| Introduction |
| Analysis of the Australian Government’s program of infrastructure investments and existing project initiatives |
| Trends and insights |
| Infrastructure case studies |
| List of sources |
| Endnotes |
6 March 2025
This document delivers on the requirement in section 5DB of the Infrastructure Australia Act 2008 (IA Act) that Infrastructure Australia must give to the Minister and table in both Houses of Parliament each financial year:
This second edition of the Annual Performance Statement includes:
This statement reports on the performance outcomes being achieved by states, territories and local government authorities in relation to the infrastructure investment program and existing project initiatives funded by the Australian Government. It excludes analysis of Australian Government funding provided through grants and funding provided to other entities, including to private sector entities and Government Business Enterprises.
The Australian Government provides funding for state and territory infrastructure projects through two main mechanisms: grant programs and the Federal Financial Relations (FFR) system. The FFR facilitates about a quarter of all Australian Government expenditure via a range of funding agreements, known collectively as Federation Funding Agreements (FFA).2
As Infrastructure Australia’s remit is focused on nationally significant infrastructure, projects have been identified for analysis where:
Projects meeting the criteria above were identified in the infrastructure sectoral FFA from the following FFA schedules:
This year’s analysis is based on data provided on 69 transport infrastructure projects, two water infrastructure projects, and one social infrastructure project that meet the defined criteria.3
Using the selection of projects, Infrastructure Australia looked at:
Projects in the FFA Schedule for Land Transport Infrastructure Projects completed before May 2022 were excluded from analysis. In addition, not all of the 72 projects are included in the change in time and cost analysis. Some projects are excluded due to data availability at the time the analysis was conducted.
The following analysis relates to the applicable projects only and therefore provides an indication of the Australian Government’s infrastructure investment. It does not look at or analyse delivery of the Australian Government’s full program of infrastructure investments.
Using data current at Budget 2024-25, road and rail infrastructure projects represent almost all of the Australian Government funding included in the analysis, with road and rail infrastructure investments accounting for 58% ($40.4 billion) and 40% ($27.9 billion), respectively.
The investment comprises 26 mega-projects (investments with a total project cost of at least $1 billion), which represents over a third (36%) of total investment. Of these, 15 mega-projects received an Australian Government contribution alone of at least $1 billion. Additionally, there are 6 (8%) projects close to this threshold, with a total project cost over $900 million. In comparison, there are 22 (31%) projects with a total project cost of $500 million or under.
Figure 5 shows that most projects are in the planning or delivery phases: 27 (37.5%) are in planning, with 36 (50%) projects in delivery. 9 (12.5%) projects have completed since May 2022.
Maintaining a balanced program, particularly for mega-projects, is important to provide a sustainable pipeline of investment for industry that is deliverable and provides a realistic funding profile for governments.
Start dates have changed for more than a quarter of projects (27%) since Budget 2023–24, with 11 projects starting later and 5 starting earlier.
Expected project duration has increased for 26 projects (44%), with just over half of these (15 projects) expecting an increase of up to 25%. Six projects anticipate an increase of over 50%, with half of these (3 projects) expecting an increase in duration over 75%.
Expected duration has decreased for 14% of projects (8), with the vast majority (88%) experiencing a decrease of up to 25%.
The total Australian Government investment for projects with extended duration is $22 billion. Increases in duration occurred mostly in road projects (18) as opposed to rail projects (8) and typically resulted in a later expected completion date for the project, rather than the project starting later. Duration of road projects have on average increased 17%, which is more than the 11% average increase of rail projects.
Conversely, when considering total project costs, rail projects have on average increased 37%, which is more than double the average road project cost increase of 15%.
31 (47%) projects had a change in Australian Government funding between Budget 2023-24 and Budget 2024-25, with 33 (50%) having an increase in total project cost over the same period. 10 (15%) projects had a total project cost increase over $500 million in the year.
Of the projects analysed that had a change in total project cost, 19 (29%) had an increase of up to 50%, with 12 (18%) projects experiencing an increase of over 50%. 2 (3%) projects experienced reductions in total project cost.
The changes in total project cost resulted in similar changes to the Australian Government funding contributions, with 18 (27%) projects having an increase of up to 50%, and 11 (17%) projects experiencing an increase of over 50%. Two (3%) projects experienced reductions in Australian Government funding.
Premature announcements of infrastructure projects, when the planning, design, and risks are not sufficiently mature, can lead to cost and time increases. As outlined in a range of reports,4 there is evidence that major infrastructure projects, irrespective of their types, sectors and locations, often experience cost increases and delivery delays. The impact of project design and development maturity on the certainty of the cost and schedule needs to be considered when making future infrastructure investments, including their public announcement, at the individual and portfolio level.
This is the first year that the statement has included year-on-year analysis and will provide a baseline for future years. As the dataset grows, future statements will be able to incorporate additional analysis
Post completion reviews provide governments, communities and industry with important lessons to inform future infrastructure development and delivery practices. Reviews are developed by assessing the planning, delivery and outcomes of projects to determine whether objectives and/or forecasted benefits and costs have been realised. Where relevant, post completion reviews explore the reasons for any differences in expected and actual outcomes.
Combining and analysing multiple post completion reviews – an activity known as post completion evaluation – can also yield appropriate lessons to repeat or avoid. Assessing project outcomes at this aggregate level draws learnings from a range of project types, infrastructure sectors, and geographies.
The Australian Government recognises the importance of post completion evaluations by acknowledging the need for greater evidence on whether or not projects are achieving intended outcomes. Additionally, new requirements for post completion reporting have been agreed between the Australian Government and state and territory governments, through the FFA Schedule on Land Transport Infrastructure Projects (2024–2029). As the mechanism that facilitates Australian Government investment through its Infrastructure Investment Program, the FFA Schedule strengthens requirements for states and territories to provide post completion data to enable post completion evaluations and future benefits realisation analyses of projects.
High quality data is critical to post completion reviews, however the requisite data can be difficult to obtain if not planned for upfront. Project data can be scattered across multiple systems, among multiple delivery contractors and government departments, and compiled in inconsistent formats, making it challenging to access and consolidate. Additionally, resource constraints may impact the availability of personnel, expertise, and budgets to effectively collect, manage, and analyse large volumes of project data, particularly for historical activity. Furthermore, even when project data can be compiled, confidentiality obligations and sensitivity mean the information cannot be shared, even if there is appetite to do so.
To overcome these challenges, the requirements for data organisation, capture, storage and sharing should be established during business case development. This will ensure the necessary data is available to compare the forecasts made in the business case with the delivered key performance indicators and project metrics to determine how well the project met its goals and targets.
Important data streams to capture include:
Moving forward, Infrastructure Australia will work with the Australian, state and territory governments to access post completion data to conduct analysis of whether an Australian Government’s infrastructure investment is achieving its intended impact.
To guide analysis, Infrastructure Australia is developing a framework for post completion evaluation. These aggregated evaluations will enable insights and learnings to be developed and shared while simultaneously reducing the potential for negative outcomes to be attributed to a specific project or stakeholder.
The objective of the post completion evaluation framework is to provide a structured and transparent approach to the evaluation of completed infrastructure projects, which informs our advice to the Australian Government and drives system-wide improvements for future project development, assessment, and delivery.
Infrastructure Australia’s Statement of Expectations from the Australian Government sets out the expectation that Infrastructure Australia will undertake a post completion review of a selection of significant, completed infrastructure projects each year. This is an important new role to help drive nation-wide learning from the investments made to date. Over the next twelve months, Infrastructure Australia will engage with stakeholders to consult on the framework’s development.
The introduction of new reporting requirements for land transport infrastructure projects in the Infrastructure Investment Program, coupled with the development of a post completion evaluation framework, marks a significant shift in the role of post-completion reporting and evaluation throughout the lifecycle of new projects in the Infrastructure Investment Program. This change represents a more comprehensive approach to assessing and learning from completed infrastructure projects, which will be reflected on in future editions of this statement.
Despite widespread recognition of its benefits, the integration of infrastructure and land use planning remains a persistent challenge across governments. A lack of coordination, conflicting priorities and fragmented decision-making responsibilities can limit governments’ ability to deliver optimal community outcomes. Cross-government collaboration and early engagement can significantly contribute to overcoming these challenges by improving the quality and efficiency of planning, decision-making and delivery of major infrastructure projects. Engagement between the Australian, state and territory governments will ideally begin at the earliest stages of project scoping and continue throughout project planning to enable collaborative and effective development and review processes.
Infrastructure Australia notes an increasing trend for cross-government engagement and collaboration between the Australian Government and state and territory governments, as demonstrated in proposals submitted to Infrastructure Australia. Since 2021, Infrastructure Australia has engaged early with both the states and territories and relevant Australian Government departments on over 85% of business case evaluations. There are also significant infrastructure projects underway demonstrating this, such as the Western Sydney Aerotropolis, where the different levels of government working together is critical to success.
Early engagement allows Infrastructure Australia to provide project specific advice on the Infrastructure Australia Assessment Framework (IAAF) requirements. This ensures that proposals seeking more than $250 million in Australian Government funding are following best practice. Upfront involvement also increases our understanding of a proposal’s complexities, reducing the need for additional information requests and creating a more transparent and streamlined evaluation process.
Engaging early and fostering collaboration among all levels of government is essential for overcoming the complex challenges that span across different jurisdictions in large infrastructure projects. Prioritising cross-government collaboration by engaging early will lead to a more harmonised approach to infrastructure planning and delivery.
Land use models and demand forecasts are fundamental in infrastructure planning processes to quantify future needs and guide investment decisions. Infrastructure projects’ costs and benefits are closely tied to expected service and usage levels, as future demand forms the basis of economic appraisals.
Increasing the rigour and transparency of land use modelling and demand forecasting techniques is essential for developing a robust understanding of the potential impacts of infrastructure projects. Infrastructure Australia’s review of businesses cases has shown that the application of these techniques within the transport sector requires further improvement to account for future uncertainties.
Traditional transport planning approaches are being challenged by changing travel patterns and emerging uncertainties such as rapidly evolving technology and a changing climate. In response, new methods have gained traction, evident by the increasing adoption of movement and place frameworks across jurisdictions that focus on shaping desired futures through stakeholder engagement and multi-modal planning. However, validating long-term visions against uncertain futures remains complex, necessitating more rigorous and transparent forecasting techniques.
In recent times, land use and transport integration models have been playing an increasing role in planning and assessment of both transport and land use, with at least one jurisdiction having developed a land use and transport integration model as part of an integrated planning framework. Infrastructure Australia acknowledges that these emerging models can provide valuable insights into the impacts of infrastructure strategies and proposals, however, it is important to recognise the ‘black box’ nature and limitations of these tools. For example, land use and transport integration models have a methodology which can be reviewed, however, their modelling assumptions and outputs can be difficult to interpret. While useful to support decision-making, all inputs and assumptions should be clearly defined and outputs should not be solely relied upon as definitive predictors of the future.
Refer to Infrastructure Australia’s Guide to risk and uncertainty analysis for guidance on planning infrastructure for an uncertain future.
Meeting Australia’s net zero targets is a substantial challenge that requires a coordinated approach across infrastructure sectors. Infrastructure Australia’s Annual Performance Statement 2024 identified inconsistent assessment of sustainability and resilience in businesses cases and the need for governments to consistently and rigorously integrate decarbonisation into infrastructure planning as part of business-as-usual processes. Encouragingly, sustainability and decarbonisation are coming into focus across jurisdictions, indicating that all levels of government are responding to the net zero challenge.
In 2023, the Infrastructure and Transport Minister’s Meeting agreed to establish the Infrastructure Decarbonisation Working Group to improve national coordination and help oversee a new transport decarbonisation work plan and shared principles for national transport decarbonisation. To date, the Working Group has overseen a number of nationally consistent decarbonisation policies for transport infrastructure, such as development of national carbon values.
Additionally, the Australian Government and state and territory governments have contributed many examples of policies, advice and thought leadership over the last 12 months, which strengthen how the infrastructure sector will support to net zero targets.
Report – Embodied Carbon Projections for Australian Infrastructure and Buildings
Description – Infrastructure Australia’s Embodied Carbon Projections for Australian Infrastructure and Buildings report forms part of our broader advice to support the Australian Government’s decarbonisation priorities and objectives.
Using data sourced from Infrastructure Australia’s Market Capacity program, this report quantifies a baseline of the upfront embodied carbon in Australia’s built environment. Infrastructure Australia puts forward six recommendations for the Australian Government to consider in its work towards the reduction of embodied carbon from infrastructure and buildings.
Report – Transport and Infrastructure Net Zero Consultation Roadmap
Description – The forthcoming Transport and Infrastructure Net Zero Roadmap and Action Plan will represent the net zero sectoral plan for the transport and transport infrastructure sectors, and provide a clear strategy for reducing transport emissions. The Consultation Roadmap — the first of two development stages — sets out potential pathways for transport and transport infrastructure to contribute to net zero by 2050.
Report – Victorian Infrastructure Delivery Authority (VIDA) Transport Infrastructure Decarbonisation Strategy 2024
Description – VIDA’s Transport Decarbonisation Strategy sets out commitments within two distinct streams:
VIDA’s transport projects have been implementing a range of opportunities to reduce their carbon footprint, recognising significant reductions can be achieved where the contractual mechanisms, supports and incentives are in place. The Transport Decarbonisation Strategy sets out three key mechanisms.
Report – TfNSW Sustainable Infrastructure Program
Description – The Sustainable Infrastructure Program is a four-year program created to streamline and drive decarbonisation and circularity on transport infrastructure projects. Aligning with Transport for NSW’s (TfNSW) Net Zero and Climate Change Policy, the Program is a pathway for TfNSW and industry to collectively deliver on infrastructure-related net zero targets and transition to a circular asset model.
The objective of the program is to streamline and simplify decarbonisation and circular economy for TfNSW project teams and industry partners by:
Report – NSW Decarbonising Infrastructure Delivery Policy and Embodied Carbon Measurement for Infrastructure
Description – This policy applies to all NSW Government building projects valued over $50 million and linear infrastructure projects valued over $100 million. The policy will ensure that upfront carbon — the emissions generated during the production of materials and the construction of infrastructure--is considered consistently on NSW Government projects. While these examples represent encouraging signs of progress, success relies on consistent and rigorous integration of sustainability and decarbonisation strategies into infrastructure planning and operations across all sectors. For example, when preparing business cases, proponents should explicitly address decarbonisation considerations to align with relevant government policies and commitments. This includes:
Given the extent of thought leadership, policies, and advice emerging from all levels of government, proponents are strongly encouraged to incorporate comprehensive decarbonisation analysis into their business cases. By integrating sustainability and decarbonisation assessments as standard practice, proponents can enhance project viability and play a crucial role in the nation’s coordinated effort to address climate challenges. Embracing this shift towards rigorous decarbonisation planning will benefit individual projects and all infrastructure sectors.
Our Guide to assessing greenhouse gas emissions provides guidance on considering the impact of greenhouse gas emissions in business cases.
The capital investment of infrastructure projects and the ongoing operating and maintenance costs of delivered assets play a fundamental role in determining their social, economic and environmental value. Developing cost estimates for large infrastructure projects is challenging due to their complex nature, long planning and construction timelines, and the various external factors that can impact costs.
The 2023 review of the Australian Government’s $120 billion Infrastructure Investment Program identified $32.8 billion in known cost pressures. The Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) provides Cost Estimation Guidance, outlining the principles proponents are expected to follow in preparing cost estimates for proposals seeking Australian Government funding for the Infrastructure Investment Program. State and territory jurisdictions also produce detailed cost estimation guidance.
A review of business cases submitted to Infrastructure Australia indicate that increasing the rigour of cost estimation during project development would increase confidence in decision-making and maximise value for the Australian community.
Insufficient understanding of site conditions, particularly due to inadequate geotechnical and subsurface investigations, is a major contributor to cost overruns in infrastructure projects. Conducting insufficient or poor-quality geotechnical, groundwater or topographical surveys prior to construction can lead to unexpected discoveries during site establishment and excavation that require additional engineering solutions and/or extra works that create delays. Undertaking comprehensive site investigations and planning can help mitigate these types of cost overruns.
Another factor that contributes to cost overruns is optimism bias. Optimism bias leads to overestimating positive outcomes and underestimating negative ones. In infrastructure development, where multiple complex processes occur simultaneously, each requiring independent decisions, even small instances of optimism bias can accumulate. The layered decision-making in large-scale projects can amplify this impact, as each planning and estimation stage can introduce its own positive skew. This cumulative effect often results in underestimated costs and overestimated benefits.
While there are challenges associated with cost estimations for large infrastructure projects, the importance of robust cost estimation cannot be overstated, as it forms the foundation for sound decision-making. To maximise the value of Australian Government infrastructure investments, funding commitments should not be finalised until a robust cost estimate has been developed. Announcing and committing to projects and/or costs before essential information is understood can create challenges associated with expectations that are based on inaccurate and/or incorrect time and scope, and budget allocation efficiency.
Infrastructure Australia recognises and supports the consideration of the timing of public project announcement, as occurs in several jurisdictions, and sufficient prior undertaking of investigative works.,
Before an infrastructure funding commitment is announced, the cost estimate should be informed by appropriately detailed site investigations and be based on a level of design commensurate with the size and development stage of the project.
The cost estimate should include all costs likely to be in incurred over the lifecycle of the project. This includes all capital, operational and maintenance costs, as well as project specific costs. Project specific costs can include the costs of environmental offsets and those associated with the interface with and integration of the project with existing infrastructure and other infrastructure projects in delivery. It should also account for risk by using a probabilistic estimation method to determine the contingency allowance. Finally, appropriately justified escalation rates should be applied, and the estimate be peer reviewed by a reputable, independent reviewer.
This approach ensures that public resources are allocated efficiently and effectively, promoting transparency and accountability in infrastructure planning and delivery.
Refer to the Australian Transport Assessment and Planning Guideline’s cost estimation guidance and DITRDCA’s Cost Estimation Guidance notes for further information on developing robust cost estimates.
Options identification and analysis is an important step in infrastructure development, and involves full exploration of all possible options before progressing those with greatest potential for achieving project objectives and maximising social benefits for Australians.
To identify a shortlist of options, the IAAF requires a structured analysis and filtering process to determine the costs and merits of each identified option. The approach should be appropriate to the proposal under consideration and the level of rigour should increase as the number of viable options reduces.
Analysis of business cases submitted to Infrastructure Australia indicates that while the options identification and analysis undertaken is generally appropriate, there are opportunities to improve how options align to the strategic objectives of the proposal and how options can be packaged to achieve more efficient and effective outcomes.
During the options analysis stage of infrastructure development, there are also significant opportunities to achieve a material impact in the reduction in greenhouse gas emissions through development of lower carbon options. These options could include incorporating demand management strategies that reduce the need for new infrastructure, employing low-carbon materials and construction methods, reducing the amount of land clearing and incorporating green infrastructure elements that act as carbon sinks (e.g. urban forests and wetlands).
A review of business cases submitted to Infrastructure Australia indicates a need to refine how dismissed options can be retrieved and combined to form composite options for subsequent assessments. In the case of non-capital options, or options addressing a small number of objectives, it could be feasible to merge these with other options to collectively address the issue and achieve outcomes comparable to higher-cost individual options.
Generally, the process of developing and analysing options is iterative. Option packages should be identified and evaluated as distinct alternatives to ensure potential synergies (where delivering the package of options has a greater impact than delivering each individual option independently) and economies of scope and scale are thoroughly considered. Although options are likely to evolve during the analysis and filtering process, significant changes eventuating during the planning stages should be documented and justified. Where multiple major interventions are packaged together into a program, a programmatic approach to project development should be adopted. Our Guide to program appraisal provides guidance on how options should be grouped into a program if they address a common problem or realise a common opportunity, and if they can be delivered in a coordinated manner to obtain benefits not available from delivering them individually.
To achieve a more robust and structured options analysis, there should be a focus on enhancing the strategic alignment of options during their development and optimising how they are packaged in the filtering and analysis process. This approach will ensure that all viable alternatives are thoroughly examined, reducing the risk of subjective decision-making and provide a strong justification for committing to a particular solution. This not only improves the quality of decision-making but also strengthens the overall business case, boosting stakeholder confidence, increasing value for money and enhancing the likelihood of project success.
The Victorian Government, through the Level Crossing Removal Project (LXRP), is delivering 110 level crossing removals across metropolitan Melbourne. Major construction commenced in 2015 and all 110 committed level crossing removals and associated rail improvements, including an additional 11 level crossing closures, are planned to be completed by 2030. To overcome the challenges of coordinating a large interrelated program of physically independent projects across a broad geographical area within ‘live’ brownfield rail corridors, LXRP implemented an innovative Program Alliance Framework.
The Alliance Framework is a collaborative, performance-based delivery model involving five program alliances competing for work packages over a period of up to 10 years, subject to performance. It emphasises high performance across various delivery criteria such as safety, on time performance, disruption management and sustainability, offering ongoing work allocations for alliances who can consistently deliver across these metrics. The framework is built on transparency, trust, and teamwork, and incorporates a gainshare/painshare mechanism based on cost performance and includes commercial incentives for non-price outcomes.
The Alliance Framework has realised numerous benefits for infrastructure delivery that otherwise would be difficult to achieve with traditional delivery approaches.
The LXRP Program Alliance Framework is an example of how collaborative project delivery models can be used to manage complex inter-related infrastructure programs, leading to improved productivity and community outcomes.
This type of project governance and delivery could be applicable on other types of government-led programs, such as multi-section road corridor upgrades or maintenance programs.
More information on the Level Crossing Removal Project is available on the LXRP website.
In December 2022 and January 2023, ex-tropical cyclone Ellie caused severe flooding, significantly damaging the existing Fitzroy River Bridge – a vital crossing on the Great Northern Highway, which stretches more than 3,000 km across Western Australia to the Northern Territory border. This damage cut off access to Aboriginal communities, the East Kimberley, and the Northern Territory, necessitating urgent action. The bridge’s reconstruction was jointly funded by the Australian and Western Australian governments through the Disaster Recovery Funding Arrangements.
Led by Main Roads Western Australia, the project aimed to construct a new two-lane bridge with improved resilience and capacity. The project team employed several techniques to accelerate the project’s delivery and achieve an unprecedented speed of bridge rebuild in WA. This was made possible by: fast-tracking the approvals and procurement process; significantly reduced time for contract award to establish the Fitzroy Bridge Alliance; and close collaboration with suppliers and contractors to ensure critical components such as bridge beams, bearings and concrete were made available at the time they were required and installed in an efficient, but safe manner.
As a result of the challenging site conditions and compressed delivery timeline associated with seasonal flooding, an incremental bridge launching construction methodology was adopted. This method involved assembling the bridge structure on the riverbank and gradually extending it across piled foundations in the riverbed. By allowing simultaneous offsite fabrication and onsite construction, this approach significantly accelerated the project timeline. During construction, temporary low-level crossings maintained the essential road connections, supporting critical freight transport and the tourism industry.
Completed six months ahead of schedule, the new bridge is substantially stronger than the original bridge, increasing its resilience against future flood events. The rapid restoration of the bridge helped mitigate long-term impacts on businesses and communities that rely on the road network for travel and goods delivery. The project also delivered significant social benefits, employing over 240 locals, with 25% of total construction hours attributed to Aboriginal people. Additionally, 26 Aboriginal-owned businesses were awarded contracts associated with the project. With the bridge now open, Main Roads WA and the Fitzroy Bridge Alliance are working with other state government agencies to identify ongoing business and employment opportunities for locals who have developed skills and business capacity as a result of the bridge build.
While the New Fitzroy River Bridge rebuild is unique in its circumstances, it demonstrates how collaborative approaches and efficient construction methodologies can rapidly deliver critical infrastructure in challenging environments and create capability for future infrastructure delivery. As Australian infrastructure is exposed to increasingly severe weather events, the Fitzroy River Bridge rebuild provides useful lessons for swiftly reinstating damaged critical infrastructure across the country.
More information on the New Fitzroy River Bridge can be found on the Main Roads WA website.
