Billions of dollars worth of new roads, homes and renewable energy projects could blow out in cost or be delayed years as the nation faces a shortage of 300,000 workers to build vital infrastructure.
A $29 billion jump in the value of the nation’s major infrastructure pipeline, driven in part by new housing and energy projects, has prompted concern that regionals may miss out on a renewed lift in public and private spending.
Major projects such as Melbourne’s Metro are coming to an end – but new ones have increased the pipeline of public works to $242 billion.Credit: Jason South
Federal agency Infrastructure Australia on Thursday said there was now $242 billion in public projects planned over the next five years with another $760 billion expected to be delivered by the private sector.
It was the first increase in the expected value of public projects since 2022.
Transport projects, including major rail and road works, account for $129 billion of the expected public spend over the next five years. Expenditure on utilities is forecast to double to $36 billion while building projects, including social housing, is expected to lift by $6 billion to $77 billion.
But completing this work will require a substantial lift in the nation’s infrastructure workforce, which is already short 141,000 workers. By 2027, the shortage is tipped to grow to 300,000.
Agency chief executive officer Adam Copp said there had to be a change to the way the country dealt with ongoing worker shortages for infrastructure projects.
“If we keep doing what we’ve always done, which is to throw more fit, young, usually men at the problem, we’re not going to get it all done,” he said.
Sixty per cent of firms surveyed by the agency said labour and skills remained the biggest risks to delivering projects.
Of the forecast worker shortage, regional parts of the country will face the biggest strain.
The current shortage in regional areas will climb from 38,200 now to 181,000 by 2027. The shortage in capital cities is expected to lift modestly, from 131,700 to 148,000 before starting to ease as major projects come to an end.
Queensland’s Sunshine Coast, Toowoomba and Wide Bay, plus the Murray, Riverina, Hunter Valley and New England areas of NSW are most exposed to a worker shortage.
That is due to a surge in public investment in those areas. Almost $700 million, made up largely of new energy projects, is planned for the New England area alone, and $550 million is earmarked for the Sunshine Coast.
Trades workers and labourers account for more than 60 per cent of the expected worker shortage.
Copp said lifting productivity across the infrastructure sector would be pivotal to delivering projects, particularly in regional areas.
New production methods such as pre-fab housing could reduce costs facing the construction sector.Credit: Kate Geraghty
“With community buy-in, this mammoth investment presents a once-in-a-generation opportunity for these regions. But to unlock it effectively and ensure we have the people power to do the job, we need to turn the page on three decades of stagnating productivity in construction. We need to do more with less,” he said.
“We need to start investing in innovation rather than fixating on delivering at the lowest possible cost.”
Across both private and public infrastructure, the agency estimates $163 billion is earmarked for renewable energy projects including transmission lines, solar farms and pumped hydro. Most of that is planned for regional areas.
There are signs that price pressures are starting to ease for infrastructure projects.
The agency noted that the prices of key construction materials such as timber and cement had largely tracked overall inflation over the past 12 months.
Steel prices, however, have dropped with a substantial increase in imports of cheap fabricated steel. Imported steel is up to 50 per cent cheaper than domestic production.
The report was released after new figures from the Australian Bureau of Statistics revealed the number of new mortgages taken out by investors hit a record high in the three months to the end of September.
Investor loans jumped by 13.6 per cent in the quarter to 57,624. The previous record for investor loans of 52,787 was set in March 2022 when official interest rates were 0.1 per cent.
Loans for owner-occupiers also increased in the quarter, reaching a three-year high of 83,846, of which 29,637 were to first-time buyers.
The lift in investor loans has prompted speculation that the Australian Prudential and Regulation Authority may use so-called macro-prudential rules to restrict the share of bank loans given to investors.
Greens housing spokeswoman Barbara Pocock said the last time the authority tightened investor loans was between 2014 and 2018, which helped slow house price growth.
“Australia needs to get back into the business of giving loans to owner occupiers rather than property investors – and if the government won’t do it, then APRA should,” she said.
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