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Nick Carney's Optimistic View on The Future of Cities

Nicholas Carney is a Partner at the law firm Herbert Smith Freehills. Nick advises governments and private sector clients in Australia on all aspects of major infrastructure, construction, technology and future cities projects, including public private partnerships, divestments and privatisations. 

In December 2020, he joined Victor Perton in the Optimism Cafe.

Victor Perton:  Nick Carney, what makes you optimistic?

Nick Carney:  I'm a naturally optimistic person, which might be a bit rare for lawyers, and no doubt there were some times this year when my optimism was challenged. But, really, I think this year has been very difficult for a lot of people, but I'm feeling very optimistic at the moment about the way we've come through it collectively as a group, and hopefully we can learn some of the lessons, and hold onto some of the good things that have come out of what's a very, very difficult year. That makes me very optimistic.

Victor Perton:  Reading your report on cities and infrastructure and your social media comments, you are really optimistic about the future of Australian cities. What makes you optimistic about the future of Australian cities?

Nick Carney:  "Thanks, Victor.  COVID has obviously had an impact on cities. There've been like lockdowns that have been forced, lots of shops that have been shut. It's been very, very difficult. You hear stories about people making tree changes or sea changes and moving away. And we, as a firm, as a global firm with a big Australian presence wanted to explore that.

"So, we reached out to 450 senior executives who were involved in infrastructure and redevelopment projects to ask them how they're feeling about current and future projects. It was 450 people globally, and overwhelmingly, people are optimistic about their current projects and about their future projects.

"In Australia, that was particularly noticeable where 86% of the respondents we interviewed are more optimistic now than they were before their projects. So, that underpins my optimism. It was also very interesting understanding what's driving their optimism. 

Victor Perton:   Well, one of the things that changed in Australia, of course, is the national cabinet, a complete rewrite of federal state relations. And you emphasized the importance of government and private sector collaboration. But we've been talking about that for 20, 30 years and recycling assets. So, what have you seen in this last year with the national cabinet and, of course, the need to fund what they call shovel-ready projects?

Nick Carney:  It's a good question. So, look, in Australia, we have lots of layers of government as I'm sure all your listeners would appreciate.

We've got local, state, and federal. And so first of all, we've seen tremendous collaboration between various lines of government during COVID.

There's an adage that says never waste a crisis. I don't want to make light of the crisis because it's really been challenging for people, but we have seen people put aside their political differences and work together in the common good, and we've seen the results from that. And I one source of optimism for me is that having seen that and having seen the success in the national cabinet, it would be great if we can now apply that to infrastructure, to our cities, to our services.

And I think that there's a framework and we saw last Friday that the national cabinet was talking about how the national cabinet works to coordinate the planning, and timing, and phasing of infrastructure projects, taking into account the challenges around capacity constraints that may exist. And I think that's a really positive development. It's long overdue, I would say.

Victor Perton: One of the things that you talk about in the report is the recycling of assets. And, as we've joked, these spectacles I'm wearing are from a Sydney start-up and the frames are recycled, a much smaller scale example of the circular economy. So, what's happening with the recycling of assets to help make that better future for cities?

Nick Carney:  I think there's two things that came out of our report and the discussions we've had with people. One is the circular economy, and I was really pleased to hear that the glasses you're wearing a part of the circular economy. They look fantastic, really go with your jacket and background images of the sunrise.

The circular economy is about testing how we can reuse and recycle things in order to reduce waste and be more efficient.

We're working at the moment on the Western Sydney Aerotropolis, which the New South Wales government is planning. It is not often you get to plan and master plan and deliver a new city, and so they are thinking a lot about how you can encourage and use circular economy principles as part of that.

And it's much easier when you're starting with something new than generally.

But also as part of the sort of COVID and our interactions with China at the moment around trade, we as a country are looking to be more resilient, and being more resilient means doing more with what we've got. So, that's circular economy. I think it's a really exciting and emerging area. And so that's the first one.

In terms of recycling assets, that's also a phrase that has been adopted in the last five, six years about how we fund new infrastructure projects.

We've seen some really, really innovative thinking in New South Wales in particular, where we've seen government selling infrastructure assets, and then using the proceeds to build new infrastructure assets, and they sort of call it the virtuous cycle. And the money has to come from somewhere to do this.

If government is choosing the right projects, so they're productive projects that they are investing in and they are going to create jobs but also have a long-term productive impact on our economy, on the wellbeing of our citizens and our cities, then it's definitely a virtuous cycle you end up with.

Victor Perton:  I worked on the G20, which Australia was the president of in 2014 and, of course, the global infrastructure hub was one of the initiatives of that summit.   I recall then there was a hundred trillion dollars in a pipeline that needs funding.  And insfratsrtucture organisations in Australia includes Infrastructure Australia, Infrastructure Victoria and similar bodies in New South Wales and the other states. My impression is that government and the private sector is getting better and better at identifying projects. What's your view on that?

Nick Carney: They are the IBodies, as they're called.   Infrastructure New South Wales iNSW and you've got Infrastructure Australia and so on, and the different states have them.

I think they play a really important role in trying to de-politicise infrastructure priorities. And they do that in a number of ways by identifying, putting out a pipeline of projects that they think make sense. And then they have important roles through gateway processes where they test projects : The economics and the cost-benefit analysis around them, as well as just the robustness of the processes they're going through. I think it's really best practice having bodies like that. And I think that's been a great export that we have done to other countries, the iBody concept.