Despite rail freight emitting up to 16 times less greenhouse gases compared to road freight operations, the industry faces significant decarbonisation challenges. 90% of heavy haul operations currently rely on diesel locomotives, contributing to the rail freight sector accounting for 4% of Australia’s transport emissions and 0.8% of national emissions. The long lifespan of existing diesel locomotives and the need for extensive infrastructure upgrades for electrification or charging pose substantial barriers to decarbonisation.
To address these challenges, the Australian Renewable Energy Agency (ARENA) has invested in a groundbreaking project led by Aurizon, Australia’s largest rail freight hauler. The project aims to develop, test, and trial a 1.8 MWh battery electric tender (BET) on one of Aurizon’s operational haulage routes. The trial seeks to demonstrate the potential for this technology in enabling fuel switching, when coupled with a diesel locomotive, and in its end state, as a range extender for battery electric locomotives. The project is currently in the design phase, with trial operations set to commence in early 2026.
With over 600 locomotives in operation, transporting 250 million tonnes of commodities annually, and with approximately 5,000km of rail network infrastructure under management, Aurizon is well-positioned to drive significant change in the industry. The BET project is part of Aurizon’s broader strategy to inform fleet investment decisions and drive industry-wide innovation in zero-emissions technologies.
Early insights from the trial highlight several key challenges. Charging infrastructure poses a significant hurdle, with limited high-voltage grid connections in their operations and potential capacity constraints as more industries transition to electric operations. Standardisation of charging systems is crucial for enabling interoperability across mixed fleet operations, which will be essential for broader industry adoption. Market readiness is another challenge, given the limited availability of off-the-shelf zero-emission rail decarbonisation products suited to Australian conditions.
Government support has proven critical in these early stages of development. The success of this initiative could have far-reaching implications for the rail industry and Australia’s broader decarbonisation efforts. It could help establish a pathway for economic viability of zero-emission rail technologies, increase renewable energy use in the transport sector, significantly reduce carbon emissions from rail freight, and potentially transfer technology to other heavy transport sectors.
More information on the battery-electric tender trial is available on ARENA and Aurizon’s websites.
Find out more about our Annual Statements here
Read the 2025 Annual Budget Statement
| Introduction |
| Infrastructure Australia proposes national infrastructure priorities to inform Australian Government investment |
| Future investment considerations |
| List of sources |
6 March 2025
This document delivers on the requirement of section 5DB of the Infrastructure Australia Act 2008 that Infrastructure Australia must give to the Minister and table in both Houses of Parliament each financial year:
This second edition of the Annual Budget Statement includes:
The national infrastructure priorities proposed represent Infrastructure Australia’s view of the current, most significant focus areas for infrastructure investment at a national level in the short, medium and long term. The priorities (in Figure 1 and discussed further below) address and support nationally significant infrastructure needs and opportunities and have been developed based on:
These national infrastructure priorities are not intended to be exhaustive. Infrastructure Australia also expects these national infrastructure investment priorities to evolve in future statements based on further engagement, updated analysis and as infrastructure investments progress.
The priorities set out in this Annual Budget Statement support policies and initiatives of the Australian Government, including but not limited to those identified in Figure 2.
Our national freight networks need to be fit-for-purpose to support a growing freight task and higher productivity vehicles, withstand climate impacts and provide efficient interstate movements on an interoperable network. In urban areas, it is an ongoing priority to manage the twin challenges of growing freight and commuter traffic.
Maximising the productivity and resilience of our supply chains will be critical for Australia to continue to prosper and remain globally competitive. An efficient freight network is also crucial to the achievement of other policy objectives such as road safety and net zero. We also need to ensure that Australia’s freight can be moved using the mode most suited to the task.
Increasing the productivity of Australia’s freight networks requires an integrated approach, across infrastructure, technology, data and policy. There are a range of initiatives underway by Australian governments focused on improving freight productivity across this spectrum including targeted infrastructure investments, increases to higher productivity vehicle access and the use of technology including higher capacity signalling, smart motorways and secure access to data.
Improving freight movements on our interstate rail network is integral to national productivity. In addition to the significant Inland Rail project spanning Victoria, New South Wales and Queensland, priorities include improving national rail network connectivity and interoperability. This includes interstate freight and passenger rail networks that have interoperable physical infrastructure and digital signalling and communications systems. It also includes improving regional rail freight access and capacity, and connecting growing regional industries to markets.
Nationwide, improvements to the road freight network include continuing substantial upgrades and tackling critical pinch points for heavy vehicles on key strategic and interstate regional and remote road corridors, such as the Bruce Highway in Queensland, the Great Northern Highway in Western Australia, and the Stuart, Eyre and Sturt Highways across South Australia, the Northern Territory, Victoria and New South Wales.
Any new investments in the national freight network will build on significant existing investments in project planning and delivery by the Australian, state and territory governments. This includes road investments such as the Coffs Harbour Bypass in New South Wales, the Inland Freight Route Upgrades in Queensland, Great Northern Highway in Western Australia, the Nationwide Freight Highway Upgrade Program in South Australia and the Tanami Road in the Northern Territory.
There are also substantial rail investments underway such as the Murray Basin Freight Rail in Victoria, through the Australian Rail Track Corporation and Freight Rail Revitalisation in Tasmania.
Ports are essential to the national economy and Australia needs increased port capacity and common-user infrastructure across the country to facilitate demand, trade and growth, especially to support priority national industries. Examples include ports in Perth and Darwin, Burnie in Tasmania and east coast ports such as Brisbane, Townsville, Newcastle and Kembla.
Our ports must also be well-connected to provide efficient, integrated import and export supply chains. Intermodal freight terminals, logistics hubs and rail and road freight connections to major ports in places such as Brisbane, Melbourne, Sydney, Darwin and Adelaide are needed to serve growing access and capacity demands for rail and heavy vehicle access to export facilities. Enhancing east-west land transport connectivity is vital for ports along Australia’s eastern seaboard, from Townsville and Gladstone in Queensland to connectivity between Western Sydney, Newcastle, Port Botany and Port Kembla in New South Wales. Elsewhere, freight rail network and/or road capacity improvements will be required to support Westport in Kwinana, ports such as Burnie in Tasmania, and major industry development at ports such as Adelaide, including AUKUS at Osborne.
The Australian, state and territory governments are already investing in planning and delivery of improvements to ports capacity and connectivity. This includes planning for Westport and for road access improvements to Darwin Port, as well as delivering improved heavy vehicle access for Port of Gladstone. Governments are also investing around ports to unlock opportunities in clean energy industries, such as green hydrogen and critical minerals. This is discussed further below under Delivering Net Zero and a Clean Energy Economy.
Investments in high-capacity public transport and road networks are needed to support major cities, unlock priority areas for housing and employment growth in cities and suburbs and address existing congestion, alongside measures to improve efficiency of existing networks and promote modal shift.
Passenger rail capacity and connectivity are at the heart of growing our cities and catering for future growth. This includes major city-shaping rail mega projects across Sydney, Melbourne, Brisbane and Perth. Modernising rail signalling and digital train control systems is also a key step to increasing urban rail capacity, safety and interoperability for passengers and freight for Brisbane, Sydney, Melbourne, Perth and Adelaide.
Upgrades and extensions to existing rail networks are important to service growing activity centres and suburbs. This includes strategic corridors between Brisbane, the Gold Coast and Sunshine Coast in Queensland, enhancing rail links to Melbourne’s north and west growth areas and speeding up intercity connections, such as High Speed Rail and Sydney-to-Canberra rail connections.
The removal of level crossings from congested urban transport networks supports improved productivity and increased safety, by enabling more efficient road and rail movements and reduced conflict. While relatively few level crossings remain in places such as metropolitan Sydney, other major capital cities including Greater Melbourne, Brisbane and South East Queensland, Perth and Adelaide all identify a need for removing level crossings in priority locations across their respective networks.
Upgrades to the capacity of major road corridors and networks remain essential in ensuring well-functioning cities into the future. Delivering Adelaide’s North-South Corridor – Torrens to Darlington (T2D) project, road upgrades in Western Sydney, capacity and connectivity of Melbourne’s outer metropolitan road network and highway upgrades in Perth, such as the Mitchell and Kwinana freeways, are prominent examples.
Light rail and rapid bus infrastructure to connect centres, corridors and growth areas are also important in moving cities efficiently and sustainably. Examples include delivering further stages of light rail for the Gold Coast, Parramatta and Canberra, enhancing and re-designing existing tram and bus networks in Melbourne and Adelaide, and improving rapid bus transit links for Western Sydney, Perth and Hobart.
Australian governments are continuing to co-invest in planning and delivery of efficient urban transport systems through the Federation Funding Agreement Schedule on Land Transport Infrastructure Projects (2024-2029). This includes major urban road projects such as Melbourne’s North East Link, Adelaide’s T2D and the M12 in Western Sydney. It also includes significant investments in major rail and rapid transit projects, including Direct Sunshine Coast Rail, Brisbane Metro, Sydney Metro Western Sydney Airport and METRONET.
The capacity, security and resilience of water is vital for Australia and requires investing in water and wastewater treatment, desalination, recycling, dams, weirs, pipelines and irrigation modernisation.
Ensuring cities have water and wastewater infrastructure to support increasing urban populations, especially to enable delivery of national housing targets, is essential. Water quality and security in regional areas is also a priority, including peri-urban, regional and remote parts of Victoria, New South Wales, South Australia, the Northern Territory and Western Australia.
Water is a critical enabler of economic opportunities in established and emerging industries, many of which are significant regional employers. This includes mining, advanced manufacturing and green hydrogen – for example in regional areas of Queensland, New South Wales, South Australia and Western Australia – as well as supply capacity and efficient irrigation systems to support water-intensive agriculture in places such as the Northern Territory, Tasmania and Western Australia.
Water supply and infrastructure must also be resilient to climate change and hazards, such as drought, floods and extreme weather. This requires investing in dams, desalination, and flood mitigation projects.
This will build on existing Australian Government investment commitments to planning and delivery of new and upgraded water infrastructure. This includes through the National Water Grid Fund, such as Paradise Dam in Queensland, the Darwin Region Water Supply Infrastructure Program, Tasmanian Irrigation schemes and business cases for South Australia’s Northern Water Supply and the Barossa, Clare Valley and Eden Valley. The Australian Government is also funding enabling infrastructure (such as connecting essential services like water, sewage, power, and community amenities such as community centres and parks) that supports new housing development through the Housing Support Program.
The net zero transition involves an immense delivery task to build the infrastructure to achieve national emissions reduction and renewable energy goals. The focus of this effort is the electricity generation, battery and pumped hydro storage, and transmission infrastructure across the 43 renewable energy zones (REZs) identified by Australian Energy Market Operator for the National Electricity Market. There are also vast economic opportunities to unlock in priority areas for net zero such as hydrogen, renewables exports and critical minerals.
For example, hydrogen hubs – largely close to established ports – are being developed in places such as Gladstone in Queensland, the Pilbara in Western Australia, Whyalla in South Australia and Melville Island in the Northern Territory. Critical minerals extraction, processing, export and manufacturing opportunities exist across regional Australia – from Queensland’s North West Minerals Province, to northern and central-west New South Wales, northwest Victoria and across Tasmania, South Australia and Western Australia. These include strategic minerals like copper and zinc and critical minerals such as antimony, lithium, cobalt, vanadium and rare earth elements. For example, the Northern Territory offers manganese, copper, lithium and tungsten and plans to establish critical minerals processing and manufacturing at Middle Arm.
Infrastructure will be necessary to support delivery of REZ clean energy projects and other geographically associated economic opportunities in industries such as hydrogen, agriculture, advanced manufacturing and defence, and accommodate the growth and transition of regional workforces needed to support these. Infrastructure itself will also need to decarbonise – this is discussed further below under Infrastructure decarbonisation and embodied carbon.
In addition to acting as significant hubs for hydrogen production, storage and export, ports are integral to import supply chains for wind turbine components and the base from which offshore wind areas (such as those in Gippsland and Southern Ocean, Victoria, and Bass Strait in Tasmania) are installed and serviced.
Further, rail and road infrastructure improvements are required to enable transportation of over-sized, over-mass renewable components from ports to site – for example, in New South Wales routes from the Port of Newcastle to Central-West Orana, New England and Hunter-Central Coast REZs.
Water infrastructure will need to ensure sustainable supply to enable water-intensive net zero industries including green hydrogen production, mining operations and downstream minerals processing. Industrial processing and refining facilities are also needed for minerals processing, hydrogen production, storage and distribution, and other net zero economy opportunities such as battery manufacturing and recycling.
Transport and social (including housing, healthcare and education) infrastructure are also needed to attract and support regional workers across a range of industries in priority growth and development areas, including renewable energy, hydrogen, mining and advanced manufacturing. Examples include New South Wales Special Activation Precincts in priority locations such as Parkes and Wagga Wagga.
Broader changes in the economy are also creating emerging infrastructure demands and sustainability challenges. For example, accelerating investments in data centres and warehouses, driven by surging uptake of artificial intelligence and digitalisation of the economy, are energy- and water-intensive due to high electricity consumption, which converts to heat and demands significant water use for cooling.
Australian governments and private industry are already investing substantially in the net zero transition. In addition to significant Australian Government investments in renewables, including over $30 billion in financing through the Clean Energy Finance Corporation and revenue underwriting projects through the Capacity Investment Scheme, other current commitments that may influence further enabling infrastructure requirements include:
This section highlights several critical considerations for the Australian Government when making new infrastructure investment decisions.
Each year, Infrastructure Australia undertakes detailed analysis and demand projections of Australia’s national major public infrastructure pipeline (MPIP) as part of its Market Capacity program. The MPIP covers projects valued over $100 million in New South Wales, Victoria, Queensland and Western Australia, and over $50 million in South Australia, the Australian Capital Territory, the Northern Territory and Tasmania.
The MPIP is currently valued at $213 billion across the 5 years from 2023–24 to 2027–28. This represents an 8% drop in the last 12 months (compared to the demand projection last year for 2022–23 to 2026–27) and follows significant effort by governments to proactively manage infrastructure spending in light of market capacity constraints.
Public spending on major infrastructure works accounts for approximately 25% of the total construction market, estimated at over $1.08 trillion over the five years from 2023–24 to 2027–28. Buildings (62%) dominates the total construction market, followed by transport (17%), utilities (11%) and resources (10%).
Transport infrastructure remains the largest public infrastructure expenditure category, accounting for 59% of the MPIP ($126 billion) over the five-year outlook (2023–24 to 2027–28). However, transport investment has reduced by 20% on the previous year’s projections, driven by completions of mega-projects in 2023–24, fewer new projects commencing and cost changes for some mega projects in the outlook period.
The decline in public investment in transport is somewhat offset by growth in the other sectors. Buildings infrastructure investment ($71 billion) has grown by 13% and accounts for 34% of the MPIP. While utilities infrastructure investment ($16 billion) has grown by 60% and accounts for 7% of the MPIP. Growth in public utilities investment is driven by new energy projects, especially solar and wind farms.
The cost of construction materials continues to remain high with most materials experiencing year-on-year growth for three straight years. However, the rate of growth appears to have eased over the past twelve months, driven largely by drops in the price for some steel products.
Cost escalations on major infrastructure projects have largely been driven by rising materials cost pressures, which has increased by almost four times higher than labour cost increases over the last three years. Labour accounts for over 60% of costs on a land transport infrastructure construction project compared to under 40% on housing construction project.
Industry reports price escalation of non-labour inputs over the last 12 months of about 10-20%, and hold the view that prices are yet to peak.
Concrete and steel are the construction materials most critical to infrastructure delivery by volume and value, and may be subject to cross-sector competition in the event of supply shortages.
The current infrastructure workforce stands at approximately 198,000 full time equivalent employees and is expected to grow steadily in future. Although there has been a reduction in projected worker shortages (-32,000) by almost 13% (October 2023 compared to October 2024), there is an estimated 197,000 shortfall of infrastructure workers this year. Shortages will prevail across all occupational groups and reflects broad shifts in the MPIP over the five-year outlook:
Changes to the size of the infrastructure workforce appears to be largely attributable to workers moving in and out of the construction industry, rather than between construction sectors (for example between infrastructure, housing or commercial/industrial construction). Efforts to grow the total construction workforce will benefit the infrastructure sector.
Nationally, workforce shortages appear to have peaked in capital cities but are projected to rise in regional areas (non-Greater Capital City Statistical Areas), which are expected to almost match current levels in capital cities in 2027. This demand growth is driven by the nation’s energy transition, with the majority (89%) of planned government-funded solar and wind farms to be built in regional areas.
Construction multifactor productivity growth dropped to -0.8% in 2023, a decrease from 0.3% in 2022, continuing a 30-year trend. Boosting construction productivity is essential to delivering Australian governments’ infrastructure ambitions in clean energy, housing, transport and other sectors.
Infrastructure Australia’s 2024 Infrastructure Market Capacity report provides further analysis and advice.
States and territories have significant, diverse public infrastructure asset bases, which are growing in scale and complexity. Jurisdictions report common issues with underfunded and reactive maintenance, which impacts service delivery, asset lifespans, costs, financial sustainability and the resilience of assets and networks to increasing risks from severe weather and natural hazards.
Funding for new infrastructure is often prioritised over maintenance and renewal. However, many existing assets are ageing and under increasing pressure from constrained public finances, growing and changing demands, modernisation of services and standards, climate change, extreme weather, and the challenge of maintaining dispersed assets across vast geographical areas. Roads, social infrastructure (such as health, education and justice) and public housing feature prominently among ageing asset classes that are priorities for increased maintenance and renewals.
In our 2024 Annual Budget Statement, Infrastructure Australia recommended the Government give greater focus to funding maintenance and renewal of existing infrastructure assets alongside potential new investments. This recognises the growing challenges of ageing assets, maintenance liabilities, infrastructure resilience and the need for a more sustainable funding mix.
At the 2024–25 Budget, the Australian Government committed to progressively increase annual funding for maintaining local roads under the Roads to Recovery Program from $500 million to $1 billion. Under the Federation Funding Agreement Schedule on Land Transport Infrastructure Projects (2024–2029), the Government has also increased its funding to states and territories for maintenance on the National Land Transport Network, from $350 million in 2023–24 to $460 million in 2024–25.
Good asset data and information is critical to effective asset management and prioritisation of maintenance and renewals based on factors such as cost, criticality, performance and risk, but asset data often lacks quality, accuracy and consistency. This creates challenges in understanding risks and the scale or cost of maintenance needs and backlogs, efficiently allocating resources, promoting preventative approaches and making the case to invest in existing assets alongside new assets.
The increasing complexity of asset portfolios, growing demands for public infrastructure and fiscal and market constraints on delivery of new infrastructure to meet demands may strengthen incentives to upgrade and maximise the value of existing assets, evolve asset management policy and practice, and innovate how assets are used to improve efficiency and value.
Infrastructure is a major contributor to emissions and Australian, state and territory governments recognise the need to reduce emissions from infrastructure and the built environment to achieve net zero targets. Key areas of priority and action already underway through the infrastructure lifecycle include:
Infrastructure Australia’s 2024 Embodied Carbon Projections for Australian Infrastructure and Buildings report estimated the amount of upfront embodied carbon in Australia’s pipeline of infrastructure and buildings is forecast to be between 37 Mt CO₂e and 64 Mt CO₂e per year in the five years to 2026–27. These emissions account for 7% of Australia’s national emissions, with most of these emissions coming from the manufacture of construction materials.
The report presents practical strategies and recommendations to support infrastructure and built environment decarbonisation. These include switching to lower-carbon building materials and construction technologies, such as green steel or aluminium produced with 100% renewable electricity, as well as changing the way infrastructure and building projects are planned, designed and delivered to embed considerations of decarbonisation early.
Adopting the strategies and recommendations in the report would mean that, by 2026–27, Australia can reduce upfront emissions from the five-year construction pipeline by 23% at no additional cost. This is equivalent to a reduction of 9 Mt CO₂e – roughly 2% of Australia’s gross national greenhouse gas emissions in 2022–23.
Australian Bureau of Statistics, Building Activity, Australia, Table 38. Number of Dwelling Unit Completions by Sector, States and Territories, 2024, www.abs.gov.au/statistics/industry/building-and-construction/building-activity-australia/latest-release#number-of-dwellings-completed
ACT Government, ACT Infrastructure Plan Update, www.builtforcbr.act.gov.au/infrastructure-plan
Australian Energy Market Operator, 2024 Electricity Statement of Opportunities, 2024, https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/nem_esoo/2024/2024-electricity-statement-of-opportunities.pdf?la=en&hash=2B6B6AB803D0C5F626A90CF0D60F6374
Australian Energy Market Operator, Renewable Energy Zones, 2024, www.aemo.com.au/-/media/files/major-publications/isp/2024/appendices/a3-renewable-energy-zones.pdf?la=en
Australian Government, Budget 2024-25, Budget Measures: Budget Paper No.2, 2024, available at: www.budget.gov.au/content/bp2/download/bp2_2024-25.pdf
Australian Government, Capacity Investment Scheme, www.dcceew.gov.au/energy/renewable/capacity-investment-scheme
Australian Government, Clean Energy Finance Corporation, www.cefc.com.au/
Australian Government, Federation Funding Agreement Schedule for Land Transport Infrastructure Projects (2024-2029), www.federalfinancialrelations.gov.au/agreements/land-transport-infrastructure-projects-2024-2029
Australian Government, Housing Support Program, www.infrastructure.gov.au/territories-regions-cities/cities/housing-support-program
Australian Government, Hydrogen Headstart program, www.dcceew.gov.au/energy/hydrogen/hydrogen-headstart-program
Australian Government, Infrastructure Investment Program, www.investment.infrastructure.gov.au/about
Australian Government, Infrastructure Investment Program – Targeted Road Safety Programs, Budget 2024-25, www.investment.infrastructure.gov.au/sites/default/files/documents/national-subprogram-overview-budget-2024-25-fact-sheet-building-australia.pdf
Australian Government, Infrastructure Policy Statement, www.infrastructure.gov.au/sites/default/files/documents/infrastructure-policy-statement-20231114.pdf
Australian Government, National Agreement on Closing the Gap, www.closingthegap.gov.au/national-agreement
Australian Government, National Climate Risk Assessment, www.acs.gov.au/pages/national-climate-risk-assessment
Australian Government, National Freight and Supply Chain Strategy, www.freightaustralia.gov.au/
Australian Government, National Housing Accord, www.treasury.gov.au/policy-topics/housing/accord
Australian Government, National Productivity Fund, www.ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/address-australian-business-economists
Australian Government, National Reconstruction Fund, www.nrf.gov.au/
Australian Government, National Urban Policy, 2024, www.infrastructure.gov.au/department/media/publications/national-urban-policy
Australian Government, National Water Grid Fund and Investment Framework, www.nationalwatergrid.gov.au/
Australian Government, Net Zero by 2050, www.dcceew.gov.au/climate-change/emissions-reduction/net-zero
Australian Government, Regional Investment Framework, 2023, www.infrastructure.gov.au/territories-regions-cities/regional-australia/regional-investment-framework
Australian Government, Resourcing Australia’s Prosperity, www.ga.gov.au/scientific-topics/resourcing-australias-prosperity
Australian Government, Rewiring the Nation, available at: https://www.dcceew.gov.au/energy/renewable/rewiring-the-nation
Australian Government, Telecommunications in new developments policy, 2024, http://www.infrastructure.gov.au/department/media/publications/2024-telecommunications-new-developments-policy
Australian Government, Third Runway Major Development Plan—Melbourne Airport—Conditions of Approval, 2024, www.infrastructure.gov.au/department/media/publications/third-runway-major-development-plan-melbourne-airport-conditions-approval-10-september-2024
Infrastructure Australia, 2024 Embodied Carbon Projections for Australian Infrastructure and Buildings Report, www.infrastructureaustralia.gov.au/embodied-carbon-projections
Infrastructure Australia’s Infrastructure Market Capacity 2024 Report, www.infrastructureaustralia.gov.au/infrastructure-market-capacity-program
Infrastructure Northern Territory, NT Infrastructure Plan & Pipeline, 2022, dipl.nt.gov.au/industry/nt-infrastructure-plan-and-pipeline
Infrastructure Northern Territory, NT Infrastructure Strategy 2022-2030, 2022, www.dli.nt.gov.au/strategies/nt-infrastructure-strategy-2022-to-2030
Infrastructure NSW, 2023-24 State Infrastructure Plan, 2023, www.infrastructure.nsw.gov.au/media/vetcpbb1/infr10125-state-infrastructure-plan-2023-24.pdf
Infrastructure NSW, Decarbonising Infrastructure Delivery policy, 2024, www.infrastructure.nsw.gov.au/expert-advice/decarbonising-infrastructure-delivery/
Infrastructure NSW, NSW State of Infrastructure Report, 2023, www.infrastructure.nsw.gov.au/media/oznlnai5/insw-state-of-infrastructure-report-2022-23.pdf
Infrastructure NSW, Staying Ahead: State Infrastructure Strategy 2022-2042, 2022, available at: https://sis2022.infrastructure.nsw.gov.au/
Infrastructure SA Capital Intentions Statement, 2023, www.infrastructure.sa.gov.au/our-work/capital-intentions
Infrastructure Western Australia, Foundations for a Stronger Tomorrow: State Infrastructure Strategy, 2022, www.infrastructure.wa.gov.au/foundations-stronger-tomorrow-state-infrastructure-strategy
NSW Government, NSW Budget: Social Housing and Homelessness Investment, 2024, www.nsw.gov.au/media-releases/nsw-budget-social-housing-and-homelessness-investment
NSW Government, NSW Regional Plans, www.planning.nsw.gov.au/plans-for-your-area/regional-plans
Northern Territory Government, NT Infrastructure Audit, 2023, //dipl.nt.gov.au/strategies/nt-infrastructure-audit
Queensland Government, Queensland Regional Plans, www.planning.qld.gov.au/planning-framework/plan-making/regional-planning
Queensland Government, State Infrastructure Strategy, 2022, www.statedevelopment.qld.gov.au/__data/assets/pdf_file/0013/72103/state-infrastructure-strategy-2022.pdf
SA Government, South Australian Economic Statement 2023, //www.premier.sa.gov.au/south-australian-economic-statement
SA Government, South Australia’s Freight and Supply chain strategy, 2024, https://www.dit.sa.gov.au/__data/assets/pdf_file/0003/1371027/DIT-SA-Freight-and-Supply-Chain-Strategy-2024-06.pdf
SA Government, South Australia’s 20-Year State Infrastructure Strategy Discussion Paper, 2023, www.yoursay.sa.gov.au/state-infrastructure-strategy-url
Tasmanian Government, Keeping Hobart Moving, 2023, www.keepinghobartmoving.tas.gov.au/__data/assets/pdf_file/0011/466715/Keep_Hobart_Moving_Transport_Solutions_for_Our_Future.pdf
The Senate, Select Committee on Adopting Artificial Intelligence, 2024, https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Adopting_Artificial_Intelligence_AI/AdoptingAI/Report
The Treasurer, the Hon Dr Jim Chalmers MP, Address to the Australian Business Economists, 2024, www.ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/address-australian-business-economists
Victorian Government, Victorian Infrastructure Plan 2021, www.dtf.vic.gov.au/victorian-infrastructure-plan-2021
Victorian Government, Victoria’s Infrastructure Strategy 2021-2051 (Volumes 1 & 2), 2021, Infrastructure Victoria, www.infrastructurevictoria.com.au/infrastructure-strategy
Western Australian Government, State Infrastructure Strategy – Foundations for a stronger tomorrow: WA Government Response, 2023, www.wa.gov.au/government/publications/state-infrastructure-strategy-foundations-stronger-tomorrow-wa-government-response-2023
Find out more about the Annual Statements here
Read the 2025 Annual Performance Statement
23 December 2024
With Australia’s infrastructure boom far from over, our Infrastructure Market Capacity research will be more important than ever in supporting governments and the infrastructure industry to navigate supply and demand as they deliver our nation’s pipeline.
