Governments must insert a mechanism into long-term infrastructure planning to ensure projects are capable of meeting community expectations in a post pandemic environment, infrastructure experts warn.
The large allocation to broadband upgrades in the United States’ $1.2 trillion infrastructure bill signed this month has thrown into focus the dominance of urban road and rail projects in Australia’s bloated public infrastructure investment portfolio.
Around 80 per cent of Australia’s $218 billion infrastructure spend over the next five years will go towards transport projects to compensate for years of underinvestment, most of them scoped and budgeted pre-COVID-19.
Since then, the pandemic has triggered a 200 per cent increase in net migration to regional areas, while simultaneously proving that four million people can productively work from home, Infrastructure Australia modelling shows.
“Despite the importance of digital connectivity bought into sharp focus by COVID-19, the vast majority of Australia’s infrastructure spend is still being directed into pouring concrete,” Accenture infrastructure specialist, Kylee Anastasi, says.
It’s not a criticism, it’s just a matter of timing, she says. Australia’s boom kicked off around 2016-17, compared to the US which is now entering its boom phase.
“If you look at the priorities under the US plan, 5G for regional areas for example, they’re not just building back, they’re building back smarter,” Anastasi says.
Aurecon global chief executive, William Cox, says increased investment to tackle the nation’s broader infrastructure challenge, including telecommunications, data centres, energy, and water, cannot come at the expense of transport infrastructure. That particular can has been kicked down the road for too long.
He says the private sector is gaining greater confidence to invest alongside government in utilities projects.
“We are seeing some promise in terms of the willingness for public sector and private sector to collaborate and partner, and with the significant investment through superannuation funds,” Cox says.
With an estimated 430 projects worth $218 billion due to be completed by 2025, Australia’s unprecedented wave of investment in public infrastructure projects is being ravaged by labour and material shortages, the introduction of new technologies, and the net zero movement.
Together, this trifecta is driving up prices and pushing out delivery schedules.
“We might see peak transport spend shift out a few years given the sheer number of big transport projects happening simultaneously and reported shortages of key inputs,” Cox says.
Infrastructure Australia and the Grattan Institute have raised similar red flags.
At its projected peak in 2023, the infrastructure sector will have just half the people it needs to deliver on the current pipeline, according to Infrastructure Australia’s workforce skills supply report.
The sector will be short 93,000 skilled workers, with the most acute among engineers, scientists and architects manifesting in late 2021.
Interstate migration will offer some reprieve but will not address major national shortages between now and 2024, Infrastructure Australia says. Overseas workers, often perceived as a panacea to these shortages but in reality only supplying 6 per cent of new entrants to the sector, are an insufficient counterweight to address the demand challenges.
“Governments need to adopt portfolio and pipeline management practices to help smooth the pipeline and manage resources,” Infrastructure Australia chief executive Romilly Madew says.
Demographics are compounding the problem. Over 40 per cent of current infrastructure workers are likely to retire over the next 15 years contributing to a significant loss of experience.
Internationally, competition for talent is running hot as well. In addition to the US, Indonesia plans to invest over $US430 billion in infrastructure over the coming years, and Europe’s project pipeline remains buoyant.