Infrastructure Market Capacity 2023 Report Summary

Infrastructure Australia’s third annual Infrastructure Market Capacity report has now been released. The report provides an update on the forward pipeline, capacity constraints across the sector and makes clear recommendations to drive a more sustainable industry.

Key takeaways

  • The infrastructure pipeline has smoothed slightly over the past 12 months, noting this does not include the impacts of both the NSW and Commonwealth Government infrastructure reviews.
  • The five-year major public infrastructure pipeline has increased by 4 per cent to $230 billion, however, there is a 10 per cent decrease in peak expenditure.
  • Investment in both regional areas and the energy sector is expected to grow to between three and four times its current level, with cross-sectoral demand placing ongoing pressure on market capacity.
  • Labour is still the top capacity constraint with a shortage of 229,000 full-time infrastructure workers predicted as of October 2023. The most acute shortage remains in engineering and science-based roles.
  • Global supply chain pressures have eased; however, local materials can not meet demand, particularly in steel and quarry products. There is an opportunity to increase domestic capacity and markets through low-emission construction materials.


Recommendations in the report are broken down into four key themes:

  1. Understanding demand
  2. Understanding non-labour supply
  3. Workforce and skills
  4. Improving construction productivity

These recommendations have largely been developed with the intention of providing concrete actions for governments to take within the next 12 months.

Understanding demand

Infrastructure Australia (IA) has expanded its view of infrastructure demand by 7 per cent in the last 12 months, with its database now reflecting 74 per cent of the national construction pipeline. IA is looking to increase this coverage across mining, defence and residential buildings.

IA has made two recommendations relating to demand, seeking a continued focus on active pipeline management across jurisdictions. IA has also asked the Australian Government to consider issuing whole of government guidance on market capacity to ensure cross-sector capacity is managed and competition for key inputs reduced.

The increase in the rolling pipeline is driven in equal parts by new projects being added and cost escalation, resulting in a redetermination of total project expenditure. The largest driver of increased project costs is geotechnical issues discovered during construction which account for over $2 billion in cost escalation.

The transport sector is responsible for 30 per cent of the combined infrastructure investment pipeline to 2027.

Understanding non-labour supply

IA has made four recommendations related to non-labour supply, two of which relate to quarry and steel supply with the other two focused on monitoring local material output and the adoption of a national recycled first policy.

In good news for the infrastructure sector, international pressures are easing with global shipping volumes and prices having stabilised after peaking throughout 2021 and 2022. Commodity prices are also moderating but are still significantly higher than pre-pandemic levels.

An industry opinion survey conducted by IA shows that domestic factors are driving most supply-side risk with this risk increasing over the past 12 months and total escalation in the range of 7-10 per cent.

There is significant scope to increase the adoption of recycled alternatives in construction and boost the domestic supply of key inputs. Work is underway in this space, but IA recommends increasing collaboration between government and industry and policy settings that incentivise investment in recycled material use and the circular economy.

Workforce and skills

IA has recommended the Australian Government explore the development of a national infrastructure workforce strategy, accompanied by a boost in the tertiary education pipeline, the onshoring of migrant engineers and an increase in the supply of apprentices and trainees.

There is a 129 per cent shortfall of workers needed to meet the current infrastructure pipeline investment, which equates to an increased shortage of 15,000 employees over the past year.

With labour shortages by skill largely consistent across regional and metro areas there is no capacity in the market to take from one area without increasing shortages in the other.

Attrition continues to be an issue for the sector with a quarter of construction workers leaving the industry within three years. The projected workforce shortfall across the industry is set to stabilise by 2027 when a workforce surplus becomes a possibility.

Improving construction productivity

A range of recommendations have been made by IA to support a productivity uplift, following three decades of stagnation in the construction industry. These recommendations include the introduction of a national productivity baseline, improved workplace culture and participation, the introduction of new technology and methods and improved risk allocation between parties.

The report also shows a continued increase in multifactor productivity in the transport sector following a trough during the pandemic. However, there is still a significant amount of work to return to pre-pandemic productivity levels.

The adoption of a common data framework for the infrastructure sector would support improved cost modelling, greater upfront planning and cost savings between 20-30 per cent from the use of digital twins.

Diversity remains a challenge for the industry despite findings that show companies with above average diversity can increase revenue.

There is a disconnect between industry and government in terms of risk allocation with 75 per cent of the private sector believing government should carry planning risks exclusively, compared with 43 per cent of government respondents.

RA’s Insight

Roads Australia (RA) welcomes national co-ordination to actively manage a smoother and more sustainable infrastructure pipeline, with a priority focus on skills and materials supply.

RA members have consistently called for a nationally coordinated pipeline to improve the sector’s capacity to deliver.

Moving towards an investment environment that reduces competition between jurisdictions for key inputs on infrastructure projects will lead to a more sustainable and achievable pipeline.

IA’s Infrastructure Market Capacity Report reaffirms the urgency of national reform to drive a strong and consistent productivity uplift across the sector and its supply chains, including through education and training, innovation and technological improvements.

RA plays a key role in facilitating the development of national reform options in partnership with industry and government stakeholders, and will continue backing initiatives that establish the transport sector as a career of choice, including as a strong supporter of the Construction Industry Culture Workforce and Wellness in Infrastructure initiatives.

RA looks forward to playing an active role to inform national transport infrastructure productivity reform and supporting industry and government to create an environment where market capacity aligns more closely with the priorities of governments across the nation.

View the report in full here.

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