For years, demand has been far outweighing supply leading to cost increases and project timelines being delayed.
While this year we find demand to be easing, it’s clear there is more work to do, with skills shortages and cost escalations persisting.
These challenges are not unique to Australia. You only need to look at the skills shortages Europe is grappling with in delivering its renewable energy transition, or the challenges Canada is facing to deliver more housing as proof points that we are not alone.
Now in its fourth year, our Infrastructure Market Capacity research has grown into a trusted and reliable source of information that captures the $1.08 trillion of construction activity happening right across the country. The report also continues to detail and explore the plant, labour, equipment and materials needed to deliver on the nation’s five-year Major Public Infrastructure Pipeline, which now stands at $213 billion.
The strength of this research lies in the collaborative relationships Infrastructure Australia has formed across industry and government. We acknowledge and thank all participants for the part they played in developing this year’s report, through data sharing and close collaboration.
Infrastructure underpins the growth of our economy – it supports the productivity and liveability of our nation.
The successful planning and delivery of infrastructure is critical in supporting our nation’s growing cities and regions, particularly as we navigate the growth in investment across renewable energy and social infrastructure projects, while continuing to deliver record levels of investment in major transport projects.
As governments grapple with these critical decisions, Infrastructure Australia is committed to supporting the Australian Government with the independent advice it needs to drive a thriving, efficient and productive construction sector for the economic and social prosperity of all Australians.
Tim Reardon
Infrastructure Australia
Chief Commissioner
Australia’s Major Public Infrastructure Pipeline is $213 billion across the 5 years from financial years 2023–24 to 2027–28 (‘five-year outlook’), down 8% compared with the projection of 12 months earlier for the corresponding outlook period 2022–23 to 2026–27. This outcome represents a significant management of demand by governments across Australia to reduce the gap between supply and demand, however demand continues to outstrip supply overall.
Infrastructure Australia has updated its Market Capacity database with relevant major public infrastructure project pipeline information provided by state and territory governments. A comparative analysis of the national Major Public Infrastructure Pipeline outlook versus the previous outlook period from 12 months earlier reveals:
Key changes in the Major Public Infrastructure Pipeline across the past 12 months include:
Growth of the building and utilities sectors reflect governments’ ambitions to boost housing stock and transition our energy sources towards a net zero future.
Projected shortages for infrastructure workers have decreased (-32,000 compared to the 2023 forecast) as demand softens and supply grows, reflecting the impact of governments actively managing ambitious pipelines to align demand more closely with market capacity. Accounting for the impact of cost escalations, and coupled with the softening of demand, the volume of workers required on the Major Public Infrastructure Pipeline alone has reduced by 20% across 2023–24 to 2027–28 compared to the previous five-year outlook period, helping to close the gap between supply and demand.
However, shortages continue across each of the three occupational groupings (Engineers, Scientists and Architects; Trades and Labour; and Project Management Professionals).
This year, demand has shifted across certain occupation groups compared with the previous year’s forecasts, due to the natural progression of projects and adjustment of forward pipelines. For example, peak demand for engineers has now passed, as more projects move out of planning and design and into the construction phase. Notwithstanding, engineers remain in shortage.
Nationally, shortages appear to have peaked in capital cities but are expected to rise in regional areas, due to significant new renewable energy projects announced in the regions alongside modest projected increases in supply.
The majority (64%) of new entrant workers will come from Vocational Education and Training, with a quarter from higher education and the rest from migration (10%).
Changes to the size of the infrastructure workforce appear to be largely attributable to workers moving in and out of the construction industry, rather than shifting within construction sectors (examples include movements from infrastructure to housing, housing to infrastructure, or commercial/industrial construction to infrastructure).
We have seen extraordinary escalation in costs trends over the past three years since the establishment of the Market Capacity Intelligence System in 2021, especially in non-labour resources. Recent data has indicated that the volatility of the past three years has, however, reached a point of relative stability, with average price growth for construction materials easing from 11% in 2021–22 and 12% in 2022–23 to 4.3% in 2023–24 (see Section 2: Non-labour Supply for details). It, therefore, was the right time for Infrastructure Australia to revisit the cost assumptions that underpin the Market Capacity database. This involved an analysis of cost escalations in the past three years compared with trends over the previous decade.
Key findings from Infrastructure Australia’s analysis include:
The cost of construction materials continues to remain high, with most materials experiencing year-on-year growth for three straight years. However, the rate of growth appears to have eased over the past twelve months, driven largely by drops in the price for some steel products. Industry sentiment suggests a reported price escalation of non-labour inputs over the last 12 months of about 10–20%, and that prices are yet to peak.
Concrete and steel, the construction materials most in demand, are vulnerable to cross-sector competition in the event of supply shortages. An analysis of Australia’s steel fabrication capacity shows that over two-thirds of domestic capacity is located across New South Wales, Queensland and Victoria. The Northern Territory has least access to local supply despite having the largest demand growth rate of the jurisdictions for steel fabrication products within the Major Public Infrastructure Pipeline.
Construction industry insolvencies are disproportionately high compared to other sectors, accounting for almost 27% of total insolvencies in 2023–24. Small business insolvencies account for 82% of total insolvencies in construction and their profits are in decline. Within the sector, residential construction businesses account for a significant share of total construction insolvencies (24%), compared to non-residential construction businesses (5%) and heavy and civil engineering businesses (3%).
Tier-1 construction companies (that have delivered projects or been awarded contracts valued at over $1 billion) are taking a greater share of public infrastructure contracts, with the top 5 companies estimated to be holding over 40% of the infrastructure market’s current contract value in 2024.
While construction productivity growth remains stagnant, economic and financial indicators for the industry are up, with earnings up by 11.6% and contribution to national gross domestic product (Industry Value Added) up by 14.8% in 2022–23.
At an industry level, construction productivity is driven by sustainable construction output growth supported by growth in labour and capital productivity. Almost 47 cents in every dollar spent by a construction company goes to outsourcing services, such as labour hire for skilled trades workers, design and engineering consultants, and capital rentals such as hiring a crane (defined by the Australian Bureau of Statistics as ‘intermediate services inputs’). This has gradually grown from 40 cents in every dollar in 1995–96.
The high reliance on outsourced services reflects a structural characteristic of the construction industry, where work is delivered by larger businesses subcontracting further down the chain to smaller or specialist businesses. Further work to understand the impact of contracting arrangements between stakeholders (client, constructor, subcontractor, supplier) and outsourced services on construction supply-chain resilience would enable governments and industry to better identify project performance drivers that could drive sectoral productivity growth.
Despite stagnant levels of industry multifactor productivity growth, individual companies surveyed as part of Infrastructure Australia’s 2024 Industry Confidence Survey rate their current productivity levels as ‘good’. However, industry continues to call for a more balanced approach to risk allocation in contracts, citing issues such as overly complex and litigious contract models, governments’ low tolerance for risk and the threat of extreme weather events on project delivery. Parties need to continue working together to find the best balance of risk to minimise unnecessary costs and deliver best value for money.
59% of the Major Public Infrastructure Pipeline is made up of land transport infrastructure projects, and since the previous Infrastructure Market Capacity Report, there have been significant enhancements to the Australian Government’s approach to priority setting, risk management, and the planning and delivery of land transport projects. This includes enhancements achieved through the new Federation Funding Agreement Schedule on Land Transport Infrastructure Projects (2024–2029), developed in partnership with the states and territories. The new Federation Funding Agreement Schedule replaces the preceding 5-year National Partnership on the Land Transport Infrastructure Projects (2019–2024).
Impactful reforms include:
These reforms demonstrate governments’ intentions to actively manage their transport infrastructure pipelines and reduce the gap between the supply and demand for resources in infrastructure delivery. We are starting to see the impacts this year, with a more manageable public infrastructure pipeline coming off the exponential growth trajectory of the past few years. However, demand still significantly outweighs supply, and construction productivity growth remains stagnant compared to other industries (such as transport or telecommunications).
Adherence to the renegotiated Federation Funding Agreement Schedule processes will support active demand management of the transport infrastructure pipeline. Governments will need to remain vigilant and discerning in their infrastructure spend, including closely managing cross-sector demand in the face of budget and inflationary pressures over the short-to-medium term.
The Australian Government 2024–25 Budget aimed at helping built environment organisations acquire a larger share of the available workforce and boost workforce productivity. Under the Australian Universities Accord (released February 2024) and the National Skills Agreement (commenced January 2024), funding was committed in the 2024–25 Budget that would boost construction workforce supply. BuildSkills Australia, the Jobs and Skills Council for the building, construction, property and water sectors (launched in February 2024), has also released its 2024 Workforce Plan that aims to identify the most important strategic challenges facing the construction, property and water industries, and provides a framework for tackling these challenges in collaboration with industry, unions and government.1 Key challenges identified in the Workforce Plan include attracting and retaining highly skilled workers and improving productivity in the construction sectors.
The Australian Government 2024–25 Budget invests $22.7 billion over the next decade to secure Australia’s place in the net-zero global economy, through the Future Made in Australia plan. A key component of the Future Made in Australia plan is the National Interest Framework, designed to guide the Australian Government’s decision-making process for identifying and supporting priority industries.2 The Framework identifies green metals as a priority industry under the net-zero transformation stream, along with renewable hydrogen and low carbon liquid fuels. Two other priority industries, critical metals processing and clean energy manufacturing, are also included under a second economic resilience and security stream.
Steel is a key material used in construction and conventional means of steel production are carbon intensive. Australia can develop a long-term comparative advantage in green metals by drawing on our abundant metal and renewable energy resources. The Future Made in Australia plan may relieve pressure on supply chains and boost local workforce capability.
Another key area of progress is the development of a National Construction Strategy to improve construction productivity. Through the Infrastructure and Transport Senior Officials’ Committee (ITSOC), governments are working with industry on national approaches across four areas:
In keeping with the recommendations made in the 2023 Infrastructure Market Capacity Report, this year’s edition refreshes existing demand and supply insights, while adding new evidence, all of which is oriented towards demonstrating progress against the recommendations.
For each recommendation area — managing demand, boosting labour supply, boosting non-labour supply and increasing productivity — we propose the future directions for the Australian Government to continue the momentum gained this year. Collectively, these recommendations present national priorities for monitoring and mitigating infrastructure market capacity constraints, across all infrastructure sectors. Table 1 sets this out in detail.
Active demand management | |||
|---|---|---|---|
| 2023 recommendation | Progress over last 12 months | Current state | |
| 1 | Active pipeline management |
|
|
| 2 | Consider cross-sector whole-of-market capacity | ||
| Future directions | |||
| |||
Boost materials supply | |||
|---|---|---|---|
| 2023 recommendation | Progress over last 12 months | Current state | |
| 3 | Quarry supply |
|
|
| 4 | Steel supply | ||
| 5 | Local materials production data | ||
| 6 | Recycled materials | ||
| Future directions | |||
| |||
Boost workforce supply | |||
|---|---|---|---|
| 2023 recommendations | Progress over last 12 months | Current state | |
| 7 | Develop a National Infrastructure Workforce Strategy |
|
|
| 8 | Boost the higher education pipeline | ||
| 9 | Place more qualified onshore migrant engineers in engineering jobs | Future directions | |
| 10 | Boost the supply of apprentices and trainees |
| |
| Improve construction productivity | |||
|---|---|---|---|
| 2023 recommendations | Progress over last 12 months | Current state | |
| 11 | A productivity study and national baseline |
|
|
| 12 | Participation and workplace culture | ||
| 13 | New technologies and modern methods of manufacturing | ||
| 14 | Risk allocation between parties | ||
| Future directions | |||
| |||
The annual Infrastructure Market Capacity reports respond to a request made by the Prime Minister and First Ministers in 2020: that Infrastructure Australia work with jurisdictions and industry bodies to monitor the infrastructure sector.
Like the previous three editions of the Infrastructure Market Capacity Report, this report examines public infrastructure demand and market supply capacity over five years - in this case, 2023—24 to 2027—28. It provides an updated health check and analysis of our national construction market’s capacity to deliver public infrastructure works.
The report is structured as follows:
This edition of the Infrastructure Market Capacity Report advances the analysis on current and emerging influences on market capacity from previous reports, including:
Demand-side coverage: we have expanded our demand-side database by capturing investment in defence infrastructure works, private investment in mining and resources, and smaller scale residential buildings which have not previously been captured in earlier editions.
Demand-side resource costs: recent data has indicated that the cost-escalation volatility of the past three years has reached a point of relative stability, while analysis of the project cost estimates in our database verifies that cost pressures have been incorporated in estimates. To maintain accuracy of our modelled resource requirements, Infrastructure Australia updated its cost assumptions for resources demanded by applying appropriate increases (based on the Australian Bureau of Statistics Producer Price Index and Wage Price Index) to cost rates per resource.
Steel fabrication capacity analysis: The Australian Steel Institute initiated a collaboration with Infrastructure Australia to compare steel fabrication supply-side capacity by geography with nearby project-level demand. Similar supply-and-demand analysis on other materials could be included in future editions of this report if useful supply-side data is willingly shared following the positive example set by the Australian Steel Institute.
Significant work has been undertaken against all four categories of recommendations from the 2023 Infrastructure Market Capacity Report to actively manage demand, boost materials supply, boost labour supply, and turn around construction productivity. This edition provides an update of market capacity conditions with respect to demand and points to future directions for the Australian Government to maintain the momentum for work in progress against each of the existing recommendation areas.
The Market Capacity Program is an assumptions-based methodology for identifying market capacity risks. It was developed in collaboration with state and territory governments, industry, advisory bodies and other subject matter experts. These partnerships are integral to the ongoing evolution of the Market Capacity Program.
The Market Capacity Program is underpinned by two system components:
The National Infrastructure Project Database aggregates and organises infrastructure project data supplied by the Australian Government (including defence), state and territory governments (public investments), the Australian Bureau of Statistics (housing building activity) and GlobalData (private investments).
The following infrastructure sectors are included in the Market Capacity Program:
The Market Capacity Intelligence System is a set of analytical tools that interrogates and visualises project demand sector, project type and resource inputs, for the following infrastructure pipelines:
We have comprehensively reviewed and updated our Market Capacity Program assumptions this year to ensure our cost estimates and assumptions reflect current economic conditions.
Step 1 involved a comparative analysis of 2024 data collection from jurisdictions to compare the average investment by infrastructure asset class across all jurisdictions, compared with 2022 project estimates before inflation accelerated. We found that those estimates had increased in line with cost pressures. Because this revision to estimates occurred across the pipelines of states and territories, it meant Infrastructure Australia’s modelling assumptions needed to be updated to reflect inflation, such that we are forecasting the right number of workers needed or material tonnages needed.
Step 2 involved work to integrate relevant price indices, including the Australian Bureau of Statistics’s Producer Price Index and Wage Price Index, to ensure differential escalation rates of construction inputs are factored into our cost estimates and assumptions.
Step 3 involved the application of resource-specific escalation rates. Different resource categories were found to have unique escalation rates. For example, the cost of materials like steel or concrete have increased at a different rate compared to labour costs or equipment rental fees. This variation is due to factors such as supply-chain dynamics, market demand, and industry-specific constraints. By incorporating differential escalation rates, the updated assumptions provide a more accurate and realistic representation of the current cost environment, ensuring that the project estimates are aligned with the latest economic conditions.
Supporting the quantitative analysis research each year, Infrastructure Australia also undertakes industry research to gauge industry confidence levels and better understand their perspectives on current market conditions.
This year, three surveys were undertaken of Australian businesses in the building and construction industry, supplemented with in-depth interviews:
All state and territories were represented in this year’s industry surveys and were roughly representative of construction industry geographical spread across the country – most in New South Wales and Victoria, followed by Queensland, Western Australia and South Australia, and the smaller jurisdictions Australian Capital Territory, Tasmania and the Northern Territory.
For more details on the survey methodology, see Appendix F: Industry Confidence surveys.
See the Supporting Appendices for detailed explanations of the Market Capacity methodology:
This section presents Infrastructure Australia’s 2024 demand projections for major public infrastructure works over the five-year outlook (2023–24 to 2027–28), within the context of the wider construction market. It includes analysis of changes over the last 12 months compared to projections last year, covering views of the demand profile by construction sectors, geographies, workforce and materials.
The demand analysis is supplemented with industry assessments of current delivery capacity, including changes over the last 12 months and confidence to scale up over the forward estimates, collected from our 2024 industry surveys and interviews.
The Australian Government, in partnership with state and territory governments, should continue to actively manage public infrastructure demand through:
Figure 1 shows the Infrastructure Australia pipeline of forecast construction activity based on cost estimates against the backdrop of total construction activity as reported by the Australian Bureau of Statistics. The main difference between the two measures is that the Australian Bureau of Statistics incorporates the impact of cost escalations, while the Infrastructure Australia database shows cost estimates with far less certainty about the value of future escalations. This key difference makes it difficult to assert how much of total construction activity is captured in our database. However, by expanding our database this year to include more residential activity, mining projects and defence capital projects, our database now forecasts a volume of construction activity that peaks in 2026 almost in line with current levels of construction work done as reported by the Australian Bureau of Statistics.
Even though we do not expect all projects to proceed as announced, this approach provides valuable insight into market ambition in the coming years. It also provides the added benefit of enabling a more comprehensive analysis of market demand than was possible in previous editions.
Note: Infrastructure Australia no longer displays a projection for future total construction activity as exists in previous editions of the Infrastructure Market Capacity Report.
Source (for total construction activity): Australian Bureau of Statistics (2024)4
Total construction demand captured in our database covers $1.08 trillion in the five years from 2023–24 to 2027–28. This level of forecast activity is almost in line with current run rates where the total construction activity reported by Australian Bureau of Statistics in the five years from to 2019–20 to 2023–24 was $1.2 trillion.
Figure 2 shows the total infrastructure pipeline, as captured in our database, broken down by sector. Buildings account for most of the expected expenditure (62%), followed by transport (17%), utilities (11%) and resources (10%).
Of the $671 billion in buildings, $71 billion is from the Major Public Infrastructure Pipeline, with another $43 billion invested in buildings by governments, totalling $114 billion of public investment. Figure 2 includes a breakdown of this public investment in buildings, which is dominated by residential and health projects.
For the period 2023–24 to 2027–28, public spending accounts for 25% of the $1.08 trillion construction market, of which the Major Public Infrastructure Pipeline totals $213 billion and $58 billion is planned on Small Capital Projects. The rest of this section provides an analysis of the Major Public Infrastructure Pipeline.
As shown in Figure 3, the 5-year rolling Major Public Infrastructure Pipeline has dropped from $230 billion projected last year (2022–23 to 2026–27) to $213 billion this year (2023–24 to 2027–28).
Peak investment has moved one year out to 2026 compared to the projection last year. These changes are consistent with a continuing trend each year observed by Infrastructure Australia of projected investment peak shifting into outer years, suggesting that the market struggled to deliver on an overly ambitious pipeline.
The peak demand is also flatter compared to previous years projections (2022, 2023) when demand rose exponentially to a high peak before dropping over outer years. The shape of the demand curve this year suggests a more realistic and achievable pipeline for a constrained market to deliver.
Infrastructure Australia conducted an in-depth year-on-year analysis, comparing estimates of the Major Public Infrastructure Pipeline from 2023 and from 2024 for the same 5-year period (2023–24 to 2027–28, as shown in Figure 4). Unlike last year when we reported that the pipeline had increased by 13% for this exercise, this year the 2024 forecast is the same as the 2023 forecast for the specified time period.
By studying a sample of over 600 on-going major public infrastructure projects in the 2023–24 to 2027–28 pipeline using data from both the 2023 and 2024 pipeline estimates, we identified changes in the pipeline, as visualised in Figure 5.
The pipeline decreased by 12% due to projects being removed or recently completed, with a further 11% drop from investment cuts in continuing projects.
The magnitude of 23% in reductions has not quite been netted out by new projects coming into the pipeline (10%, predominantly in the buildings sector) and increases to investment estimates (6%), leaving another 7% in increases still to be explained.
The remaining 7% increase year on year is explained by delays to project schedules. Schedule changes to several projects where construction has been delayed versus the estimates of one year earlier, had the effect of shifting project investment from 2022–23 out to later years. Where this shift occurred, we quantified the 2024 estimate as being 7% higher than the 2023 estimate for 2023–24 to 2027–28.
Figure 6 shows investment in the Major Public Infrastructure Pipeline over the 2023–24 to 2027–28 outlook period, as broken down by sector.
