Episode 167 | Infrastructure & property prices | David Tucker, Infrastructure Australia

How does infrastructure impact the property market and should it be considered when buying property?
We welcome David Tucker Chief of Infrastructure Assessment at Infrastructure Australia. David joined Infrastructure Australia in 2018 after over 16 years with some of Australia’s top-tier consulting firms. In this episode we chat shop on how infrastructure factors within the property market and how have airports, roads, transport and essential goods been impacted in recent times from the change in working arrangement and the post-COVID normal.
Here’s what we covered:

• What is infrastructure Australia and why does it exist?

• What are the different classes of infrastructure?

• How to assess key projects?

• What has made certain projects more of a priority than others?

• How has climate change impacted infrastructure projects and schedules?

• Has COVID shifted much point of view on the upcoming projects?

• How do regions compete in getting more spending for infrastructure?

• What projects should we be most excited about?

• How does infrastructure impact property prices?

• What will it take to solve the transport problems in Australia?

• What gaps in our infrastructure do we currently have and how can this be solved?

RELEVANT EPISODES:
Episode 158 | Warren Hogan
Episode 148 | Bernard Gallagher
Episode 145 | Lucinda Harley

GUEST LINKS:
https://www.infrastructureaustralia.gov.au/publications/Infrastructure_Priority_List_2021
Priority List interactive map: https://www.infrastructureaustralia.gov.au/search-priority-list-map
Infrastructure beyond COVID-19: https://www.infrastructureaustralia.gov.au/publications/Infrastructure-beyond-COVID

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: https://linktr.ee/veronicamorgan

Looking for a Mortgage Broker? www.wealthful.com.au
Work with Chris: hello@wealthful.com.au

Send in your questions to: questions@theelephantintheroom.com.au

EPISODE TRANSCRIPT:
Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…
This episode was recorded in March, 2021.

Veronica Morgan: Talk to any property investment expert, and you probably hear them include the word infrastructure in their list of what they look for in a location, but how do they really know what's going to be built and over what timeframe

Veronica Morgan: Welcome to the elephant in the room. This is the podcast where we love to talk about the big things in property that never usually get talked about. I'm Veronica Morgan, real estate agent buyer's agent co-host of Foxtel's location, location, location, Australia, and author of auction ready.

Chris Bates: And I'm Chris Bates mortgage broker. Before we get started, I need to let you know that nothing we say on here can be taken as personal advice. We always recommend you engage the services of a professional.

Veronica Morgan: Don't forget that you can access the transcript for this episode on the website, as well as download our free fall or forecast report, which experts can you trust to get it right? The elephant in the room.com did I, you

Veronica Morgan: Infrastructure things like roads, airports, railings, energy. These can make a huge difference to property prices, but we're used to waiting years, if not decades, to see action. Once a political announcement is made not. So in the world of COVID where governments are ramping up their spend in this area, what can we expect in the next year or two? What type of projects gets the green light we're joined today by David Tucker, the chief of the infrastructure assessment team for infrastructure Australia, Dave, his team is responsible for reviewing and updating the assessment framework, which actually sits out the process infrastructure Australia uses to consider initiatives and projects for inclusion on the infrastructure priority list. So there's a whole process here. So we're interested in, you know, I guess an insight into what is this process? How do things get green-lighted and you know, what sort of timeframes are involved? We're really interested in this conversation. David, thank you so much for joining us. Thanks very much for having me pleasure.

Chris Bates: I mean, I've read the kind of infrastructure reports that kind of get released every year. And I think another one's just got released Liberating for what our listeners to give us a bit of a background. What is infrastructure and what is it? Does it exist?

David Tucker: Infrastructure Australia was established in 2008. We were the first of our kind and really our role is to advise governments. We advise on Priorities for investment. So we don't hold the purse strings. We, we don't release funds. It's more about providing advice on where decision makers might direct vest funds. And as, as infrastructure Australia, we are the only body that looks nationally and across all sectors. So we cover transport, energy, water, telecommunications, and social infrastructure. So we do cover the full limit. Two primary functions, really the first is around projects and they are the physical major infrastructure projects that we all know and love very well. And, and we think about where infrastructure is needed in a physical sense. The second Avenue is then around policy and reform. So that is where we might do things differently and where we might target our energies in terms of regulation or new ways of working and that sort of thing. So yeah, our advice is, is really twofold.

