The Network of Governance & Regulatory Experimentation

Issue 1.Q
The Quayside Addendum

By Dark Matter Labs, Cities for People and MaRS
31 October 2019

Issue #1 of Legitimacities made the point that the societal crises of ecological collapse and inequality require bold collective action, yet the foundations of collective action are shaking; trust in government and institutions has eroded.

We argued that it is at the scale of cities that solutions to complex crises and new possibilities can be imagined, created, tested and implemented.
There is a need for new hybrid labs that span across sectors and have the capacity for strategic, participatory experiments: experiments that test both technology and regulation; experiments created with and governed by people from every sector; experiments that rebuild trust and reveal transition pathways.

The present document is an addendum to Legitimacities Issue #1 that focuses on the future of Toronto and its waterfront.

Legitimacities 1.Q – Innovating From The Sidewalk Up

Following the online publication of Legitimacities last June, we received many enthusiastic responses from city governments and other city builders from Canada and around the world about the idea of creating a cohort of place-based regulatory experimentation labs. Building on that interest, and in order to explore more in depth some of the main challenges and opportunities of such an ambitious shared vision for the future of Toronto and its waterfront, we are delighted to be invited to respond to the waterfront development proposals.

We believe they present a critical opportunity to set and establish the next generation standards for urban development; in process, institutional infrastructure, outputs and outcomes. The following document is focused on how Waterfront Toronto can and should become a place-based regulatory sandbox for supporting inclusive innovation.

We present a hypothesis increasingly validated across the world;

  1. We are experiencing a great transition due to the confluence of climate change; massive ecological destruction; rising wealth and income inequality; impact of automation and AI; entrenched legacy interest and growing levels of digitally-enabled monopoly power. The great transition presents unprecedented risks but also fresh opportunities for positive change.
  2. In a complex and highly contextualised world, innovation cannot be created in the isolated halls of university laboratories, but increasingly need to be constructed, tested, iterated, validated and evolved in the real-world with real-time feedback and rapid iterations.
  3. In increasingly contested environments, it is our ability to construct societal and civic legitimacy which is vital to the development of new technologies, their viable scaling and our ability as a society to absorb innovations.
  4. The construction of the institutional infrastructure for agile governance & regulatory innovation is a vital component in constructing and sustaining legitimacy and equity for new urban innovations driving a great transition.

We highlight the key drivers towards this approach and also key elements necessary for ensuring this doesn’t become a device for enabling future monopolies or regulatory capture, but a means to support an inclusive open innovation test bed – accelerating a wide range of agents of change – from civic activists, social entrepreneurs, startups and corporates – addressing the scale of the economic and social transition we are facing over the coming 10 or so years in terms of automation of existing labour markets, climate change impacts, inequality etc.

The works present from our perspective a desired and necessary direction of travel and builds on the historic groundbreaking work of Waterfront Toronto in terms of leading the urban renewal market in Canada and beyond.

The direction presented requires substantial work to further develop and invest in researching key knowledge and research gaps and thus we present it as a desired hypothesis which requires further validating, testing and experimenting.

Why Waterfront Toronto has an unprecedented opportunity

The opportunity presented by the waterfront is a once in a lifetime opportunity in terms of city-making in Toronto; but also due to its size, impact, stakeholders and value, it presents a means to not only shape markets but create new terms & conditions of the market. Therefore it presents a vital opportunity in terms of remaking and re-benchmarking the tools, infrastructures and institutions fit for the scale of urban transition our cities are facing worldwide.

Cities and municipalities are where many of our shared challenges are the most deeply felt; where innovations are increasingly found; where regulatory experimentation can happen fastest; and municipalities are the level of government Canadians most trust. Cities need to be recognised as vital landscapes for driving the social, civic and enterprise innovation necessary to support the great regulatory transition. However, city experiments can too often be a scattered series of small-scale initiatives with questionable degrees of success if they don’t learn fast from each other and build on collective credibility and shared capabilities.