Transport infrastructure investment is projected at $126 billion and remains the largest expenditure category, accounting for 59% of the Major Public Infrastructure Pipeline. This is a $32 billion reduction on the previous year’s outlook, driven by:
Buildings infrastructure investment is projected at $71 billion, which accounts for 34% of the Major Public Infrastructure Pipeline. This is up $8 billion on the previous year’s outlook. Buildings infrastructure is driven by health ($24 billion) and residential buildings ($17 billion), followed by other building types such as convention centres, offices, art facilities and laboratories ($12 billion).
Utilities infrastructure investment is projected at $16 billion, which accounts for 7% of the Major Public Infrastructure Pipeline. This is up $6 billion on the previous year’s outlook. While investment in energy projects is mainly driven by the private sector, significant public investment can be seen in large transmission projects.
Analysis of projected demand peaks by sector over the five-year outlook shows that while transport investment is expected to continue to decline, buildings infrastructure is expected to peak in 2026, while energy investment is expected grow steadily. The staggered demand peaks by sectors have an effect of maintaining a steadier level of overall investment across infrastructure.
When interpreting these projections, it should be noted that the Major Public Infrastructure Pipeline accounts for only a quarter of the total construction market and there is significant private investment in buildings and particularly in energy infrastructure.
Regional analysis of the pipeline has been made possible for the first time this year, through the development of analytical tools created in 2023 by Infrastructure Australia in collaboration with state and territory governments. These tools are designed to help government decision makers diagnose labour-supply bottlenecks, spot growth opportunities and build strong evidence bases for investment decisions.
Two analytical tools are fundamental to this regional analysis: a national heat map of construction demand and supply, and a demand pipeline simulator – both of which analyse investment demand, material demand, and labour demand and supply.
In the five years from 2023–24 to 2027–28, when compared with the corresponding period in the 2023 forecast, there is a significant geographical shift in public investment to the north, with the Major Public Infrastructure Pipeline in Queensland and Northern Territory growing by $16 billion, while New South Wales and Victoria have reduced by $39 billion.
In 2024, Infrastructure Australia undertook a deep dive of the contributions to cost escalation on the Major Public Infrastructure Pipeline by PLEM (Plant, Labour, Equipment, Materials) resource types. This analysis breaks down the total project cost escalation into its constituent parts, allowing us to identify the contribution of each resource type to the overall escalation.
We have comprehensively reviewed and updated our Market Capacity Program cost assumptions this year (based on the Australian Bureau of Statistics Producer Price Index and Wage Price Index) to ensure our cost estimates and assumptions reflect current economic conditions.
As shown in Figure 7, applying the updated cost assumptions to the Major Public Infrastructure Pipeline this year, average labour demand dropped by 20% in full-time equivalents per month compared to last year’s projection.
In terms of private investment (that is, separate to the Major Public Infrastructure Pipeline), we observed a jump in labour demand from the private infrastructure sector in the near future. This is driven by the renewable energy transition. As shown in Figure 8, from early 2027, labour demand from private infrastructure will almost double when compared with the forecast from 2023.
The top 5 occupations needed to deliver energy projects over the five-year outlook are Other Professional Engineers (those not classified as civil, electrical, industrial, mechanical or production engineers), General Construction Labourers, Electricians, Plant Operators and Project Managers.
By cost shares, materials accounts for the largest proportion (73%) of total non-labour spend on the Major Public Infrastructure Pipeline, followed by plant (15%) and equipment (11%).
As shown in Table 2, concrete is the top construction material needed by volume to complete major infrastructure works over the five-year outlook (137 million tonnes), followed by rock/bluestone (31 million tonnes), asphalt (18 million tonnes) and steel (8 million tonnes).
| Material | Demand (million tonnes) | |
|---|---|---|
| Concrete | 136.8 | |
| Aggregate | 80.0 | |
| Cement | 22.4 | |
| Sand | 34.4 | |
| Rock/Bluestone | 30.6 | |
| Asphalt | 18.0 | |
| Steel | 8.1 | |
| Steel – Structural Elements | 3.8 | |
| Steel Reinforcement | 3.6 | |
| Girders | 0.6 | |
| Rail Track | 0.1 | |
| Bitumen Binders | 1.5 | |
| Walls | 0.7 | |
| Timber | 0.3 | |
| Plasterboard | 0.3 | |
| Bricks | 0.1 | |
| Electrical Bulk | 0.2 | |
| Aluminium | 0.1 | |
| Copper | 0.04 | |
| Plastics and Polymeric Materials | 0.03 | |
| Electric Bulk | 0.01 | |
| Fibreglass | 0.01 | |
| PV Panels | 0.003 | |
As shown in Figure 9, across major public infrastructure works, materials demand is mostly driven by transport, due to its dominant position on the Major Public Infrastructure Pipeline, followed by buildings and utilities. As all sectors will be consuming concrete (aggregate/sand/cement) in bulk, it may be subject to cross-sector competition in the event of supply shortages.
To remove the impact of pipeline size, we analysed materials required per $ million to normalise data and understand material requirement per sector. In doing so, we observe that steel is another material that is critical to delivery shared cross all sectors.
To deliver $100 million of investment, we need:
Asphalt and rock/bluestone are materials heavily needed for transport projects and non-residential building types. Wall materials (bricks, plasterboard, timber) on the other hand are unique to residential buildings.
When it comes to industry’s assessment of current market capacity compared to the previous year, 64% of surveyed building and construction businesses felt it was the same, 26% believed it was worse and 6% felt it is ‘not as challenging’ as last year. There were no significant variations in responses across industry subsectors or size of contracts delivered.
When looking two years ahead, approximately 40% of surveyed businesses expect capital project activity to stay about the same as current levels, with almost a third (32%) believing it will increase and a fifth (22%) believing it will decrease.
By sector, more businesses in the utilities and transport sectors (over 40%) anticipate an increase in activity levels over the next two years than other sectors (housing, mining and commercial). A smaller proportion (32%) of residential-construction businesses expect activity levels to increase compared to 42% expecting activity to stay the same. These responses are slightly at odds with the pipeline-demand data that shows growth in residential buildings investment and a decrease in transport investment over the forward estimates compared to the previous years’ projections.
Industry notes diverging pipeline pressures in different states, observing many active or large infrastructure projects planned in some states such as Queensland, while in New South Wales and Victoria, government spending has reduced, and pipelines are lengthening.
These views align with Infrastructure Australia’s analysis of the Major Public Infrastructure Pipeline over the forward estimates, with more subdued overall demand compared to previous projections characterised by weaker investment in east-coast states and growth up north.
As shown in Figure 10, when asked to rate their confidence to scale up in response to increased investment in public infrastructure across a few growth scenarios (scale up by 5%, 10%, 25%, 50%, 100% or over 100%), most businesses believe they have the capacity to scale up to meet increased activity to a degree. Over half (53%) were very or somewhat confident in their ability to scale up their activity by 25%. However, confidence to push beyond this then starts to drop with 40% of businesses confident to scale up their activity by 50%, and 37% confident to scale up by 100%.
Source: Infrastructure Australia Industry Confidence Survey (2024)
Consistently, businesses in the mining sector reported highest confidence to scale up, followed in order by the utilities, transport and commercial sectors. Businesses in the residential construction sector reported the lowest confidence levels to scale up. This suggests the residential construction sector is experiencing more significant capacity constraints of all construction sub-sectors.
Businesses delivering larger contracts have greater confidence to scale up. Across all growth scenarios, companies delivering contracts over $100 million are more confident to scale that those delivering contracts between $10 million and $100 million. Companies delivering contracts less than $10 million in value have consistently less confidence to scale up than the two prior-mentioned groups.
Of those surveyed among the Civil Contractors Federation’s member base, representing a majority smaller Tier-3 businesses, nearly a third (31%) reported that if there was an increase in the number of projects tendered in their respective state, they could take on between 10–25% extra work. This is compared with a little over a fifth (21%) who said they could take on between 25–50% more work. Where these members suggest they have extra capacity to take on additional projects, nearly 80% said they could take on the most work in rural and regional areas, compared to 64% who reported capacity to take this extra work within metropolitan areas.
During interviews, businesses also noted the current economic environment, including inflation, rising costs and interest rates, as a challenge affecting project viability and profitability, which in turn is impacting on overall capacity
This section provides an assessment of non-labour demand and supply. It includes an overview of supply risks for key construction materials, as viewed by industry, and a snapshot on the status of key materials, plant and equipment supply this year.
Following from the recommendation made in the 2023 Infrastructure Market Capacity Report to “undertake analysis of domestic steel production and fabrication capacity…to strengthen and support sovereign supply chain capability and grow new capacity for future industries”, we provide a deep dive on domestic steel fabrication capacity using data provided by the Australian Steel Institute.
The section concludes with industry views of non-labour supply issues, collected from our 2024 industry surveys and interviews.
The Australian Government, in partnership with state and territory governments, should continue to expand construction non-labour supply through:
Businesses surveyed as part of the 2024 Industry Confidence Survey regarded most materials as posing some level of supply-chain risk. As shown in Figure 11, steel and timber supply were most often cited (rated as 9-out-of-10 or 10-out-of-10 risk by 14% and 12% of surveyed businesses, respectively), followed by concrete/cement and construction equipment as posting a threat to project delivery.
Source: Infrastructure Australia Industry Confidence Survey (2024)
Table 3 provides a snapshot of key construction material, plant and equipment supplies in 2024.
| Construction material/plant and equipment | 2024 insights and implications |
|---|---|
| Steel and steel fabrication | Steel product prices have dropped this year, driven by a combination of factors, including weakening global demand, increased production capacity, and fluctuations in raw material costs (such as for iron ore).5 Imports of steel products, particularly specialised ones like stainless steel and tool steel, remain significant (see Figure 16). A majority of surveyed local steel fabricators and manufacturers (86%) report reduced profit margins due to cheap imported fabricated steel, which is priced between 15% and 50% lower than locally produced steel (as reported by the Australian Steel Institute survey conducted in in July 2024). Reliance on imported steel exposes construction projects to risks related to fluctuating prices, transport costs, and potential supply disruptions. |
| Quarry products | Some governments have taken measures to address quarry supply risks. The Victorian Government has ramped up approvals for new quarries to meet growing infrastructure demands and aims to stabilise supply and reduce costs, with 300 million tonnes of new quarry resources approved for development.6 Queensland quarry demand and supply risks report indicates that demand for hard rock and sand can be met by reserves in existing quarries.7 |
| Concrete | Concrete production depends heavily on quarry product availability. Stricter sustainability standards and environmental regulations could lead to higher concrete production costs and potential supply delays.8 Precast concrete continues to experience long lead times due to high demand, particularly in infrastructure projects.9 These factors are putting pressure on the availability of concrete for large-scale projects. |
| Plant and equipment | The construction industry continues to experience delays in securing plant and equipment, driven by high global demand and geopolitical issues. Ongoing supply-chain bottlenecks are expected to extend lead times for essential equipment, affecting project timelines. The Australia construction machinery market size is expected to reach USD 3.29 billion by 2029, growing at a compound annual growth rate of 3.35% during 2024–2029, indicating supply responses to demand pressures driven by increased infrastructure investment.10 |
| Timber | Australia’s timber supply is facing significant challenges due to the combined effects of regulatory changes and environmental risks. Hardwood can be replaced with more expensive composite wood alternatives.14 |
| Cement | Cement production remains under pressure due to rising energy costs and stricter environmental regulations, which have forced some local cement plants to scale back operations or shut down.15 This has led to an increased dependence on imported clinker and other materials necessary for cement production. The global cement market is also experiencing disruptions due to geopolitical tensions and trade restrictions, which are affecting the availability and cost of imports. Price of cement products increased 2.4%, driven by fibrous cement products (3.3%), linked to increase in costs in labour, energy and freight inputs.16 |
| Plasterboard | The plasterboard industry faces rising energy costs, which are increasing production costs. No significant supply issues are currently reported, but higher energy expenses are expected to impact the price of plasterboard.17 The industry is also beginning to face increased demand for sustainable products, which may require additional investment in innovative technologies and processes. |
| Bitumen | The global bitumen market is expected to grow from $53.66 billion in 2023 to $56.23 billion in 2024 at a compound annual growth rate of 4.8%.18 Australia’s reliance on imported bitumen continues to pose risks, especially as global oil markets face volatility due to geopolitical tensions and environmental regulations. |
The cost of construction materials continues to remain high, with the majority of materials experiencing year-on-year growth for three straight years. However, the rate in which these materials have grown has largely eased over the past twelve months, with average annual price growth for all materials being 8% lower than in 2023 (average growth of 4.3% in 2024 versus 12% in 2023).
As shown in Figure 12, while this slow down in price escalation was felt across the board, it was largely driven by large drops in the price for steel beams and sections, and reinforcing steel, which decreased over the year by 16% and 8%, respectively. For these materials, this is a notable shift in the annual changes in the prices Infrastructure Australia observed in 2022, when the prices for these materials had increased beyond 30%. There were, however, some outliers to the broader trend for this year, with clay bricks, coating, and electrical products experiencing significant increases.
Some of these material cost escalations are being driven by conflicts in Ukraine and the Middle East, which are disrupting international supply chains. The conflict in the Middle East, for example, has seen disruptions to shipping routes, which are adding substantial costs to the transportation of materials. However, overall the increases in costs are stabilising and becoming more predictable, especially as Australia continues to move past the post-COVID-19 period.
Source: Australian Bureau of Statistics (2024)19
Over the past 12 months, the prices of oil, coal and iron ore have continued to fluctuate. While these prices are expected and not unusual, these fluctuations were not as extensive as they were in previous years.
When compared with the nature of the price fluctuations in 2021, 2022 and 2023, the prices for these materials throughout 2024 can be described as being much more stable. That is, they did not experience such wild swings in price points, which were caused by the COVID-19 pandemic, the start of the conflict in Ukraine, and renewed geopolitical tensions and conflicts within the Middle East. These events saw significant disruptions to supply chains and demand. For instance, conflict in the Middle East, especially disruptions to shipping routes in the Red Sea, has driven up shipping costs as companies are forced to reroute, resulting in longer and more expensive journeys.
Additionally, there is strong demand for materials such as iron ore from China, driven by the country’s significant infrastructure boom. As conflicts in Ukraine and the Middle East persist, along with global demand for materials, these factors will continue to influence material prices. However, this impact is likely to be more predictable than what has been experienced in the past. Figure 13 shows minimal change in the price of imported oil, iron ore and coal over last 12 months, following periods of greater variability.
Source: Department of Industry, Science and Resources (2024)20
Events such as conflicts in Ukraine and the Middle East continued to disrupt global supply chains earlier in 2024. Figure 14 shows their impact on the Federal Reserve Bank of New York’s Global Supply Chain Pressure Index.
Source: Federal Reserve Bank of New York (2024)21
In January and February, conflict in the Red Sea had a major impact on key global trade routes. As shown in Figure 15, trade volumes through the Suez Canal – the crux of Europe and Australasia’s shortest maritime route – were 50% lower than in 2023. As a result, trade levels surged around South Africa’s Cape of Good Hope due to re-routed freight.
Cost impact: The Australian Bureau of Statistics links a 1.2% rise in water freight (shipping) prices to the Red Sea conflict, while noting the increase followed six consecutive quarters of price drops.22
Schedule impact: The average journey time of rerouted freight was 26 days, which is 19 days (55%) longer than average equivalent freight trips through the Suez Canal.23
Source: International Monetary Fund Port Watch (2024)24
In Infrastructure Australia’s 2023 Infrastructure Market Capacity Report, we noted a 20% increase in steel imports over the previous two years compared with the past two decades. It is evident that this reliance on imports has continued with specialised products such as stainless steel and tool steel,25 and Figure 16 shows an increase in overall steel imports in 2023–24. Over the same period, steel prices have decreased due to a combination of factors such as lower global demand, greater global production capacity and changing raw material costs, such as for iron ore.26
Source: Australian Bureau of Statistics (2024)27
Infrastructure Australia has been tracking industry’s sentiments, through the Industry Confidence Survey, for four years. As shown in Figure 17, there have been shifts in how industry assesses domestic versus global supply risks over that time.
In 2022, just over half (53%) of building and construction businesses surveyed thought global issues alone were responsible for supply-side risks, while 37% thought it was domestic issues and 11% thought it was due to both. In 2023, industry’s opinion switched to viewing domestic factors being the predominant source. This year, half of respondents regarded both global and domestic supply chain issues being equally problematic, compared to 30% who viewed domestic and 20% who viewed global supply-chain risks as being more problematic.
The Russian invasion of Ukraine and the impacts of the COVID-19 pandemic on global supply chains in the preceding years may have elevated industry’s assessment of global risks in 2022. This year, industry is aware of the impacts of both global and domestic supply risks to their business. This aligns with our observations on the need to balance reliance on imports with domestic production capability to mitigate supply risks of key construction materials.
Note: These figures exclude ‘not sure’ responses.
Source: Infrastructure Australia Industry Confidence Survey (2022, 2023, 2024)
Figure 18 presents industry views on the main risks in sourcing global supplies for infrastructure project delivery. Industry regarded international supply-chain disruptions, delays and shortages as the highest threat (60% ranked as a threat, including 16% as a major threat).
Competing domestic demand from adjacent sectors (such as building and mining) and competing global demand were both regarded by industry as relatively similar levels of threat to the global supply chain (50–51% ranked both as a threat, including 10% as a major threat).
Source: Infrastructure Australia Industry Confidence Survey (2024)
62% of surveyed businesses noted an increase in price escalation in terms of non-labour costs over the last 12 months. The vast majority (62%) of industry surveyed noted the increase in price for non-labour resources this year. Of those that noticed this increase in costs, 64% reported a 10–20% increase.
Many believe a peak in non-labour costs is still yet to come. In fact, 43% say that prices are increasing at an accelerating rate, whereas 36% believe they have been doing so at a steady rate.
Looking specifically to those surveyed within the Civil Contractors Federation membership, the largest group (45%) said they had noticed an increase of between 10–25% in the cost of project inputs. Only 18% noted an increase of more than 25%. However, these figures reflect respondents’ views of both labour and non-labour inputs combined, not solely materials.
These industry perceptions on cost increases are largely consistent with Infrastructure Australia’s analysis of the Australian Bureau of Statistic’s price index data,28 which shows that non-labour inputs are 80% higher now than in 2010–11.
Australia needs 8 million tonnes of steel to deliver the pipeline of public and private sector construction projects over the next five years.
Steel is a critical input of transport, energy and other infrastructure projects, and a critical construction input overall. As shown in Figure 19, over half the world’s annual steel output (52%) was used within buildings and infrastructure.
Source: World Steel Association (2024)29
The global steel industry, producing over 1.8 billion metric tonnes of steel annually, is dominated by a few major producers: China (the largest), India, Japan, the United States and Russia.30 Australia plays an important role in the global steel supply chain, by mining and exporting iron ore and coking coal for steel production.
Local Australian steel output is supplemented by imported steel, some of which is critical for project success, particularly finished-steel products that are not manufactured in Australia, such as stainless steel and tool steel. Over 2013–14 to 2023–24, Australia imported approximately 2.5 million tonnes of steel a year.
Using imported steel in local construction can expose projects to risks inherent to global resourcing, such as price fluctuations, greater competition, supply-chain disruptions, product quality variances and local compliance modifications.
Additionally, embodied carbon emissions of imported steel can create uncertainty, add complexity and compromise Australia’s measures and efforts in decarbonising the infrastructure sector.
With an estimated output of 5.3 million tonnes annually, Australia’s steel industry is substantial. There are four major manufacturers of steel in Australia, supported by over 300 distribution outlets and numerous manufacturing, fabrication and engineering companies.31
The capabilities of the Australian steel industry include: steel manufacturing, roll-forming, distribution, fabrication, construction modelling, hot dip galvanizing, protective coatings and grating and handrails.
Analysis undertaken with the Australian Steel Institute reveals Australia has an estimated steel fabrication capacity of 1.4 million tonnes per year. The domestic steel-fabrication sector is comprised of majority small and medium-size enterprises, many of which are multi-generational family-owned businesses.
Whilst some businesses continue to operate as traditional ‘jobbing’ shops, many have developed specific areas of specialisation and associated capabilities. These include: bridge work, architectural steelwork, refurbishment and maintenance of mining equipment, sheet metal fabrication, chemical-industry infrastructure, civil construction, wind tower fabrication, and portal-frame structures.
The Australian Government has identified green metals (including green steel) as a priority industry under its Future Made in Australia National Interest Framework. While Australia is in the early stages of developing facilities with the capacity to produce green steel, it has the potential to reduce carbon emissions from the steel-production process and maximise the economic and industrial benefits of our move to net zero.
The Australian Government 2024–25 Budget commits funding for Green Metals Foundational Initiatives that will explore ways government can stimulate demand, including industry participation frameworks at federal and state levels, which will help define opportunities for the inclusion of green metals in energy, defence, infrastructure and housing projects.32
Australia needs 3.8 million tonnes of fabricated steel structure elements over 2023–24 to 2027–28.. By sector, buildings will require 55% of total demand for fabricated steel, transport 29% and utilities 16%.
Based on data provided by the Australian Steel Institute, we analysed the capacity and location of 296 domestic steel fabricators, representing an estimated 70% of total domestic capacity. As shown in Table 4, we estimate these producers have a capacity to produce approximately 939,500 tonnes annually, with over two-thirds (69%) capacity located across New South Wales, Queensland and Victoria.
We note that based on the Australian Steel Institute dataset, there is currently very little capacity in the Northern Territory, at less than 1% of total domestic capacity. However, the Territory will require 7% of national demand.
| State/territory | Estimated annual capacity (tonnes) | % of total capacity | % of demand |
|---|---|---|---|
| New South Wales | 255,000 | 27% | 34% |
| Queensland | 199,000 | 21% | 17% |
| Victoria | 195,000 | 21% | 20% |
| Western Australia | 152,000 | 16% | 9% |
| South Australia | 114,500 | 11% | 6% |
| Tasmania | 14,500 | 2% | 2% |
| Australian Capital Territory | 7,000 | 1% | 2% |
| Northern Territory | 2,000 | 0% | 7% |
| Australia | 939,500 | 100% | 100% |
Note: Percentages do not add to 100% due to rounding.
Source: Infrastructure Australia analysis of Australian Steel Institute data (2024)
Energy projects will drive the nation’s energy and economic transition. As our demand analysis indicates, industry is gearing up to deliver a wave of energy projects over the next five years. Through the Rewiring the Nation program, the Australian Government has committed $20 billion to build and upgrade transmission infrastructure needed to transform the generated energy from renewable sources into electricity and move it across the network to end users.
However, there is a lack of data about Australia’s fabrication capacity for specialist components needed in energy projects. Energy projects often need specialist steel components that are imported. For example, components such as lines, transformers and cables are manufactured near bigger markets in Europe and the United States, while transmission towers are imported from overseas and assembled in Australia.33
The majority (89%) of planned government-funded solar and wind farms will be built in regional areas. Transportation of supply from source, whether from a local producer or overseas via a port, to the project site will require adequate road infrastructure, co-ordination and careful project staging, especially as equipment such as wind turbine blades can measure up to 70 meters in length and 7 meters in diameter.34
One of the 14 recommendations put forward in Infrastructure Australia’s 2023 Infrastructure Market Capacity Report was for an analysis of domestic steel production and fabrication capacity. From a supply-chain-resilience perspective, this could inform broader Australian Government directions to strengthen sovereign capability and identify opportunities to grow future industries where warranted, including green steel.
More information on domestic production capacity of key construction materials could help strengthen the early stages of project planning and design. That is, projects could be planned with local businesses in mind. It could also help foster earlier engagement with the industry, providing more visibility of future demand and encourage businesses to increase capacity accordingly.
Improved visibility of demand against local supply gives the market a clearer understanding of gaps and opportunities to grow. It might also encourage small businesses within close proximity of a proposed project to collaborate and join forces to meet specific project requirements.
One such example of local business collaboration was the construction of Western Sydney Stadium in Parramatta, New South Wales. This was a $360 million project that used 4,500 tonnes of Australian steel sourced by a local supplier, with the exposed local steel fabricated and painted by several Western Sydney businesses. The structure was designed and specified to ensure local steel mills could competitively produce steel, which was then sent to a large group of existing suppliers and fabricators within a 10-kilometre radius of the stadium. The scale of the project and early engagement with these businesses gave them confidence to invest in new equipment and expand their capability to deliver.
