Skills Shortage the Biggest Threat to Infrastructure Boom
Author: Bernie Guthrie
Published date: 2021/04
As Melbournians slowly return to their offices from their WFH slumbers, and our state economy from a recession, there are only a handful of industries that didn’t feel any great effect through covid. One of those, happens to also be going through one of the biggest resource shortages that this country has ever seen – construction.
The Australia Bureau of Statistics (ABS) has recently revealed, in it’s estimates, that the Australian population shrunk by roughly 4,300 in the first quarter of the financial year. In contrast, historically the average quarterly growth for the Australian population had been approximately 85,000. According to the Department of Home Affairs, in the period of 2015-2019, Australia has approximately averaged granting 10,000 permanent visas to engineers per annum. Due to covid, this has all but disappeared. Road’s Australia (RA) recently announced in a media release, that they have partnered with rail lobbying group Australia Railway Association (ARA) to produce a joint submission to Federal Parliament's current inquiry into Australia’s Skilled Migration Program with the intent to increase immigration of engineering and construction professionals and streamline the process of visa applications.
Unfortunately, the luxury of long-term relocation assignments from other states or countries is no longer an option either. Historically, when construction is booming in one or two states across the country there have been one or two states in a more stable market, this gives you the chance to utilize interstate mobility. As it stands, construction has been a lever pulled by every state and territory to create jobs and stimulate the economy post covid. It currently makes it near impossible to utilize interstate resources as everybody seems too busy with their local workload.
If you’ve been directly or indirectly involved in construction over the past five years, it’s likely you’ve seen BIS Oxford’s graph which indicates this momentous peak of work which is currently forecast for 2021 to 2023. At the same time, the urban development and housing market is going through it’s own boom. According to the Housing Industry Australia (HIA), December 2020 had a monthly increase of 91.8 per cent in house approvals, the second highest in the past twenty years. Adding fuel to the fire, the government has extended it’s home builder scene by 12 months. Treasurer Frydenberg said that this extension would pour an extra $30 Billion into the construction economy. Unfortunately, this perfect storm of bullish market conditions has coincided with covid and our federal borders closing and our immigration tap turning off. If we don’t see an increase in migrant skilled shortages in the next twelve months, we’ll have to face this peak with the current talent pool that is on hand. Obviously, there will be organic growth from graduates and apprentices, but this won’t be enough offset the upcoming workload.
Ultimately, if the federal government can’t open to the borders to immigration soon, the talent pool of personnel in the market isn’t going to organically grow fast enough to resource the upcoming project load. As the old fable goes, we’ll continue to rob Peter to pay Paul. This leads to several other issues like exponential wage rises which bites into project margins, which leads into construction cost which often leads into more taxpayer money being wasted.