winery in Tasmania that included leaf and soil moisture.
This has broad implications and not just for those of us who want to supervise our robot-tended Tasmanian vineyards while squirting grappa from a goatskin into the back of our throats at a bullfight.
Combined with Telstra’s existing coverage, customers can use a range of near-real-time IoT applications in areas that include logistics, utilities, medicine, transport, mining, agriculture, manufacturing and many more.
Other puzzle pieces are starting to come together, meanwhile. Infrastructure Australia has laid out its $60 billion wishlist and the Turnbull Government’s Smart Cities plan – released last April – provides an uncharacteristically solid roadmap.
These two announcements — coupled with Telstra’s discovery that the company can use IoT to actually make money — are signs that Australia’s smart cities juggernaut is creaking into action.
What our mandarins must do now is help us get on our way.
Alok Patel is the chief executive of Azcende, a multinational venture capital fund, investing in urban innovation for the future of cities to drive positive social impact.