Sustainable infrastructure set to aid economic recovery
A study commissioned by the Australian Infrastructure Sustainability Council (ISCA) reveals that infrastructure will play a key role in Australia’s economic recovery following the COVID-19 pandemic, with sustainable infrastructure having the potential to deliver significant benefits.
The IS Rating Scheme Return on Investment Study found that infrastructure projects rated under the IS Rating Scheme will deliver up to $2.40 in benefit for every dollar spent.
ISCA CEO Ainsley Simpson explained that the economic multiplier effect for infrastructure expenditure is well documented — but highlighted the benefits gained in sustainability outcomes.
“Over the next few years, infrastructure will play a mission-critical role in our economic rebound — but we must ensure the money we spend today can be leveraged to maximise environmental, social, cultural and economic benefits tomorrow,” Simpson said.
“Governments know that public infrastructure is a great economic multiplier and that every dollar they invest in public infrastructure delivers around four dollars in GDP value over the life of the asset.
“Over and above this productivity dividend, our research finds IS Ratings are set to deliver a minimum of $1.60 in benefit for every dollar spent — and this figure could be as high as $2.40 in benefit.”
ISCA’s IS Rating Scheme was launched in 2012 and has since measured the social, environmental, governance and cultural outcomes delivered by more than $170 billion major infrastructure projects.
The independent cost–benefit analysis undertaken by RPS Group monetised benefits such as carbon, water, ecology and air emissions. IS-certified as-built assets have delivered accumulated reductions of 14% in energy, 27% in water and 31% in materials when compared with standard practice.
Simpson said the return-on-investment study does not quantify wider social values such as health outcomes and human capital development.
“Our study makes the business case clear: sustainability and profitability are not mutually exclusive. Importantly, the non-market benefits of infrastructure should not be limited to major projects. If uptake of the IS Rating Scheme was doubled, the net benefit would soar to $90.7 million. All infrastructure — urban and regional, large and small, new and ageing — can deliver more for our communities,” she said.
“What we also know from the research is that pursuing an IS Rating upskills the workforce, encourages innovation and drives process improvements.
“Applying the IS Rating scheme to infrastructure projects trains people to think more strategically across the asset life cycle, which in turn enhances procurement and supply chain efficiencies.”
Actions for governments
Given the central role that infrastructure will play in the next wave of fiscal stimulus, ISCA is calling on all governments to rebound with continued determination and decisive leadership, with five practical actions:
Mandate sustainability: Set the policy default for all infrastructure to sustainable and resilient, as well as economically productive.
Prioritise productivity multipliers: Invest in projects that deliver both productivity multipliers and non-market benefits, including sustainability and livability.
Leverage procurement: Stimulate local economies by developing skills and capacity and drive nationwide innovation across the supply chain.
Commit to best practice: Adopt recognised standards on all shovel-ready projects to measure and achieve best practice sustainability performance.
Embrace transparency: Use assured performance data to communicate the outcomes delivered for business, communities and the workforce.
“Infrastructure investment can help us achieve strong economic outcomes for Australia as we bounce back from the COVID-19 crisis. But we need to ensure we are spending our money wisely,” Simpson added.
“Infrastructure Australia estimates that $20 billion worth of infrastructure projects were delayed, cancelled or mothballed over the last decade due to community opposition. Construction fatigue has put pressure on communities and jeopardised the industry’s social licence.
“By mandating the IS Rating Scheme, governments can help us pivot from past practices and invest in sustainable infrastructure that de-risks assets, boosts financial performance and, most importantly, builds a better future for generations.”
Image credit: ©stock.adobe.com/au/Elnur