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2.4 Adapt infrastructure for modern needs

Creating better communities does not always mean building new infrastructure. Even under projections for a growing population, Victoria already has most of the infrastructure it will need by 2051. Looking after and using existing infrastructure better can be much cheaper than building new infrastructure, especially in established areas where construction might be particularly complicated and expensive. Well-maintained assets can remain sustainable and effective as they age, as demand grows and as technology continues to improve.

Infrastructure investment is at record highs in Victoria. The Victorian Government plans to spend an average of $22.5 billion a year on infrastructure over the 2021–22 budget forward estimates1 and local governments collectively budgeted $19.8 billion for capital works in the 2020–21 financial year.2

All governments have made significant new commitments to infrastructure spending, including to mitigate the economic effects of the COVID-19 pandemic. Yet this is only a fraction of the value of public assets.

In 2018, the Victorian Government managed non-financial assets valued at $265 billion,3 not including $14.2 billion of physical assets held by public hospital services.4 VicTrack and VicRoads alone managed more than $92 billion in transport assets.5 Councils manage over $100 billion of assets including local roads, street and local drainage services, and community, sports and recreation facilities.6 When it is well managed and maintained, infrastructure should last a long time. This means many current facilities, including major hospitals, much of the transport network, and public buildings used to deliver services, will still provide vital services to future generations. When infrastructure is not well managed and maintained it becomes less efficient and effective, and Victorians may experience reduced service quality. Waiting times to access non-urgent health care could increase due to bed unavailability, or transport services could be interrupted from worn train tracks. For some of Victoria’s most vulnerable public housing residents, ageing facilities can mean an extremely hot home in summer and a cold home in winter, impacting their health and wellbeing.

Building new infrastructure is not always required to meet the challenges of a growing and changing population. Victoria already has most of the infrastructure it will need to support its population to 2051.

Managing assets well is cheaper than new infrastructure

Ensuring public assets are fit for purpose, efficient, effective and adaptable helps meet growing demand pressures as technologies, demand and service delivery models evolve. Proactive and evidence-based management practices support asset maintenance, upgrades, and the eventual replacement, consolidation or disposal of assets when they are no longer suitable.

Sound asset management requires effective planning, acquisition, operation and disposal of assets to meet current and likely future service delivery demands.7 The asset management lifecycle involves initial assessment of investment proposals, ongoing maintenance and renewal, and asset replacement or disposal decisions, as shown in Figure 15.8 Good asset management can optimise the use and lifespan of existing infrastructure, minimise or defer the need for new assets, reduce disruptions, and allow for rapid responses to changing demand or other circumstances.9 In contrast, inadequate attention to maintenance can accelerate the need for major repairs, shorten the operational life of facilities, and create worse outcomes for users.10 Despite major new infrastructure investments, the management of existing public sector assets is often neglected.11 Victorian Government assets are managed under the Asset Management Accountability Framework, overseen by the Department of Treasury and Finance.12 It requires accountability for asset management, and many agencies have improved their approaches since its introduction.13

However, agencies inconsistently interpret their responsibilities and often focus on building or buying new assets, rather than managing existing assets strategically to maximise value.14

Inadequate and reactive asset management can incur higher maintenance costs, reduce financial sustainability and cause premature deterioration. In some sectors, buildings and fixtures are becoming more difficult to maintain in an acceptable condition as they grow old or are heavily used, and less able to support effective, safe and efficient services.15

Outdated buildings can be inaccessible, energy inefficient, unable to integrate modern technology, or unsafe. In rural areas, some councils struggle to maintain many ageing assets that no longer meet community needs (see recommendation 89). A reluctance to dispose of facilities that no longer meet needs, particularly in the face of community opposition, can prevent the rationalisation or consolidation of facilities, even when it could enable a higher quality of service delivery.16

Victorian Government agencies often have limited or inaccurate data on the condition of their assets.17 Agencies need good asset condition data to make strategic decisions about maintenance and infrastructure spending. Better data can help them get the best value from investments, make good decisions about when to acquire, renew or divest assets, be responsive to changes in demand or use, and provide better services.18

Figure 15 The asset managment lifecycle

Figure 15: The asset management lifecycle. This figure shows the phases of the asset management lifecycle, from planning and acquisition to operation and maintenance, and renewal and disposal.

A more strategic and transparent approach to asset management is likely to involve a greater commitment to timely maintenance, asset renewal and retirement. It would make facilities and the services they provide more reliable, reduce interruptions, promote more integrated infrastructure planning and generate greater efficiency

Ongoing monitoring of demand, innovations and asset condition helps infrastructure planning across the lifecycle and aligns upgrades, rebuilds, consolidations and divestments with needs. It also means building new infrastructure only when it is necessary.

Today’s infrastructure will need to meet evolving needs

Even well-maintained, upgraded and renewed infrastructure will need to adapt and evolve. The pace of change in technology and service innovation is rapid, and inflexible assets risk premature redundancy. Building facilities to be as flexible as possible would support simpler, less expensive and faster upgrades when required, which can be many times during the decades that most assets are in place.19 Planning for upgrades, rebuilds and new infrastructure should consider the ease of future asset maintenance, upgrades, expansion and possible repurposing if required. Some projects can be planned to allow for future expansion, including through design or site choices that preserve options.