Our collaboration with the Australian Steel Institute this year on the analysis of domestic steel fabrication capacity is a starting point to improving awareness of domestic supply capacity of a key construction material. Industry and governments can continue to work together to improve knowledge of demand, mapped against supply capacity, for key construction materials, particularly in national priority areas such as renewable energy.
Over the next 5 years, Australia will need over 192 million tonnes of construction materials to deliver planned infrastructure projects. Key materials used in construction, such as concrete, asphalt and steel, produce significant embodied carbon emissions throughout their lifecycle. Buildings and infrastructure are directly responsible for almost one-third of Australia’s total carbon emissions and indirectly responsible for over half of all emissions.35
In 2022, Infrastructure Australia estimated that based on current technology and standards, approximately 27% of the conventional material tonnage needed to deliver 998 road projects across Australia between 2015–31 could be replaced with a range of recycled materials.36
This year we have estimated the current (2022–2023) national uptake of three recycled materials used in construction to replace conventional materials:
These estimates were derived from uptake rates captured as part of our Embodied Carbon Projections for Australian Infrastructure and Buildings research, released in July 2024.37 An average uptake rate was calculated for each state and territory by combining rates for each recycled material across different asset classes. These averages were then weighted by demand, using our market-capacity materials demand data for the equivalent conventional material, to generate a weighted uptake rate for each material by jurisdiction. The jurisdiction uptake rates were then aggregated to provide a national uptake rate for each material.
Infrastructure Australia’s research highlights the potential of using recycled materials, among other decarbonisation strategies, to lower the embodied carbon produced by the national infrastructure pipeline, but acknowledges that several barriers exist to hinder greater adoption. It is one aspect of a wider range of opportunities to reduce construction emissions to support Australia’s net-zero commitments.
Over the last 12 months, we note the Australian Government has taken significant first steps to support industry’s continued uptake of recycled construction materials, including:
This section provides an updated estimate of infrastructure-workforce supply and shortages, by state, territories and occupational groups. It also highlights new emerging skills in demand this year and analyses worker movements both between construction sectors and in and out of the construction industry entirely.
Industry perceptions and market responses to workforce challenges are also presented, drawing from Infrastructure Australia’s 2024 Industry Confidence Survey and labour-market data analysis.
The Australian Government, in partnership with state and territory governments, should continue to expand construction labour supply by:
As of August 2024, there are 198,000 workers engaged in infrastructure across the nation. Between 2020 and mid-2022, demand and supply both increased rapidly. Since then, we observe a temporary dip in supply while demand has continued to rise, leading to more acute shortages over the last two years.
We estimate historical workforce numbers by analysing the Australian Bureau of Statistic’s Labour Force Survey and Census data. Our workforce projections are calculated by adding expected workforce entrants from training and migration, minus exits from retirement modelling and applying a population growth factor to estimate supply to 2030. Based on the long-term historical view of supply, we predict the workforce to grow steadily in the future.
Infrastructure Australia has created three occupational groups, and the current workforce can be broken down as follows:
Infrastructure Australia’s website hosts the Infrastructure Workforce Skills Supply Dashboard, which presents detailed insights on infrastructure workforce supply, demand and shortages. The dashboard is an interactive tool that allows views of the workforce broken down by state and territory, specific roles, age, and gender. Infrastructure Australia refreshes the Dashboard data annually.
We estimate a shortage of 197,000 infrastructure workers as of August 2024 – a 13% decrease from the shortage of 229,000 workers predicted last year.
Figure 20 shows the latest projection of demand versus supply over the forthcoming horizon. Compared to last year’s projections, peak demand has moved one year out, from mid-2025 to mid-2026. This trend is consistent with observations made in previous years and is likely reflective of planned expenditure being pushed back as the market struggles to deliver on overly ambitious delivery targets.
Source: Nous Group commissioned by Infrastructure Australia (2024)
Figure 21 presents a national comparison of shortages across capital cities and in regional areas (outside the Greater Capital City Statistical Areas as defined by the Australian Bureau of Statistics).
Shortages appear to have peaked in capital cities but are projected to rise in regional areas, driven by significant new renewable energy projects announced in the regions with only modest increases in supply projected. It should be noted, however, that the diminishing shortage in capital cities may largely reflect poor pipeline visibility in the years beyond the forward estimates.
While all jurisdictions remain in shortage, these impacts are unevenly felt across the nation:
Note: This shows shortages only for projects with a known location (those that can be mapped to a specific Statistical Area Level 4 as defined by the Australian Bureau of Statistics) and thus does not equate to total national labour shortage.
Source: Nous Group commissioned by Infrastructure Australia (2024)
As discussed in Section 2: Understanding Demand, energy projects are driving the growth in workforce demand over the five-year outlook. The top five occupations needed to deliver energy projects in over the five-year outlook are:
Broken down by occupation groups, the 197,000 total workforce shortfall comprises of:
Vocational Education and Training, higher education and migration all play crucial roles to the supply pipeline of workers. Figure 22 shows a majority (61%) of new entrants in 2025 will come from VET, followed by 28% from higher education and 11% from migration.
Furthermore, the relative share of Vocational Education and Training entrants will grow slightly to 64% in 2029, compared to the share of higher-education graduates which will drop to 26% over the same period. This reflects the evolution of the workforce profile over time as demand for trades workers increase and surpass engineers over the forward estimates.
Looking at skilled migration intake in 2023, Engineers, Scientists and Architects received the largest portion (66%) of visas in the construction industry compared to visas granted to skilled workers in Finishing Trades and Labour (18%), Structure and Civil Trades and Labour (7%) and Project Management (8%).
Given it takes longer to train engineers, scientists and architects than workers in trade and labourers, migration provides a quicker short-term fix to address shortages. However, as noted in the 2023 Infrastructure Market Capacity Report, many qualified migrant engineers, once on shore, struggle to secure an engineering role due to a range of barriers. Several initiatives are underway by governments working with industry to address this problem, such as Engineers Australia’s Global Engineering Talent Program.
Source: Nous Group commissioned by Infrastructure Australia (2024)
The Global Engineering Talent (GET) Program is a program run by Engineers Australia, targeting engineers currently in Australia on a skilled migration visa who are unable to find work or are working in a position not commensurate with their skill and experience level.
It delivers participants with a six-week preparatory course through Engineering Education Australia with engineering standards specific training and a 12-week paid internship at an engineering firm.
Figure 23 provides a snapshot of the top emerging skills per occupation group with the highest annualised growth in the share of job ads that mention them in 2023–24.
All skills identified, except for two, were not present in the list of top emerging skills last year. As noted in the 2023 Infrastructure Market Capacity Report, this analysis does not capture the volume of demand, as many of the skills identified would not be in wide circulation or in high demand for some time, if ever. While demand for these newly identified skills is unclear, the speed of their arrival indicate that skill requirements evolve rapidly, and that job designs need time to settle.
Note: Skills mentioned in 2024 but not in 2021 may not be strictly ‘new’ – they may have appeared in intervening years.
Source: Nous Group commissioned by Infrastructure Australia (2024)
Infrastructure is a subset of the larger construction labour pool. To better understand the drivers behind worker movements, we conducted an analysis to compare changes that could be attributable to individuals moving between construction sectors (infrastructure, housing and commercial/industrial) and those moving in and out of the construction industry entirely.
Figure 24 suggests changes to the size of the infrastructure workforce appears to be largely attributable to workers moving out in and out of the construction industry, rather than within construction sectors. Over 2021–22 to 2023–24, net gains of 56,700 infrastructure workers entering or leaving construction more broadly overshadowed the net losses of 5,300 workers to adjacent construction sectors. Three in every four of these movements were attributable to ‘all of construction’ activity, or workers moving in and out of construction, rather than between sectors within construction. As such, all-of-construction trends play a key role in shaping the infrastructure workforce.
Source: Nous Group commissioned by Infrastructure Australia (2024)
As shown in Figure 25, over half (56%) of respondents surveyed in Infrastructure Australia’s 2024 Labour Shortage Survey expect the labour market to worsen over the next 1–2 years, while 22% expect shortages to remain the same and another 22% expect an improvement. This supports our analysis that, while workforce shortages have peaked this year due to a flatter demand profile compared to previous years’ estimates, industry will continue to struggle to secure the workers as shortages will remain across all occupational groups.
Industry reports that labour shortages have contributed to delays in project timelines, increased workloads for existing employees, and increased costs this year. Fewer respondents, however, noted poor work quality or increased rework as an impact.
76% of surveyed respondents believe that demand growth outstripping supply is the top driver of workforce shortages. Aside from demand growth outstripping supply, industry does not have firm views about other causes for the shortage, with responses shared almost equally across wage, training and retention issues.
These findings reinforce the continued need for a two-pronged approach to alleviating workforce shortages – boosting supply as well as careful demand management.
Source: Infrastructure Australia Labour Shortage Survey (2024)
Industry reports that the top barriers to hiring the right candidates are poor skills and experience, and difficulty attracting candidates.
There may be a range of reasons candidates do not have the skills or experience companies are looking for. This includes existing workers needing to be upskilled, learners requiring more on the job training before graduation, or applicants not meeting prequalification requirements set by the government.
As shown in Figure 26, construction job vacancies have dropped from the peak in 2022, despite rising labour shortages from 2021. Within the context of low unemployment and a tight labour market, it may be that industry has given up attempting to recruit workers for what is seen to be less desirable work or locations considering chronic shortages.
Source: Nous Group commissioned by Infrastructure Australia (2024)
The mix of skilled labour needed on a construction project varies as it progresses from planning to delivery and commissioning. Careful workforce planning and scheduling is necessary to ensure a company hires and retains the workers needed at each right stage of the project life cycle to deliver on schedule. Improving visibility and certainty of the pipeline enables businesses to more efficiently plan labour resources and invest in building capacity.
Consult Australia’s 2024 survey of design, advisory and engineering businesses found that in the last 12 months, almost half (46%) of respondents have made resource cuts and more (57%) have redeployed staff to alternative projects due to changes to the government infrastructure pipeline.39
Infrastructure Australia’s 2024 Industry Confidence Survey found that businesses continue to report pipeline uncertainty as one of the biggest risks to project delivery. Notwithstanding the widespread construction workforce shortages at the national aggregate level, delays or uncertainty at the project level may disincentivise businesses from investing in longer-term workforce capacity building.
This section provides an overview on the current state of the construction industry. It includes an overview of industry trends, including productivity and insolvency trends, an update on progress made by the Construction Industry Culture Taskforce to improve workplace culture and diversity and a case study demonstrating how modern construction methods can improve infrastructure outcomes.
The Australian Government, in partnership with state and territory governments, should continue to progress national efforts to uplift construction industry productivity through:
As of June 2024, there were 452,820 businesses in operation in the Construction industry across Australia. This is far more than any other industry sector, outnumbering the next largest industry (Professional, Scientific and Technical Services) by over 100,000 businesses.
Over the previous 12 months, the number of construction businesses grew by 2.0%, with 8,900 new entrants. As shown in Figure 27, this is 0.8% below the all-industries average, behind comparable sectors such as Transport, Postal and Warehousing (8.5%), Professional, Scientific and Technical services (2.6%), and Electricity, Gas, Water and Waste Services (2.5%), but slightly above Mining (1.5%).
As of June 2023, almost all (98%) construction businesses are small in size, with less than 20 employees.40
By employment-share size:
Over half (55%) of construction businesses turn over less than $200,000 per year.
Source: Australian Bureau of Statistics (2024)41
Based on project contract data from Infrastructure Australia’s Market Capacity database, we analysed construction companies that have delivered infrastructure projects that are funded publicly or via public-private-partnerships over the last three years.
We have segmented the infrastructure construction market by capacity size, as follows:
Our analysis shows that the value of the infrastructure market has increased substantially in this time and, although lower-tier companies are being awarded more contracts of smaller work, tier-1 companies are undertaking more work of higher-value projects, with increased complexity.
In 2024, there are 25 tier-1 construction companies that meet the above definition. Collectively, as shown in Figure 28, the share of the public infrastructure construction market contracts held by tier-1 firms has grown from 49% to 59% since 2016.
Source: Infrastructure Australia analysis of GlobalData (2024)
The top five companies have taken most of the share gains, growing 9% compared to the remaining tier-1 companies, which only grew 1%. As shown in Figure 29, the total value of contracts held by the top 5 companies amounts to 69% among tier 1s.
Source: Infrastructure Australia analysis of GlobalData (2024)
While the value of the infrastructure market has increased substantially over time, and lower-tier companies are being awarded more contracts of smaller work, tier-1 companies are undertaking more work of higher value projects, with increased complexity. As shown in Figure 30, over the past 8 years, the average value of contracted works undertaken by tier-1 companies have nearly doubled to roughly $600 million in 2024.
Australia finds itself facing a situation where our largest and most important infrastructure projects are increasingly being allocated to large, offshore companies. Australia is therefore competing with other international infrastructure markets for their services. However, if one of these large foreign-owned contracting companies were to exit the Australian market, the impacts would include further concentration of the market, a loss of capability in terms of project delivery expertise and skills, and a loss of capability in terms of fiscal capacity.
The media has reported on the insolvency of several large construction companies this year, as the economy experiences an uptick of insolvencies across all industries during 2022–23.
This comes off the back of extraordinarily low insolvency rates in the preceding two years (2020–21 and 2021–22). This coincided with key financial relief responses from the Australian Government to the COVID-19 pandemic, including the JobKeeper Payment, the HomeBuilder Grant and the Australian Taxation Office debt recovery pause. These efforts had the effect of artificially suppressing insolvency rates during the pandemic years.
During those years, as shown in Figure 31, the construction-industry insolvency rate dropped to a low of 0.21% in 2021–22, less than half the average rate of the previous 7 years (0.48%).
Research indicates that for the construction industry, a substantial portion of corporate insolvencies tend to follow economic downturns.42 The current rate of construction insolvencies can also be linked to the unintended consequences of monetary policies and government stimulus designed to counteract the effects of the COVID-19 pandemic.43
Note: These figures are based on external administrators’ and receivers’ reports, and on counts of businesses operating at end of each financial year.
Source: Infrastructure Australia analysis of Australian Bureau of Statistics (2024) and Australian Securities and Investments Commission (2023)44
Construction industry insolvency rates have always been slightly higher than the all-industry average. On a cumulative basis, the insolvency rate for construction (0.35%) in 2022–23 is still lower than the pre-COVID-19 historical average and aligns with the broader market trend.
In relative numbers, more construction businesses face insolvency each year than those in any other industry. As shown in Figure 32, 3,000 construction business entered insolvency during 2023–24, representing 27% of all insolvencies.
Note: These figures represent companies entering external administration or having a controller appointed.
Source: Australian Securities and Investments Commission (2024)45
The Australian Securities and Investments Commission’s Insolvency Statistics show that construction businesses involved in residential construction carry a high risk of insolvency. As shown in Figure 33, residential building insolvencies accounted for 24% of total industry insolvencies in 2023–24, much higher than those in non-residential buildings (5%) and heavy and civil engineering (3%) that year.
The category of businesses delivering ‘construction services’ is the only group collectively exhibiting higher insolvency numbers than residential building businesses, representing 68% of total industry insolvencies in 2023–24.
An estimated 15% of construction services were for residential construction in 2022–23, which accounted for almost 40% of total intermediate inputs into residential building construction in that same year.46
Note: These figures are based on the notification of appointment lodged with ASIC when a company enters external administration or has a controller appointed. ASIC started collecting industry subdivision from 29 April 2021, and therefore this detail is not available prior to 2021.
Source: Australian Securities and Investments Commission (2024)47
These construction services businesses deliver a range of trade services that can be further broken down into: residential building construction, building completion, building installation, building structure, land development and site preparation, and other services. As shown in Figure 34, most insolvencies have been in the ‘other construction services’ category.
Continued insolvency of these construction services businesses, which has been increasing since 2022, would further exacerbate the number of insolvencies directly affecting residential building construction.
Note: These figures are based on notification of appointment lodged with ASIC when a company enters external administration or has a controller appointed.
Source: Australian Securities and Investments Commission (2024)48
As shown in Figure 35, micro construction businesses with less than 5 employees represent over two-thirds of insolvencies during 2022–23. Small businesses with less than 19 employees make up 82% of total construction insolvencies.
Governments tend to focus on the head contractors with whom they enter into contracts. These head constructors then typically rely on a network of subcontractors to deliver much of the work. Subcontractors don’t have a direct contractual relationship with the principals who fund the project and are vulnerable to risks passed onto them from higher up the chain.
The steep upward trend in the number of construction insolvencies over the last two years has added to the supply risk factors to successful infrastructure delivery. Insolvency in the construction sector can trigger a domino effect due to its reliance on a complex network of subcontractors and suppliers to deliver the work. For example, the flow-on effect of construction insolvencies in the supply chain can lead to subcontractors leaving behind projects due to chain bankruptcies.
This occurs when the profit of the main contractor is compromised, causing a ripple effect of financial uncertainty throughout the construction chain. A 2008 study conducted in Japan found that nearly 20% of bankruptcies are attributed to this link effect, which is more pronounced in larger bankruptcies, indicating the ripple effect grows with the size of the initial insolvency.49
Note: These figures are based on external administrators’ and receivers’ reports.
Source: Australian Securities and Investments Commission (2023)50
A better understanding of the impact of contracting arrangements on construction supply-chain resilience would allow the industry to better manage capacity and absorb market fluctuations caused by economic downturns, thereby minimising negative impacts throughout the supply chain.
Aside from a 2016 study of tier-one subcontractors, much of the research to date has focused on head contractors. The 2016 survey identified key factors central to subcontractor productivity,51 such as:
Further research to understand the network impact of subcontracting arrangements on construction supply-chain resilience would provide a useful lens on how to improve construction industry performance and productivity.
As shown in Figure 36, construction-industry gross-value-added multifactor productivity growth dropped to -0.8 in 2023, a decrease from 0.3 in 2022.52 This continues a 30-year trend of construction productivity consistently tracking flat and underperforming other comparable industries, such as transport and manufacturing, since the Australian Bureau of Statistics commenced its estimates in the late 1980s.
Construction was one of the eight sectors that showed productivity decline over the preceding year. This is an opposite trend to 2022 when only three sectors presented a negative multifactor productivity growth.
The calculation of Australian Bureau of Statistics multifactor productivity is complex and decreases in growth can be attributed to several factors. Most recently, decreases in construction multifactor productivity and construction labour productivity resulted from growth in hours worked and capital services outpacing growth in construction output. Despite showing signs of recovery, the construction industry is still challenged by lingering effects of the economic downturn following the COVID-19 pandemic, including increases in the number of insolvencies, labour and skills shortages, material supply constraints, and high construction costs.
Note: Selected industries include: agriculture, forestry and fishing; mining; manufacturing; electricity, gas, water and waste services; construction; wholesale trade; retail trade; accommodation and food services; transport, postal and warehousing; information, media and telecommunications; financial and insurance services; arts and recreation services.
Source: Australian Bureau of Statistics (2023)53
In 2022–23, the construction industry grew across a range of other key economic and financial performance metrics:
2023–24 estimates of quarterly gross output increased by 0.5%, bolstered by a 0.5% rise in Construction Services (driven by trades for housing construction) and a 0.9% rise in Heavy and Civil Engineering (driven by public investment), offset by a 0.2% fall in Building Construction, driven by non-residential construction.55
Notwithstanding declines in both dwelling commencements and approvals caused by higher borrowing and construction costs, the volume of dwellings under construction in 2022–23 contributed to an increase in the value of construction work done for the period.56
At an industry level, construction productivity will be driven by sustainable construction output growth supported by growth in labour and capital productivity. Understanding the breakdown of outputs and inputs to the lowest level can help mapping of project-level effectiveness measures of cost, schedule, safety and asset performances. These linkages will provide necessary evidence to support measuring, monitoring and reporting of construction productivity on a project and portfolio level basis.
Gross-value-added multifactor productivity growth is broadly defined as a ratio of a measure of output to a combined input of labour and capital. To get a more complete picture of total inputs that go into construction, we examined the Australian Bureau of Statistics alternative gross-output-based multifactor productivity measure, which captures intermediate inputs – materials, energy and services – in addition to labour and capital. The gross-output-based multifactor productivity trend over time exhibits similar movement with the gross-value-added-based approach.
When broken down into intermediate inputs, as shown in Figure 37, services comprised a majority share of total input costs and has been slowly growing, from 40% in 1995–96 to 47% in 2021–22. In comparison, materials accounted for 23%, labour 20% and capital 9% of total input costs in 2021–22. In relative dollar terms, the cost of services grew by $14.5 billion in 2021–22.
Source: Australian Bureau of Statistics (2023)57
The intermediate services input category covers any outsourced services by a construction company that is used up in the process of production within one year.
The high reliance on outsourced services reflects a structural characteristic of the construction industry, where work is delivered by larger businesses subcontracting further down the chain to smaller or specialist businesses.
Infrastructure Australia surveyed 200 businesses this year on their perceptions and claimed practices for improving productivity. The findings provide an indication of current practices and a basis for future work to develop evidence-based productivity metrics and activity drivers that could improve productivity at the project or program level.
Despite poor productivity rates at the industry level, results from our 2024 Industry Confidence Survey shows that individual companies are reportedly content with their current productivity. Of companies surveyed that operate in the construction phase of the infrastructure life cycle, almost half (49%) believe that productivity is ‘good’ (with a rating of at least 8 out of 10), and a further 9% say productivity is ‘extremely good’ (with a rating of 10 out of 10). This is comparable to the average of companies across the infrastructure life-cycle, with 46% noting productivity is good and 8% extremely good.
Construction companies appear to be unclear about which direction productivity has shifted over the previous two years, with 40% rating it as ‘about the same’ and the rest split between higher (28%) or lower (31%). Similarly, across all infrastructure, 44% rate productivity as about the same, with the remainder split between 28% higher and 25% lower. Only a small percentage of respondents (2%) were unsure, answering ‘can’t say’ to how their productivity compares to two years ago.
When asked to rate a range of factors impacting productivity on their business, surveyed businesses ranked upskilling as the most effective lever to increase productivity (as shown in Figure 38). With workforce consistently rising to the top of issues impacting both capacity and productivity, construction businesses should prioritise investment in workforce attraction, retention and upskilling first.
A range of perceived barriers to workforce upskilling however were noted during interviews:
(Company)
After workforce upskilling, construction-focused companies ranked the following productivity factors:
Source: Infrastructure Australia Industry Confidence Survey (2024)
As shown in Figure 39, when it came to measuring how these industry members measured the productivity of their operations, they use a wide range of work-level and project-level metrics. For instance, members said they measured their productivity by work unit cost; work unit output per worker; absenteeism; total project cost verses total material costs and the earned value of a project against the planned costs for work done.
The wide range of metrics used by the industry to measure productivity shows there is no universal way in which productivity is measured and reiterates the need for work to be undertaken to develop a set of productivity metrics and indicators to better measure infrastructure productivity, as was recommended by Infrastructure Australia in the 2023 Infrastructure Market Capacity Report.
Less than 10% of respondents measure labour metrics at the company level (turnover and absenteeism rates), which is somewhat surprising given workforce shortages are a top market constraint.
Another surprising result is that very few companies (8%) measure rework done. Given the tight profit margins for construction businesses, rework done could have a significant impact on the final bottom line, particularly for smaller businesses who are more likely to be undercapitalised and thus less resilient to unexpected setbacks. It has been estimated that rework can reduce companies’ yearly profit by up to 28%.58
Source: Infrastructure Australia Industry Confidence Survey (2024)
Beyond looking at immediate project costs, industry should take a strategic and longer-term approach to tracking productivity, particularly workforce indicators and other considerations that have the potential to seriously undermine their business sustainably, such as rework done.
Further, given outsourced services account for almost half of construction company costs, companies should also look to capture productivity metrics of their outsourced labour contingent.
Figure 40 below shows that industry surveyed by Infrastructure Australia this year regards risk allocation in contracts, timelines for delivery and delays in obtaining planning and environmental approvals as the highest risks to project delivery.