Specifically this is made possible by the following:

  1. The unique credibility, historic legitimacy and capacity of Waterfront Toronto as a public sector strategic agent of regeneration.
  2. The unique interest in the development by all 3 tiers of government; provincial, city and federal.
  3. The size and scale of the development to be a meaningful testbed for urban innovation.
  4. Toronto’s prime role in the global real estate market and the site’s current and future value.
  5. Canada & Toronto increasingly becoming the location of preference for the emerging digital talent economy.
  6. Canada seeking to lead the global next generation governance technologies debate and practices and investing significantly into crafting this future and building on a world-class current standing.

Together these present the structural reason and basis of why we applaud Waterfront Toronto’s vision it has sought to advance.

10 Principles for Innovative and Legitimate Regulation and Governance


Inclusive innovation

Innovation in an age of great transition (addressing climate change, biodiversity loss, increasing inequality, impact and opportunity of automation and AI) needs to embrace actively a full range of agents of change; activists, social and public entrepreneurs, as well as startups and the corporate sector. A singular focus on optimising existing industries presents significant societal risks along with undermining the credibility of regulatory modernisation as a public benefit process.

We must deliver a change process which recognises the agency of civic activists, civically-minded entrepreneurs as well as local and indigenous communities and their demands on governments to update their systems. These diverse voices must be heard across policy and regulatory processes, from the setting of agendas to the innovation and enforcement of rules.


Regulatory innovations for a great transition

Regulatory innovation needs to be placed, understood and facilitated beyond the current focus of enabling current economic actors and sectors. Regulatory innovation must acknowledge that we are facing a seismic economic and societal revolution of unprecedented scale. This future requires us to structurally rethink and remake how we regulate and govern, and Toronto’s waterfront presents an ideal test bed for exploring how Canada is to survive and thrive in this transition.


Integrated regulatory innovation

Regulatory innovation is often stuck in entangled sovereignties and dependant on many industries and activities locked into a nest of regulators―spanning city, provincial and federal governments, as well as international trade agreements. Too often, locally relevant innovations are blocked by higher levels of regulations that don’t take into account the reality of the sector being regulated.

Regulatory modernisation should be initiated in close proximity to the civic, social or enterprise drivers on the ground and led by the relevant local jurisdiction. Higher orders of government and governance should then be layered on top of the local regulatory touchpoint to address issues of scale and harmonisation. This requires a new model of cross-governmental collaboration and new capacities in layered governance. Waterfront Toronto has a unique opportunity to advance this integrated capacity for regulatory innovation by inviting regulators at all three levels of government to participate in an integrated, place-based regulatory innovation zone.


Moving beyond red tape reduction

Regulatory innovation needs a new approach which goes beyond the traditional attempts to surgically accelerate the cycle of policy renewal in key sectors or specific interventions and derogations. The prevailing logic of regulatory innovation is too often driven by corporate demands. This tends to reduce it from a fundamental and inclusive discussion about public value(s) to a narrow concept of ‘unburdening’ business.

Future-fit regulatory innovation must respond to more diverse sources of demand for change. More fundamentally, it should reimagine and remake how we regulate in a complex, emergent world to reduce negative externalities whilst unleashing Canada’s Whole of Nation and Toronto’s Whole of City capacity to innovate in response to the speed and scale of the challenges we face.

Investment in regulatory innovation needs to be focused on building the systemic institutional capacity for agile regulation and innovation; not singular, piecemeal regulatory adjustments driven by heroic individual efforts with political backing. Our complex, interconnected and emergent world needs a decentralised and distributed capacity for the development and implementation of anticipatory, agile and digital-at-source regulations.


