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Cities of the future: planning for the needs of next generation city dwellers

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Cities of the future: planning for the needs of next generation city dwellers is a report from The Economist Intelligence Unit and commissioned by the Commonwealth Bank of Australia, that examines the future of cities with an emphasis on Australia as a large country with a high urbanisation rate.

The Economist Intelligence Unit bears sole responsibility for the editorial content of this report. The findings do not necessarily reflect the views of the sponsor.

Kim Andreasson was the author of this report and Charles Ross was the editor. To better understand the opportunities and challenges in developing a city of the future, interviews were conducted and supplemented with wide-ranging desk research.

Our thanks are due to the following interviewees for their time and insights:

• Tony Brennan, group executive, Lendlease Technology, Australia

• Nick Cleary, chairman and CEO, CLARA, Australia

• Paul Fletcher, federal member for Bradfield, minister for urban infrastructure and cities, Australia

• Julian Thomas, professor of Media and Communications, RMIT University, Melbourne, Australia

• Tan Kok Yam, deputy secretary in the Smart Nation and Digital Government Office, Prime Minister’s Office, Singapore

• Karin Wanngård, mayor, City of Stockholm, Sweden

About the report

1© The Economist Intelligence Unit Limited 2018


Executive summary 2

Introduction 4 Australia in a global context 4

A technology-driven future 6 Policy and planning 7 Unlocking mobility 7 Retrofitting and fitting infrastructure 8 Circular economies 8

Public and private-sector responsibilities 9

Road blocks 10 Adapting to reality 10 Liveability 11 Digital adoption and inclusion 11

Global lessons 12 Nordic ideas 12 The future from Stockholm 12

Into the future 15

Contents

2 © The Economist Intelligence Unit Limited 2018


become more effective. The problem is especially acute in small geographic areas (such as Singapore) but also in some large ones (such as Australia) given migration movements.

• A technology-driven future: solutions to greater urbanisation often rely on emerging technologies that underpin development across areas such as infrastructure, mobility, and circular economies. Such solutions require a renewed focus on job creation, as well as digital adoption and inclusion, for sustainable development.

• Policy and planning: challenges of the future require a new approach to decision-making, and leaders are scouting the world for best practices. Australia has borrowed the concept of “city-deals” from the UK, which is a deal between the government and a city to provide the latter with more autonomy, and there is also a renewed emphasis on public-private partnerships.

• Regulations are holding back progress: when it comes to mobility (as in autonomous vehicles), circular economies and a desire by private-sector actors to provide innovative services using technologies, the lack of proactive

A city of the future is admittedly a vague concept that transcends similar terms such as “smart”, “intelligent” and “sustainable” cities. However, the basic notion remains the same: given accelerating urbanisation rates across the world, cities increasingly need to become more effective in delivering basic public services, often utilising emerging technologies, to better serve its residents.

This report looks at the opportunities in creating a city of the future in terms of policy and planning, mobility, retrofitting and fitting infrastructure, and circular economies. The ways that leading cities, such as Singapore and Stockholm, are innovating and using technology can offer positive examples. Australia, which is a developed country with a high rate of urbanisation, stands to learn from such global peers.

To provide insight into the development of cities of the future in Australia and elsewhere, The Economist Intelligence Unit conducted in-depth desk research and interviews with experts across the world. The key findings of the research are as follows:

• No choice but to adapt: given high rates of urbanisation, cities must

Executive summary



government regulations is often seen as a barrier.

• Liveability as the end goal: the notion of liveability, or simply a better quality of life, is a utopian concept but reigns as the ultimate goal towards which cities strive. To reach this goal, however, cities need to overcome present challenges by using technologies wisely to deliver better services. z



Australia in a global context

Australia faces the same urbanisation challenge as other countries. But there are also significant differences. “We have an affordability crisis,” says Nick Cleary, chairman and CEO of Consolidated Land & Rail Australia (CLARA), who notes that five Australian cities are among the 20 most expensive globally. “Our current solution is urban sprawl, but [the] problem is that it adds to congestion and affordability, as it pushes people further away.”