Chris Bates: I mean, I guess the interesting point there is just the difference in governments of state to federal. I mean, how did that sort of play out with your sort of remit?

David Tucker: So we're a Commonwealth government agency. So really our main audience would be the Commonwealth government. And our remit comes in from a, from a legislation point of view, where we assess business cases that are seeking more than $250 million of Australian government funding. So by that nature, it's, it's very large infrastructure, but what we've really tried to pivot and think beyond just those major projects and take a more of a regional and local look as well, so that it is very much advice to governments, but the, the actors may also be the States and territories, not, not just the Commonwealth.

Chris Bates: So you could come up with a recommendation for this could be a priority, but that funding could have lots of different avenues. And that's not your sort of role to sort of figure out who should find what it's more a case of just identifying these sort of key.

David Tucker: That's correct. So the PR the infrastructure priority list was just released on Friday. We prepare that list. It's a, it's a, it's a live list it's updated throughout the year, but we do an annual publication of it. And as I say, that was released on Friday. So perfect timing for this conversation today. It's it's a list that is about increasing profile and drawing attention to where investments are needed. And the Commonwealth may, may choose to, to fully fund some of those aspects or mainly involve a partnership with the States and territories. So really, as you say, it's about drawing attention and then over to the decision-makers as to where they then target their investments going forward.

Veronica Morgan: Has it been a real change in where the priorities are focused in say in the last couple of years is climate and energy really factoring into it a lot?

David Tucker: Absolutely. It was interesting in your introduction when you talked about infrastructure and you said transport and airports and rail, and they were always traditionally what we thought about when we talk about infrastructure and interestingly, the priority list that we've, we've just released. I think we've set it for three years on the trot now that it's bigger and more diverse than it's ever been before. And we've really introduced not by design, but by me and by infrastructure gaps, though, a lot of new priorities around water, around telecommunications, around social infrastructure and of course, energy as well. So transport is still there, but the, the diversity of the list has necessarily grown, not only responding to what's happened in the last 12 months, but really what's the shift that's been occurring over the last few years.

Chris Bates: And the main, the COVID sort of, you know, I guess change on many levels is that sorta, you know, I guess the regional movement you know, need for infrastructure around sort of even telecommunications and, you know, good, better internet in the regions, et cetera. What are some of the major things that when you're doing your report this year, you're changing the order of what's important, longer term to Australia. Yeah.

David Tucker: Yeah. So we, we take a 15 year horizon that our work. So we don't really look what's happened in the past. It's all about what's happening now and what's emerging and what's going to happen in the future. And obviously the pandemic has made us rethink where those investments are needed. And to your point, the, the decentralization has been a big, a big factor there's been I think they, the statistic is something like 200% more people have moved to regional areas from, from the cities over the, over the eight, nine month period. So there is there is a need to then focus on the regions, but at the same time, there's also been the working from home. And so the working from home has been our, our local networks need to be ready to support people in their in their localities. And that's how big implications on waste and utilities and you know, our ability to move around our local areas rather than being on those primary routes, coming into city centers.

Veronica Morgan: They're not knock on effects. Amazing. Isn't it? When you think about it, it's it, you know, you think working from home, what does that do? But then obviously that puts a load on like you say, wastes for argument's sake that you wouldn't have to worry about before, because everybody's in the city for most of the day or however it works, but, you know, I'm interested in your saying that it's measured that 200% more movements from urban to regional areas over there that eight month period. What's the, what's the sense in terms of the permanence of that? How do you predict this stuff?

David Tucker: Yeah, it's, it's very difficult. It's very difficult, as you can quite imagine. I think a lot of people have taken the opportunity to move to regional areas and, and just see whether that lifestyle changes white for them. Certainly some people I know have taken that journey and they'll start to contemplate whether coming back to the city full-time or part-time is, is going to work for them going forward. So really we don't know we've been, so infrastructure Australia has been doing some work with the States and territory transport departments to think about how travel behaviors and whether we can think about more adaptive considerations for our travel patterns. So it's very emerging kind of considerations there, but it will be important to contemplate whether that has a, a lasting impact on our, like your infrastructure needs. But what we do with that infrastructure Australia is, as I said earlier, we assess these major projects and consider whether they are good things to do for the, for the Australian community. And we've built a reputation for being robust and evidence-based, and, and I guess bringing accountability to decision makers as to where they target their investments. Yeah.