Regulatory change from both push and pull

Regulatory innovation needs to be a combination of both pulling and pushing; responding to change from a full range of change agents, but also inviting and supporting regulators to lead the reinvention of existing markets for public benefit. As it disrupts traditional institutions and regulatory regimes, the great transition also offers unprecedented opportunities for radical openness and inclusiveness, eliminating information and communication asymmetries, and dramatically lowering costs and raising the efficacy of regulation in a complex world.

Technology advancement offers unprecedented reach and precision to regulators, affording a more proactive and anticipatory role for regulators in driving an intentional economy and society.


From regulating for certainty to regulating with uncertainties

Regulation is about managing risks, not eliminating them. Command-and-control-based risk narratives imply we are able to anticipate and control risks threatening us. In the face of runaway tech innovation and the uncertainties of climate break-down, we need to shift from regulating perceived certainties to dealing with continuously evolving known and unknown uncertainties. This means developing regulations that are robust to disruption through the use of futures techniques; and designing for adaptability through the use of outcomes-based, parametric, and conditional regulations.


Building distributed capacity for experimentation

Regulatory innovation is inherently the product of regulatory experimentation. Regulatory experimentation is a disciplined process for transforming deep uncertainty into manageable risk. This involves testing and openly documenting new ideas across diverse local settings to see whether, how, why, and under what conditions they work.

Regulatory experimentation is enabled by open and legible rule-making processes, common experimental design frameworks across diverse geographies, peer-to-peer learning, mutual accountability, collective credibility, and shared capabilities that cross departments and levels of government.


Reconciliation through regulatory innovation

Canada, Toronto and Waterfront Toronto is uniquely placed to learn and explore alternative governance futures enabled by indigenous ways of knowing and traditions. This could help establish stronger intergenerational responsibility and consciousness of interdependence, as well as contribute to building a foundational reconciliation towards self-governance and self-management. As Canada’s First Nations, Metis and Inuit people move towards self-governance, they are collectively remembering and re-interpreting traditional forms of governance that have particular relevance to the great transition.

Since Indigenous people comprise less than 5% of the world’s population, yet protect 80% of global biodiversity, it is undeniable that Indigenous people hold some of the key answers about how to rethink our interdependencies in this context of global climate breakdown.
 Toronto’s waterfront is covered by the Dish with One Spoon Wampum Belt Covenant, a notable example of Indigenous governance dating back to 1142 to peaceably share and care for the land and resources surrounding the Great Lakes.


Innovation on a foundation of civic legitimacy

Regulatory innovation requires the continual construction of civic legitimacy in an increasingly contested world. This requires us to augment traditional regulatory consultation processes and embrace new techniques like civic audits, citizen juries, peer reviews, and participatory co-design. Regulating with legitimacy in a complex and dynamic world requires a new form of public engagement that leverages big data and thick data; high tech and high touch; action and reflection on action; experimentation and iteration; in order to build trust and democratic participation.

To avoid tokenization, citizen deliberation bodies must have real power. Agenda setting and the terms of reference must be free from corporate influence. A citizen jury should deliver its recommendations to the highest level of governments (Mayor and Council / Cabinet) and government agencies (the Board). Governments that act on those recommendations act with the legitimacy of citizen power, and can gain and maintain the trust of constituents.


Place-based innovation, not gated innovation

Experiments with innovative city-building need to be space- and time-limited to enable safe-to-fail experimentation. They should also be designed for scale, so they can catalyze outcomes well beyond the experimental zone.

To achieve scalable outcomes, place-based innovation zones need to be designed as open systems, involving the communities living in surrounding neighbourhoods. They also need to articulate the pathways for local innovations to scale to established neighbourhoods and new brownfield developments. To improve scalability, developers should avoid reliance on special conditions and bespoke entities that are unique to the innovation zone for generating outcomes. Instead, they should use the innovation zone to help build the capacity for innovation of existing institutions and public organizations that operate beyond the boundaries of the innovation zone.

Building on these insights we propose moving beyond sector or key technologies-based strategies focused on advancing current industries and sectors through regulatory innovation. We recommend Waterfront Toronto adopt a place-based regulatory sandbox strategy to support inclusive innovation and the foundational capacity for agile and legitimate governance & driving urban innovation.