Australia faces a particular challenge in providing equal services to a low population density across a large area. “Another challenge is making wise technology choices,” says Paul Fletcher, the Australian minister for urban infrastructure and cities. On a recent visit to San Jose, California, he was struck by an observation from the City of San Jose’s Chief Information Officer: a lot of technology vendors came to the government with solutions for problems which didn’t exist.

The development of ICT infrastructure is a prominent example in which the Australian government has sought to provide equal access across the country, starting with fixed-line phone connections. Today, the

There is a need to prepare cities for the future in order to deal with population growth. Globally, the total urban population rose from about 34% in 1960 to 54% in 2016.1 In Australia, it increased from 82% to 90% in the same timeframe, reaching among the highest urbanisation rates in the world, especially for a large country.

Globally, the urban population is expected to rise to two-thirds by 2050.2 As a result, cities all over the world are planning for populations that are larger, denser and more demanding of resources than ever before. Geographically small countries, such as Singapore, have already reached 100% urbanisation, highlighting the need to create efficient urban systems to deal with population growth. As an illustration, Singapore launched its Smart Nation initiative in 2014 to better prepare for the future.3

This report examines how today’s cities are being designed and redesigned for tomorrow to meet such challenges. Some call such initiatives “smart cities” while others label them “intelligent” or “sustainable”. Semantics aside, the challenge remains the same: cities must wrestle with more efficient use of resources to deliver better services to more people.

1 http://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS 2 http://www.un.org/en/development/desa/news/population/world-urbanization-prospects.html 3 http://www.pmo.gov.sg/mediacentre/transcript-prime-minister-lee-hsien-loongs-speech-smart-nation-launch-24-november

Introduction



government has embarked on the National Broadband Network, a heavily subsidised initiative with the initial aim to roll out fixed-line fibre-network connections to 93% of premises across the country by 2020, with mobile and satellite broadband connections to the remaining 7%.4 This initiative will potentially deter further urbanisation and provide a platform to create cities of the future.

“Australia is not a leader in innovation but a leader in adoption of technologies,” says Mr Cleary. That may change. Innovation and Science Australia, a scientific advisory agency, recently published a strategic roadmap. Australia 2030: Prosperity Through Innovation will guide government actions to promote innovation, with a particular focus on artificial intelligence (AI).5 “In some sense, the opportunities map to the challenges,” says Mr Fletcher. “For example, how can we best leverage technology to make cities function more effectively as they become larger in population and physical size.” z

4 https://www.nbnco.com.au/blog/the-nbn-project/hm-tb-nbn-is-now-halfway-to-connecting-australia-to-great-broadband.html 5 https://www.computerworld.com.au/article/632741/new-australian-innovation-roadmap-calls-focus-ai-machine-learning/



among the multitude of city sensors that support different city operations, and how to do this sustainably” says Mr Tan.

“We want to use technologies to improve people’s future,” says Mr Tan, highlighting the role of digital tools in creating better cities. In Singapore, for example, technology is envisioned as a tool to improve public services, create economic opportunities, and as a platform for collaboration and participation. As such, technology is a cross-cutting tool and can be used to support four broad categories of developing future cities: policy and

Among the most important technological advances supporting such aspirations today are the Internet of Things (IoT), in particular sensor technologies, and robotics to some extent, says Tan Kok Yam, deputy secretary in the Smart Nation and Digital Government Office in Singapore. He cites rapid developments in machine learning and AI as another key trend, while pointing out the importance of cyber-security in terms of protecting and defending systems. “A heavier reliance on digital technologies will bring about new challenges that may require entirely different ways of managing cyber risks; for example, what to secure

A technology-driven future



planning, mobility, retrofitting and fitting infrastructure, and circular economies.

Policy and planning “Cities that will prosper in the future will be those that effectively use data and technology to deliver richer, more seamless and connected experiences to citizens across all aspects of their lives,” says Tony Brennan, group executive, Lendlease Technology, Australia. “This can only truly happen, however, if regulatory frameworks demand and promote the sharing of data and infrastructure, remove vested interests, and create new opportunities for disruption.”