Source: Infrastructure Australia Industry Confidence Survey (2024)
From interviews, business outlined key issues seen to be adding to overall costs:
In light of continued escalation of costs, industry appears to be using cost variations as a pre-emptive tool to mitigate the impact of continued and ongoing cost escalations. 51% of businesses surveyed by Infrastructure Australia have sought a contract variation in the last 12 months. Businesses reported factoring in cost variations of at least 10% into budgets, or omitting the costs from quotes to win projects with the intention of a cost variation future down the track.
Parties need to continue working together to find the best balance of risk to minimise unnecessary costs and deliver the best value for money.
Efforts to improve construction workplace culture and increase diversity will have positive flow on effects for attracting and retaining employees in the industry. Aside from wages, employment conditions, workplace culture, working hours and career development opportunities are factors influencing whether people choose to enter or leave construction.
Currently, the industry does not track well on these metrics with the Construction Industry Culture Taskforce finding that:
Further, 63% of construction workers surveyed by the NSW Building Commission are considering leaving and cited the difficulty in achieving work/life balance as the main reason.
The Construction Industry Culture Taskforce is tackling the three critical challenges of construction industry culture, which cost the Australian economy roughly $8 billion a year, and deter workers from joining and remaining in the industry at this crucial time of low productivity growth and acute skills shortages. These challenges are:
The Taskforce has developed a Culture Standard: a framework for clients and contractors to co-create work cultures that prioritises time for life, diversity and inclusion, and wellbeing. This is to be used in procurement activities, whereupon clients commit to buying services from compliant constructors. For example, the Culture Standard requires constructors to comply with project programming requirements that ensure time for life for workers, including:
Creating a solid evidence base for the Culture Standard has been critical, so a multi-institutional research team, led by RMIT University, has captured and analysed interview and survey responses of construction workers engaged in one of five pilot projects. So far, findings indicate that:
The Culture Standard was adopted by the Brunt Road Level Crossing Removal project, which composed a five-day work week from a 10-hour Monday-Friday schedule, and a 6-hour Saturday schedule on a Rostered Day Off week. The project achieved each of its time and budget milestones, including a 21-day reduction in total workdays per year, while intentionally focusing on workforce mental health and gender diversity. Senior project stakeholders have celebrated and attested to the ability of the Culture Standard to:
The Culture Standard will be finalised and released in early 2025, along with the final research report including an economic analysis.
The Construction Industry Culture Taskforce is a jointly funded initiative of the Australian Constructors Association and the Governments of New South Wales and Victoria that is supported by a multi-institutional research team led by RMIT University. Other jurisdictions have requested and joined the Taskforce since its inception, specifically the Australian Capital Territory, South Australia, Queensland and Western Australia.
Photo source: supplied by Fulton Hogan.
Photo source: supplied by Fulton Hogan.
There has been much written about the productivity uplifting potential of new technologies and modern methods of construction. However, uptake rates remain low.
Interviewed respondents this year accepted that low uptake of technology hinders Australia’s ability as a market, and specifically as a sector, to stay competitive, and that investment in technology currently sits lower on the list priorities.
Results from the Infrastructure Australia’s 2024 Industry Confidence Survey shows that industry regards digital and innovation (automation, data digitalisation and materials innovation) as having less impact compared to a range of other categories.
Views did vary slightly depending on the phase of the infrastructure life-cycle a business focused on, with companies placing more value on the factors that are closer to their core business:
Laing O’Rourke has developed an award-winning bridge delivery system that demonstrates how modern construction methods can measurably improve infrastructure outcomes.
The use of the modular bridge system adopts ‘product-led design’ where the bridge design takes account of the characteristics of the products, rather than attempting to retrospectively fit a set of precast products to an outline design.
At its highest level, as shown in Figure 41, the system comprises a digital bridge configurator and an engineered kit of parts – a range of standard precast products – that can be formed to create modular single-span integral bridges with precast prestressed concrete beams and associated wingwalls.
Source: Laing O’Rourke (2024)61
The kit of parts is also readily applicable to steel beam solutions, bridges with bearings, multi-span bridges, standalone elements in larger schemes such as piers, retaining walls and box-structure sections.
The system was co-created with industry and academic partners and has been used to deliver solutions for major clients. These include High Speed 2 – the UK’s high-speed rail delivery partner – which has noted considerable improvements in programme, productivity and sustainability measures.
The construction and assembly of the 35-metre span High Speed 2 trace bridges delivered a programme saving of 18 weeks. This 50% reduction on the original programme (37 weeks using traditional construction methods, versus 19 weeks using the kit of parts) was primarily due to the rapid construction of the abutments and wingwalls.
The construction of the modular abutments and wingwalls of the High Speed 2 trace overbridges (each measuring 400 square metres on elevation, approximately) was completed in three weeks by a six-person on-site team. This represents an 84% reduction in on-site labour compared to traditional construction using in-situ reinforced concrete, which was estimated to be completed in 11 weeks (minimum) by a 10-person on-site team.
A detailed carbon study of the modular bridge system concluded that the modular approach reduced embodied carbon by 8% in the abutments, compared to an equivalent, traditionally designed in-situ reinforced concrete abutment.
The bridge delivery system offers other potential benefits. For example:
Source: Laing O’ Rourke (2024)62
15 July 2024
This report offers the following six recommendations aimed at supporting the development of Australian Government decarbonisation policies for infrastructure and the built environment.
Report finding | Opportunities | Recommendations |
|---|---|---|
| The decarbonisation of the built environment suffers from industry silos and a lack of collective ambition. While governments and industry are working hard to manage their emissions, efforts often focus on individual assets, overlooking interconnected networks and systems. Moreover, project-level decarbonisation initiatives often commence late in the planning stages, risking the discretionary nature of carbon reduction goals and potential compromises through value engineering. | To decarbonise the built environment at scale, it is essential to take a comprehensive approach and work together across the value chain. This means seeing assets as part of a larger interconnected system, breaking down barriers across sectors, markets and jurisdictions and developing a unified strategy. By applying decarbonisation principles early on and considering the entire lifespan of buildings and infrastructure, it is possible to maximise opportunities to reduce embodied carbon and minimise trade-offs. | The Australian Government, working with state and territory governments, should develop a comprehensive national plan to actively promote the decarbonisation of emissions embodied in Australia’s built environment, in particular by:
|
| Limited understanding of decarbonisation and climate related issues across industry along with a lack of confidence in using lower carbon materials are obstacles to moving towards low carbon solutions. While individual projects may see success, there is a lack of collective data to support widespread adoption of innovative approaches. The Austroads Environment and Sustainability Taskforce, along with the Australian Government, state and territory governments, and New Zealand, are actively working together to fill knowledge gaps and promote new methods for reducing carbon in road-related infrastructure. At the same time, the Australian Government’s investment in the Infrastructure Net Zero Initiative aims to unite industry and government stakeholders to drive ongoing policy changes and innovation in cutting carbon emissions from infrastructure. | Decarbonisation at scale requires education and training for professionals, trades and consumers. Training should focus on addressing carbon literacy, specification of low-carbon products, and construction techniques with low-carbon materials. Sharing proven methods and project learnings can support broader knowledge uplift across industry. | The Australian Government, with state and territory governments should build carbon confidence and literacy for professionals, trades and consumers by:
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Historically, Australia has lacked a nationally consistent way of measuring embodied carbon in the built environment. Different methods are used to calculate and claim carbon reductions and there is no single, trusted dataset for all construction material emissions factors. Without this, it is hard to access and compare the emissions of different products. Across Australia there is no uniform mandates to measure and report embodied carbon. Work is currently underway to develop standardised approaches. The National Australian Built Environment Rating System is developing an Embodied Carbon rating tool to enable new buildings and major refurbishments to measure, verify and compare their upfront embodied carbon. On 7 June 2024, Australian Infrastructure and Transport Ministers also approved the Embodied Carbon Measurement for Infrastructure: Technical Guidance, which provides a nationally consistent approach to measuring embodied emissions in infrastructure projects. However, further work is needed to implement consistent measurement, reporting, data collection and data assessment across Australia. | Decarbonisation should be based on a nationally accepted way of measuring embodied carbon, which is supported by a national database of emissions factors for construction materials to ensure consistency in measurement. Policy support for measuring and disclosing upfront carbon can help industry understand the true impact of new construction and stimulate the market for low carbon solutions. | The Australian Government, with state and territory governments, should continue developing a nationally standardised embodied carbon measurement system, which allows for consistent methods to collect, measure, and assess data about embodied carbon. This could involve:
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A lack of consistent and continuous demand for low carbon products creates difficulties for the development of low carbon solutions that are commercially viable. Companies seeking to develop lower carbon products face cost premiums, and some domestic manufacturers have expressed concerns with carbon leakage from high-carbon, low-cost imports. The lack of valuation for carbon impacts in many projects results in cost-driven decision-making during procurement, often favouring low-cost options over initially specified low-carbon alternatives. In December 2023, the Infrastructure and Transport Ministers’ Meeting approved a nationally consistent set of carbon values for use in transport infrastructure projects. As of March 2024, Infrastructure Australia requires the use of these values in infrastructure proposal submissions. The Infrastructure Decarbonisation Working Group, led by the NSW Government and the Australian Government, is also developing policies to reduce embodied emissions in transport infrastructure. This includes the creation of a ‘carbon in procurement and contracts’ guideline to support the implementation of measures promoting transport decarbonisation. | A nationally agreed approach for stimulating demand for low carbon solutions would help to demonstrate consistency and reliability for the supply chain. Funding support for the development of low carbon materials will also help to speed up their adoption into Australia’s built environment. | The Australian Government, working with state and territory governments, should agree a common national approach to drive market demand for low carbon solutions. This could involve:
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The unwillingness of the industry to embrace new project delivery approaches due to fear of risk exposure is impeding progress in decarbonisation The incremental effort involved in identifying risks associated with new delivery approaches and then allocating risk to the party best placed to manage is substantial, leading project teams to opt for traditional solutions and conservative procurement practices. | Asset owners and contractors need to share risks and rewards to encourage the adoption of lower-carbon solutions on projects. This could involve prioritising decarbonisation as a metric for project success, offering shared reward incentives through contracts, and developing new models for project delivery. Government funded projects that support trials and pilots of new solutions would provide data and insights to support investment decisions and increase industry confidence. | The Australian Government, working with state and territory governments, should develop new methods for project delivery which share risks and rewards for innovative approaches. This could involve:
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| Supplier investment in low-carbon solutions is hampered by overly prescriptive product specifications on projects, which specify that materials must meet a certain prescriptive characteristic rather than performance outcomes. This inhibits the entry of new materials and solutions. Slow updates to industry standards and project specifications also mean that the pace of development will outstrip a standard or specification’s ability to keep up with the latest options available. | Governments and private entities should transition to performance-based specifications on projects, which focus on desired outcomes rather than specific product characteristics. This would allow for innovative approaches that deviate from traditional specifications and support the uptake of lower carbon solutions on projects. Faster, more agile processes should be introduced to ensure that standards and specifications can be updated in a timely way. | The Australian Government, with state and territory governments, should work with industry to drive national alignment on low-carbon expectations through performance-based standards and specifications. This could involve:
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It is with pleasure that I present this Embodied Carbon Projections for Australian Infrastructure and Buildings report, which, for the first time, uses our Market Capacity Program data to measure the embodied carbon intensity of forward-looking infrastructure and buildings pipelines across a five year period.
This report identifies that, in the near term, the biggest immediate opportunity for lowering embodied carbon emissions lies in upfront emissions from the manufacture and supply of materials. These easy-to-abate emissions represent almost 2% of the yearly national total, and are addressable via low-cost and practical decarbonisation strategies explored in this report.
In the long-term however, the decarbonisation of Australia relies on us cultivating the optimum conditions for success, today. This means developing an informed market that values carbon in policy, and consistently measures and reports embodied emissions.
To this effect, we have included six recommendations for governments to consider in the development of sectoral decarbonisation plans that will inform the Australian Government’s Net Zero 2050 plan and 2035 carbon reduction targets.
I would like to extend my thanks to the project team whose efforts culminated in this insightful research, and also express gratitude to all those involved across the jurisdictions and industry for their invaluable contribution which have enriched the depth and breadth of our findings.
Gabrielle Trainor AO
Interim Chief Commissioner
This Embodied Carbon Projections for Australian Infrastructure and Buildings report establishes a baseline for upfront embodied carbon in Australia’s built environment. It does this by estimating the carbon impact of the forward-looking construction pipeline for building and infrastructure from 2022–23 to 2026–27.
It finds that the built environment is directly responsible for nearly one third of Australia’s total emissions and contributes to over half of all emissions. Over the next five years, construction activity from the pipeline will be responsible for producing between 37 to 64 Mt CO2e per year. Almost a quarter of upfront emissions from construction activity over the next five years (or 2% of Australia’s total emissions in 2022–23 can be abated at no additional cost by employing practical decarbonisation strategies, such as material substitution. Targeted engagement with industry and government stakeholders indicated that this will require an informed market which values carbon in policy and consistently measures and reports embodied emissions.
The carbon impact of the forward looking construction pipeline is based on Infrastructure Australia’s National Infrastructure Project Database, which aggregates project level data for buildings, transport, and utilities projects valued over $100 million in New South Wales, Victoria, Queensland and Western Australia, and over $50 million in South Australia, the Australian Capital Territory, the Northern Territory and Tasmania, in addition to private building projects with a capital value of over $25 million. To account for the effect of project unknowns on construction material quantities and address gaps in smaller residential projects, an additional forecast of embodied carbon emissions was also conducted which aligns material demand quantities with estimates of national supply levels (See Section 5: Accounting for Uncertainty: Hybrid Analysis)
The report highlights key areas of opportunity for governments to consider in the development of sectoral decarbonisation plans that will inform the Australian Government’s Net Zero 2050 plan and 2035 carbon reduction targets.
We note the following efforts of governments to lower embodied carbon in infrastructure and buildings:
This report offers a combination of quantitative and qualitative analysis to assist governments in understanding the potential for decarbonising infrastructure and buildings, as well as the increased usage of low embodied carbon materials in construction. These are key focus areas identified in the Australian Government’s most recent Infrastructure Policy Statement (November 2023).1
By presenting data and insights, it seeks to inform the development of policies aimed at reducing embodied carbon in the built environment. It also aims to initiate discussions on potential policy levers that align with this goal, such as the ongoing development of sector-specific plans by the Australian Government for the decarbonisation of buildings and transport infrastructure.
It responds to three pieces of legislation:
The Infrastructure Australia Act 2008 which requires Infrastructure Australia to consider the impact of infrastructure proposals on Australia’s net greenhouse gas emissions, the achievement of Australia’s GHG emissions reduction targets and any policy issues arising from climate change that Infrastructure Australia considers relevant to the proposal.
This report leverages Infrastructure Australia data to analyse the embodied carbon emissions of Australia’s infrastructure and buildings pipeline. This includes estimating the embodied carbon that will be produced in the next five years if no action is taken, evaluating the potential emissions and costs associated with using low-carbon building materials and construction methods, and identifying barriers and government interventions that could increase the adoption of these solutions.
Section 2: Baseline Measures of Embodied Carbon presents baseline measures of carbon emissions produced by Australia’s infrastructure (listed below and depicted in Figure 1):
Also in Section 2: Baseline Measures of Embodied Carbon are the carbon and cost impacts of using like-for-like material substitutions in government infrastructure projects for two decarbonisation scenarios.
Embodied carbon projections in this report are based on the quantities of construction materials demanded by the forward-looking infrastructure pipelines of the Australian Government, and state and territory governments. These quantities have been determined using the analytical tools of Infrastructure Australia’s Market Capacity Program - an assumptions-based methodology that identifies market capacity risks by analysing infrastructure project data provided by governments, which, combined with private investment data provided by GlobalData, reflects around 75% of market demand in the forward estimates period.
This report offers high-level recommendations for the Australian Government to work towards the reduction of embodied carbon from infrastructure and buildings in support of Net Zero 2050. These recommendations aim to initiate investigations and identification of policy levers that are best placed to achieve this objective, and were developed following extensive consultations with government stakeholders, industry members, and technical experts - see Appendix for a summary of our stakeholder consultation insights.
A summary of opportunities and recommendations is included in the Executive Summary of this report.
Throughout Australia, governments are taking steps to design and implement policies targeting the reduction to embodied carbon in the built environment.
The Australian Government is actively working to create consistent frameworks for decarbonising infrastructure and buildings. Three key workstreams were established under the auspices of the Infrastructure and Transport Ministers’ Meeting:2
The National Australian Built Environment Rating System is working on a national framework to measure, benchmark, and certify emissions from construction and building materials. This framework aims to help building owners establish measurable targets for reducing embodied carbon in buildings.
The Environmentally Sustainable Procurement Policy aims to improve the environmental sustainability of government procurements. The reduction in embodied carbon in construction projects is a key metric of the policy. As of July 2024, procurement of construction services over $7.5 million requires suppliers to measure and report on embodied carbon reduction.
NSW Government, through Infrastructure NSW, has published a Decarbonising Infrastructure Delivery Policy which sets expectations for NSW Government infrastructure delivery agencies on managing carbon in public infrastructure projects. This is supported by Measurement Guidance. In partnership with the Environment Protection Authority, Infrastructure NSW is also developing a monitoring framework to require infrastructure projects to report embodied carbon and maximise the use of recycled materials
Infrastructure Victoria has released advice on opportunities for the Victorian Government to reduce emissions of future public infrastructure investments. This advice focuses on policy and guidance to address emissions at all stages of development.
This research is underpinned by Infrastructure Australia’s Market Capacity Program, a data-driven research initiative designed to help stakeholders understand the national infrastructure pipeline. By continuously monitoring market conditions and capacity to deliver infrastructure, the Market Capacity Program provides insights to inform government policies and management of infrastructure pipelines. The Market Capacity Program was set up in response to a request by Ministers at the Council of Australian Governments meeting of 13 March 2020.
The Market Capacity Program is underpinned by a National Infrastructure Project Database, a central database that brings together and organises project data. State and territory governments contribute to the database by providing regular, comprehensive, up-to-date information. A Market Capacity Intelligence System complements the database. This is an extensive set of analytical tools to examine and visualise capacity across different sectors, project types and resources. Together, this suite of tools, data and reports provide up-to-date evidence to better understand Australia’s infrastructure pipeline and the market’s capacity to deliver in the coming years.
Given that Market Capacity Program analysis cannot account for future changes in cost, schedule, or scope, Section 5: Accounting for Uncertainty: Hybrid Analysis offers an alternate forecast of embodied carbon emissions, which considers the effect of project unknowns on construction material quantities - for example, resource shortages and typical project slippage. In addition, these alternative projections address gaps in smaller residential projects, expand material categories, and align calculated material demand quantities with estimates of national supply levels.
Embodied carbon from construction activity in 2023 contributed 10% of Australia’s total carbon emissions, with upfront carbon contributing 7%.
A steady reduction of upfront carbon is achievable by applying like for like decarbonisation strategies, with potential for 23% reduction on the baseline by 2027. This roughly equates to a reduction of 9 Mt CO₂e, or 2% of Australia’s national greenhouse gas (GHG) emissions in 2023.
The reduction of upfront carbon in the manufacturing of construction materials and the construction process provides a short-term opportunity for policymakers to consider in working towards Net Zero 2050.
To support decarbonisation policy design and implementation, this section provides baseline measures of embodied carbon in infrastructure, and estimated emissions and costs from the use of like for like material substitutions in government infrastructure.
Australian infrastructure and buildings were projected to contribute 57% of national carbon emissions in 2023. Of this, embodied carbon from construction activity in the built environment represents 10% of national emissions, as shown in Table 4.
Embodied carbon represents the sum of the GHG emissions associated with materials and construction processes throughout the whole lifecycle of an infrastructure or building asset, including material extraction, transportation, manufacturing, construction, use, replacement, demolition and end of life. These emissions are ‘locked in’ by the decisions made during the planning, design, procurement, delivery and maintenance of new construction projects.
As Australia strives towards net zero, it is crucial to address embodied carbon, which reflect the climate consequences of today’s construction decisions, and embed emissions for the lifetime of the asset.
| Emission | Definition | 2023 emissions (kt CO2e) | Share of national emissions |
|---|---|---|---|
| Embodied | Emissions associated with materials and construction processes used over an asset’s life. | 54,400 | 10% |
| Operational | Emissions from asset use: mainly electricity and on-site combustion of diesel and natural gas. | 112,000 | 21% |
| Enabled | Emissions made possible by an asset’s existence, such as diesel emissions made possible by the presence of highways. | 137,000 | 26% |
While operational and enabled emissions represent a larger proportion of the total compared to embodied carbon, there are already many initiatives targeting them, and they can be reduced by decarbonising the electricity grid or using green hydrogen.
Embodied carbon is much harder to abate. While some embodied carbon will reduce as the grid decarbonises, others will not. This is because the carbon footprint of many building products (such as steel, cement, bitumen, glass, plasterboard, bricks and aggregates) comes from process heat and chemical emissions rather than from electricity.
As the grid decarbonises and progress is made on reducing the operational energy use of Australia’s buildings and infrastructure, embodied emissions are expected to account for a greater share of an asset’s carbon footprint over its lifecycle.
There is an opportunity for governments to increase their range of embodied carbon reduction policies as part of efforts to decarbonise the built environment, which have to date focused extensively on addressing operational emissions.
Embodied carbon can be divided into the different stages of an asset’s life at which they occur.
These include:
The analysis in this report focuses on upfront embodied carbon, defined here as the greenhouse gas emissions and removals associated with the creation of an asset, network or system up to practical completion.3
Figure 2 illustrates the activities underlying the infrastructure and buildings lifecycle modules as defined by international and European standards for lifecycle assessment of buildings and infrastructure assets.4,5,6,7,8
Activities factored into upfront carbon calculations include:
Based on data from Infrastructure Australia’s Market Capacity Program (2023), Australia’s construction pipeline is projected to produce between 37 Mt CO₂e and 64 Mt CO₂e of upfront carbon each year, between 2022–23 and 2026–27. Of this, buildings represent the largest share of the total upfront carbon, accounting for approximately half of total forecast emissions in most years. This is followed by utilities, which have the greatest variability, accounting for 14% of forecast upfront emissions in 2022–23 and 41% in 2026–27. Finally transport infrastructure accounts for approximately one-fifth to one-quarter of upfront emissions in most years. In 2023, upfront carbon from building activity is estimated to produce approximately 7% of Australia’s national emissions (see Table 5).
| Embodied carbon emissions | Definition | 2023 emissions (kt CO2e) | Share of national emissions |
|---|---|---|---|
| Upfront | Emissions from the creation of an asset, network, or system, up to the point of practical completion. | 35,200 | 6.6% |
| Use phase | Emissions from maintaining and/or refurbishing an asset. | 17,800 | 3.4% |
| End-of-life | Emissions from asset demolition and/or deconstruction. | 1,490 | 0.3% |
Of the activities responsible for upfront carbon emissions, the manufacturing of construction materials (modules A1—A3 in Figure 2) account for most upfront carbon. These activities are described in Table 6.
| Upfront carbon emissions | Description | 2023 emissions (kt CO2e) | Share of upfront carbon emissions from infrastructure and buildings |
|---|---|---|---|
| Materials manufacture (A1-A3) | Emissions from the manufacture of construction products, from extracting, harvesting, or recovering raw materials, through to the manufacturer’s outbound factory gate. | 27,500 | 75% |
| Transport to site (A4) | Transport of building products to site. | 1,680 | 5% |
| Construction (A5) | Emissions from asset construction including land use change/clearing, waste, and energy (including commissioning). | 7,400 | 20% |
Materials manufacturing (modules A1—A3 in Figure 2) represents the highest proportion of upfront carbon emissions across all sectors. This can be seen in Figure 3, which shows a breakdown of emissions by lifecycle module for 2023–24.
The dominance of materials manufacturing in upfront carbon is most pronounced in the buildings sector in terms of volume (21 Mt CO₂e) and in the utilities sector in terms of share (89%). Construction is the second most significant lifecycle stage, accounting for 9% to 28% of total emissions. The key contributors to construction emissions vary between asset types. Some are due to construction or commissioning energy, while others are the result of land use change. Transport of building products to site is the least significant lifecycle module relatively, accounting for only 2–5% of total emissions.