The evolution of regulatory sandboxes

In response to calls for collaborative and agile regulation, the last few years have seen a rise of regulatory experimentation in the form of so-called sandboxes. First-generation sandboxes in Canada and around the world tended to be based in government and focus on a single sector (primarily financial technology), start-ups, and generally did not explicitly prioritise public good (although some included value criteria such as financial inclusion for product testing).

Subsequent iterations are increasingly civic (e.g. social care in Scotland) and hybrid (e.g. multi-jurisdictional sandboxes in the UK). Regulatory sandboxes provide a controlled environment to safely and openly test innovation. First-generation sandboxes have been the subject of valid critiques based on poor user protection, acting as a trojan horse for deregulation, long delays in setup, creating new costs shouldered by the public sector, and a broad lack of evidence of subsequent regulatory change. This is partly due to missing hybrid structures to govern experiments, and an absence of sustained, multisector support for, and engagement with them.

Creating public value from Toronto’s waterfront

Throughout history, public value has been discovered or created at the intersection of diverse actors working together. For the next generation of regulatory sandboxes, a truly hybrid environment at the intersection of these diverse actors is needed; a collaborative place and platform for the discovery of the public good.

We believe it is vital we build a place-based approach to regulatory innovation and high governance test beds for innovation in cities and communities. Place-based innovation bounds innovation risks in space and time; grounds innovation in everyday life; allows for rapid iteration and massive parallel experimentation; and is sensitive to Canada’s geographic and cultural diversity.

10 Key Components for a Next-generation Place-based Regulatory Sandbox

Waterfront Toronto has a unique opportunity to drive the creation of a place-based regulatory sandbox and the institution infrastructure for inclusive innovation.

In the Issue #1 of Legitimacities as well as in the submission to the call on regulatory modernisation of the Treasury Board Secretariat of Canada, we called for the creation of a network of place-based regulatory sandboxes across cities in Canada. If Waterfront Toronto is to become one of these spaces, here are some of the key components that should be considered:


Building legitimacy: establishing citizen assemblies, audits and juries for oversight

A public administrator is insufficient to address the complexity of the issues from governance and legitimacy to technical capacity and potential conflicting interests.

Citizen assemblies provide people with a way to request radical change, and a request from the people gives legitimacy to government to act, and allows for cross-party support. A citizens’ assembly brings people together to learn, deliberate and make recommendations on an issue of public concern. Similar to jury service, members are randomly selected from the population by a process called sortition. According to the Sortion Foundation, “citizens’ assemblies are fair, transparent, inclusive, and effective. They give a profound increase in the legitimacy of decisions by providing solid evidence of the considered endorsement by an informed, representative sample of your community.”

Citizen audits are “a systematic way of publicly identifying the responsibilities of an authority’s directing minds, their apparent performance and the adequacy of their public reporting.” Audits perform the crucial role of allowing citizens to explore an issue in depth to understand it fully, and is helpful for building legitimacy around a problem.

A citizens’ jury is an innovative means of involving everyday people in the process of government decision-making, permitting citizens to engage with evidence, deliberate and advise. They “are small enough to permit effective deliberation, relatively inexpensive compared to the larger deliberative exercises of planning cells and consensus conferences, yet sufficiently diverse that the citizens engaged are exposed to a broad range of public experience and perspectives.”


Building trusted data governance

The Master Innovation and Development Plan identifies an Urban Data Trust as a new entity for governing responsible data collection, sharing and use within Quayside and the IDEA District. Any data governance approach should work across the entire waterfront, and be scalable to the City of Toronto. Data trusts are but one promising approach to data governance that merit further experimentation and testing by Waterfront Toronto and need to be part of a wider portfolio of experiments in building trusted data governance futures.

