Government leaves it late for labour shortage solution

Australia's central government is getting bad press about a problem which many countries would love to have -- an affordable A$242 billion infrastructure pipeline underway and, hopefully, substantially complete by the end of the decade.

The snag, in Australia's case, is that there are not enough people to build it, at least when measured against present day physical numbers of boots on the ground and a belief in straight-line projections based on historical performances.

Infrastructure Australia, (IA) is the nation's government-sanctioned independent infrastructure adviser and has been analysing supply and demand across the infrastructure sector annually since 2020. 

Labour shortages are not just a public pipeline issue, it says. Data centres, for example, are not a government pipeline responsibility but the agency names them alongside energy, defence and water, as sectors where shortages of engineers, designers and experienced project directors are constraining what gets delivered.

The labour shortfall

At the end of last year there were 204,000 workers engaged in infrastructure across the nation, of which around 62 percent were trades workers and labourers and 12 percent project management professionals. The other 26 percent is made up of engineers, architects and scientists.

The construction industry alone faces an immediate shortage of 141,000 workers, with the Australian Constructors Association warning that the shortfall could balloon to 300,000 by mid-2027 if a coordinated national strategy isn't implemented.

Master Builders Australia (MBA) CEO Denita Wawn says that immigration remains an essential part of the solution, but it cannot replace the need to rebuild Australia's domestic skills pipeline. 

The MBA blueprint contains 32 policy recommendations, including recognition of "prior learning reform" and activating the 18,400 construction-qualified workers already living in Australia.

MBA is calling for a construction training bond to improve apprenticeship completion rates. "Attracting apprentices means little if we continue losing over 50 percent before they complete their training," she says.

"The analysis shows the most expensive option for governments is to do nothing. That would place $242 billion worth of infrastructure and housing construction activity at risk while allowing the cumulative workforce shortage to blow out to 935,600 workers by 2035," Wawn says.

The white knight 

Accepting the only viable solution takes a bit of faith in something we don't yet know -- the pace of development, and the speed of implementation, of artificial intelligence (AI) and robotics. 

Plus the completion of a raft of data centres to drive AI with new transmission networks to feed the centres. 

If the plan infrastructure succeeds, the side effects will act as the catalyst to a sea change in the global face of Australia. It will spur currently poor productivity levels and create the model country of the future.

What an amazing solution if it can be pulled off by the time of the 2028 federal elections – midstream for the current infrastructure investment and judgement day for the current government.  

Deadlines for AI retraining 

While the Federal Government's Department of Employment and Workplace Relations reports no immediate mass layoffs across the wider economy, economists and government bodies expect structural disruptions to scale significantly by 2030. 

This could be infrastructure's saving grace, in part, if the government quickly provides additional support for upskilling and re-training. 

The AI issue and infrastructure's solution are inextricably linked but hard to plan for and count on when AI is growing at a rate unknown even to its creators.

The Commissioner of Jobs and Skills Australia predicts that the number of Australian workers jobs lost to automation and artificial intelligence will grow beyond the current forecasts of 600,000. 

Across the board, as many as 1.3 million Australian workers (9 percent of the workforce) can expect their jobs to be lost, automated or requiring radical transition because of artificial intelligence, according to reputable research centres such as McKinsey and AlphaBeta

Like any good thriller, the question is whether the hero will arrive in time to defeat massive engineering and labour shortages in Australia's infrastructure sector from mid next year.

All about timing

Australia's private sector appears pretty much up to speed in preparing to tackle AI infrastructure and is working well with states on innovative procedures to increase productivity. 

The key question that remains is if federal and state governments can work together to produce the training and upskilling incentives in time to avoid an internecine war for trained labour between the states' contractors.

Central and state governments quickly need to refresh yet again an already successful apprenticeship support programme, introduce more upskilling programmes and fund companies directly, or provide subsidies, for internal upskilling programmes to retrain and retain workers.

Any thought of a backup plan for infrastructure which relies on practices that have worked well enough in the past, appears doomed by the sheer size of the logistics now involved. 

Challenges and solutions

"This added demand will not come without challenges for the market - productivity growth remains sluggish, while worker shortages present a significant risk to the delivery of projects," IA chief executive Adam Copp says.