Carbon emissions shown in Figure 4 reflect the five-year infrastructure ambitions of each state and territory. The largest share of emissions is forecast to come from New South Wales, followed by Victoria, Queensland, Western Australia, South Australia, Tasmania, the Australian Capital Territory and the Northern Territory. While these emissions broadly follow differences in population, there are major differences in how they are made up. South Australia, Queensland and New South Wales plan to invest heavily in utilities, particularly utility solar. Tasmania, Western Australia and Victoria plan to invest in transport infrastructure. The Australian Capital Territory and the Northern Territory are focused on buildings.
This research also investigated the carbon and cost impact of using like-for-like, decarbonisation strategies in forthcoming public infrastructure projects found in Infrastructure Australia’s Market Capacity Program database.
The adoption rates for decarbonisation strategies were calculated under two scenarios, reflecting a mid-level and maximum rate of adoption The Maximum Decarbonisation Scenario represents the highest level of ambition that industry stakeholders felt were achievable by 2026–27, assuming that cost was not a barrier. The Mid-level Decarbonisation Scenario uses lower uptake rates and reduces the use of decarbonisation strategies that are particularly expensive.
Table 7 presents a summary of the different uptake rates per scenario. Section 4: Cost and Carbon Abatement Potential examines cost and carbon abatement potential of each strategy.
| Decarbonisation strategy | Baseline* | Mid-Level Decarbonisation by 2026–27* | Maximum Decarbonisation by 2026–27* |
|---|---|---|---|
| Supplementary cementitious materials replace cement | 0–35% | 40% | 50% |
Reclaimed asphalt pavement replaces asphalt in:
| 0–10% | 0–25% |
|
Recycled crushed concrete replaces aggregates in:
| 0–5% 0% | 5–20% | 10–30% |
| Structural steel lightweighting | 0% | 50% | 100% |
| Reinforcing steel lightweighting | 0% | 50% | 100% |
| Fibre reinforcing replaces mesh/bar | 30% | 60% | 100% |
| Steel made in electric arc furnace with 100% renewable electricity | Grid average | 50% | 100% |
| Hydrated lime replaced in asphalt | 0% | 100% | 100% |
| Aluminium made with 100% renewable electricity | Grid average | 25% | 50% |
| Biodiesel in construction | 5% | 10% | 20% |
| Renewable electricity in construction | Grid average | 30% | 100% |
* A range indicates that uptake rates vary by state and typecast.
Our analysis concludes that under the Maximum Decarbonisation Scenario, the upfront carbon emissions from public infrastructure could be 23% lower in 2026–27 with the use of like-for-like decarbonisation strategies considered in this report – see Table 8.
2022–23 | 2023–24 | 2024–25 | 2025–26 | 2026–27 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
kt CO₂e | Change | kt CO₂e | Change | kt CO₂e | Change | kt CO₂e | Change | kt CO₂e | Change | |
| Buildings | 21,000 | 0% | 27,000 | -5% | 30,000 | -9% | 21,000 | -19% | 9,900 | -31% |
| Transport | 9,800 | 0% | 11,000 | -4% | 10,000 | -7% | 8,300 | -16% | 6,900 | -25% |
| Utilities | 5,300 | 0% | 13,000 | -2% | 19,000 | -4% | 15,000 | -8% | 14,000 | -16% |
| Total | 37,000 | 0% | 52,000 | -4% | 59,000 | -7% | 45,000 | -15% | 30,000 | -23% |
A 23% reduction in upfront carbon emissions from public infrastructure is equivalent to a reduction of 9 Mt CO₂e, roughly 2% of Australia’s gross national greenhouse gas emissions of 529 Mt CO₂e in FY 2023.9
This scenario would lead to a cost saving of $160 million (see Table 9), which is equal to 0.14% of the total value in Infrastructure Australia’s Market Capacity Program pipeline.
| Scenario | Carbon abatement | Cost |
|---|---|---|
| Baseline | No change | No change |
| Mid-level decarbonisation | 13% reduction | 0.24% cost saving |
| Maximum decarbonisation | 23% reduction | 0.14% cost saving |
A breakdown of the costs of the Maximum Decarbonisation Scenario is shown in Table 10. Replacing materials with lower-carbon alternatives results in an overall saving in material spend as cost-saving strategies more than compensate for those with a cost uplift. Increases in construction and commissioning costs are due to the use of biodiesel and renewable electricity. The increase in labour cost is due to an estimated increase in structural engineering fees to optimise structural steel (i.e., to reduce the amount of structural steel needed to achieve the desired level of performance).
| Cost | Original cost ($million) | Additional cost ($million) | Change |
|---|---|---|---|
| Materials | $36,000 | $-690 | -1.9% |
| Construction | $8,300 | $240 | 2.9% |
| Commissioning | $680 | $85 | 13% |
| Labour | $45,000 | $200 | 0.44% |
| Unaffected | $26,000 | $0 | 0% |
| Total costs | $116,000 |
| 0.14% |
Under the Mid-level Decarbonisation Scenario, a 13% reduction in upfront carbon emissions is achievable with a larger cost saving of $280 million – or 0.24% of the total project value in Infrastructure Australia’s Market Capacity Program pipeline.
These scenarios show the significant potential for replacement materials in lowering embodied carbon emissions in infrastructure. However, it is worth noting that emission projections may not be realised exactly as presented as they are subject to government ambitions, market conditions, and emissions that occur beyond Australia’s territorial boundaries, which that may or may not change over time.
While a 23% saving in upfront carbon would be a significant contribution to Australia’s decarbonisation agenda, eliminating the other three quarters of upfront carbon emissions from the construction pipeline will need a different approach. It will need building products to be decarbonised from the supply side, and changes in how Australia plans, designs and procures assets so that embodied carbon is considered early. The only way to effectively reduce embodied carbon at scale is to start early and coordinate through the value chain.
A conscious and concerted national effort is going to be crucial in meeting Australia’s net zero commitments. Successful decarbonisation of the built environment will require coordinating across the whole infrastructure planning, delivery and operation system, and a step change in how infrastructure and building assets are planned, built, operated, maintained and reviewed. This also involves overcoming a series of obstacles to change.
Taking insights from our consultation with industry and government stakeholders, this section explores obstacles to reducing embodied carbon in the built environment and provides recommendations for the Australian Government as it designs and implements targeted decarbonisation policies.
The Australian Government, working with state and territory governments, should develop a comprehensive national plan to actively promote the decarbonisation of emissions embodied in Australia’s built environment, in particular by:
Using lifecycle thinking to manage environmental and social impacts, minimise carbon footprints and avoid trade-offs
The individual carbon-reduction efforts of governments are a welcome first step on the path to national decarbonisation.
While many individual initiatives are underway, there is no overarching plan for targeting embodied carbon in the built environment. This limits the scope for collaboration across the built environment and linking new construction with Australia’s ambition for a net zero transition.
At the individual asset level, decarbonising a building or infrastructure asset is often considered without studying the implications for carbon on the wider system that the asset belongs to. Disconnected operations or any form of tunnel vision in decision making is a barrier to just transition, and can result in unforeseen trade-offs or unintended social, environment and/or economic impacts.
To address this, decarbonisation of the built environment should be addressed using a systems-based approach and through close collaboration across the value chain.
Using lifecycle thinking, which considers the impacts that asset owners and managers can control and influence when assets are created, operated and used ensures that multiple environmental and social impacts are considered across an asset’s whole lifespan.
Asset owners should also collaborate with other members of the value chain to speed up decarbonisation through the project delivery process. Early engagement and collaboration among value chain members such as owners and managers, designers, constructors, procurers and product/material suppliers is needed at all levels, from system to asset in order to effectively reduce carbon emissions.
To maximise whole-life carbon reduction and scale up the individual efforts of individual project teams, stakeholders should use the decarbonisation hierarchy (see Figure 5) to evaluate need, assess alternatives, adopt low carbon solutions, and improve. The greatest opportunity to avoid or reduce emissions occurs at the ’need’ stage, and gradually decreases through the design, materials selection, construction, and operation stages. Whole-life carbon can be influenced again at the end of an asset’s first life, if/when it can be refurbished, repurposed, deconstructed and/or decommissioned.
The Australian Government, with state and territory governments, should build carbon confidence and literacy in buildings and infrastructure by:
Widespread climate illiteracy and a lack of knowledge sharing can delay uptake of lower carbon materials
Australia’s decarbonisation efforts are detrimentally impacted by a general lack of understanding among industry professionals, trades, and consumers of climate and carbon issues (climate literacy), myths concerning low carbon materials and an absence of detailed and actionable learnings.
As assets are built or renewed, product choices are made based on current knowledge and perceptions developed over time. Myths about the difficulties and impracticality of using lower-carbon materials are common, and influence project decisions at both design and procurement stages. Where the availability, quality and performance of low-carbon construction materials are not well understood, hesitancy in their adoption is to be expected.
Knowledge about characteristics of low carbon products needs to be supplemented with practical awareness and know-how on their use for a project. Lack of confidence about specification and use results in low and fragmented demand for low-carbon products, which slows supply chain development due to insufficient demand, and less product availability.
Use of low-carbon products on projects often rely on substantial trials and testing, which are essential to ensure that alternative products are fit for purpose for their intended applications. Without evidence of multiple prior successes, project teams may be unwilling to use lower carbon alternatives which is problematic as test results are rarely published and case studies lack the detail required to replicate results.
One example of efforts to address these gaps in the industry and promote innovative building techniques in the transport infrastructure sector can be seen in the Austroads Environment and Sustainability Taskforce, comprising the Australian Government, state and territory governments, and New Zealand Government. Together, they are developing guidance, conducting research, and updating Austroads standards.
Additionally, the Australian Government has invested in the Infrastructure Net Zero Initiative, which brings together industry and government stakeholders to achieve the shared goal of decarbonising infrastructure. This collaboration recognises the shared responsibility of decarbonisation and the opportunity to create an aligned and effective use of collective time, resources, and expertise to accelerate the highest-priority initiatives to drive lasting policy change and industry innovation.
The Australian Government, with state and territory governments, should continue developing a nationally standardised embodied carbon measurement system, which allows for consistent methods to collect, measure and assess data about embodied carbon.
This could involve:
Reducing carbon emissions at scale is only possible with reliable and consistent measurement tools. Implementing a standard methodology and data system at national level poses a significant challenge.
Historically, Australia has lacked a nationally consistent way of measuring embodied carbon in the built environment. Various methods are used to calculated and claim carbon reductions on projects, leading to a lack of consistency and credibility in measurement, with inconsistent and non-comparable results. This makes it difficult for stakeholders to accurately calculate and track carbon emissions. Additionally, there is no comprehensive dataset for process-based lifecycle analysis emissions factors, which makes it difficult to access and compare the emissions of different building products. Furthermore, a shortage of compliant product data, such as third party verified EPDs, which limits the ability for decision makers to make informed low carbon choices when selecting building materials.
Recognising the imperative to consistently measure, compare and set reduction targets for embodied carbon in buildings, the National Australian Built Environment Rating System (NABERS) is working to create an embodied carbon rating tool for buildings, which would allow building owners to set robust and measurable targets for reducing embodied carbon in buildings. In concurrence, the Infrastructure and Transport Ministers’ Meeting has approved the Embodied Carbon Measurement for Infrastructure: Technical Guidance, a nationally consistent approach to measuring embodied emissions in infrastructure projects.11 Further work will involve developing and maintaining a national emissions factor library and nationally consistent data reporting and collection.
The Australian Government, working with state and territory governments, should agree a common national approach to drive market demand for low carbon solutions.
This could involve:
Industry is less willing to create more products and solutions that have low carbon impact, because the demand for them is not dependable. This hinders the advancement of the sector and the country as a whole.
Stakeholders identify several causes of demand dependability:
Many stakeholders interviewed for this report called for fairer carbon accounting, including the Building Products Industry Council and representatives of the steel industry, for who carbon leakage was regarded as an item of importance for government intervention.
In March 2023, the Australian Government announced it would undertake a review of carbon leakage as part of the Safeguard Mechanism reforms. The review will assess carbon leakage risks and policy options to address them, including the feasibility of an Australian Carbon Border Adjustment Mechanism. The review will focus on trade-exposed goods under the Safeguard Mechanism, particularly steel and cement which are key inputs for many types of infrastructure. The review’s first consultation paper was released on 13 November 2023 and closed on 12 December 2023. A second round of consultation will be undertaken in mid-2024. This review is expected to be completed by 30 September 2024.
The delivery of major infrastructure projects presents a unique opportunity for the Australian Government to drive decarbonisation outcomes. For instance, the Infrastructure Policy Statement, released in November 2023 notes that as emissions reduction techniques emerge, the Australian Government expects them to be factored into project delivery. This lays a clear foundation on which project selection funding decisions could be made in future.
There is also work underway to drive a more consistent approach to procurement. Through the ITMM, the Infrastructure and Transport Ministers’ Meeting, the Infrastructure Decarbonisation Working Group, chaired by NSW and the Commonwealth, is developing a ‘carbon in procurement and contracts’ guideline to inform the implementation of measures to ensure transport infrastructure projects support decarbonisation goals.
To elevate the consideration of carbon in project decision making, ITMM approved a nationally consistent set of values for use in transport infrastructure projects. Infrastructure Australia has introduced a requirement that infrastructure proposals submitted to Infrastructure Australia must use the nationally consistent set of carbon values in their submissions from July 2024.
The Australian Government, working with state and territory governments, should develop new methods for project delivery which share risks and rewards for innovative approaches.
This could involve:
Stakeholders identified fear of risk exposure as one of the major barriers hindering effective decarbonisation efforts. This reluctance stems from industry inertia, where trying new approaches or technologies to reduce carbon emissions is often seen as risky. Hesitance is further compounded by industry’s limited bandwidth, as it contends
with numerous commercial and workforce challenges alongside the complexity of the bidding process. Government procurement practices were reported to be conservative, undermining the imperative to tackle climate change and adopt progressive policies.
This inherent reluctance to take risks has also led to a resistance to pilot new projects as well as a preference to pass on risks to other parties. This is particularly evident in traditional contract models, where risk is typically shifted to the constructor in post-tender D&C (design and construct) contracts. Unfortunately, by this stage, the opportunity for significant decarbonisation in the project has often passed, leaving the constructor with limited options for reducing carbon.
Moreover, the aversion to risk has also hindered the willingness to try new and innovative approaches. Many stakeholders reported that there is a preference for familiar and low-risk solutions, instead of considering effective or innovative alternatives. As a result, even when new and well-tested solutions are available in other countries, there is a reluctance to adopt them in Australian projects. This is exemplified by the use of general purpose limestone cement, which is commonly
used overseas by not yet embraced in Australia. Overall, the apprehension towards risk and change in the industry is seen as a barrier to decarbonisation efforts.
The Australian Government, with state and territory governments, should work with industry to drive greater national alignment on low-carbon expectations through performance-based standards and specifications.
This could involve:
Leading efforts to expedite the updating of standards and specifications, developing a more efficient system and providing funding for critical updates to keep pace with evolving options.
During consultation, industry stakeholders were frustrated by existing specifications, which prescribed specific characteristics for products rather than performance outcomes. This can limit the entry of new and innovative materials into the market.
Existing construction bias and out-dated material standards and specifications often preclude the use of lower-carbon materials, mixes and processes. Traditionally, specifications prescribe characteristics of a compliant product, such as a minimum required composition. These are typically narrow, focusing on known solutions.
Another barrier to progress is fragmentation in product specifications across jurisdictions, which discourages investment by diluting market demand. This is further compounded by Australia’s inherent challenges of low population and geographical spread, making it difficult to justify product changes due to inconsistent demand for specific requirements.
The low pace of updates to standards and specifications is another significant barrier. Stakeholders expressed frustration at the lag in updating these standards, which makes it difficult for the industry to keep up with the latest low carbon materials. According to some stakeholders, slow progress in the update of existing stipulations mean that new solutions are judged on their adherence to narrow and prescriptive specifications rather than their performance.
As innovation in low carbon materials continues to advance, it is imperative that measures are taken to speed up the process of updating standards and specifications.
To overcome these barriers, it is necessary to address the issue of consistency in product specifications at a national level. There is also a need to transition to performance-based specifications and ensure that standards and industry specifications are updated in a timely manner.
Analysis presented in Section 2: Baseline Measures of Embodied Carbon showed that Australia can reduce upfront carbon emissions from its pipeline of infrastructure and buildings by up to 23% in 2026–27 by applying like-for-like decarbonisation strategies considered in this report.
The cost and carbon abatement potential of each decarbonisation strategy is shown in Figure 6. Four of the 11 groups of strategies considered in this report lead to a cost saving at the project level – recycled crushed concrete replaces aggregates in concrete and pavement sub-base; reclaimed asphalt pavement replaces asphalt in base course and wearing course; structural steel lightweighting and hydrated lime replaced in asphalt - and one is cost neutral – reinforcing steel lightweighting. The following remaining strategies incur a cost, shown in red, however most costs are small compared to the value of assets in the pipeline:
Of the strategies, biodiesel uptake is by far the most expensive, with relatively small benefit to reducing greenhouse gas (GHG) emissions. The Maximum Decarbonisation Scenario assumes that usage increases from 1% in 2022–23 to 20% by 2026–27 (i.e., nationwide adoption of a B20 blend across the construction sector. However, with current pricing, this strategy becomes expensive at the national level. As such, the Mid-Level Decarbonisation Strategy assumes a moderate uptake of biodiesel beyond current levels.
The strategies with the greatest influence on upfront carbon are:
The analysis in this report is based on Infrastructure Australia’s Market Capacity Project Database. This system aggregates project-level data to create a comprehensive overview of Australia’s infrastructure and building investment pipeline. This data is informed by budget processes and forward projections derived from budget estimate periods.
However, the landscape for project delivery has become progressively challenging, with constraints of available skilled labour and resources, market fluctuations, and inconsistencies in project and portfolio planning standards. Consequently, delays due to slippage are now widespread, which can lead to over-estimation of material demand.
Further, Infrastructure Australia’s Market Capacity project database focuses on major projects per state.
Major projects are defined as:
The forecast may overestimate spend - and therefore upfront carbon - in some areas as a result of project slippage and threshold values, while underestimating it in others.
This project applies two scenarios to manage uncertainty:
Upfront carbon emissions from construction activity in Australia’s buildings and infrastructure under the Hybrid analysis was calculated as 38 Mt CO₂e in 2022–23, the baseline for this study. This is equivalent to 7% of Australia’s total greenhouse gas (GHG) emissions in 2022–23. Use phase embodied carbon was estimated to be 18 Mt CO₂e, and end-of-life embodied carbon was estimated to be 1.5 Mt CO₂e (Table 11).
For detailed results of the hybrid analysis please refer to the report Supporting Appendices: Embodied Carbon Projections for Australian Infrastructure and Buildings.
| Embodied carbon emissions | Definition | Emissions | Share of national emissions |
|---|---|---|---|
| Upfront | Emissions from the creation of an asset, network, or system, up to the point of practical completion | 38,200 | 7.2% |
| Use phase | Emissions from maintaining and/or refurbishing an asset | 17,800 | 3.4% |
| End-of-life | Emissions from asset demolition and/or deconstruction | 1,480 | 0.3% |
Most upfront carbon emission come from manufacturing construction products. Figure 7 provides a breakdown of upfront carbon emissions by lifecycle module. Construction products make up 73% of upfront emissions (modules A1 to A3 in carbon footprint standards). The remaining 27% comes from transport (module A4, 4%) and construction (module A5, 23%). In the construction phase, emissions come from four main sources: land use change for greenfield sites, construction waste, construction machinery and commissioning.
Figure 8 presents a 5-year view of upfront carbon emissions from the infrastructure and buildings construction pipeline. Under the hybrid analysis, the upfront embodied carbon in Australia’s pipeline of infrastructure and buildings is forecast to be between 40 Mt CO₂e and 56 Mt CO₂e each year for the next 5 years, equating to 256 Mt CO₂e. Buildings represent the largest share, accounting for approximately half of the total forecast carbon emission (133 Mt CO₂e). This is followed by Utilities, which accounts for approximately 28% of the total emissions (71 Mt CO₂e). Transport infrastructure accounts for approximately a fifth of the total (52 Mt CO₂e).
Figure 9 presents forecast upfront carbon using both the hybrid analysis (lighter filled stacked bars) and the pipeline analysis (darker filled stacked bars). The pipeline analysis shows dramatic growth in upfront carbon (high ambition in the short-term) and then decline (projects later in the time horizon not yet identified and committed). The hybrid analysis attempts to correct for this variability and therefore shows steady growth over the 5-year period between 2022–23 and 2026–27. It shows a steady increase until FY 2025, followed by a levelling out in 2025–26 and 2026–27.
Comparing the two analyses:
The total results are similar for the years 2022–23 to 2025–26. However, the make-up of these results is quite different. For buildings, the pipeline analysis is skewed towards larger projects, many of which will not be built in the forecast year. The hybrid analysis is influenced by many smaller projects, particularly residential building construction.
The pipeline analysis shows a rapid rise in construction, followed by a decline. The hybrid analysis is more stable over time. This is due to the difference in underlying approach for forecasting building construction, in which the pipeline analysis relies on self-reporting, and the hybrid analysis forecasts future building construction activity based on past construction activity.
Figure 10 shows a breakdown of the emissions by project type using the hybrid analysis for 2022–23. Detached residential buildings, multi-unit residential buildings and utility solar are forecast to have the highest upfront carbon footprint at the national level, with detached residential buildings in first place, due to the sheer number constructed. The next group of project types is state roads (Freeway/Highway), warehouse and office buildings – with state roads and warehouses having a relatively similar forecast upfront carbon footprint in 2022–23. Wind utilities, semi-detached residential buildings, retail stores and railway stations round out the top 10.
Figure 11 shows the carbon and cost changes for both the hybrid and pipeline Analysis, under the Mid-Level Decarbonisation Scenario and Maximum Decarbonisation Scenario. According to the hybrid analysis, the Maximum Decarbonisation Scenario is able to achieve a 21% carbon reduction on the pipeline by 2026–27, with a cost uplift of $37 million. The more moderate Mid-Level Decarbonisation Scenario can achieve a 12% carbon reduction on the pipeline for a saving of $200 million.
| Scenario | Carbon abatement | Cost | ||
|---|---|---|---|---|
Pipeline | Hybrid | Pipeline | Hybrid | |
| Mid-Level Decarbonisation | 13% reduction | 12% reduction | 0.24% saving | 0.08% saving |
| Maximum Decarbonisation | 23% reduction | 21% reduction | 0.14% saving | 0.02% uplift |
Methodology overview
This report calculates:
The analysis in this report is based on Infrastructure Australia’s Market Capacity Project Database, including major projects per state, defined as:
Material quantities were determined from this system, which combines forecast capital expenditure with an overlay of the typical spend on plant, labour, equipment and materials (PLEM) per asset type.
For this report:
Emission factors were calculated to represent national or state averages wherever possible. Emission factors were weighted using apparent consumption, as below:
𝐴𝑝𝑝𝑎𝑟𝑒𝑛𝑡 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 = 𝐷𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 + 𝐼𝑚𝑝𝑜𝑟𝑡𝑠 − 𝐸𝑥𝑝𝑜𝑟𝑡𝑠
Where there were multiple domestic manufacturers or multiple import countries, emissions were weighted by market share wherever possible. Where this information was not publicly available, plant manufacturing capacity was used as a proxy for market share for domestic manufacture.
The analysis in this report focuses on upfront carbon defined here as the greenhouse gas emissions and removals associated with the creation of an asset, network or system up to practical completion. This definition is based on that for ‘capital carbon’ from PAS 2080:2023 (BSI Australia, 2023).
Carbon emissions are calculated as the “sum of greenhouse gas emissions and greenhouse gas removals in a product system, expressed as CO₂-equivalent (CO₂e) and based on a life cycle assessment using the single impact category of climate change” (ISO, 2018). Where the term carbon is used in this report, it refers to the carbon dioxide equivalent (CO₂e) of all greenhouse gases.
Upfront carbon includes the following life cycle modules:
These lifecycle module codes (i.e., A1-A3, A4 and A5) derive from international and European standards for lifecycle assessment of buildings and infrastructure assets. It is worth noting that many building/infrastructure asset carbon footprint studies do not include commissioning energy. This is an item that emerged as being relevant for some asset types during the stakeholder consultation process for this project. Further, land use change is often excluded due to a lack of good data on its potential impacts. Both are included within this study.