A particular challenge for city policies in Australia is the fact that there are three levels of government structures (federal, state and city). In addition, there may also be multiple local councils across cities, which require additional co-ordination, such as sharing information and data.

Investment priorities for major transport infrastructure, for example, are largely determined by Infrastructure Australia, a national body that maintains a priority list. There are also the political complications, of course, of parties going to an election with various promises and proposals. Finally, the private sector, which operates

airports, among other infrastructure, plays a significant role, underscoring the need for information-sharing (see box).

Unlocking mobility Road and rail networks are often considered the backbone of successful city development. In Australia, the prime minister, Malcom Turnbull, has proposed the development of “30-minute cities”, where nobody’s journey to work or school should be longer away from their homes than that timeframe. Seizing on the momentum, CLARA has proposed new urban developments connected via high-speed rail. “Inland Australia is completely overlooked,” Mr Cleary says. “If we can connect Sydney, Melbourne and new development cities in a self-funded model, this will resolve many challenges and provide job opportunities.”

Similarly, new technologies abound, which could potentially resolve many challenges. “Our vision in public transport is to make it as timely for the commuter as private transport, in order to overcome current capacity constraints and reduce the need for road infrastructure,” Mr Tan says about the situation in Singapore, who adds that the government hopes to reduce the need for road vehicles. “We think driverless technology will support this vision, but we will have to implement the technology



at a sensible pace. It takes just one freak accident for the public to lose trust in the technology.” “Autonomous vehicles, drones and robotics will significantly impact how we create better cities in the future,” adds Mr Brennan about the possibilities. Notably, such technologies already exist or are emerging but require appropriate government regulation and investment to gain mainstream traction and shift the way we live, work, shop, play and travel, he continues.

Retrofitting and fitting infrastructure

In some regions, such as Asia and Africa where 90% of urban growth is expected to take place, city planners have more freedom to construct new infrastructure. However, older cities in Europe and the US must find new and innovative ways to incorporate technology and other planning solutions into already developed areas.

“We have a housing shortage that, if not fixed, may deter people from moving here. We need to expand the city, but this must be done in a sustainable way; Stockholm’s good environment being one key factor for many when deciding to live and work here. I strongly believe that the solution lies in welcoming and applying new technology,” says Karin Wanngård, mayor, City of Stockholm, Sweden.

One example is water and energy technology underpinning housing infrastructure. “We’ll see growing reuse of energy and water for multiple purposes,” says Mr Fletcher. “For example, in Australia we have one of the highest penetration [rates] of solar panels on homes, and we’ll see [the] energy network more distributed rather than a top-down approach.”

Circular economies

An alternative to the traditional linear economy (make, use, dispose), a circular economy is restorative and regenerative by design and relies on innovation to minimise waste and negative effects, according to the Ellen MacArthur Foundation, a pioneer in this field.6 In practice, the concept can be applied anywhere from washing machines to the automotive industry.

A circular economy can also help to reach the global goal of reducing emissions. “Those that succeed in this work will have a competitive advantage in the globalised economy,” says Ms Wanngård. “There is also a growing market for new innovations in this area. For Stockholm, having companies that can produce environmentally friendly solutions in a wide range of areas— from transport to how we build sustainable housing—is a great export opportunity, creating new jobs in an economy that is becoming increasingly internationalised.” z



6 https://www.ellenmacarthurfoundation.org/circular-economy

Public and private-sector responsibilities

“For the property, construction and infrastructure industries, low power sensors, AI and robotics will create the most dramatic and visible changes. For example, buildings and infrastructure will sense problems and act without human intervention,” says Mr Brennan. “Smart cities are high on governments’ agendas but the challenge will be how policy is adapted in response to the changes new technology bring. An important focus area for policy is the collection, sharing and analysis of data generated by places, machines and people across the urban and built environment.”

“We must be open to new planning models,” adds Mr Cleary. “Not just technology but new economic models that have a potential for disruption, such as energy.” He cites the small cost in energy generation but large cost in transmission as an example where current regulations are hindering innovation and solutions. “The technology already exists but how can we create economies of scale when you have to be part of a closed national system?,” he laments.