Public buildings and infrastructure need to adapt to match the changing needs of Victorians. Many public buildings do not provide suitable access for those with impaired mobility.

The need for dignified access to, and use of, commercial and public buildings will only become more pressing as Victoria’s population continues to age. Evolving building standards and the impacts of climate change mean ageing properties may need upgrades to keep people safe, comfortable and healthy.

As a service provider, major landowner, employer and tenant, the Victorian Government is uniquely placed to drive positive, long-term change.

Recommendations for better managed and more modern infrastructure

Infrastructure Victoria makes the following recommendations to adapt infrastructure for modern needs. These would be most effective if complemented by improvements to planning and funding that support: resilient infrastructure networks and assets (see section 1.3); public transport accessibility (recommendation 44); the maintenance of regional roads and rail freight networks (recommendations 78 and 79); cooperation with regional councils on community infrastructure (recommendation 89); and making social housing suitable for changing climates (recommendation 95). 

Recommendation 54: Require accessible buildings for public services

In the next year, establish an accessibility upgrade fund to contribute towards priority building upgrades to meet contemporary accessibility standards. By 2032, require all Victorian Government provided and funded services to be delivered from premises that meet contemporary accessibility standards.

Infrastructure supports delivery of many different public services, but not everyone can access the buildings used to deliver these services. One in five Victorians has a disability,20 and nearly one in six is aged over 65 years.21 Many older buildings used to deliver services were not built to contemporary accessibility standards. These include schools, police stations, sporting and cultural facilities, buildings used to deliver community services,22 and associated pathways, car parks and seating.23

In May 2011, the Australian Government introduced the Disability (Access to Premises – Buildings) Standards 2010.24 These standards provide references to technical specifications to ensure dignified access to, and use of, commercial and public buildings. They aim to provide older people and people with mobility, vision, and hearing impairments with better access to places and services and more opportunities to connect with family, friends, and the community.25

These standards have largely been incorporated in legislation and building standards26 but only apply to new and refurbished premises. Many legacy buildings are not required to meet these standards until they undergo a major renovation or refurbishment. Consequently, some public services are delivered from inaccessible buildings, making it hard for people to access those services. For example, evidence from Odyssey House Victoria shows that residential facilities delivering alcohol and other drug rehabilitation services require upgrades to improve accessibility.27

All Victorians have a right to equal access to public services and the premises delivering them. The buildings enabling these services are also workplaces, and need to be accessible if the Victorian Government is to achieve its 12% target for employment of people with a disability in the Victorian Public Service by 2025.28

The Victorian Government has committed to using universal design principles when designing infrastructure and public transport projects.29 However, these tend to only apply to designing new buildings or upgrades and not improving existing infrastructure. There is currently no requirement for buildings delivering public services to meet contemporary accessibility standards. The Victorian Government should adopt a policy requiring all buildings delivering public services to achieve contemporary accessibility standards by 2032, even if they were constructed before the standards came into effect. This aligns with the same timeline for achieving improved accessibility on the public transport network (see recommendation 44).

Proactive retrofitting will be a significant undertaking, but the Victorian Government does not need to upgrade every building. Over a 10-year period, it can relocate services from inaccessible buildings to accessible ones, especially if buildings are leased. It can incorporate advice from diverse communities about accessibility requirements. In some cases, it may be more cost-effective to retire old government-owned buildings than retrofit them, and government consideration of property disposals should prioritise inaccessible buildings. Simpler modifications can be incorporated into regular maintenance work. Appropriate exemptions should be included for heritage buildings where providing good accessibility is not feasible. For larger, unavoidable and priority upgrades, the Victorian Government should establish a fund to contribute to upgrade costs. Work needs to begin immediately to achieve the 2032 target, including identifying and costing priority upgrades to establish a suitably sized fund.

Recommendation 55: Rapidly renew old public housing

Rapidly renew dilapidated public housing properties to improve functionality, accessibility and energy efficiency with a priority to renew at least half of all older low-rise apartments and older three bedroom detached dwellings by 2031.

Victoria’s public housing is deteriorating, with over 60% of dwellings being more than 30 years old.30 Housing over 30 years old has higher maintenance costs than newer homes.31 Ageing homes mean rising maintenance costs, putting extra pressure on the system’s financial sustainability.

The Victorian Government has recognised the need for improvement. Its $5.3 billion Big Housing Build program, COVID-19 stimulus package, and other investments have allocated over $1 billion to improve maintenance and renewal of public housing.

Victoria’s public housing portfolio does not meet the current needs of its tenants. Nearly half of tenants live alone,32 but nearly half of public housing dwellings have three bedrooms.33 This problem is even more pronounced for new applicants, with around 80% seeking one- or two-bedroom dwellings.34 Many older properties are poorly designed, with inadequate accessibility and energy efficiency. Inaccessible homes include low-rise apartments or ‘walk-ups’, which can only be reached by flights of stairs and are inappropriate for growing numbers of older people and people with a disability. Low energy efficiency means higher energy bills and lower health outcomes. These issues will worsen as climate change intensifies, but smaller upgrades can be a useful solution (see recommendation 95). Aboriginal Victorians are more likely to need and use social housing than other Victorians, and better homes can also better meet their cultural needs and help Close the Gap in outcomes for Aboriginal Victorians.

