By Jon Davies, CEO, Australian Constructors Association
“Whilst there are challenges in the infrastructure market, today, we’re confident that we’ll be able to attract the very best workers so that it’s delivered, and it will be a quality outcome for our state for generations.”
These are the words Queensland’s Energy Minister Mick de Brenni used when questioned about finding the necessary resources to construct two new pumped hydro projects in the State, but is he right to be confident? Will there be enough people to construct the growing pipeline of ‘new energy’ projects in Queensland and around the nation?
In October 2022, Infrastructure Australia, the government’s Infrastructure Advisor estimated that there was a shortage of 214,000 workers required to deliver the pipeline of infrastructure projects at that time and that by 2023 the demand for workers was expected to be double the available supply.
Australian State and Federal governments can’t just postpone the construction of new energy projects as they have made firm commitments to support decarbonisation. Crucially, this growing investment in new energy coincides with record levels of investment in transport infrastructure which is needed to improve the competitiveness of the nation and military infrastructure that is required to improve the defence of the nation. This situation is further exacerbated in Minister De Brenni’s home state of Queensland where there will be an additional investment of $7Bn in infrastructure for another immovable deadline, the 2032 Olympic games.
For an industry used to boom, and bust cycles, it is also worth noting that this investment boom is different from previous booms in that a large proportion of the spend is happening in metropolitan areas. This is making it even more difficult than usual to find people willing to supplement local workers in order to construct large projects in regional areas, the types of projects being constructed by the Department of Defence as well as new energy projects.
So, what is the solution?
Despite growing calls to cancel or defer infrastructure investment there are limited obvious opportunities to do so that have consequences that are worse than the problem we are trying to solve (resource availability).
The historical response to this problem is to look to skilled migrants to fill the gap but there are a number of reasons why this won’t work and could actually exacerbate the problem of skills shortages.
Firstly, Australia is not the attractive destination for migrants that it once was. We made it very difficult for people to leave the country during COVID and we have an extremely high cost of living. Secondly, the competition for skilled migrants is red hot. Every other major country is spending big on infrastructure and new energy in particular.
Finally, we are already struggling to house our current population. Where will we house the migrants required to address the skills shortages in construction and other industries? If we have to build even more accommodation and infrastructure, this will only increase the demand for skilled resources.
So, if skilled migration is not the answer, what is?
The only silver bullet to address our skills deficit is improved productivity. We need to find ways to do more with the resources we already have.
The good news is there is plenty of scope to do this. If we could close the gap in productivity growth between construction and other major industries over the last thirty years, we could be saving $58Bn every year or, potentially more importantly, we could be constructing the planned pipeline of projects without the need for any additional resources.
So, how do we do this, particularly in regional areas?
At a holistic level, we need to look at adopting a more programmatic approach to construction. This means bundling projects that require similar skills and delivering them in a way that evens out resource requirements. By doing this, there will be more certainty for investment in local capability, an increased focus on skills development and, increased certainty for investment in offsite manufacturing capabilities. Design for Manufacturing and Assembly (DFMA) This has the potential to not only improve productivity but also increase construction reliability.
There are of course a myriad of other opportunities to improve industry productivity, most of which are well known and have been around for many years. Now is the time for a collective approach to finally realise them.
If we can address our productivity problem, the construction industry can truly become a field of dreams where we have enough resources to build the new energy projects we need to meet our environment commitments and at the same time, construct the infrastructure we need to become more competitive as a nation. Become more productive and we can build it all!