Chris Bates: I mean, that was going to be one of my questions is how does the conflict of interest between winning votes, winning seats, winning parliament and where you spend money when you're in parliament, you know, in terms of staying in power, how does that all sort of play out versus what makes ideological sense for Australians as a community as a whole?

David Tucker: Well, absolutely. So, so infrastructure Australia is an independent body, but it's something that we have to be very responsible about. We, we, we don't want to be hard-nosed, we've got to recognize that some of this infrastructure is being brought forward because it is stimulating particular regions, it's creating jobs and we don't really want to stand in the way of that. So our philosophy is about being a bit more pragmatic and say, okay, this piece of infrastructure is, is, has, it has, let's say a commitment made against it. So for whatever political reason, how do we then provide advice so that the decision-makers and the community are fully aware of the full range of benefits that that's really going to bring about. And yeah, it's about ensuring some accountability though. It's not about saying perhaps whether it should proceed or not. It's just being a bit more wide, wide eyes wide open around what that infrastructure is going to do for us.

Veronica Morgan: And really our advice can then be, how do we ensure that in proceeding with it, we can derive the outcomes that it's seeking to achieve. So what sort of projects are being brought forward as a result of COVID?

David Tucker: Well, I think there's a whole range, to be honest, there's, there's the smaller projects. There's been a lot of conversation around maintenance projects and use utilizing them to, to drive the, the workforce and to overcome known infrastructure deficits. But then you've also got the, the major large productivity enhancing projects that, that we all know the, the airports and the major roadways and the others. So there, there really is a range of, of major infrastructure, but these things don't happen quickly. The business cases for them take time to take the modeling and to, to undertake the economic analysis associated with during a robust assessment of their worth and their value. There's a lot of work in terms of procurement and risk and, and ensuring that the cost estimates are accurate. So we, we, we're not seeing these projects just brought forward without detailed planning. It's, it's more a case of what is ready to go. And then how do we ensure that they are being taken forward in the most most sensible and robust way so that they will have a user benefit in, in the longer term.

Chris Bates: And even though there's a very low interest rates around the world, government borrowing and spending money but there probably should at the moment, you know, to keep their economies going, is there really a problem though, in terms of actually labor, you know, in terms of actually businesses and people to actually do all these infrastructure problems you know, is it really even not really a money problem or desire to do them? It's more a case of have we actually got the ability to do them?

David Tucker: It's a very good question. And the other point to add in that is, do we actually have the material was to do them as well? So we've infrastructure Australia has actually been asked by government to do a major piece of work and we call it the market capacity study. And it's exactly that. It's trying answer that exact question. So we're looking at all of the infrastructure projects around the country that have been brought forward so that we have a more holistic pipeline at a national level to really understand what the what the big picture is of these major infrastructure projects. And then to look the next layer in terms of what resources do we need, what people and skills and capability do we need to deliver them? What, what materials do we need to ensure they can happen? And how do we then get a more smooth pipeline rather than a bumpy pipeline of focusing so much attention in one, say geographical area or one type of project to actually get a, a greater consistency.

David Tucker: And of course, with the pandemic, the might overseas migration has reduced, and we've always relied on resources from overseas to supplement our local workforce to deliver these major projects. So how do we ensure that we can get these projects to move forward at a reasonable rate, and we're not burning out our people and, and we're delivering projects in a safe and an efficient way. So we've been on a journey. We started that work in December. Our first cuts of that work is due by the middle of the year. And government have asked us to continue with that on a year by year basis. So it will be an emerging piece of work that we're undertaking in collaboration with all the States and territories to ensure that we have a pipeline that is workable. Yeah.

Chris Bates: And I guess it's you know, there's so many different projects out there, right. And scarce is figuring out what's more priority, especially if the world's in an infrastructure boom as well, how do you get top talent? And then top talent allows for more money. And then the whole project viability changes as well because the costs go up. So it's a really sort of challenging time I reckon, to, to kind of advise the government at the moment.

David Tucker: Yes, it absolutely is. I think in industry circles, it's been well known that we haven't, we've had a lack of rail signaling engineers for some time. And obviously with with a push to more public transport and, and some of the major rail projects around the country, we've got to ensure that we've got the capability to actually ensure they can be delivered.

