Infrastructure investment confidence high, but challenges looming over the horizon

May 29, 2019 – A critical shortage of skills remains the number one concern of construction industry leaders charged with delivering Australia’s record transport infrastructure spend over the next decade, according to a new industry survey.

The Roads Australia (RA) Industry Confidence Outlook shows that while short-term confidence is running high, industry leaders believe there’s an urgent need to take strong collective action to attract and retain the skilled workers needed to deliver projects beyond 2020.

The Outlook will be released at the annual national Roads Australia Transport Summit, being held in Sydney over the next two days. The Summit will host 280 industry leaders including NSW Transport and Roads Minister, Andrew Constance, and Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development, Michael McCormack.

The RA survey results are based on responses from some 50 senior executives from contracting and consulting firms and industry suppliers with a combined net worth of more than $7 billion.

Of those polled, 87 per cent say they have confidence to invest in plant, people and/or equipment in Australia over the next year.  (On a scale of one to 10, the average confidence rating is 7.6 across those who responded positively. This is broadly consistent across all states and territories.)

Also on the plus side, 89 per cent of those surveyed expect to increase or maintain staff levels in the next 12 months, with only 11 per cent anticipating a decrease.

However, the lack of a skilled worker pipeline and ‘fit-for-purpose’ procurement processes rate as areas of highest concern over the longer term.

“Skill shortages are the number one risk to delivering Australia’s record infrastructure pipeline, and if not addressed may lead to cost blowouts, delays and unprofitable projects,” says Roads Australia President, David Stuart-Watt.

“Government and industry need to work together to identify strategies to encourage more women and young people into the industry. Gender diversity, in particular, remains a very big problem in our industry and we need to redress it far more quickly than we’re doing at present.

There’s also an urgent need to supplement our workforce with skills from overseas. To that end, we think some of the skill eligibility requirements in the new Temporary Skills Shortage (TSS) visa system need to be looked at again.”

Mr Stuart-Watt said the Confidence Outlook survey also rates current procurement processes as a potential brake on industry’s ability to deliver future work on time and budget.

“There are a lot of inefficiencies and inconsistencies that add to the overall cost of bidding, and which could be addressed through greater standardization of contracts and processes,” he says.

 “Industry and government also need to find the middle ground on project risk. We need to come up with a more balanced, partnership-based approach.”<

The survey also identifies concerns around the longer term, reliable and cost-effective supply of construction materials, such as sand and aggregates.

Conducted in April, the RA Industry Confidence Outlook is an annual survey providing an industry benchmark on confidence and top business challenges.

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