Renewing older low-rise apartment estates and detached three-bedroom dwellings should be an immediate priority. Renewal will most likely involve demolition and replacement of the existing housing, but depending on the form of the existing housing, may involve renovation and expansion. Low-rise apartment estates in good locations offer strong redevelopment and intensification opportunities, either to generate extra housing or leverage land value to lower redevelopment costs. Older detached dwellings have high maintenance costs. By creating smaller attached dwellings on larger blocks, housing can better match tenant need. Some estates for renewal may not be in desirable locations. In these cases, rebuilding could occur in a better location. Relocating tenants can present a challenge in renewing and disposing of old public housing stock. Increased targeting means social housing is now usually only offered to highly disadvantaged people, meaning they stay longer and create few natural vacancies. The Director of Housing has legal powers to relocate tenants,35 but this can prove challenging if housing managers cannot offer attractive alternatives, such as modern one- or two-bedroom apartments. Social housing supply growth (see recommendation 68) should be used to assist tenant relocation for faster retirement of old assets, by providing new, fit for purpose homes for transfers.

Rapid renewal of old public housing stock needs extra funding, over and above that being provided for new supply. However, in the long term this will be at least partially offset by lower maintenance costs, better matching of tenants to housing, and better tenant health. In some cases, renewal costs can be reduced by leveraging land value, such as in the Olympia Housing Initiative.

Case Study. Olympia Housing Initiative.

The Olympia Housing Initiative is a 10-year program to incrementally replace and revitalise 600 public housing units in the suburbs of Heidelberg West, Heidelberg Heights and Bellfield in Melbourne.

It is funded through the sale of some older properties, with the proceeds used to build new, more suitable homes in the same area. Over 220 new homes have been built, including a village-style, multi-unit development in Perth Street for single people, families and older people.36

Recommendation 56: Upgrade and rebuild public hospital infrastructure

In the next five years, publish priorities for hospital renewal to enable modern health care services and meet future demand. In the next 10 years, redevelop the Royal Melbourne Hospital and progress the upgrade and rebuild of the Alfred Hospital and Austin Hospital.

Growing demand on Victoria’s hospital system will require existing facilities to operate efficiently even as innovative new models of care are explored (recommendation 25) and new capacity built (recommendation 69). Many public hospital facilities are close to, or past, their envisaged lifespans.37 Spending on capital works has not kept pace with the need for asset maintenance and renewal, nor with advances in medical science and technology.38 Aged facilities can require more frequent and expensive emergency repairs.39 Many older buildings do not meet modern standards for accessibility, safety or energy efficiency.40

The Victorian Government should work with public hospitals and health services to establish a more strategic and proactive approach to the statewide, whole-of-life management and renewal of hospital assets. Within five years, it should publish priorities for rebuilds and major upgrades, ideally in a public plan for health infrastructure that also includes sequencing and timelines for investment (recommendation 32). Supported by regular condition assessments of hospital assets, a transparent approach could provide greater certainty for government agencies, hospital managers, stakeholders and the public, and result in fewer interruptions to patient care.41

Some of Victoria’s most critical hospitals are those most in need of renewal. The Alfred, Royal Melbourne (City Campus) and Austin hospitals are priorities, as they are three of the state’s largest hospitals and provide a significant share of specialist health services across the state, including major trauma care. They also have significantly aged infrastructure. Maintenance issues at the Alfred Hospital have become disruptive system failures, forcing the temporary relocation of services and requiring around $45 million in funding for emergency repairs each year.42 The Royal Melbourne Hospital’s ageing facilities restrict effective delivery of care and research.43 Most operating theatres are close to 40 years old at the Austin Hospital and need urgent redevelopment.44 Short-term funding has addressed critical failures, but major capital works are required.45

The Victorian Government has funded initial planning for redevelopment of the Royal Melbourne Hospital, including a new campus in the Arden precinct.46 In the next decade, it should deliver the project and finalise planning for the rebuild or major refurbishment of the Alfred and Austin hospitals, with a view to delivering both as soon as possible. The full cost of renewing all three hospitals is estimated at around $6 to $7 billion.47 Project sequencing and staging can enable the continued delivery of services while mitigating cost, timing and other risks associated with parallel delivery. Infrastructure renewal will also benefit surrounding precincts.

The cost of required upgrades and rebuilds across Victoria over coming decades will be significant. These will be partly offset by savings from more efficient service delivery and facility management, fewer interruptions to patient care and a reduced need for expensive emergency repairs. Final costs and timelines will depend on government decisions on how best to balance planned service need and asset condition. Those same decisions should inform use of existing resources, including the Metropolitan and Regional Health Infrastructure Funds, and may require investment in data collection and systems.

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