Thursday, June 13, 2024

Massive worker shortfall threatens plans to build 1.2m new homes, Infrastructure Australia warns

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Australia’s $230bn infrastructure pipeline, the energy transition and plans to build 1.2m new homes are under threat from a shortfall of 229,000 workers, Infrastructure Australia has warned.

Infrastructure Australia’s chief executive, Adam Copp, has called on the government “to urgently boost the pipeline of workers into the sector” while releasing its market capacity report, the third such update warning of labour shortages.

Copp told Guardian Australia the biggest shortages were in white-collar jobs such as structural engineers and project managers, occupations that would qualify for the specialist skills pathway announced in the migration strategy released on Monday for those earning more than $135,000.

He said the new pathway was “definitely going to be very helpful”, with visas approved in as little as seven days, along with reforms to make visas “portable between employers”.

“We do need to develop our domestic capability … We have a long-term pipeline, across transport infrastructure, energy, defence infrastructure, we’ve got 1.2m homes we need to deliver,” he said.

“We need to grow our domestic workforce in construction.”

According to Infrastructure Australia, trades and labourers shortages are growing at the fastest rate and will remain acute until 2025 – a forecast deficit of 131,000 full-time workers by 2024.

While unions and business have welcomed the migration strategy, business has complained that trades have been excluded from the specialist pathway.

On Monday the home affairs minister, Clare O’Neil, defended the exclusion, arguing that voters would not regard it as “controversial” that for sectors such as trades, “you should have to prove that there is a skills shortage before you start to recruit overseas”.

Infrastructure Australia’s report found the pipeline of projects had “slightly smoothed over the last 12 months, with projected expenditure more evenly distributed” over four years.

It praised governments for “positive steps to proactively manage their pipelines and reduce the gap between the supply and demand for resources”, including reviews to reprioritise projects.

The federal government has recommitted to $120bn of infrastructure spending over 10 years but in November slashed dozens of projects to save $7bn to redirect to other projects due to concerns about $33bn of cost overruns.

On Tuesday the government will release figures claiming it has found $9.8bn of unspecified “savings and reprioritisations”.

The government said the mid-year economic and fiscal outlook (Myefo) would contain $5.2bn of “unavoidable spending” Labor is blaming on the Coalition, the biggest item of which is a $1.5bn cost of ending the pandemic event visa, attributable to reduced tax revenue.

Closing that visa is projected to force 70,000 people to leave Australia in the next 12 months, one of the key measures that Labor has used to drive a reduction in net overseas migration.

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Other spending includes $392m to continue the response to the Covid-19 pandemic and $254m to respond to biosecurity risks such as red imported fire ants.

Labor claims 99% of the spending decisions in Myefo were “unavoidable”, confirming that the mid-year statement will contain few new measures.

Labor MPs met the treasurer, Jim Chalmers, in the last sitting fortnight to complain households are bearing the brunt of reducing inflation through higher interest rates, but the government is wary of doing more for fear of fuelling inflation with spending or handouts.

Infrastructure Australia’s report advises that “governments will need to remain vigilant and discerning in their infrastructure spend, in the face of budget and inflationary pressures over the short to medium term”.

Copp said with $230bn of infrastructure being built over five years and investment in the energy sector quadrupling over that period “the industry is finding it increasingly difficult to source key building materials and workers”.

“A clear message in this year’s report is that limited access to local steel and cement, as well as localised shortages of quarry products is contributing to price uncertainty in the supply chain, leading to delays and cost overruns.”

The report also identifies the “opportunity to build domestic capacity and markets for new low emissions construction materials, such as recycled materials”, he said.

“For major road projects, our modelling suggests that close to a third of conventional materials – 54m tonnes annually – could be replaced with recycled materials.”

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