By Adam Copp, Acting CEO, Infrastructure Australia

Unprecedented demand from a massive major project pipeline combined with the lingering symptoms of the COVID-19 pandemic have created a perfect storm that is bringing construction companies to their knees and threatening budget blowouts that will hit the public purse.

It’s no longer a question of if a project will slip – the question is when, by how long and at what cost. As Infrastructure Australia’s 2022 Market Capacity Report highlights, Australia’s public infrastructure pipeline increased by $15 billion over the last year alone.

The five-year pipeline is currently valued at $237 billion with New South Wales, Victoria and Queensland accounting for more than 80 per cent of that investment.

This is all happening against a backdrop of severe labour shortages and supply chain disruptions causing huge delays and exorbitant cost increases for construction materials, creating a pressure cooker situation in an industry that was already struggling with low productivity.

The Prime Minister and First Ministers requested Infrastructure Australia undertake this research at the Council of Australian Government in March 2020. Since then, we’ve been working with state and territory governments and industry across Australia and the globe to investigate the issues and find a pathway forward.

Reprioritising the pipeline

The first and most immediate step governments can take to alleviate the pressure is to look at its current pipeline and reassess its priorities based on the current capacity constraints within the market.

We saw the NSW Government take this step last year, reprioritising the Beaches Link as well as other projects to mitigate against delivery risks and we know other jurisdictions are working on this as well. Of course, these are difficult decisions. Delaying projects means communities need to wait longer for the roads and transport projects promising to make their lives easier.

There are political implications too. But something has to give – if governments don’t proactively take control, the market will likely do it for them. The end result could be budget blowouts and delivery delays that ultimately mean the taxpayer gets less infrastructure for their buck.

Attracting talent

When it comes to having the people available to do the work, supply will not even come close to meeting the demand this year based on current projections. In 2023, labour demand is projected to grow by 42,000 to a peak of 442,000 which is more than double the available supply expected.

Our research shows that labour scarcity is the single biggest issue facing construction companies. This is an industry ripe for cultural reform. We know many construction workers are suffering from bullying, unrealistic deadlines and long and inflexible hours with limited opportunities for career development. The job takes a toll physically and mentally.

Safe Work Australia statistics show that the construction sector had the third highest rate of fatalities across all sectors, with 24 fatalities in 2018. Australian construction workers are also 70 per cent more likely to take their own lives than employees in other industries. This is unacceptable.

Against this backdrop, it’s no surprise the sector is failing dismally when it comes to diversity and attracting women. Women make up just 12 per cent of the construction workforce, most of which work in clerical or administrative roles – that’s not good enough for a sector that is Australia’s third largest employer.

An industry with a healthier gender diversity balance will help address the current cultural issues facing the sector. We need to do more to attract young women to the industry and we need the industry to make diversity and inclusion a business priority.

The reality is, you can’t be what you can’t see – we need more women in leadership roles across the industry. Already there is some good work happening in this space, including the work of the Construction Industry Culture Taskforce to develop and implement a new Culture Standard for the industry.

The 2022 Jobs and Skills Summit also delivered action in this space with the Australian Government and states and territories agreeing to a $1 billion one-year National Skills Agreement to provide additional funding for fee-free TAFE in 2023 while a longer-term agreement to drive sector reform and support women’s workforce participation is negotiated.

The Australian Government also committed to strengthening existing reporting standards to require employers with 500 or more employees to commit to measurable targets to improve gender equality in their workplaces.

Innovation and digitisation

Innovation is one of the key tools we have to make change, improving productivity and attracting and retaining men and women to work in the exciting industry that construction is. A switch to manufacturing and off-site prefabrication is one way we can ease the physical burden for our construction workers and drive a better work/life balance, reducing safety hazards along the way.

More widespread adoption of digital twins which enable the simulation and rehearsal of all aspects of construction can identify hazards, or better ways of doing things, as well as reducing risks, not to mention costs. Everyone in our sector, from government to the local trade, is experiencing the impacts of these unprecedented challenges. Let’s take this opportunity now to work together and drive real change to set the industry up for a healthier future.

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