Building data trust architecture with structural operational legitimacy is about more than just the design of a corporation, institutional infrastructure but requires the design of such an entity or institutional framework to be led independently by a public value first organisation. It requires legal and fiduciary responsibilities and the human and technical capacity to be able to monitor, audit and enforce its use, and powered by a legal aid fund. Without which these infrastructures are prone to “capture” and worse still, being ignored.

Further, it is clear an urban data trust architecture designed to govern urban data does not obviate Canadian Personal Information Protection and Electronic Documents Act (PIPEDA) requirements, so it does not actually solve the problem of obtaining meaningful consent in the public realm. These are structural challenges which cannot be bypassed merely through data classification and require more radical consideration, including regulatory reform and civic participation.

These future and prototypical models will need to be experimented in the public and evolved with civic oversight. Whilst we recognise data trusts present vital infrastructures for next generation cities, the institutional design and capacity will need to be actively designed commensurate to the risk they present to democracy along with the opportunities they present for the next economy. This is not a yes or no challenge but challenge of institutional design. A design which could produce a global template for democratic cities and Waterfront Toronto is well placed to lead this future.

A data trust is not the only possible model, and it will not solve all of the digital governance challenges of Quayside. However, without some type of dedicated, public value-driven organisation supported by the policies and infrastructure for responsible data governance, the potential to achieve Waterfront Toronto’s outcomes will be significantly impacted, along with the future capacities of cities in democratic countries to absorb and lever societal scale technologies. For we know when civic organisations, urban planners, social enterprises and startups have access to accurate, timely data at scale, they can unlock new value that improves city life and catalyses the new economy, but this future cannot be constructed on the funeral pyre of democracy.


Moving beyond problematic categorisations of data

Existing categorisations of urban data is defined as “…anchored to geography, unlike data collected through websites and mobile phones, and lends itself to local governance.” (Sidewalk Labs, 2019). This becomes increasingly unclear to define because, increasingly, transactional data can be easily identified to geography.

Distinguishing between urban data vs transaction data suggests that ambient data collection needs to be held to a higher standard (demonstrate public benefit that outweighs the risks) than transaction data (since individuals willingly exchange their personal information for services they value). This is reasonable, but it also dodges the highly problematic existing practices for transaction data. By placing transaction data out of scope of the urban data trust, the trust could create the highest standards of privacy for urban data, and yet be completely undermined by large-scale corporate surveillance of citizens’ transaction data.

Personal vs non-personal data is an outdated and increasingly unhelpful distinction, because 1) re-identification is so difficult to assure against, and 2) just because data is non-personal does not mean it is free from harmful uses (discrimination against marginalised groups does not require personal information).

Y.A. de Montjoye and A. Gadotti of the Computation Privacy Group argue “we need to move beyond de-identification and start using modern solutions to unlock the huge potential of data for social good and economic development. Else, we risk being stuck in the false dichotomy that we have either innovation or privacy.”

The current paradigm of privacy based on protection of analog personal information breaks down in a world where cloud-connected sensors are embedded in our phones, homes, cars and streets. In this new reality, we need to develop classifications not around the type of data or how it was collected, but rather based on acceptable vs unacceptable use. One approach to this hard problem is to use distributed ledgers to record how data is used that can be audited to identify and enforce against misuse. Misuses of data include: exploits of weaknesses in human psychology through persuasive technology; political manipulation that undermines democracy; discrimination against marginalised groups; and stalking individual physical movements and digital activities.

We need to consider new models of privacy- and anonymity-preserving data collection architectures including ecosystems of civic data trusts, safe sharing sites, personal data stores, secure data collaboration platforms and other technologies, data as public infrastructure, that give people more control and trust over how they store, manage and use personal data generated online.


Building public digital institution infrastructure

In order to address complex social issues like climate breakdown, we need to build primary capacity for government innovation. But in order for this to happen, government infrastructure needs digital addressability and interoperability to be updated for the 21st century.