Veronica Morgan: Honey. You say that it there's the amount of people that say, all we need is fast rail. That's going to solve the housing affordability problem. In many cases, that's, I've heard that said but yes, it's, it's all well, good to say, Oh, we need fast rail, but there's, there's so much involved. And even just the simple fact, you've got one segment, the workforce where there's, it, there's a lack of it's it's, mind-blowing, isn't it, in terms of all the different leavers and the, and the elements that you have to take into consideration before green-lighting anything. Yeah.

David Tucker: Yeah, absolutely. And in, in Sydney at the moment we, we're building a major airport in Western Sydney, we're building major roads, we're building Metro systems and there's a lack of crushed rock to be used as base. So, you know, it's, and, and I, I think there's also a lack of concrete. So the, these are, these are big, big issues because it's obviously a drive to push these projects forward and ensure that they, as I say, they're being delivered efficiently and that risks are being managed, but what's the, what's the expense of being able to achieve that. So this piece of work, I think, will prove extremely valuable to assist in governments, choosing which projects they bring forward and ensuring that they are done in a, in an evidence-based way to ensure that they can be achieved by the time client timeframes that's been put upon them

Veronica Morgan: Was with, of course, you know, hit the front page headlines or the light rail in Sydney, for instance, the massive cost blow outs and unexpected, you know obstacles and whatever it is that leads to these cost blow outs. So these are the sorts of things that you're hoping to to head off and be able to predict so that you can actually prioritize other projects that you be more confident you've got resources for. Is that sort of what you're talking about?

David Tucker: Yes. the, the light rail is a really interesting one. It's not one that infrastructure Australia looked at in detail. We, we were involved very early on but it was fully funded by, by the state. So it didn't pass out books for a, a detailed assessment later on. And of course there was a lot of, there was a lot of public debate in the construction of that project and the impact that had, but interestingly as a, as a resident and someone who walks across George street on my way to work, it's a fantastic environment. Now, it's, it's pedestrian friendly. The, the trams, when I see them are heavily used, and it's a service that has, has changed the way that we move around in Sydney. And so it was really interesting that there was a lot of debate as part of the construction and the cost associated with it. But there hasn't been much said about actually the benefits that have been achieved and the value that that has then provided to the city. And, and I know that some of the retail pro businesses along George street have absolutely thrived. So yes, they did suffer some pain during, during the, during the construction world, they've had benefits in the longer term and they, they will continue to have those.

Veronica Morgan: So how are those benefits measured though? I mean, that's, the individual businesses obviously can report an increased turnover, et cetera, et cetera. But as a, as a, in a macro sense, how those, how are they measured?

David Tucker: Yeah, so, so this is economics and the, this is part of the work that I've been doing at Iowa for the last 12 months. We have our assessment framework, which underpins the analysis that we undertake for, for each, each proposal that's brought forward to us and we use cost benefit analysis. It's in all of the States and territories use cost benefit analysis, quite simply as it sounds, it's a, it's an assessment of the costs versus the benefits to see if one outbalances the other. And there is a lot of literature and guidance on how that's done. And in a typical sense, if we think about the light rail we look at the, the travel time savings and the ammenities generally you can quantify a lot of things based on people's behaviors and willingness to do things. But what we have been trying to do through, or we are doing through our refresh of the assessment framework is to think beyond the economics.

David Tucker: So we absolutely want to see a robust cost benefit analysis being undertaken, but how do we then layer in those other aspects that are more challenging to put a value on, and how do we recognize those as part of, of our evaluations? And so that's really thinking about quality of life and although troubled time savings does have a quality of life aspect to it. It's also about how people move and, and how they feel in a, in a, in a particular place. And and then there's obviously the the broader business benefits and, and the, the opportunities that are derived at a, at a more of a place level that are quite difficult to, to cost through reflective of a, of an individual project. So, yes, we we've been on this journey to try and be more holistic with our, with our assessments, so that when we provide advice on these major projects, it's not just focusing on on a cost benefit analysis kind of number, but actually more, more broader than that. And, and thinking around the quality of life aspects, we've, we've introduced sustainability and resilience and more those strategic level thinking to, to contemplate what these projects are actually going to do for our places and, and for the network or the system in which they're being introduced into.

