Australia still has an enormous shortfall of workers who are needed to deliver upon the national pipeline of public sector infrastructure construction projects, a new report has found.

(above image: NSW Government)

Shortly before Christmas, Infrastructure Australia released the 2024 edition of its Infrastructure Market Capacity Report.

The report provides an overview of the nation’s capacity to deliver upon the national pipeline of public infrastructure construction work that is expected over the next five years.

As part of the report, Infrastructure Australia has compiled an updated dashboard which provides current estimates and forward projections for public infrastructure workforce demand and supply across 46 occupation categories.

As of August, the dashboard indicates that the nation had an estimated shortfall of 197,000 workers across the 46 occupations.

In total, Australia had a requirement for 395,000 workers across the occupations but had only 198,000 such people currently in the infrastructure workforce supply.

As a result, the nation has only around half the workforce that it needs in order to deliver upon the current pipeline of work.

This is the case notwithstanding that the workforce shortage has contracted by 13 percent (from 229.000) over the past year since the publication of the 2023 report.

In terms of individual occupations, the report found that worker shortages exist across each of the 46 occupations which are covered in the report.

However, the focus and location of shortages is changing.

As the majority of large-scale transport projects have moved from design through to various stages of construction, the shortage of engineers has peaked – although engineers are still in shortage.

Instead, the focus of shortages is now shifting toward onsite trade and labour roles.

In terms of locations, meanwhile, shortages appear to have peaked in large cities but are expected to increase in regional areas on account of significant numbers of new renewable energy developments which are entering the pipeline.

Shrinking and Changing Pipeline

The report comes as Australia’s pipeline of infrastructure work is undergoing change in several respects.

First, the overall dollar value of the pipeline is finally beginning to contract. This is occurring after the pipeline soared to record levels over recent years on account of a huge number of large-scale public road and rail projects.

Over the five years spanning 2023/24 until 2027/28, the overall value of public infrastructure work done is expected to amount to $213 billion. At this level, the value of work is 8 percent lower compared with the previous five-year outlook period spanning 2022/23 until 2026/27.

It should be noted however, that the current pipeline remains extremely large by historic standards.

Beyond this, the focus of work is shifting in terms of sectors and locations.

In terms of sectors, the report shows that transport investment remains the largest expenditure category.  Indeed, the $126 billion five-year pipeline of road, rail, airport and other transport projects accounts for 59 percent of the overall public infrastructure pipeline.

However, the transport pipeline has shrunk by $32 billion over the past twelve months. This has happened as megaprojects have moved through to completion, fewer new projects are entering the pipeline, cost and schedule changes have occurred on some projects and some projects in the existing pipeline have been deferred or cut following a Commonwealth review into the sustainability of the pipeline.

However, the report also indicates that work is expected to pick up in terms of social and public housing as well as projects which are associated with Australia’s energy transition.

In fact, looking across the entire construction sector (both public and private projects), the report forecasts a six-fold increase in the value of renewable energy work.

In terms of locations, meanwhile, the pipeline of work is shrinking in New South Wales and Victoria but is expanding in Queensland and the Northern Territory. This is happening as the focus shifts from transport to renewable energy and as Queensland prepares for the 2032 Olympics.

(As the peak of the transport boom passes, infrastructure workforce demand will shift toward public housing and renewable energy. Image source: smallcaps.com.au https://smallcaps.com.au/australia-needs-2-million-workers-meet-clean-energy-future/)

Better Planning and Productivity Needed

Aside from labour shortages, the report notes that the nation’s infrastructure sector faces other challenges.

Whilst the rate of material price growth has normalised after recent peaks, the price of construction materials is now around 30 percent higher compared with its level three years ago.

Furthermore, industry productivity has remained stagnant over the past three decades even as productivity in other economic sectors has improved.

Commenting on the report, Infrastructure Australia CEO Adam Copp said that action is needed in several areas.

First, careful planning will be needed in areas such as renewable energy to ensure that we have the logistics and enabling infrastructure that is necessary to support these projects and to get resources to locations where they are needed.

Challenges in this area should not be underestimated. For example, wind turbine blades can measure up to 70 meters in length and several meters in diameter. This can pose difficulties in terms of getting these to site.

Beyond that, Copp says that industry culture needs to improve in order to improve productivity and to attract and retain more workers.

“In order to attract new workers to the industry and retain the ones we have, government and industry need to address the underlying cultural issues that are holding productivity back and driving people, particularly women, away from a career in construction,” Copp said.

“This should be an industry of choice, but the reality on the ground is it’s a harsh working environment—we see burnout, stress, and incredibly poor mental health and wellbeing.

“Addressing culture will be critical to ensuring we can deliver the nation’s infrastructure priorities.”

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