Funding Smart Communities
BY GEORGE PAYNE, SMART COMMUNITY CONSULTANT FROM DELOS DELTA
November 2022
Imagine a world where the best projects consistently receive government funding. This aspiration was fundamental in the recent shakeup of the regional federal grants process and the need to assess infrastructure projects in a way that is both fair and objective. Smart community (i.e., for precincts, towns, cities, or regions) and future focused economic projects naturally do well in an award environment that is both merit-based and dispassionate. The tangible benefits of data-driven decision-making, digital connectivity, or improved digital literacy, make smart community projects a compelling proposition in almost all contexts.
When smart community projects are generally so positive the lack of specific federal funding programs has been disheartening. With some notable exceptions, particularly the New South Wales Government, state governments have also been reluctant to fund and promote the smart community agenda. Instead, over the last decade, smart community projects in Australia have increasingly been championed by local government, which has consistently pursued projects, pilots, and strategies at varying levels of maturity across the country.
Key Lessons
With its strong connection to communities, local government is a natural vector for smart initiatives. However, funding smart communities at this level is not without its own challenges. More could be done to strengthen collaboration between local governments. There also exists a clear need to attract recurring funding at both the state and federal level to ensure Australia isn’t left behind international leaders. Reflecting on the last decade, we’ve identified 7 tips for enhancing smart community funding in the future, which we discuss in greater detail below:
Enhancing smart community funding – 7 tips for local government
1. Work together to lobby the Australian and state governments
2. Take a strategic approach and identify the highest priority local projects
3. Partner up with other local governments to pool resources
4. Measure the impact of smart community projects to influence decision makers (and unlock investment)
5. Modernise your risk management practices to encourage smart community innovation / investment
6. Build capacities to leverage smart technologies
7. Review your forward capex program to integrate smart community dimensions
Don’t let perfect be the enemy of good
Early funding is often, but not always, best directed towards base physical infrastructure. Digital infrastructure is, after all, the backbone of any digital transformation, and the interdependencies inherent in the smart community domain necessitate the presence of robust base infrastructure and digital connectivity to support emerging technologies.
Nevertheless, smart community planners can and must acknowledge the need for investment in basic infrastructure, while simultaneously leveraging existing assets. Every local government area has some fibre connectivity, some mobile connectivity, and some wireless connectivity that should be leveraged to deploy smart solutions here and now. Letting perfect connectivity requirements get in the way of the good increases the risk that local government falls into the trap of abdicating responsibility for driving smart community concepts to telcos and state governments. The solution: local governments should fund smaller scale smart community initiatives while also advocating for larger scale smart tech investment.
A strategic approach is needed to support funding and implementation
Smart communities are as much about people as they are about digital technology. In fact, smart communities do best when new technologies are funded and implemented only after careful consideration of local needs. Adopting a strategic approach can thus help to identify community needs, identify the appropriate services required to address these needs, and then assess which digital technologies (if any) could be used to enhance these services.
The development of any strategy provides a valuable period in which the detailed collection of data and evidence can help to identify service blackspots, which in turn drives successful programming, marketing, and collaboration with other communities. The presence of a codified strategy also provides a tangible platform for advocacy to dictate and drive future action, ideally supported by evidence uncovered through strategic development. Finally, pursuing smart community activity without a strategy can increase the risk that expensive technology solutions are acquired without due regard for community needs, and thus solutions quickly become obsolete or unsuitable.
Funding rounds should be accompanied by training and capability
Beyond the roll-out of digital technologies, smart communities must ensure they have the capability and training to make the most out of their tech investments. Maturing smart communities build their capabilities over time, typically through funding rounds with an in-built capability-building and training component. This maturity is often demonstrated through the pathways from technology roll-out through to using resultant data in meaningful ways. A good example – a lot of the time effort goes into deploying smart bin technology. However, a better outcome is a balanced approach which results in both the deployment of smart tech AND new business models which leverage technologies to modernise services.
The Australian Government needs to commit to supporting smart communities
Amongst other things, smart communities are about demonstrating economic value, ensuring community inclusion and digital literacy, and using technology to protect and conserve the environment. There exists a large opportunity cost for Australia if we under invest in this sector. The lack of explicit smart community funding from the federal government since 2016 poses a risk that the country slips behind international competitors. State governments are also aware of, but are potentially undervaluing, the benefits of smart technology, data, and innovation, including the many positive externalities that emerge through smart community initiatives (digital connectivity, literacy, smarter measurement, and the protection of environmental assets).
Local governments are leading the way, but a national perspective and federal coordination would greatly accelerate the nation’s maturity in the smart domain. In a digital future, governments across the world should direct public investment into local smart infrastructure much like they did with the road, rail and sewage networks of the Industrial Revolution. It is therefore critical that local governments continue lobbying the state and federal governments to play a stronger role in planning and funding the deployment of smart tech across Australia. On the other hand, the Australian Government needs to commit to bringing local government to the policymaking table. Cities and regions are nearly always excluded from policymaking discussions in this space (digital engineering, AI etc) which invariably contributes to the poor adoption of smart concepts in Australian communities.
Measure impacts, evaluate risks, unlock systematic funding.
Adopting a robust approach to the ex-ante and ex-poste analysis of smart projects will enable programs to be tailored to optimise benefits and risks. Muscular impact measurement frameworks will allow local government to unlock recurring and sustainable funding streams. This is made possible by clearly evidenced and defensible financial, social, economic and environmental benefits which outweigh the costs of change management and the risks of failure.
One of the biggest pitfalls in the funding and financing of smart communities is risk aversion. Cautious attitudes to risk should not hinder the uptake of smart community concepts, technologies, and processes. Again, smart community planners must avoid letting perfect be the enemy of good. Given clear use cases, projects should be allowed to fail early (and be rescoped accordingly). The use of trials and pilots can help to limit losses and build the case for more expansive and expensive smart solutions.
Encouraging a reasonable degree of risk in procurement processes is healthy, and in some cases necessary given the risk of inaction in any counterfactual scenario. Innovation in biodiversity management, for example, could warrant a higher degree of risk taking given the scope for the dangerous effects of climate change and habitat loss. In each instance, the (many) benefits of smart technologies and concepts should be balanced with the costs as well as the risks of action and inaction.