This future cannot be constructed on closed, proprietary systems; black-box algorithms are extremely disempowering to cities and citizens, whether through software or hardware.

Private sector-controlled totalising technocratic optimisation is extremely problematic if only the final answer is published – not the underlying model. We as citizens have to take it on good faith that they have optimised the model in the public interest, and not to advance their own private profit motive.

Foundational requirements are the creation and encouragement of civic-minded behaviours through open civic and deliberative protocols, code and documentation.

“Open systems are the invisible operating system that we all use every day: the playing field. They are the common platforms that allow any citizen or business to collaborate and compete in society or the economy, usually for free and always without asking permission.

When we talk about design and innovation, we tend to over-focus on singular ‘disruptive’ businesses. But historically, underlying systems innovation has always been more important.

If we want to build a successful, sustainable, fair and inclusive digital economy and to navigate the massive changes of the next half-century, we need to design, invest-in and deploy new open systems for everyone” (Open Systems Lab, 2019).

This requires investment in building new open registries, machine readable codes of conduct, protocols, standards, policy and regulation, and open smart licensing capacities for public and public value assets.

An incomplete list of city-scale interventions includes;

  • Open data standards (collection, retrieval, processing, use)
  • Open environmental and natural assets registries, use, management (carbon sequestration etc.)
  • Open energy production, use, management
  • Pollution monitoring and management
  • Open noise regulation, sensing, and compliance management
  • Open waste regulation, sensing and compliance management
  • Open footfall traffic data
  • Driving open supply chain data
  • Open transportation data
  • Open licencing public space  (public use, etc.)
  • City-wide wikis
  • Open building & regulation information management systems (inputs, outputs, life-cycle analysis)

This infrastructure and the capacity to develop it for public benefit and open civic use is a keystone for building digital democratic urban futures. To unlock this future, Waterfront Toronto will need to be tooled and its capacity developed, for experimentally testing and developing these and other associated primary digital governance infrastructures – if we are to inclusively explore the opportunity offered by the waterfront development.


Building self-sovereign technological infrastructure and intellectual property

Ownership and the implications of ownership of primary technological infrastructure is a foundational challenge for building democratic digitally-enabled cities - given the scale of investment required and the uncertain means of value creation.

Yet, critical digital infrastructure being owned and operated to create the possibilities of monopolistic power is increasingly viewed as a structural challenge to creating open, fair and free to all markets of innovation – through a combination of knowledge asymmetries it advances, first access to experiment it privileges, and the capacity for micro biasing and misalignment of incentives it creates. New experimentation in ownership and post owned infrastructure is vital to unleashing this economy – to support the development of infrastructure which ensures fair & inclusive economies that serve the public good.

We also know for Public benefit ownership ensures data collected is owned and managed by a city and its citizens along with “Technological sovereignty allowing both government and citizens to decide and articulate their own priorities in the use of technological innovations in creating public benefits” (Barcelona Ciutat Digital, 2016).

We need to test, experiment and validate new mechanisms, means and coding of capital for creating a for-public benefit infrastructure economy - beyond the dichotomy of state, and private provider - embracing perhaps a new economy of trusts, self sovereign assets, etc - which open up radical possibilities of anti-monopolistic post ownership economies.

When exploring self-sovereign infrastructure, it’s useful to consider Chris Allen’s 10 principles of self-sovereign identity:

  1. Existence – Users must have an independent existence.
  2. Control – Users must control their identities.
  3. Access – Users must have access to their own data.
  4. Transparency – Systems and algorithms must be transparent.
  5. Persistence – Identities must be long-lived.
  6. Portability – Information and services about identity must be transportable.
  7. Interoperability – Identities should be as widely usable as possible.
  8. Consent – Users must agree to the use of their identity.
  9. Minimisation – Disclosure of claims must be minimised.
  10. Protection – The rights of users must be protected.