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David Tucker: Something diverse. When you talk about those things, is there one project or a number of projects where you think, you know, this is going to be a huge impact to our quality of life, but also a massive benefit to costs that, you know, you think that, you know, you're excited about, I guess, and things that we need to do. So

David Tucker: We published on, on Friday that has 180 items on it. And they're split into two categories. We have initiatives which are essentially problems and opportunities, and they're saying, okay, we've, there is a gap and something needs to be done here, but we don't define at that stage what the solution is. We're just saying that there is an opportunity for investment to reader to investigate the most appropriate solution to it. And then the other category we have on the list is projects. And that's where we've seen a full business case that actually has a solution. So and then the, the next layer of categorization is priority and high priority. So by being on the list, they are naturally priorities in themselves, but then we identify those high priority things which have greater scale, greater influence a a greater anticipated impact. So we don't rank the items on the list, per se. We don't have our high priority projects that we've put in order because everyone is, is individual. And they go in different geographical locations and they're in there for different sectors. So how could you prioritize, say a rail line in, in, in Victoria versus a road project in NWA, it's not really fair to compare them. So it's more about recognizing the full range of benefits that each one has.

Veronica Morgan: It's interesting. You say that only because I was the very next question. I was going to say what's top of the list. What's the top of the list. So you can't tell me that, but rather than a specific project, is there a, that is starting To rise to the top of the list?

David Tucker: I don't think so, actually. And I said earlier that the list has become more diverse. And in the last couple of years, we've, we've really recognized the need for water security and for communications improvements. And that's recognizing not only the, the, the shift that we've seen to regional areas in the last 12 months, but also that there was a lack of infrastructure in regional remote areas. Anyone really, that was demonstrated to a very high profile way through the Bush fires, where we, we obviously had people in, in regional areas who are terribly affected, but our ability to communicate with those people through social media and other and through mobile networks actually saved lives. And it was recognized that in, in Southern new South Wales, where that was occurring, the, the networks were, were okay. There was improvements needed, but they were okay, but we're not as fortunate as that in other regional locations. And we as a name, as a first fastball country need that type of coverage across all of our country to benefit people no matter where they are. And of course, with the pandemic and the ability to travel, it's recognized that they, the tele health and the, and the tele education activity has become a big trend. And the trends that we've seen have probably been, we probably seen the change in eight or nine months that we would have anticipated over the next eight or 10 years.

Veronica Morgan: Yes.

David Tucker: Both it's really advanced the, the things that we were already anticipating to occur. And so our infrastructure kind of needs to, to keep pace with them. I I've said it to a few people, aren't we lucky that we spent a lot of money on the NBN, because that was all that, again, light like the light rail example got a lot of media press for how much money it costs, but actually it was a fantastic network to have the, the NBN was able to release latent capacity. So, so we've got greater bandwidth and enabled us to, to work no matter where we were, why we were living or operate.

Veronica Morgan: And so,

David Tucker: Yeah, I think we've definitely seen a big change in the types of infrastructure. That's on our list away from those traditional road and transport related projects to, to digital to water and to answer some of the social infrastructure as well.

Veronica Morgan: Now, what is obviously a big issue, and I don't know, even things, the four corners show on the bushfires down the South coast where, you know, people turn on the tap and there's no water, you know, and they're trying to fight a fire. And it was also at the tail end of a drought also. And I wonder, you know, traveling around the countryside as as I like to do on the odd occasion, seeing the lovely lush green Hills that we have now because of El Nino that wonder what's going to happen, you know, with this migration to the regions all these people forget there's a drought or probably concept there's been a drought or what it looks like in the drought or having a shorter, shorter drought. You know, I saw, I would imagine that that is something that sort of there's a real spotlight on water security. That's just one reason. I mean, obviously there's lots of other reasons. So what, what can be done around that because dams are very unpopular aren't they,

David Tucker: They, they are but absolutely more needs to be done. And I think we've, we've got the challenge of possible water, which is what we, as the community drink every day. And then we have the non-potable water, which is what our agricultural producers use for, for obviously growing crops. And that, and there's a balance between how that, how that water is used for different purposes. Absolutely more needs to be done. We, we, we've seen this before, where we go through a drought and then we get the El Nino and everything's right again, and all those investments come off come off the table again, but it's about sources of water and how that's, how, how water is provided. But then there's also the transmission of water and ensuring that if a, if a local area has a shortage, that they're not just relying on one form of water being provided, but there's, there's a backup system.

David Tucker: And so it's having that resilience in the network to ensure that the water is provided. And so they, again, the priority list touches on water in, in many different areas. They in Perth and, and, and the Southwest coast of WLA, we, we broadened an existing initiative for greater water security in that area. We've, we've got a new listing for Southeast Melbourne for the treatment of recycled water. So there is a lot of evidence of water just being released into the, and there's a great opportunity there where water can be used for planing fields and, and other irrigation opportunities rather than and so that the, the possible water that our communities need is, is is for the community. And it's not being used in other ways. So how do we recycle water in a better way to get that around?

