The Deal is the DNA of the Project: the Good Governance Imperative

We have historically looked to government to assume risk and planning control in building our cities. For example, the activation of the once dilapidated historic wharves at Walsh Bay into a thriving cultural and entertainment precinct demonstrates how multiple small decisions, brought together by a strategic vision, can incrementally bring about a successful result. Since initial remedial works were carried out on the piers of the wharves in 1983, to the present masterplan for Arts NSW, the culture-led regeneration has been open to contributions by multiple participants under the stewardship of guidelines and policies established by government, authority and tenant stakeholders.

Similarly, although in a much more heavy-handed manner, the Darling Harbour revitalisation in the late 1980s converted railway shunting yards into a conference, retail and recreation precinct. The whole process was undertaken with the active direction of then Minister for Public Works, Laurie Brereton.

In recent years, however, there has been a loss of public accountability and transparency as infrastructure and urban renewal projects have been packaged into profit-imperative, low risk, private sector business opportunities. Our primary decision-makers lean towards an opaque consortia of project financiers, builders and operators contracted to a governance framework characterised by varying levels of introversion, with a lack of public participation and accountability.

This new trend in the delivery of public infrastructure has led to mixed results. The least successful projects are mono-functional, generic and physically and socially disconnected from the surrounding urban context, whereas most successful urban regeneration projects are diverse, authentic and acknowledge their historical, cultural and urban context.

How we design the governance structure fundamentally affects how we design the deal. And how we design and structure the deal inevitiably becomes the DNA of a project.

This is evident in the case of the Cross City Tunnel, undertaken as a public-private partnership to be financed, designed, constructed, operated and returned to government. The project was to be delivered at no net cost to the public purse. This meant that any cost increases were passed onto the private consortium comprised of infrastructure and banking groups.

Whilst the government sought the best financial deal for the taxpayer, the interests of the public users of both the tunnel and alternative routes to the tunnel were jeopardised. This was evident in the high toll price and the prioritisation of tunnel mobility over surface accessibility. The outcome was public disillusionment and criticism of the government’s role in the project. The private sector partner went into receivership and the project was sold a year after completion at a substantial loss.

How much discretion are deal-makers allowed to exercise? Our perception that planning is ad hoc, opaque and driven by private benefit is revealed in the subordination of a planned harbour foreshore park to an inferior inland pocket park at Barangaroo Central. In its final approval stage, the now approved casino tower received sustained criticism at public hearings before the independent Planning Assessment Commission. A decision made by a former government to pass legislation that specified the foreshore siting of the casino meant that subsequent attempts to redistribute the casino’s substantial mass were thwarted.

The Crown Casino development was put to government as an unsolicited proposal. A proponent of a successful unsolicited proposal enters into a commercial relationship with the government outside of usual open tender processes. The proposal is assessed on the basis of uniqueness, value for money, whole of government impact, return on investment, capability, capacity, affordability and risk allocation. But an otherwise appropriate process-driven bias to mitigate financial risk does not appear to be balanced by a process-driven bias to engage with the public and to deliver public benefit. Financial return to government is only one component of the public benefit, particularly regarding the development of public foreshore land.

Where is the clearly defined framework to ensure that the public interest is addressed in these public-private deals? NSW governments tend to release only limited details of private partnerships, on the basis that the details are commercial-in-confidence. We need to ensure governance and commercial arrangements are transparent and that the community is well-informed and engaged. Disclosure of contracts and material variations is the minimum we should expect.

Australia’s major cities are among the few in the developed world without metropolitan governments and the means for public involvement in planning, resource allocation and structural issues such as urban consolidation. State ministers should ideally set the policies that guide development of urban areas. But they should not be involved in routine assessment processes that can create conflict as political intent mixes with profit-driven urban renewal ambition. The loss of a planned foreshore park as a consequence of legislation approving the specific location of a restricted gaming venue is a case in point.

‘Success involves not only the mitigation of financial risk to taxpayers but a practice of openness and transparency leading to a sense of public ownership towards urban renewal. Iterative and incremental development should prevail over the wholesale closure of lands for development by a single player’

The creation of the Greater Sydney Commission and its relatively open district plan making process is a major step forward in establishing a new regime for developing the future of the metropolitan area from a regional perspective.

The success of current and future urban renewal projects depends on carefully designed governance, the inclusion of the public and multiple authors in all stages of planning, delivery and operation. Success involves not only the mitigation of financial risk to taxpayers but a practice of openness and transparency in greater public participation leading to a sense of public ownership towards varied, interconnected and engaging urban renewal. Iterative and incremental development within an agreed framework of project principles should prevail over the wholesale closure of lands for development by a single player.

Business as usual will always aim for the highest profits with the lowest risk, or, in the case of infrastructure, perform a narrow function and do little else. A better way to design the DNA of a project would be to establish a set of guiding principles which lead to fairer, diverse and accessible urban renewal. The process must be open to change, iterative and incremental, and should not have a fixed start and end state. The physical form and ownership pattern must be open and permeable, open to change and open to the contributions of many participants and residents over time.

The NSW government agency UrbanGrowth NSW announced in June that it would assume the role of master developer of the White Bay Power Station foreshore site. In doing so, it rejected the commercial and design driven bids of all invited private sector consortia to redevelop the site as a technology hub.

Viewed in the context of deep public mistrust that proper planning processes are being bypassed in favour of behind-the-door deals it might be inferred that the government is beginning to listen to the public in this apparent break from the business-as-usual development model. Let’s watch this space. In anticipating a change in course, we must ask ourselves what type of city do we want, and for whose benefit.

Anton Kouzmin is principal of Anton Kouzmin Architecture and is a member of the Built Environment Committee of the AIA NSW Chapter

SOURCES
Mike Harris, ‘Megaprojects: A global review and the Australian context’, The University of Sydney, 2014
Arup for Arts NSW, ‘Walsh Bay Arts Precinct Vision’, 2012 Peter Phibbs, ‘Driving alone – Sydney’s Cross City Tunnel’, University of Western Sydney, 2007,
Associate Professor Rod Simpson, ‘Address to the Festival of Urbanism Discussion’, Sydney Town Hall, 2014
Brendan Gleeson, Jago Dodson, Marcus Spiller, ‘Metropolitan governance for the Australian City: The case for reform, Urban Research Program’, Griffith University, 2010
Tarsha Finney, ‘White Bay re-think hinges on who looks out for the public interest in remaking Sydney’, theconversation.com, 2016 Anne Davies, ‘Architects of Sydney defend public interest as Barangaroo Casino faces final hurdle’, The Sydney Morning Herald, 2016