Building an open multi-regulator/tiers of government sandbox

New districts – or regulatory sandboxes – require innovative approaches to the process of rule-making.

Establishing a zone where all three levels of government are invited to experiment together affords the unique opportunity to test new ways of doing, on the basis that regulation is replaced within the zone by high levels of data transparency and oversight. Waterfront Toronto’s unique structure – an ownership model involving all three levels of government – makes this possible. The zone would not require governments to devolve their regulatory responsibilities to Waterfront Toronto. Rather, Waterfront Toronto could serve as the coordinating body and container for multi-regulator experimentation.

Importantly, the sandbox needs capacity not to just give clarifications on what existing regulations mean, but the capacity to create and model new experimental regulations, and to test and validate them with innovators.

By adopting this new model of collaborative governance, Waterfront Toronto would create the conditions to co-evolve regulation with technology and business model innovations; addressing products which need regulatory space as well as those operating outside current regulation (for example, a rental contracts platform). The sandbox would provide a high governance, low regulatory environment for experimentation which effectively manages risk without stifling innovation. Governance without regulation is achieved through requiring a clear public benefit case for all experiments; the use of a strong code of conduct for experimentation; transparent sharing of performance and incidence data; and open access to all actors who pass the public benefit test and conform with the code of conduct.

New regulations developed in the sandbox should be machine-readable by default, so that APIs can be open to developers to enable cheaper and more consistent enforcement of regulations.


Predictive capacities of public space

If data is to be used to create predictive assets of cities and its citizens, who owns these? What are the permissions of use to reduce other peoples’ value of their asset, and optimise yours? What will be the machined and algorithmic business models and systems of this new economy and what will be its fair and equitable architecture?

While data modelling has undoubtedly improved cities and its services – from public transport efficiency to waste collection, Dan Hill notes that “…data is being used to predict behaviour and manage our cities. But the idea of the ‘Predictive City’ should be treated with a healthy dose of scepticism.”

As noted in Ontario’s Data Strategy, “Algorithms are often a ‘blackbox’, with neither users nor regulators having a sightline into how recommendations are made. It is possible that algorithms can manipulate user behaviour, directing them towards dangerous or harmful content or choices.”

Predictive assets are derivatives of multiple data points and impact multiple actors, so their ethical infrastructure and subsequent value distribution (and prevention of monopoly power) is important.

Predictive economies are reliant on collective intelligence and data capabilities of a system. How might we structure predictive economies and their regulations in order to best serve the public?


Building a blind trust for funding the development of the infrastructure for collective regulatory change

Investment in regulatory innovation needs to be focused on building the systemic institutional capacity for agile regulation and innovation, not singular, piecemeal regulatory innovation driven by heroic measures and political backing. Our complex, interconnected and emergent world needs a decentralised and distributed capacity for the development and implementation of adaptive, agile and digital-at-source regulations.

A civic-minded approach is fundamental to building genuinely inclusive urban infrastructure. But how might we avoid regulatory capture when the public administrator is funded by the industry it regulates? While we recognise it’s beneficial for regulation to be flexible and easily updated, not everyone is able to influence its development as large amounts of resources are required. Meanwhile, smaller and critical civic and environmental innovations are blocked from emerging.

If we are lacking the infrastructure for more democratic and decentralised regulatory changes, perhaps those with the most resources should fund it? Through a blind trust, the biggest lobbyists and all levels of government could fund a civic regulatory experimentation fund.

Private venture capital funding models are problematic as they reduce the role of government to passive approval. A blind trust solves the problem of the private sector funding public innovation without regulatory capture and disproportionate influence. While non-profits could be an alternative, they often cannot directly accept finance from large corporates due to reputational risk.

Whether through a blind trust or other means, we should explore and develop civic-driven funding capacity for new civic infrastructure, without relying on problematic venture capital models.


Building the mechanisms to create a smart commons and civic capital

Toronto’s waterfront is recognised as a public asset that we want to revitalise into a vibrant, sustainable new neighbourhood.