David Tucker: We've also listed two new initiatives. In fact, there's quite a few new water initiatives. There was two in South Australia, one around the Bourassa region for the water supply for agricultural use in that region. And then further North in, in Northern South Australia for water security for the, for the industry in that location. So we, the way that we, we use the priority list is we draw our attention at a national level to big things, and then find the States and territories, then come to us with region specific responses. That's take that national problem at a more local level to actually then drive the investment in those areas. And we, we saw a fantastic example of that a couple of years ago, where we listed a national road safety problem, and the States and territories have now come forward with targeted solutions to regional roads in response to that. And so I think with the water story, we'll, we'll see that kind of action occurring over the coming years as well.

Chris Bates: I mean, the other, I guess key resource when you're in a house is electricity. You know, how does that sort of transition gonna play out? Or we got a massive glaring hole in terms of if we go all to solar or you know, we all want more renewable and how does that sort of play out? And are we sort of ready for that sort of transition, you know, electric cars and all these sort of things?

David Tucker: Yeah, I, again, we, we, we've taken a, not a, a broad view, but we've taken the view that there is multiple requirements here. There is, there's absolutely a role for renewables. But there's also a revolt, a role for more dispatchable energy sources that provide that, that underpinning of constantly energy as, as we need them. And again, it, it, it can vary between different geographies as well. So I think again, so we released a report in December on, on the impacts of the COVID pandemic and it had some fantastic statistics in there as to how things have changed. And one of them that came up was there was an increase of 165,000 solar panels of a small scale. So generally that's your, your homes, people have really embraced the, the solar opportunity for their homes. And I think Dan was just in the first half of 2020, it was just the first six months. So there's definitely been a, an uptake by, by households. There is also a need to do more by governments, both in terms of our sources of energy, our types of energy and the, and the distribution of energy to ensure that we do have that resilience and capacity in, in our networks to support, to support demand. And, and obviously when, when we have a heat wave and there's an overload of on the map, that's the type of thing that we wanted to be able to protect against.

Veronica Morgan: It must be quite frustrating for you that this is such a political issue. I mean, I know that you're independent as in infrastructure, Australia is independent, but I mean, these, these are highly political issue and, and, and the inactivity from our current government in terms of having a policy on these, you know what I mean, and a rule plan, it must drive you nuts.

David Tucker: Not really 

David Tucker: Independent. So that gives us the scope to be, to continue to voice and to draw attention and to raise profile of big matters that need to be resolved. So we published a, an infrastructure audit in 2019, and that was a national cross set tool view of our infrastructure needs and gaps across the country. In response to that, we are currently developing an infrastructure plan or a strategy that responds to many of the problems and opportunities that were identified in the audit. And so that, that plan is being finalized for released middle of the year. And that really is going to target the reforms and actions that we think government needs to take. So all we can continue to do is use data, use the evidence that's presented to us to challenge thinking, and to continue to push the debate on, on what is needed to occur going forward. So it's not about blame, it's not about saying what hasn't been done. It's more about taking that forward looking view on these. This is what Australia needs going forward. And, you know, I think we found the, when we did our last plan in 2016, a lot of the recommended

Veronica Morgan: We put forward in that have been taken forward and have been kind of been completed.

David Tucker: And so when we would then hope that this next plan our goal is to provide recommendations that are practical and achievable. And so we would expect that many of those can then be addressed following the release of this next plan as well.

Veronica Morgan: So what are you most excited about in terms of, you know, what's what could come or what you've been working on?

David Tucker: That's a, that's a great question. I think I mentioned about the market capacity work, I think from our engagements with us, our States and territories, that's going to prove extremely valuable in terms of thinking about how we can get a more stable and an efficient pipeline for the delivery of these major projects. So, so that will be a massive piece of work for us. One piece of work I haven't spoken about is our work on regional gaps. So we have our, our priority list, which is termed nationally significant infrastructure needs. And so we, we have a threshold in that to recognize those big things that are most needed for, for the country, but we don't want to undermine the importance of local and regional needs as well. And so we've commenced a piece of work around, they specifically looks at the needs of our, of our regions and communities so that we can draw attention to that as well.

