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Australia’s infrastructure build threatened by materials and skills shortages

18 Dec, 2023
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Australia’s infrastructure, housing and energy agenda is under threat amid challenges accessing local building materials and a shortfall of 229,000 public infrastructure workers, Infrastructure Australia’s 2023 Infrastructure Market Capacity report has found.

Infrastructure Australia’s Chief Executive Adam Copp said: “Construction activity and demand for building materials, skills, and labour is at a historic high.

“The infrastructure sector is delivering a major public infrastructure pipeline valued at $230 billion over five years. This is occurring alongside a plan to build 1.2 million new homes as well as major investment in the energy sector, which is quadrupling over that same period.

“With so much construction activity underway, the industry is finding it increasingly difficult to source key building materials and workers – particularly engineers, skilled trades and labourers.

“A clear message in this year’s report is that limited access to local steel and cement, as well as localised shortages of quarry products is contributing to price uncertainty in the supply chain, leading to delays and cost overruns.”

The annual report identifies key trends in public infrastructure investment, and analyses market capacity constraints that could inhibit delivery of the major public infrastructure pipeline.

Copp said the report found acute quarry shortages loomed in Melbourne, NSW’s Mid North Coast and South East Queensland, while steel imports were increasing because Australia’s steel production capacity could not meet demand – with a 20 per cent increase in imports over the last two years compared with the previous two decades.

Copp said: “Global supply chain pressures have eased for now, with steady improvements in international production, trade, and transport measures compared with 12 months ago.

“However, Australia’s lack of domestic capacity to supply building materials exposes investments to cost-overruns, delays and future global supply chain risks. It’s also much more difficult to understand the level of embodied carbon in imported materials.

“Currently, there is no method for collecting or analysing data on local manufacturing and production outputs at the national level, hindering the ability to predict supply and mitigate for shortfalls, as we can do with labour.”

The 2023 market capacity report includes 14 recommendations for the Australian Government to act in partnership with state and territory governments and industry to improve the demand-supply balance, and ultimately the long-term sustainability of the construction sector.

Copp said: “Australia has an opportunity to build domestic capacity and markets for new low emissions construction materials, such as recycled materials. For major road projects, our modelling suggests that close to a third of conventional materials – 54 million tonnes annually – could be replaced with recycled materials.

The report found that Australia’s infrastructure workforce would need to grow by 127 per cent to meet demand. It is the third year that Infrastructure Australia has reported significant labour shortages.

Copp added: “We urge governments to work together and with industry to address this structural workforce shortage. While broad skills and workforce reforms are underway nationally, we need to urgently boost the pipeline of workers into the sector and develop a national infrastructure workforce strategy.”

Additional key findings include:

  • Trades and labourer shortages are growing at the fastest rate and will remain high until 2025—a peak of 131,000 full-time workers by 2024.
  • Key regions across the country will experience extraordinary growth in the three years from 2024—25. Top five regional hotspots include Murray, Mid North Coast and Riverina in NSW, Central Queensland, and the Northern Territory Outback.
  • According to 2021 Census, women represent 14 per cent of the construction workforce—a marginal increase on the 12 per cent identified in the 2016 Census.

The Australian Constructors Association (ACA) commended the release of the updated market capacity report.

ACA Chief Executive Officer Jon Davies said the report’s significance was a wake-up call, underscoring the immediate need for industry-wide changes to meet Australia’s infrastructure needs.

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

“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.”

ACA particularly commended the report’s recommendations that 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.

Davies continued: “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.

“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.”

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