“The rate of change in technology is unprecedented,” says Mr Fletcher. Citing Uber, the transport-sharing company, he says the lines between public and private transport will blur in the near future as autonomous vehicles are not necessarily owned by individuals. “In the future, we will have corridors with vehicles moving down them, at one moment connected, or at one moment pods splitting up, as they don’t necessarily need physical rails, which means there is a blurring line, and also blurring public-private ownership,” he says.

The number of companies entering the autonomous vehicle race is also increasing with Google, Volvo and Tesla, among others, announcing initiatives in this area. Besides Singapore, which granted access to nuTonomy, another autonomous vehicle company, few countries have addressed the regulatory challenge that comes with such development. Given the pace of technological change coming to cities, however, this is probably only the beginning of the lines blurring between public and private sectors.



infrastructure services,” says Mr Cleary. His aim is to minimise this by using existing technology, as well as emerging ones. “We’ve taken a smart cities approach where the number one thing we’re looking for is being flexible, agile and adopting the right technology.”

The challenge of creating a “smart sustainable footprint”, or establishing a better environment through the use of technologies across areas such as energy, water and transport, remain regulatory. “The legislature has to move with the times. The government needs

“Cities need to become smarter to meet broader economic and city objectives such as accessibility, jobs, affordable housing and healthy environments,” says Mr Brennan. The goal is simple but difficult to accomplish in practice for a number of reasons. Despite the many obvious opportunities, there are simply barriers towards creating a future city, such as improving infrastructure, liveability and digital inclusion.

Adapting to reality “City sprawl adds high demand on

Road blocks



to embrace technology and realise that innovations such as driverless cars are here already,” says Mr Cleary. “We need politicians that are brave and need them to lead, otherwise the private sector will continue to provide the leadership,” he says.

Liveability A vague concept, liveability simply means a better quality of life for residents. According to a recent Economist Intelligence Unit survey of citizens, the main motivation for governments to develop a smart city was perceived to be greater efficiency (cited by 28%), followed by enhanced quality of life, or liveability (26%). We have tracked liveability across the world over the past 15 years, and in 2017 the top-ten list included four Australian cities.7

Yet liveability remains a notional concept in terms of how to achieve it in practice. It simply remains difficult for policymakers to make concrete plans to make residents of a city happier, although there are serious efforts to do so.

“A smart city must be a sustainable city.” says Ms Wanngård. She views climate change as a growth opportunity for cities, as it raises the standard of living for citizens and helps attract businesses. “The climate issue is becoming ever more important to many people, and those cities that can

offer a good environment and show that sustainability is at the top of the agenda will be more attractive to people and business alike.”

“We need to be smart about technology in our cities and the places we build—precincts, communities, buildings, workplaces and infrastructure—so we can create the best places for future generations,” says Mr Brennan.

Digital adoption and inclusion “Digital inclusion needs to be at the heart of our thinking about the possibilities of smart cities,” says Julian Thomas, professor of Media and Communications at RMIT University in Melbourne. Given the potential impact of technology, policies in this area need to be developed at a city level. “There is increasing evidence that affordability is a major obstacle for digital inclusion, especially among the growing population of mobile-only internet users,” says Mr Thomas. “Local government has the capacity to ensure that public Wi-Fi is actually useful for students, low-income residents, workers and visitors, and homeless people.” Hence cities around the world, such as Stockholm and Singapore, are developing free Wi-Fi programmes to support greater digital inclusion and by extension access to public services.

7 http://www.eiu.com/public/topical_report.aspx?campaignid=liveability2016



Global lessonsGovernments are looking to create better cities for the future, and often look to others for innovative approaches. “We look at best practices, such as city-deals,” says Mr Fletcher, citing a policy tool concept borrowed from the UK.8 “We also look to other federations such as the US, Canada and Germany to identify [political] bodies with representation from multiple stakeholders.”