David Tucker: And as I say, we, the, the priority list, the national priority list does have a lot of regional focused elements to it. We'll take that to the next layer. And again, look at the data that's occurring across the country to, to then identify a pipeline for regional development as well. So I, I think that's very, that's very interesting and exciting piece of work. For me personally, I mentioned about the refresh of the assessment framework, and that's really going to change the way that we undertake our evaluations and, and take that more holistic view so that, you know, as alongside just an economic lens where we're taking a, more of a strategic and social lens as well, so that we see these projects in a, in more holistic way. And we've, we've also done quite a bit of worker in, in the sustainability and resilience space and in thinking about how our infrastructure is not only responding to an immediate challenge, but having a long-term benefit for our communities and that that infrastructure is adaptable and resilient to a range of future circumstances. So I think that that for me, is some, some areas that I'm looking forward to certainly in the, in the next six months or so, it sounds very exciting, but you, you mentioned the word social infrastructure a few times, what exactly is that that can vary? So it can be hospitals, schools, it could be the justice system social housing even even our, our green spaces and our, and our so parks and and recreation spaces and even our blue infrastructure. So our waterways as well.

Chris Bates: Yeah, I think the I mean, what's really interesting around the work you do, is it just highlighting what could happen and what should happen and what should be the priorities for the government longer term. And a lot of people haven't really even looked at your list before had no idea the impact that so many different projects in so many different categories and needed. And it's some actually going to happen a lot it to happen, and they're going to completely change the livability of some places versus others access to the city, et cetera. So I think very well listeners that are looking at the sort of property market is a really good sort of report to sort of be tracking and constantly be watching what's happening longer term, because they could importantly impact the decisions you make from an investment point of view or from a living point of view. So I think that's probably the, the real takeaway. I'd really encourage our listeners to sort of really kind of delve deep and keep tracking this, because I think it's really interesting to, to know what may come

David Tucker: In the show notes too, so people can access that report, but I was gonna say so we published the report, but actually what would be most valuable to your listeners is our online portal. So go onto the infrastructure Australia website and our priority list is an interactive tool. So you can filter based on the sector you're interested in, or you could zoom in on the particular geography that you're interested in and see the Rangers, the range of proposals that have been put forward that would affect your area of insurance. And that has, that has gone at a lot of, of interest. And that's a tool that we will continue to do. We'll continue to keep updated and, and the, the priority list, as I say, it was published last week, but it's continually updated throughout the years. So we accept proposals at any time we assess them and if they are deemed appropriate for

Veronica Morgan: Then the priority list gets updated. So it is absolutely a worthwhile resource to look at what those, what we consider to be the, the investments that are most needed for Australia. Fantastic. We'll definitely put a link for that in the show notes then as well. Do you have also, can you send us a copy of that December report that you mentioned earlier? Yes, I can. And we'll put that into,

Chris Bates: So thank you so much, David. I really appreciate it. I mean, it's a really deep conversation. I think if, if clients haven't or, you know, listeners, haven't started to think about the longer term impacts of different infrastructure you know, there could be a big hole, you know, that could be a problem that, you know, could always hold back your sort of investment because no money is going to get fixed that problem, even though you think it should. So really appreciate you coming on.

Veronica Morgan: Thank you very much, really appreciate. It has been a good chunk.

Chris Bates: I want to do a Dumbo for us, but Veronica, have you got one for us?

Veronica Morgan: Oh, I do. I actually have I went through a house in, I won't give the suburb away cause it it's probably going to come on the market soon. And so but it was in the inner city. Okay. And I looked at this terrorist house with an agent. He said to me, well, it's just been renovated. You know, it's lovely, it's great. It's in a really good street, et cetera, et cetera, et cetera. I was so excited going to look at this off market for my client. I really thought it was the one, right. I got there and I walked inside and I was just so bitterly disappointed. I wanted to cry. And they, these people had bought this property. It needed a full renovation and what they'd done was so cheap and awful, I just was like, what the hell? And it was just awful.

Veronica Morgan: The cheap kitchen, cheap Austrian, cheap joinery, everything cheap, cheap. And I thought missed the market. This thing will struggle to sell, but that wasn't the full Dumbo of it. The full Dumbo, as I discovered, was when they bought it. It had been converted into a series, a, some of these big old terraces in inner city suburbs. It sort of like boarding houses, you know, they, they were converted into flats. So I think there was three or four flats in this, apart in this some house. And so the people that bought it it's thought that they would just be able to just renovate these flats and continue renting them out as a high yielding investment when I got to council and they did no due diligence, they bought this and didn't check any of this stuff out. Right. So then they've discovered that not only will council not allow them to do that, council said, no, it has to go back to one residence, but double whammy it's actually heritage.