Tackling the multitude of complex problems we collectively face, from environmental degradation and ecological collapse to growing social inequities, requires us to rethink how we raise and steer capital towards our shared civic assets.

By civic assets we mean tangible assets, including the physical and social infrastructure that the public sector has traditionally provided (schools, roads, parks, wastewater treatment, etc) – as well as earth-systems that support us (land, air, water, trees). Civic assets also include intangible assets: data, governance competencies, predictive models and networks that give people the ability to better understand and navigate the growing social and ecological liabilities of our age.

If our cities are going to be the main sites for public investment in carbon-free sustainable infrastructure, we’re going to need to rethink how the economics behind those investments work.

We need a different path to the future; a path that starts by recognising public goods create private wealth.

The existing proposal for Waterfront Toronto suggests a self-financing infrastructure mechanism where government doesn’t need to be involved. While self-financing infrastructure is a clever mechanism to fund public infrastructure, we must recognise that if the value created by that mechanism is then captured by the private sector, the community loses.

Instead, we can start to invest in public infrastructure in a way that creates more equitable outcomes; explored through Smart Covenants; a new model for community-led urban development. Rather than rely on duties, levies or taxes – though these will be necessary – Smart Covenants work toward redesigning our regulatory systems so they don’t favour speculative financing and land trading. Smart Covenants ensure the public reaps a more equitable share of the value created by public and private infrastructure development.


Building truly regenerative strategies to help us stay within planetary boundaries

Rather than perpetuate surveillance capitalism and infinite growth models, we need to experiment with shifting to donut-economics and P2P accounting models – measuring atoms, matter and bits – within planetary boundaries. Not only is it possible, but also necessary to test alternative models based on principles of the commons.

It’s not enough to optimise delivery of goods – in turn accelerating consumption – if we are to meaningfully address ecological challenges over the next quarter-century. Our material goods and their supply chains need to be radically reimagined, beyond the rent-seeking of the corporate sharing economy if it’s to be both truly circular and not advancing future monopolies. This may include carbon emissions of goods and services onsite, offsite, offsetting and low-carbon products that are minimised, durable, open, repairable and circular in nature.

Douglas Rushkoff notes: “The digital economy, so far, is just corporate industrialism on steroids: extract value from people and places … The moment we stop optimising the digital economy for the growth of capital, and optimise it for the circulation of value between people, everything will start to get better really fast.”

A net zero carbon approach and commitment must be a strategic objective if we are to take the ecological challenge seriously.


We believe Quayside is a strategic opportunity to redefine the means, methods and outcomes of urban renewal for the 21st century. This future should be led and developed by Waterfront Toronto, for and on behalf of current and future residents of Toronto, as public innovation infrastructure. Waterfront Toronto’s unique position – including its existing mechanisms to engage with all three levels of government – has the genuine capacity to drive the change that is needed.

Further, we believe the redevelopment of Toronto’s waterfront is not only an opportunity for the city itself, but for all cities and communities in Canada to better negotiate the creation of value at the intersection of the public, private and civic. With increasing investments in the fabric of our cities coming from big global corporations, communities around the world are facing major challenges around public means of constructing and preserving public value.

Nevertheless, it is clear that government alone neither has the capacity nor should be the sole architect of public value. Government doesn’t equal public, necessarily. Governance for public value is and needs to be formed at the equitable intersection of state, markets, educational institutions and civic activism – that is, in new hybrid entities – where the public good openly and fairly is deliberated with all its different and complementary models of making societal decisions.

This kind of innovation, however, will require strategic investment with the ambition to create new lead markets and civic activism, if it is to stand any chance at being established as a legitimate alternative to current trends. The present document is only a seed of a provocation aiming to open alternative civic futures. To make them a reality, investments of the right order of magnitude are essential.

By Dark Matter Labs, Cities for People and MaRS
31 October 2019


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