Australia’s civil engineering and construction sector is facing enormous challenges as the nation confronts a shortfall of 229,0000 infrastructure workers, the latest report has found.

Infrastructure Australia has released the 2023 edition of its annual Infrastructure Market Capacity Report.

The report examines the capacity of the engineering and construction sector to deliver upon public infrastructure commitments.

According to the report, there have been several encouraging developments in terms of the sustainability of the infrastructure supply pipeline since the previous report was published in December last year.

First, it notes that public infrastructure demand has flattened.

Over the five years to 2026-27, major public infrastructure spend across all levels of government is expected to be valued at around $230 billion.

Whilst this represents a four percent increase compared with the previous report, it also shows a 10 percent drop in the highest peak of expenditure as well as a shifting of investments into later years.

This, Infrastructure Australia said, points to encouraging efforts on the part of governments to manage their capital project pipelines in a more sustainable way.

This has occurred through means such as the Australian Government’s review of its infrastructure pipeline – the result of which saw the cancellation of 50 projects.

Nevertheless, the report said that demand will continue to grow strongly in several areas.

In particular, energy sector investment is expected to grow to at least four times current levels as the nation’s energy transition gathers steam.

Whilst most of this growth will be funded by the private sector, the extraordinary levels of investment which are involved will add significant pressure to material and labour capacity in terms of public investment.

Added to this is significant public investment which is in planning in areas of defence, mining and housing.

Meanwhile, the report points to particular regional hotspots of demand across Queensland, New South Wales and the Northern Territory.

These include the Murray, Mid North Coast and Riverina regions in New South Wales along with Central Queensland and the Northern Territory Outback.

Over the three years from 2024/25, these areas may see levels of investment which are three times higher compared with the previous three years.

All this is leading to challenges around resource availability.

In particular, the report suggested that as of October, the nation had a shortfall of 229,000 full-time infrastructure workers.

Worker shortages are expected across all occupational groups.

At the moment, the most significant shortages are in the engineers and scientists category. This will continue to be the largest category of shortfall until the middle of 2024.

Beyond this, the fastest growing category of shortages is trades and labour – a category for which shortages are expected to remain high until 2025.

Turning to materials, the report acknowledged that global supply chain pressures have eased since the previous market capacity report was published twelve months ago.

However, it said that in particular hotspots, local material supply is unable to meet demand.

This is particularly the case for steel and quarry products.

In terms of steel, IA says that imports over the past two years are up by 20 percent compared with the long-run average over the past two decades.

In quarry products, acute shortages are looming in several regions, with long lead times from quarry approval to extractions making it difficult to source alternative supplies when and where they are needed.

Furthermore, the report pointed to long entrenched ‘wicked problems’ which have held back construction sector productivity for decades.

These include a lack of diagnostic productivity measures, poor rates of female workforce participation, inconsistent uptake of new technologies and modern manufacturing methods and poor/unfair risk allocation.

In its report, Infrastructure Australia made fourteen recommendations to improve the long-term sustainability of the nation’ public-sector civil construction sector.

In terms of materials, it calls for building more domestic capacity and markets for low emission materials such as recycled materials.

For major road projects, the report suggests that up to one-third of conventional materials could be replaced with recycled materials. This equates to 54 million tonnes of savings annually.

In terms of labour, it recommended the development of a national infrastructure workforce strategy.

Construction industry lobby groups welcomed the recommendations.

Jon Davies, CEO of Australian Constructors Association, described the report as a wake-up call that underscored the need for industry-wide change.

“The lack of substantial progress since the report’s inaugural release two years ago reinforces the need for bold, transformative action,” Davies said.

“Current incremental changes are falling short; migration is on the rise, yet the workforce shortfall persists, with shortages already at 229,000 full-time workers.

“The reality is Australia’s construction industry needs to learn to do more with the resources it has but to do this the sector’s ‘operating system’ requires a complete overhaul—and someone needs to take the lead.

Davies welcomed the report’s recommendations – particularly those focused on national strategies to enhance construction participation such as the work of the Construction Industry Culture Taskforce in developing a new industry culture standard.

But he said that the nation needed a National Construction Strategy to provide a comprehensive and coordinated approach to implement the recommendations with urgency.

“ACA proposes a collaborative initiative led by the Federal Government, engaging state and territory governments, industry stakeholders and unions to develop a National Construction Strategy,” Davies said.

“Key components of the proposed National Construction Strategy include the development of nationally consistent procurement principles and a unified approach to construction data collection.

“The National Construction Strategy would also articulate a strategic framework for elevating the overall skill level of the construction industry. This includes reskilling initiatives to adapt to emerging technologies.

“With a National Construction Strategy Australia can finally create a sustainable industry that is forward-looking, embracing new ways of doing things, while being a diverse industry of choice for the next generation of the workforce.”