Infrastructure Australia has released its latest insights into the Australian sector with a holistic new report.
A new report has highlighted how rising material costs, worker shortages, and other external influences impact Australia’s infrastructure sector.
Infrastructure Australia has released its Market Capacity Report 2024, the fourth annual report since the practice began in 2021. The latest report highlights a significant shift in how and where investment occurs in Australia’s infrastructure pipeline.
While major transport projects account for most infrastructure spending, the growth areas are energy and social infrastructure projects. According to Infrastructure Australia’s data, building projects and utilities also saw growth, being valued at $71 billion and $16 billion, respectively. Transport projects saw the largest reduction in spending of all project types, with a reduction of $32 billion, for a total of $126 billion in the pipeline.
However, transport sector businesses interviewed as part of the report indicated they believed there would be an increase in activity levels over the next two years. Their enthusiasm is tempered slightly by the data shown in the report, including when considering transport investment across the forward estimates.
Infrastructure Australia chief executive officer Adam Copp said these changes reflected a broader public policy and investment shift.
“This recalibration in investment is due to some governments coming off of significant investment in transport projects and changing focus to addressing the housing crisis and transitioning to a net zero future,” he said.
There were also significant shifts in the key infrastructure markets across Australia. The report highlights significant growth in the Queensland and Northern Territory markets, while Victoria and New South Wales both saw reductions in their overall pipelines.
Growth in these two areas could create additional workforce problems and concerns about material supply for major projects. Infrastructure Australia has recommended a national approach be taken to ensure the supply of raw construction materials going forward.
“We are seeing the Northern Territory and Queensland’s pipelines growing by a total of $16 billion, while NSW and Victoria’s pipelines have decreased by a total of $39 billion,” Copp said.
“The biggest challenge that comes with increasing activity in regional areas is how to attract workers as well as get the materials needed to complete these projects.”
Other industry stakeholders have previously highlighted the concerns around material supply in these areas. Cement Concrete & Aggregates Australia (CCAA) issued several calls last year for action regarding a Heavy Construction Materials Plan in most states, including Queensland, South Australia, New South Wales, and Western Australia, ahead of the western state’s upcoming state election.
The organisation has continually reinforced that states need to implement a plan to stabilise the supply of raw materials and protect quarries to ensure state governments can deliver their stated infrastructure pipelines. In Queensland, this has become more acute as the state prepares to host the 2032 Olympics in Brisbane.
The Market Capacity Report highlighted concrete as Australia’s most in-demand construction material over the next five years (136.8 million tonnes), followed by aggregates (80 million), cement (22.4 million tonnes) and sand (34.4 million tonnes.
In response to Infrastructure Australia’s report, CCAA chief executive officer Michael Kilgariff said a national plan for heavy construction materials was key.
The CCAA has repeatedly pointed to Victoria’s approvals coordinator as a potential model to replicate. According to the Victorian Government, the coordinator helped unlock 300 million tonnes of new quarry resources approved for development.
“The 2024 Infrastructure Market Capacity Report reconfirms that challenges such as material shortages, cost pressures, logistics and regulatory approvals continue to have an impact, particularly in the supply and sustainability of essential construction materials: cement, concrete, aggregate, and sand,” he said.
“The call for a nationally coordinated strategy to stabilise raw material supplies and ensure continuity is welcomed by CCAA.”
Of particular concern is the increase in material costs. Infrastructure Australia’s data illustrate that construction materials cost around 30 per cent more than they did three years ago. Most businesses surveyed in the 2024 Industry Confidence Survey believed most construction materials had “some level” of supply chain risk, ranging from steel to concrete and cement to timber, fuel and construction equipment. Most businesses saw concerns around steel and timber supply, but concrete and cement ranked third, followed by construction equipment.
The report noted that increased energy costs and stricter environmental regulations had impacted the supply of cement and in turn, increased material cost. Concrete suffered from stricter sustainability standards with precast concrete being in particularly high demand across the sector.
“The key message remains that concrete, aggregate and sand are the dominant materials facilitating affordable, lower carbon building and infrastructure,” Kilgariff said.
“The closer materials are to where they’re needed, and the more governments streamline approvals and support industry-led recycling initiatives, the better the outcomes for our common goals.
“An essential component of this strategy would be to expedite quarry approvals, as the availability of raw materials like aggregates and sand requires fast-tracking approvals for quarry expansions to meet growing demand in the right place at the right time, particularly where urban encroachment threatens existing resources.”
In addition to legislation to support material supply, including lowering barriers around circular materials, Infrastructure Australia called on governments and the private sector to solve the workforce issue in the industry.
“In order to attract new workers to the industry and retain the ones we have, government and industry need to address the underlying cultural issues that are holding productivity back and driving people, particularly women, away from a career in construction,” Copp said.
“This should be an industry of choice, but the reality on the ground is it’s a harsh working environment—we see burnout, stress, and incredibly poor mental health and wellbeing. •
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