State and federal infrastructure spending fuelling skills and labour shortfalls

Anthony Albanese’s infrastructure, housing and climate targets are under threat with the nation facing severe skills and labour shortfalls, a major report has warned.

Infrastructure Minister Catherine King. Picture: NCA NewsWire / Martin Ollman

Anthony Albanese’s infrastructure, housing and climate targets are under threat, with the nation facing severe skills and labour shortfalls, a major report has warned, sparking calls for state and federal governments to limit spending on capital works programs.

With historic demand for labour and materials inflating costs in an already overheated market, Infrastructure Australia is sounding the alarm over the federal government’s ability to deliver on promises central to the Prime Minister’s agenda due to a lack of locally sourced building materials and available workers.

The independent body’s 2023 Infrastructure Market Capacity report said Australia faced a shortfall of 229,000 workers, which is likely to inhibit delivery of the nation’s $230bn public infrastructure pipeline over the next five years.

The concern comes as Australia undergoes a major energy transition, with investment in renewable projects expected to quadruple over the same period, while Labor has also pledged to build 1.2 million homes.

“Demand still significantly outweighs supply and productivity growth remains stagnant compared to other industries. Governments will need to remain vigilant and discerning in their infrastructure spend, in the face of budget and inflationary pressures over the short to medium term,” the report said.

Infrastructure Australia chief executive Adam Copp called on governments to make hard choices about which projects should go ahead, and within what time frame, amid concern massive infrastructure spending was placing pressure on limited resources.

“This is going to be a challenge for all governments … into the future. It will be dependent on different states but governments need to take a hard look at their pipelines constantly to make sure they are managed,” Mr Copp said.

Infrastructure Minister Catherine King last month axed 50 projects from the commonwealth’s $120bn capital works program in response to a sweeping independent review but repeated there would be no cuts in funding.

The report identified severe shortages in local steel and cement, as well as localised shortfalls of quarry products, contributing to price uncertainty and leading to delays and cost overruns.

Mr Copp said the report finds acute quarry shortages loom in Melbourne, the NSW Mid North Coast and southeast Queensland.

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

“However, Australia’s lack of domestic capacity to supply building materials exposes investments to cost-overruns, delays and future global supply chain risks.”

The report, to be presented to state and commonwealth leaders at national cabinet, has made 14 recommendations including that governments develop a national infrastructure workforce strategy to better attract and retain workers and ensure a supply of labour to meet demand.