"One of our key recommendations is for governments to incentivise the market to trial productivity-enhancing innovations such as Modern Methods of Construction which can then be scaled - just like the UK, US and Singapore have done," Copp says.

"We're also recommending the development of consistent nationwide training programmes to upskill workers in these innovations.  

"We need to start investing in innovation rather than fixating on delivering at the lowest possible cost," he says.

Where the money is going

The $242 billion funding pool is split across three major sectors, with transport commanding $129 billion, more than half of the total budget. It will be spent on major rail links, regional road corridors and logistics hubs.

Social housing initiatives and public building projects will eat up $77 billion, leaving $36 billion for utilities and energy, $20 billion of which is expected to be swallowed by transmission networks and grid net-zero updates.

"The pipeline shows governments are doubling down on energy transmission and housing projects in a bid to meet their targets, while continuing to deliver the major transport projects we need to enable Australia's productivity and liveability for decades to come," Copp says.

"Our analysis shows public and private sector ambitions to deliver renewable energy projects - transmission lines, solar, wind and pumped hydro projects - are estimated to total $163 billion over the next five years, a significant proportion of which would be driven into our regions."

Recognition of labour issues

IA's 2025 Infrastructure Market Capacity Report  (published in November 2025) calls labour the most critical delivery risk in the country. Around 60 percent of the firms it surveyed agree. 

The labour shortages could have acute impacts for regional areas (any area, town or city outside of major metropolitan centres), with 10 regions across NSW, Tasmania and Queensland forecast to see public investment rise by at least 200 percent. 

Regional labour shortages are forecast to quadruple between 2025 and 2027 on the back of energy projects, which it says are being delayed at the approvals stage, with firms holding off on workforce investment until they see shovels in the ground. 

Issues for the bigger players

On a grander scale, Queensland, for example, is looking for a million new residents in the next 10 years to fill the gap, offering international incentives and domestic bribery to support its programmes to achieve early 2030s targets. 

Its exceptional infrastructure needs are driven by the 2032 Olympics and the Bruce Highway upgrades.  

New South Wales and Victoria have similar ambitions, with the other states not far behind although priorities can be different from the predominately tradie demands of their Northern neighbour. 

Victoria's city-changing suburban rail loop east in Melbourne is backed by a $6 billion federal injection and, in Western Australia, the Anketell Road Upgrades will provide industrial infrastructure designed to link critical mineral zones, housing hubs and defence networks. 

Freight Rail upgrades across the country will cost $1.75 billion to optimise the national supply chain through the Australian Rail Track Corporation 

Not just about tradies

A report from Engineers Australia highlights that the shortage is not just about raw numbers, but a lack of senior, experienced professionals capable of leading complex projects. 

The engineering pipeline also has outpaced the domestic engineering workforce and "firms are struggling to secure qualified engineers, which is already stalling key projects across the country," the report says.

Randstad's 2026 Engineering & Construction report says there has been a surge in job advertisements for technical professionals in 2026. 

It names mechanical services estimators, critical facilities managers and building services engineers as the roles the Sydney and Melbourne data centre build-out is pulling on hardest.

The whole AI driven package 

In a report released this month (October) recruiter Sonitec's founder and CEO Tuncay Goenuel says companies don't just need individual AI hires - they need complete teams to take AI from concept to production. 

"That thesis became the foundation of the AI Talent desk: we don't place job titles; we staff the entire AI lifecycle. 

This year Sonitec added a second desk, Infrastructure Talent, for the engineers and project leaders who build, commission and run data centres and major venue, transport and precinct projects. 

The shortage of engineers, scientists and architects peaks at about 126,000 late this year and the shortage of project management professionals at about 59,000 by mid-2027. 

"Those are the people who run commissioning programmes, grid connections, venue builds and rail packages," Goenuel says.

Sub contractors 

Subcontracting now accounts for 41 percent of infrastructure construction, which means more than $100 billion of the five-year pipeline will be delivered by firms other than the principal contractor. 

Tier 2 and specialist contractors are competing for the same project directors, engineering managers and commercial managers as the Tier 1s, says Goenuel.

Occupations AI risk levels