In India, the central government is pushing smart city initiatives, given it has the world’s second-largest population (after China), and is in great need of new solutions to resolve the challenges of urbanisation. In 2015 it launched the first India Smart Cities Challenge in which 98 cities competed to receive funding from the Ministry of Urban Development to develop their ideas into an actuality.9

Nordic ideas Stockholm is consistently rated among the smartest cities in the

world. “The city council has formally adopted a strategy for Stockholm to become the smartest and most connected city in the world,” says Ms Wanngård. “The strategy involves a unique focus on sustainability. The goal is for Stockholm to become economically, ecologically, democratically and socially sustainable through innovative digital services, transparency and connectivity.”

Having set the ambitious goal for Stockholm to become the most connected place in the world, the city established Stokab, a government-owned company, in 1994. It now provides fibre internet to 90% of the households and 100% of businesses. “The basic philosophy behind it being that access to fibre infrastructure is a strategic utility for the city—just like water,” says Ms Wanngård.

The future from Stockholm Stockholm is the fastest-growing capital city in Europe. As such, it faces

8 https://www.gov.uk/government/collections/city-deals9 http://www.smartcitieschallenge.in/index.cfm



much of the same challenges of urbanisation as rapidly growing cities in Asia and Australia, and similarly looks to technology-based solutions to overcome them. “I believe that those cities that have the ability to embrace and apply new technology will be able to make the transition to smart cities quite rapidly. It will also greatly benefit people living in the cities, as well as improving conditions for businesses,” says Ms Wanngård. “Some of the most interesting things are the developments made within open data, big data and IoT. Combining big data, open data and IoT provides endless possibilities.”

As a result, the City of Stockholm will carry out extensive investment in digital innovation in the coming years. In conjunction with the city council's decision on a strategy for a smart and connected city, Skr115m (about US$14.3m) will be earmarked for digital innovation. In addition to this initiative, the city has undertaken extensive projects to develop digital support within schools, and an increased focus

has now been placed on social services. A total investment of Skr545m goes directly to projects aiming to improve the city's operations with the help of digitisation during 2017-18.

The strategy's main focus is to fully take advantage of the opportunities that arise with development in areas such as the IoT and big data analysis, as well as to take the city's work with open data to the next level.



The rise of technology and the future of smart cities have also brought into question their impact on employment. Research and experts are largely split on this point, however, as some argue that it will lead to job losses while others argue that technology is either supplementary or that workers will gain the necessary skills to move into value-added positions. “We hope to overcome an ageing population and a reduced labour force with technology, so that we do more, and do better, with less”, says Mr Tan. “But it is sweeping to say that machines will replace humans. A skilled workforce will invariably be needed in jobs that require high-tech, high-trust and high-touch,” he continues.

There is also likely to be a strong demand for new types of jobs and skill sets. In Stockholm, the city has already created jobs for the future: 18% of the workforce works in high-tech related jobs, which is the highest share in Europe. “We recently introduced programming as a topic in elementary school, believing that one should see code as a new language, much as we in the past had put great importance to our children learning foreign languages, such as English,” says Ms Wanngård. z



Creating a city of the future to deal with increasing urbanisation and related challenges, such as water, road, rail, buildings, technology and general liveability barriers, among others, requires innovative solutions. Much of them rely on technology advancements; some are already available but hindered by lagging regulations while others are emerging and require careful policymaking and planning.

“The crucial part lies within the process of application,” says Ms Wanngård. “There’s no use in installing faucets in every home if the water is undrinkable. This is where political will and decision-making comes in.” Hence, regulators must create a conducive environment for investment and opportunity. At the same time, it

is in their own interest. “Finding ways to build sustainable cities and regions will provide those that succeed with a competitive advantage,” says Ms Wanngård. “Most people want to live in healthy and good environments; this will, in turn, attract talent and businesses to those that can offer this.”

The future depends on cities making adjustments to improve liveability for everyone, as urbanisation rates are set to grow. However, it is also vital to stimulate jobs, as technology will probably replace a portion of the workforce. It is a tall task, but also a necessary one. “I truly believe that cities can succeed if there is political will and an openness to embrace new technology,” summarises Ms Wanngård. z

Into the future

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