The Herbert Smith Freehills report, “Future of Cities: Businesses stand ready to help governments unlock city investment”, highlighted the importance of government and private sector collaboration to sustain the current $4.8 trillion pipeline of city projects across the globe.

This builds on the previous study by Allens which also called for Australia to refocus its infrastructure pipeline if it is to stage an infrastructure-led recovery from COVID-19.

The new HSF study found that optimism towards projects is higher now than before the pandemic and that Australian business leaders are far more optimistic about the future of such projects than their overseas counterparts. Confidence is notably highest in jurisdictions that have been more successful in controlling the virus.

“Major city projects are often seen as inflexible, but 54 per cent of senior executives consider their projects to be more adaptable to change now than before the pandemic,” HSF infrastructure partner and report lead Nicholas Carney said.

“We need to capture and hold on to this adaptability for future projects.”

Among Australian respondents, 86 per cent are now more confident about their city projects than before the pandemic. By contrast, only 57 per cent of those based in the Middle East are more confident in their projects, while 59 per cent of UK respondents and 58 per cent of respondents in the Americas expressed more confidence. 

The HSF study also found that Australian business leaders involved in city projects are far less concerned about a recession or other economic conditions than their counterparts around the world, with only 5 per cent of Australian respondents suggesting this was the greatest threat to their projects. 

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Concerns over health in cities were the greatest concern for these respondents, followed by concerns about construction costs and the deployment and futureproofing of technology.

Mr Carney said the findings of the survey suggest now is a good time for companies and governments to invest in our cities.

“Governments are investing record amounts in our cities through transport projects such as Sydney Metro Greater West, Victoria’s $5.2 billion social and affordable housing scheme and record investment in health infrastructure across the country,” he said.

“Such investments will support growth through the creation of thousands of jobs, but they also provide productivity and wellbeing outcomes for communities.”

Mr Carney said different layers of government need to work together, take a long view on cities and city projects, and recognise that solutions to complex problems will come from the convergence of sectors and disciplines.

“Governments in Australia are ahead of the rest of the world in terms of infrastructure investment, with recent Commonwealth and state budgets allocating significant capital to project development,” he said.

“Federal infrastructure spending over the four years to FY2023-24 will climb to $48.8 billion.

“That’s 65 per cent higher than the four-year spend projected in last year’s Budget, with major projects including the Sydney Metro–Western Sydney Airport Line and Geelong Faster Rail to see an investment boost along with renewed investment in the energy market’s low emissions technologies and network infrastructure.”

Mr Carney analysed that Queensland’s recent election saw a focus on road upgrades in the state, especially upgrades to the Bruce Highway, while South Australia saw a 38 per cent increase to its infrastructure budget allocation with a focus on public transport and roads – especially the North-South Corridor project – and health infrastructure including Adelaide’s new Women’s and Children’s Hospital.

The NSW Government also handed down a budget that included an increase in infrastructure expenditure of about 17 per cent to $84.2 billion.

“These government projects will need the ingenuity of the market to help them,” Mr Carney said. 

“That means encouraging and rewarding innovation by the market and recognising that solutions may lie in the convergence of sectors such as infrastructure-tech or investments in precincts which combine real estate and infrastructure. 

“NSW Premier Gladys Berejiklian has spoken about a ‘precinct-led recovery’ which, at its heart, is about the vibrancy, productivity and economic success of our cities and citizens.

“Our survey shows that success also depends on greater leadership and support from government and regulators and a need for flexibility on project planning.”