Investment in public infrastructure over the next five years will top $218 billion with annual spending set to hit $52 billion by 2023, the national infrastructure advisory body says.

This level of investment, and the rate of growth needed to achieve it, has never been seen before, Infrastructure Australia’s Market Capacity Report released on Tuesday says.

The report is part of Infrastructure Australia’s market capacity research program and the first of what will be a regular series.

The report focuses on 634 major public infrastructure projects across transport, utilities and building and includes 430 projects worth $218 billion to be completed by 2025.

Most of the investment will be in the transport sector, primarily in road and rail, with transport consuming 80 per cent of all resources, Infrastructure Australia says.

Competition for materials

Demand for materials is forecast to grow at 30 per cent per annum, with demand for rail track topping the list.

Demand for construction plant, including cranes, scaffolding, temporary site facilities, and special plant like tunnel boring machines, is also expected to rise over 140 per cent over three years.

“What that translates to is demand for plant, labour, equipment and materials two thirds higher than the previous five years,” Infrastructure Australia’s director of policy and research Jonathan Cartledge told a media briefing.

However this will also raise the risks, including the ability of the market to meet demand so the projects can be delivered on budget and on time.

Transport projects are at particular risk, Mr Cartledge added.

“When we look at transport projects and cost overruns, when we look at the heavy percentage they make up of that pipeline, this data also reinforces those risks,” he said.

Jobs shortages

Employment in the infrastructure sector will need to grow from 183,000 today to more than 288,000 to meet a predicted shortfall of 105,000 jobs in 2023, the report says.

Skills across the 50 different occupations that contribute to the public infrastructure construction workforce will be in increasing demand, with potential shortages in 34 of them, including scientists, engineers, architects and project managers.

Taken together this data points to increasing risk to cost escalation and on-time delivery as we try to manage a new wave of investment

Infrastructure Australia CEO Romily Maddew

Achieving gender equality  in the construction sector, which has the lowest female participation of any industry in the country at just 12.7 per cent, is one way of addressing the shortfall, Mr Cartledge says.

He said both globally and in Australia, 75 per cent of transport projects are delivered over-budget.

“We would like to see that lifted to be on par with the broader workforce,” he said.

Complex risk environment

The report identifies a number of other risks on top of price escalation and labour shortages, including climate and cybersecurity risks.

Mr Cartledge said the risk visibility offered by the report hasn’t previously existed.

“We think this work …  gives government a new insight that they haven’t previously held,” he said.

Mr Cartledge said the report underscored the need for government to invest in capability building.

There were “encouraging” signs this is already occurring, he said, with the establishment of the Significant Project Investment Delivery office and the infrastructure and project financing agency IPFA.

There has also been an increased focus on sustainability and climate risk with regards to infrastructure planning.

“We’re seeing investments in capability building that signal growing awareness,” he said.

However he said skills and cability across projects remained patchy, with most of the focus on very large projects.

“What we’d like to see is a more consistent approach across that full $218 billion large infrastructure pipeline that we’re expecting over the next four years,” Mr Cartledge said.

Opportunity for reform

Chief of policy and research at Infrastructure Australia Peter Colachino says while the report points to a more complex risk environment for the delivery of projects, it also presents opportunities for innovation and productivity.

The report makes recommendations to do this including improving portfolio and pipeline management, better collaboration with industry, improved public sector capacity and embedding digital practices.

He said Infrastructure Australia would also like to see process standardisation and harmonisation, and works broken into smaller packages to enable smaller local organisations to engage.

“In order to ensure we can deliver the infrastructure pipeline that’s projected we need to ensure that each element of the industry is fully engaged, from tier one contractors right through to smaller home grown organisations,” he said.

Supplementary reports have also been released on workforce and skills supply, risks and energy market capacity.