Victor Perton:  So, I've done a few keynotes and some conferences in the last year with procurement lawyers and bodies, and the changing role of the lawyer, artificial intelligence, machine learning, the smart contract. So, what's changing for lawyers in this process, and how are you, as a leading lawyer in this space, how do you see your work changing into the future, both in a more competitive environment, but also leading through using these intelligent contracting tools?

Nick Carney:  "Yes, I'd say there two key things have changed for lawyers in the last couple of years, particularly infrastructure lawyers.

The first is we're seeing something called convergence. We're seeing that the problems we're facing aren't siloed problems. They're problems that span different areas. So, solving the problems around cities involves infrastructure lawyers, real estate lawyers, planning lawyers, and also technology lawyers. We're seeing a convergence of disciplines and skills. So, you have to be more adaptable as a lawyer on projects like that.

"The other one is I think the role of technology. It flows on from the first point, but technology is everywhere.

"Technology offers very, very great opportunities for improvements in productivity, in health, in wellbeing, in the liveability of our cities. And so, again, you need to have a good understanding of technology and be able to apply that to hard assets like infrastructure.

"Infrastructure tech is a real interest of mine. The other thing is we have set up a digital law group within our firm to sort of focus on digital contracts, to focus on smart contracts, blockchain, and so forth. And so it's a really different set of skills to that which are being taught in universities, certainly when I was at university, and it's an exciting area. I just finished a coding course that we ran internally, which really pushed me and my frustrations with typing and having to workshop but it was fun."

Victor Perton:  So, will your next contract be an app, Nick?

Nick Carney:  Mine won't be. My average contract, Victor, is about 600 pages long so it would be a very complex app. But I think that there are apps that we are building for clients to manage notices that are given under contracts and to manage various processes. We work with clients to develop apps like that and, over time, you'll see more of that.

Victor Perton:   And what in your work Nick, what's a story of optimism and hope that you've seen in 2020?

Nick Carney:  I'll give you one that's specifically from my work, and then I'll give you a second one. We have done a lot of work around social and affordable housing in the last couple of years and that's been very interesting, helping the New South Wales government set up the social and affordable housing fund and a range of others. What I've found really hopeful is there's a lot of interest this year in social and affordable housing investment opportunities. It's not an area that the private sector has traditionally supported, but the private sector, and largely driven by the superannuation funds, see it as an important investment because it reduces inequality. It can reduce homelessness. It is an asset class that government has begun to start experimenting with and coming up with some innovative structures for private sector collaboration.

And so I think at the moment in New South Wales, I think there might be about 60,000 people who are on the social housing waiting list. Now, that's quite under-reported, I would expect. And so if this new wave of interest can translate into reducing that, I think that's really, really positive.

The other thing that made me optimistic is I'm going to an event just after this because I sit on the board of the Sydney Story Factory, and the Sydney Story Factory encourages and helps young kids to use creative writing and to be creative writers. And the event I'm going is the launch of a book called A User's Guide to the Pandemic, which is a collection of stories by young kids about their experiences with the pandemic, and some of them are fantastic, very heart-warming. So, that's a little plug, but it's just very optimistic seeing the resilience of people in coming through this. Hopefully, it can continue.

Victor Perton:  We'll include that link when we broadcast this. In fact, it's another intersection in our lives, Nick. I recently participated in the Hopkinton township's COVID book of hope and optimism, Hope Through Community.  My little poem was the first one, on optimism. So, it's a wonderful thing you're doing there, Nick.

So, lastly, you're a lawyer. Typically, the assessments are that lawyers are untrusting in the contracting process, and that's why you end up with a 600-page contract. So, how do you maintain your optimism in an industry that often has a bleak view of trustworthiness?

Nick Carney:  I would say that lawyers are definitely trained to be sceptical. I think that they are trained to be sceptical and at times adversarial. Lawyers like to think about all the things that could go wrong and we have to draft for all the things that could go wrong. I find that's a very tiring way to think of life. I think it's a bit easier to focus on what needs to go right. I think it's more practical to say not what could go wrong but what needs to go right and to really focus your energies around that. That's what we do with our clients and try to approach things that way. That's how I deal with it, Victor.

Victor Perton:   University of Melbourne philosopher Karen Jones, argues that trust carries a feeling of optimism that people will do what they are being trusted with.  That's going to be one of my two favourite optimism phrases out of 2020. 

Nick Carney:  "I think there's lots of views about infrastructure projects, and they're hard. They take time. They're challenging. But I came across a quote a couple of years ago which really sums up, something that Bill Clinton said, and he said, "Nobody remembers the naysayers." He said, "In the end, all that endures are the builders. And in the end, even the builders are forgotten, and all that endures are the ripples of what they built." And he said, "So, go out and go on." And I think that really works for infrastructure projects.

"For infrastructure projects, you really have to have optimism and push forward because they're very challenging but, in the end, the impact on people's lives is lasting."

Victor Perton:  If I could end with one personal question, how do you maintain your optimism? What is it that keeps you going as an optimist, both personally and in your work?

Nick Carney:  "I have two young children. I have Harriet and I have Ted, who's a Theodore, Ted, and I find that spending time with them makes me very optimistic. And one upside from this year that I'm fortunate to have is I worked from home more than previously, which means that I saw a lot more of Ted in his first year than I did of Harriet. I find hanging out with Harriet and Ted makes me very optimistic."

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