Veronica Morgan: So they had all these massive, additional costs that they had not factored in because they had to spend a lot of money, restoring heritage beaches that they had not budgeted for. And so when it came down to actually doing the renovation, they a renovating it, creating one home that they didn't factor into their, their their sums and their expectations. So they're not going to become slum laws. Like they thought they were going to be, yes, I'm Lords. Secondly, and secondly, that they had absolutely no concept of what it takes to restore a heritage building. And so the cost, every basically their entire renovating cost score was evaporated in those heritage restoration elements of the project. And so when it came down to actually finishing it off, so it's livable, they didn't have a lot of money left over and they did the cheapest, most revolting renovation. That thing won't sell, it'll struggle. It, might've probably struggled to rent it even because it's just not the right product for that market. And, and I just couldn't get over. I scratch my head. There's, you know, they bought, they paid a few million dollars for this when they bought it, this isn't not a cheap property. And I just scratch my head to think that somebody got that amount of money to invest in a property and they haven't got the smarts or the common sense to do their proper due diligence.

Chris Bates: It's a really interesting one actually, because we were starting to say, you know, there's nothing on the market and clients are desperate. And so when they're desperate, they buy, you know, get, you know, buy different properties and they would've likely would want to buy. And that's, unrenovated, let's say, and they're expensive properties that are un-renovated and they haven't got much cash and not enough cash to do a proper renovation that these type of properties need to sexify. They might be happy with it. They might, well, we were happy to live in a cheap, you know, Bunnings kitchen and a cheap you know, bathroom, but ultimately at some point you decided to sell that property or you might have to sell for some reason. And so, you know, that's definitely happening now where people can't afford to do a proper renovation of buying properties that need a property renovation, and what's going to happen. There is you just going to butcher your good asset. And so you've gotta be very careful with that at the moment. I think Israel

Veronica Morgan: Totally. And in fact, we often see in, in these sort of hot market conditions that the unrenovated property sells for disproportionate amount compared to the renovated property. And if you add the two together most people I think are overpaying for the unrenovated property. And then of course you de-value it, if you don't renovate it to the standards that it needs to be for that area. So it is a real trap. There's no doubt about it. We want to make you a better elephant rider. And this week's elephant rider training is

Chris Bates: The, you know, someone listening to this podcast is already preaching to the converted, I guess, you know, they're investing in the knowledge, hopefully by this needs to ask. But I think also looking for other sources that are reliable and that actually increasing your knowledge and are getting updated and you can just basically track it and spend weeks and weeks and every day looking at things. But now infrastructure is one of those things that I do think has a huge impact on the livability and how cities will change and potentially prices. You know, if a new train goes in a new airport you know, major changes to technology, technology and communications or water, et cetera, I think infrastructure SREs is one of those things that you should track such as development, or there's a whole list of things demo demographics, which we've done on here a lot as well and migration and you know, what the RBA is doing, et cetera.

Chris Bates: So yeah, find good sources of infrastructure and infrastructure is one of those to really track. And so you stay in your head of things and you're constantly questioning your confirmation bias, you know, is what you thought the world was like when you first purchased that property, still the world that is, you know, 10 years later, right. And is your property still going to perform well in the world coming? And you've got to always be questioning things because the easy thing is just to buy something and hold it. But if the world does change, maybe your decision should change. Maybe you should say, well, yes, I done well out of that property for those reasons. But if I did sell, yes, I pay capital gains tax and selling costs, but I could get a much better property that will benefit, you know, from the way that things are moving. So nothing's set in stone is a good philosophy for life.

Veronica Morgan: That's very true. One thing I would just add in when you're looking at infrastructure as well, there's a difference between Greenfield and brownfield and Greenfield is when it's, they said, yes, it's going to go ahead, but there's no actual groundbreaking broken yet. As opposed to brownfields where that's actually all commenced and actually is going to go ahead because you know what elections come and go. You know, it is political, this whole infrastructure thing. So therefore you've gotta be pretty certain that not only is it actually going to come about, but is it going to come about in a reasonable timeframe,