A reset at Infrastructure Australia (IA) is officially underway, with legislation passed in the final sitting week of the year to position the agency as the premier infrastructure adviser to the federal government.
But it’s not all good news for the federal government as it braces for several pain points that will either prevent major works from firing up or blow out costs.
According to IA CEO Adam Copp, skills shortages among trades and labourers are expected to hit Australia hard in 2024 and remain high until 2025, peaking at about 131,000 full-time workers next year.
The problem for government to address is how to grow Australia’s infrastructure workforce by 127% needed to meet demand.
“We urge governments to work together and with industry to address this structural workforce shortage,” Copp said.
“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.”
The IA’s 2023 market capability report outlines that in addition to quarry shortages in Melbourne, NSW’s Mid North Coast and South East Queensland, and local steel production capacity which cannot keep up with local demand, greater reliance on imported materials means identifying levels of embodied carbon in building supplies becomes a harder task.
“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,” 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.”
Speaking to The Mandarin ahead of the release of the report on Tuesday, the head of IA explained there were key insights that were useful to state governments but primarily the trends were designed to inform national decision-makers. In particular, they have major implications for Labor’s $230 billion public infrastructure pipeline over five years, the national plan to build 1.2 million new homes, and energy sector investments.
“In this report [we are] trying to give real actionable recommendations for the Australian level of government with policy levers that they control.
“Our focus is really on making sure that we fulfil that desire to be the Australian government’s premier infrastructure adviser,” Copp said.
The Infrastructure Australia Amendment (Independent Review) Bill passed both houses of parliament last week.
Among the changes the bill makes include redefining the agency’s functions and implementing a stronger governance structure whereby an advisory council supports three expert commissioners. A merit-based appointment process for the commissioners is underway.
Minister for infrastructure, transport, regional development and local government Catherine King said that under the former government, the expert advice of IA was often ignored and the agency was filled with political appointments.
“The legislative changes define IA’s mandate, improve the evaluation of infrastructure proposals, and refine the products IA delivers to better support government investment objectives — including ensuring a more targeted Infrastructure Priority List (IPL),” King said.
“A more focused and targeted IPL will mean that proposals considered for inclusion will need to be aligned to the government’s policy objectives, and within IA’s remit of transport, water, energy and communications infrastructure.”
Additional changes recommended by the Independent Review of Infrastructure Australia will be implemented via a revised statement of expectations to be issued by the government early next year.
“By underpinning sound infrastructure investment decisions, a revitalised, respected and trusted IA will support the government in achieving productivity, economic growth and sustainability outcomes,” King said.
“It will also continue to identify opportunities to streamline work with the states and territories, allowing resources to be better invested in infrastructure priorities moving forward.”
This is the third year IA has produced market capability insights. The report highlights trends in public infrastructure investment, and analyses market capacity constraints that could inhibit delivery of the major public infrastructure pipeline.
The 2023 report forecasts cost-overruns, delays and future global supply chain risks, and makes 14 recommendations to improve the demand-supply balance, and ultimately the long-term sustainability of the construction sector.
Six of the most urgent recommendations to be actioned within less than six months include proactive demand management of the infrastructure pipeline, as well as cross-sector whole of market capacity; boosting quarry materials supply; boosting workforce supply via the National Infrastructure Workforce Strategy; investing in a productivity study and national baseline; and improving risk allocation between parties.
“What’s been good about market capacity is there’s an independent data set that all governments can use in conversation with their ministers, with stakeholders, and it’s well understood and well regarded around what the issues are,” Copp said.
“Having that shape of the problem allows you to design policy interventions that should work […] and there is quite a lot of collaboration occurring around these issues. It’s a national cabinet-level issue.
“The sector isn’t just jurisdictionally based – it’s a national sector. All portfolios and all levels of government need to have that sort of bigger picture,” he said.