This report employs two different calculation approaches for two different purposes:
The purpose of the Hybrid Analysis is to demonstrate the significance of embodied carbon relative to Australia’s total national greenhouse gas (GHG) emissions. Its figures are presented as percentages of emissions as well as absolute emissions. By contrast, the Pipeline Analysis is not presented relative to national emissions because the forecast emissions may be spread across more than one year.
The baseline carbon footprint was calculated by summing several elements:
The amount of construction is total dollars per asset type (of which there are 63 types) and per state/territory. In the base analysis for the report (the Pipeline Analysis), the amount of construction comes solely from Infrastructure Australia’s National Infrastructure Project Database. The Hybrid Analysis uses the same data for transport infrastructure and utilities, but bases its buildings data on statistics from the Australian Bureau of Statistics and the Department of Climate Change, Energy, the Environment and Water.
The materials available within Infrastructure Australia’s database were used as the basis for developing an initial longlist of decarbonisation strategies. Strategies were divided into those that affect materials/products (modules A1-A3) and those that affect construction (module A5).
13 decarbonisation strategies were selected (in 11 groups) with different rates and levels of adoption, from an initial longlist of 25 strategies.
Five criteria were used to select decarbonisation strategies:
For each of the 13 strategies, we consider:
This analysis applies three scenarios for uptake rates of the decarbonisation strategies. The uptake rates for the Baseline Scenario, and the maximum uptake rate by 2026–27. under the Mid-level Decarbonisation Scenario and the Maximum Decarbonisation Scenario can be found in Table 7 in Section 2: Baseline Measures of Embodied Carbon. Current and future uptake rates were determined through workshops with industry, supplemented with research by the authors. Detailed analysis of the decarbonisation strategies can be found in the report Supporting Appendices: Embodied Carbon Projections for Australian Infrastructure and Buildings.
This is the base case for this report. The project team has endeavoured to determine actual adoption rates for all decarbonisation strategies as of the base year 2022–23. These baseline rates are then assumed for all future years through to the final year for this analysis 2026–27. No further uptake beyond the current rate is considered within this scenario. Emission factors are also assumed to hold stable for each material. This means that the amount of product forecast to be used is the only variable between years.
This scenario represents the highest practical level of ambition by 2026–27. It is designed to be an achievable best case. It assumes that barriers in standards, procurement and cost can be overcome. The main limitations on uptake rates in this
scenario are:
This scenario represents an intermediate level of ambition that is part way between the Baseline Scenario and the Maximum Decarbonisation Scenario. Adoption rates are defined by a combination of three factors:
The costing of decarbonisation strategies was conducted by Slattery. Slattery contacted suppliers and contractors to obtain baseline material costs and how these costs would change if the material was substituted. Each supplier or contractor’s information was recorded in an Excel spreadsheet with material type and price per tonne impact. The percentage of cost increases for materials per state was obtained when available.
For low-carbon concrete, prices per tonne / cubic metre were not obtained. Rather, suppliers estimated how cost would increase for a variety of concrete products incorporating supplementary cementitious materials (SCMs) compared to standard cement blend products. Pricing data obtained from the market was sense-checked against Slattery’s own internal pricing data.
Once market research was completed, estimated percentage price changes were provided for each material substitution. Where a variation in price difference was obtained for the same material substitution, the middle value of the range was used.
Emissions from manufacturing building products are calculated from extracting, harvesting, or recovering raw materials through to the manufacturer’s outbound factory gate.
For recycled and reused products, the boundary between asset life cycles has been set by applying the “end-of-waste state” defined by European standard EN 15804+A2 Sustainability of construction works - Environmental product declarations - Core rules for the product category of construction products.15 The end-of-waste state is the point at which material stops being counted as waste and starts being counted as a product. This boundary is important because it defines the point at which greenhouse gas emissions from recovery and recycling stop being counted as waste disposal in the previous asset’s lifecycle (i.e., zero emissions in the current asset’s lifecycle) and start being counted as the emissions of manufacture in the current asset’s life cycle.
Following EN 15804+A2, the end-of-waste state for a recovered material is reached when it meets four criteria:16
In practice, this definition means that the greenhouse gas emissions from many types of recycling will be classified as waste treatment operations at the end of the previous asset’s life cycle (and therefore not at the start of the current asset’s lifecycle). Exceptions include metals – particularly steel and aluminium – where the end-of-waste state is reached as soon as the metals are put into a (source- separated) skip on the construction site.
Transport to site is modelled as a mixture of truck, rail and sea freight to get materials from their original supplier to the construction site. A consumption-based approach is applied, meaning that all freight is included, including freight that occurs overseas.
Land use change includes the greenhouse gas emissions caused by converting one land use type to another. It applies to greenfield developments only and is not relevant to brownfield developments (as the land has already been developed and there is no land use change). It is particularly significant where forested areas are cleared, or where wetlands are drained.
All land use change is assumed to occur in module A5. There was some confusion during the stakeholder consultation process, as to whether land use change impacts could also occur in module A0 (pre-construction).
Construction waste emissions are calculated as the sum of four components:
Construction energy is all energy (diesel, electricity, etc.) associated with constructing an asset. This includes land clearing, excavation, laying materials, erecting structures, etc. Only energy used on- site – including site offices – is within the scope of this analysis. Activities that occur off-site are not considered. This means that corporate offices and design offices are excluded, as is transport of staff to and from the jobsite.
Commissioning is the stage in the project where an asset is tested – in whole or in part – before being handed over to the client. It takes place between construction completion and practical completion, though it often occurs in stages for larger projects. Commissioning may continue following handover to the asset owner, however the commissioning energy included in module A5 contains only the work completed under the control of the constructor.
Typically, commissioning includes the testing of critical systems, such as back-up electricity generators, security systems, fire systems, extractor fans and plant rooms. Commissioning energy is typically electricity, though significant amounts of diesel can often be used, particularly to test back- up generators or in cases where commissioning is done when the project is still off-grid.
“Greenhouse gas emissions”, “GHG emissions”, “carbon footprint” and “carbon emissions” are used interchangeably in this report. They are defined as the “sum of greenhouse gas emissions and greenhouse gas removals in a product system, expressed as CO₂-equivalent (CO₂e) and based on a life cycle assessment using the single impact category of climate change” (ISO, 2018). Where the term “carbon” is used in this report, it refers to the carbon dioxide equivalent (CO₂e) of all greenhouse gases and not to elemental carbon.
GHG emissions have been calculated using Global Warming Potential over 100-year time horizon (GWP100). GWP100 is defined by the Intergovernmental Panel on Climate Change (IPCC). Where possible the IPCC’s latest report – the Sixth Assessment Report (AR6) – was used.17 However, given that this report relies on many different sources, many emission factors follow earlier reports, primarily AR4 and AR5.18,19 This is expected to have little relevance to the results as nearly all upfront carbon emissions associated with buildings and infrastructure assets are carbon dioxide (CO₂) and 1 kilogram of CO₂ is characterised as 1 kilogram of CO₂-equivalent (CO₂e) across all versions of the GWP100 indicator.
GHG emissions and removals are reported separately for the Pipeline Analysis and Hybrid Analysis in the Supporting Appendices: Embodied Carbon Projections for Australian Infrastructure and Buildings in line with ISO 14067:2018 Greenhouse gases - Carbon footprint of products - Requirements and guidelines for quantification and PAS 2080:2023.20,21 The main results in the body of the report focus on greenhouse gas emissions only.
This report aggregates information from the bottom up and then validates it against top-down data. The approach was chosen to improve the granularity of the results. More specifically:
Exceptions have been made where no bottom-up data were available, notably for land use change.
This report applies a consumption-based approach. This approach includes the greenhouse gas emissions associated with materials and energy consumed within Australia and excludes the greenhouse gas emissions from domestically produced products that are exported.
The use of a consumption-based approach means that only a portion of the upfront carbon reported in this study occurs within Australia’s territorial boundaries. This is more important for some materials than others. For some products (e.g., photovoltaic panels), 100% of what is consumed domestically has been produced overseas. For others (e.g., aggregates and electricity), 100% of what is consumed here, has also been produced in Australia. For most products, there is a mix of domestic supply and imports.
A consumption-based approach was considered appropriate for this study because all countries share the same atmosphere, meaning that it doesn’t matter in which country greenhouse gas emissions are released. However, it is important to recognise that the Paris Agreement applies a production-based approach and only considers greenhouse gas emissions from within a country’s territory.
How significant is the difference between the two approaches for this analysis? Australia’s consumption-based emissions are typically 10-15% lower than our production-based emissions, according to work by the Department of Climate Change, Energy, the Environment and Water.22 These figures are net emissions, including the effects of Land Use, Land Use Change and Forestry. Previous analyses that have considered gross emissions – excluding Land Use, Land Use Change and Forestry – have shown similar emissions when applying production-based and consumption-based approaches.23
The differences between consumption-based and production-based approaches are not likely to be significant for this analysis. Some of the forecast savings will fall outside Australia’s territorial boundaries, however many of the decarbonisation strategies considered will also apply to products that are manufactured in Australia for export, helping to balance the books.
There are three main ways to calculate emission factors:
Process-based life cycle assessment (process-based LCA) is a bottom-up approach that starts from the many individual process steps required to make something and adds them all up to calculate total emissions. Because of its detail, process-based LCA can be used to differentiate between many different product variants. So, for example, it is possible to distinguish between a concrete mix with 10% fly ash and another with 20% ground granulated blast furnace slag. However, to make the method practical, cut-off rules and/or proxies are used to represent parts of the supply chain that are less environmentally relevant. This leads to truncation error, meaning that not all environmental emissions are captured.
An alternative approach is input-output lifecycle assessment (IO-LCA). IO-LCA is a top-down approach that uses economic input-output tables to consider trade between sectors of the economy. Each economic sector is assigned a direct emission per dollar and the trade between sectors allows indirect emissions to be calculated. IO-LCA is complete by definition (i.e., no truncation error) provided that national inventories capture all direct emissions per sector. However, it has very low resolution – at the level of market sectors only – which means that it cannot distinguish between products from the same sector.
Hybrid lifecycle assessment (Hybrid LCA) seeks to combine the two methods and achieve the best of both worlds. There are two Hybrid LCA databases for construction products in Australia:
This report uses process-based LCA as its primary method for four main reasons:
Granularity: This report includes two decarbonisation scenarios which are based on like-for- like replacement. As such, the analysis in this project requires a method that can distinguish between products in the same market sector. This requirement rules out IO-LCA.
Data availability: Process-based LCA is the method used to calculate the results in an Environmental Product Declaration and the method underpinning product carbon neutral declarations. As such, most of the product-specific data available in Australia (and worldwide) is process-based LCA data.
Industry support: Consultation through this process and through related projects (e.g., National Australian Built Environment Rating System Embodied Carbon) have shown overwhelming support for process-based LCA through the entire building and construction supply chain.
Global standardisation: International standards for LCA and product carbon footprinting typically rely on process-based LCA data wherever it is available.
The body of this report applies process-based LCA for all core calculations. For comparison purposes, upfront embodied carbon emissions for 2022–23 were also calculated using an economy-wide input-output LCA (IO-LCA) approach. This can be found in the report Supporting Appendices: Embodied Carbon Projections for Australian Infrastructure and Buildings.
This analysis is limited primarily by its own scope. It does not consider:
Other limitations include:
Engaging government and industry stakeholders was an important part of this project. The engagement ensured stakeholders:
Stakeholders consulted during the project provided insights into the many constraints across the supply chain for low-carbon materials. They highlighted the need to innovate, coordinate and break down silos. The most common supply chain frustrations stem from:
These challenges are also present in the larger value-chain, within which the supply chain operates. Section 3: Barriers and Opportunities examines the barriers to and enablers of decarbonising the value- chain. This section provides examples to illustrate the most common supply chain constraints identified by the industry stakeholders who produce, supply, procure and install low-carbon materials.
The constraints to using low-carbon products identified through consultation can be grouped into six broad categories: geography, resource availability, availability of low-emissions power, technical constraints, economic barriers, and regulations.
Infrastructure Australia’s Replacement Materials report shows that geographical limitations hinder the use of lower-carbon replacement materials, such as recycled crushed glass, recycled crushed concrete, and supplementary cementitious materials.26 These materials are not widely available due to logistical reasons, resulting in difficulty for stakeholders in accessing them. The high costs and associated transport emissions also counteract the potential carbon reduction. Availability of resources varies between states and between metropolitan and regional areas within the same state. The pavement industry reports that there is a lack of clean and suitable volumes of reclaimed asphalt pavement near to manufacturing facilities, and there is limited plant capacity to process in many locations.
Constructors too reported logistical challenges and cost impacts of sourcing lower-carbon ‘waste’ materials, because it is difficult to access these materials near new construction sites.
Limited availability of recyclate hinders production of lower carbon building products, as many stakeholders reported.
Reasons for this scarcity varied among industries.
The plastic pipe industry said that despite being able to incorporate recyclate into non-pressure pipes, there is a low volume of waste pipe available for recycling. Since plastic pipes are long-lived (up to 100 years), post-consumer recyclate is scarce, which limits production of lower-carbon plastic pipe and conduit.
Similarly, steel and aluminium producers struggle with limited recyclate availability, with much of Australia’s aluminium recyclate being sent offshore. This impacts their competitiveness in terms of both price and lower-carbon production. The recycled content in Australian aluminium is predicted to remain at less than 5% for the next five years, so Australian producers will continue to rely on imports to manufacture high recycled content building materials.
Despite having the capability to process recycled steel, Australian steel manufacturers face insufficient steel scrap on the global market to meet demand.
The concrete and pavement industries also struggle with sourcing quality recyclate, with shortages reported by asphalt producers for
materials such as recycled crushed glass and crushed and screened reclaimed asphalt pavement. The concrete industry said that growing demand for supplementary cementitious materials threatened the future supply of lower carbon concrete mixes, unless grinding capability increased in line with that demand.
Bio-based alternatives are available to replace many fossil-based materials and processes, but using them on a large scale for low carbon building products remains challenging.
The plastic pipe industry reports that the available volume of alternative raw material sources is limited and costly, even though bio and circular resins that may be ‘dropped into’ existing production processes are commercially available.
The steel industry is also exploring biochar as an alternative to coke in steel making, but sourcing sufficient quantities to meet industry demand is difficult. Additionally, combining bio-based and fossil-derived materials in production systems may not produce a clearly recognisable biobased product, making it necessary to declare the entire product mix as one in Environmental Product Declarations.
The timber industry expressed concern that the negative narrative around forest management may lead to reduced supply of responsibly sourced low-carbon timber products. Logging in native forests is set to be banned in Victoria and Western Australia in 2024, and a court action to halt logging is currently underway in Tasmania and New South Wales. Hardwood from Australia’s native forests is typically made into flooring, decking, window frames, beams and joists.
A decarbonised supply chain is reliant on low-emissions power generation to manufacture and transport low carbon materials. Until a spread of cost-competitive, low-emissions electricity is available, with capacity to support 24-hour operations, high-emitter industries will struggle to produce low-emissions solutions.
The supply of low-emissions power generation extends to capital investment decisions too. For example, the aluminium industry said that the single biggest factor in developing future refining, smelting and manufacturing locations is reliable, internationally competitive, low emissions energy.
Constructors face similar challenges in decarbonising on-site operations. Biodiesel blends can be used to help power site generators and diesel machinery, but constructors said that supply is limited. In some cases it made more sense (commercially) to offset construction emissions with carbon credits. The ability to use ‘sustainable’ biodiesel to decarbonise construction activities is constrained by the lack of local commercial production facilities, as Australian feedstocks are exported. Imported biodiesel is subject to the full fuel excise and therefore uncompetitive with standard diesel.
Existing construction biases and conservative materials standards often limit new and innovative materials, mixes, and processes. For example, although hydrated lime can reduce the
carbon footprint of asphalt, it is only permitted for Northern Territory roads. Asphalt suppliers felt that the cost of additional testing required for reclaimed asphalt pavement mixes was ‘a tax on choosing the right mix’ which can limit uptake of a market-ready low-carbon solution.
The concrete industry faces frustration with overly restrictive standards for supplementary cementitious materials and conservative engineering specifications that lead to higher
emission outcomes. Suggestions for harmonised national standards have been made, allowing for the uptake of alternative materials at scale. For example, state specifications permit different rates of fly ash; Western Australia specifies the recovery rate of generated fly ash at 72%, compared to 18% in Queensland and 10% in New South Wales.
Despite successes with buried thermoplastic pipes in other countries and a trial in Australia, the plastic pipe industry has faced difficulties negotiating with Australian road authorities and
traditional higher carbon products are still favored. Furthermore, the timber industry has concerns about the current treatment of biogenic carbon at end of life reported in Environmental Product Declarations (EPD), following an update to EN15804+A2. They question the factual accuracy of the standard, and perceive that it limits the selection of low-carbon timber solutions due to the way the standard requires its carbon footprint to be expressed.
Stakeholders highlighted commercial constraints to supplying low carbon products, citing examples such as steel manufacturers needing funding for plant upgrades and research initiatives to produce higher grade steels by 2026–27.
Producers struggle to justify capital investment due to limited or inconsistent demand, hindering the implementation of processes for producing lower-carbon products. For example, the concrete industry said that they could implement processes to produce lower-carbon products now if there was enough demand to justify the investment. Likewise, the pavement industry said that capital costs to upgrade asphalt plants to provide lower-carbon asphalt would need to be justified commercially before a commitment could be made to invest.
With no strong market driver for low carbon products, national net zero targets must be embedded in the built environment for innovative solutions to thrive.
The market’s reluctance to pay a premium for some low carbon products is also a major disincentive, stifling innovation and limiting uptake.
Constructors noted that many start-ups struggle to introduce their products to the construction industry, due to a lack of carbon literacy and understanding of testing and quality assurance requirements. This can result in failure to penetrate the market, even with good, low-carbon products. Additionally, obtaining EPDs can be prohibitively expensive for small to medium enterprises and start-ups, further constraining the introduction of viable low carbon products to the market.
Industry stakeholders stressed that requirements for regulatory licensing of recycling infrastructure limits their ability to receive, store and process ‘waste’ materials. The ability to store ‘waste’ on site depends on approvals at significant cost and often the storage volumes and timeframes are inadequate. For example, asphalt suppliers said that the Environmental Protection Authority (EPA) will not allow on-site storage of replacement materials for use in products.
Producers said that when they are classified as a waste receiver, there are regulatory barriers to the use of the recycled or waste content in their products. Regulatory reform is needed to re-classify resources that are currently classified as ‘waste’ so that they can be used as a feedstock.
A producer of non-cementitious building products said that the EPA could do more to pressure the waste industry to clean up waste streams destined for the building products sector. Access to more clean ‘waste’ can help increase the supply of these low-carbon products.
The pavement industry is frustrated at the lack of alignment in regulatory requirements and standards among state and territory roading authorities and the reluctance to adopt technologies and practices that have been proven elsewhere in the world. Stakeholders feel that statutory authorities are reluctant to listen to them, which prevents them from sharing their local expertise, and promoting the uptake of viable low-carbon innovations.
The pavement industry is frustrated that state and territory roading authorities will not align regulatory requirements and standards where practical or adopt technologies and practices that have been proven elsewhere in the world. Stakeholders feel their local expertise regarding viable low-carbon innovations is overlooked by statutory authorities.
The aluminium industry argues that Australia’s Critical Minerals List should be changed to include bauxite, alumina, and aluminium. The industry says this would stimulate investment in refining, smelting and processing these critical minerals in Australia, and support clean energy technologies and electricity network infrastructure. The Australian aluminium industry is not at capacity, and as noted above, most of Australia’s scrap aluminium is shipped offshore at a time when there is an increasing demand for recycled aluminium and low-carbon aluminium products.
Australia will rely on every sector to decarbonise at scale to support the net zero transformation. The built environment is directly responsible for one-third of Australia’s total carbon emissions, and indirectly responsible for over half of all emissions. Policies that help the built environment to address upfront carbon at the project level will contribute to the national Net Zero 2050 goal.
The analysis in this report shows that national, state and territory governments can make decisions to drive down Australia’s carbon emissions today. Policy-makers and teams delivering construction projects have effective interventions that will change how Australia constructs its
built environment.
Industry and government have identified many areas for the government to act on upfront carbon in infrastructure and buildings.
A two-step process based on two criteria led to the recommended areas of focus:
Further engagement with stakeholders later in the project saw other opportunities emerge. This report includes the opportunities that more than one stakeholder raised. ‘High importance’ means several stakeholders raised the opportunity. The additional opportunities are classified as ‘not rated’, meaning they have not been assigned a difficulty
or importance.
Figure 15 summarises the most promising opportunities identified for government intervention, based on importance and agreement on options as a possible government priority.
The opportunities for government action fit broadly into nine categories:
Upfront carbon must be assigned value in the decision-making process for projects, such as in tender evaluations. Valuing reductions in carbon means it can be weighted against other criteria such as price, quality and delivery.
A major barrier to using low-carbon products, or reusing existing buildings or materials, is a perception of unreasonable cost. However, if there is a clear priority to reduce carbon in all projects, this becomes another ‘necessary cost’, much like buying products that comply with codes and standards.
Creating a perceived value for low-carbon commodities can encourage more reuse and retrofits. It can also promote taking a whole-life carbon view for an asset, which protects against possible trade-offs.
Industry often cites the content of existing standards and specifications as a major factor that inhibits using low-carbon products. They raise two challenges: a lack of national agreement and consistency, and the need to update standards and specifications to support low-carbon purchasing.
The best way to support low-carbon construction is by setting consistent requirements that are included in all similar standards and specifications. Performance-based specifications allow for more innovative and flexible approaches. Confirming common expectations across national and sub-national jurisdictions helps create the consistent demand and volume that supply chains need to change.
The process for updating standards and specifications needs a systemic overhaul. Updates are often slow and arduous and create a barrier to innovation and change. New, more agile approaches to updates will encourage using lower-carbon solutions on construction projects.
A more open approach to other forms of compliance, which include identifying and managing risks, can encourage industry to trial newer solutions more quickly. Government should also consider more requirements to disclose high-emissions products through EPDs and material passports.
A national approach to measuring upfront carbon involves adopting common principles, methodologies, emission factors and reporting mechanisms nationally and across all states and territories. This approach will create a consistent, credible way to decarbonise the built environment nationally over time and make it possible to compare different projects.
A national methodology would enable the disclosure of upfront carbon for infrastructure and building projects. This will make it easier to understand the impacts of construction and continue to investigate the best levers to reduce it. Disclosure using agreed methods to measure the upfront carbon in construction, will help everyone understand what is possible and encourage a ‘race’ to reduce emissions which can be publicly monitored and measured. Disclosure will also show the progress being made and make it possible to refine actions to help achieve national and sub-national goals.
To help Australia reach its decarbonisation targets, managing and reducing the upfront carbon in infrastructure and buildings must be planned and deliberate. Carbon and energy management plans for construction projects are an important part of the carbon reduction toolkit. Requiring these plans for all government-funded projects and assets will ensure better decisions and action early in projects.
Consistent ways of measuring lead to baselines people trust. Setting targets for upfront carbon in construction will increase the potential for change in the built environment’s footprint. Targets are a better option than a carbon ‘cap’. Firstly, they are not seen as a ‘cap’. This is because some stakeholders view caps as unnecessary constraints where site conditions and other factors may make it hard or impossible to reach targets.
Carbon ‘budgets’, based on targets, can be allocated for projects or even parts of the pipeline. This makes it easier to take an holistic view about what is possible within the constraints of decarbonising.
Upfront carbon for developing assets should be seen as part of a wider Scope 3 emissions picture. Stakeholders wanted to see larger entities reporting their Scope 3 emissions. This would put more focus on upfront carbon and all the other carbon emissions that a company can influence.
Many stakeholders also wanted the National Construction Code (NCC) to include reporting of upfront carbon.
The Australian Government, and state and territory governments have the largest buying power in the built environment, and the greatest commercial influence for change. Government policies and agencies need to lead changes in low-carbon procurement and leaders in the private sector need to support this. National, state and territory procurement strategies must be set to match net-zero policies, and support decarbonisation to achieve agreed targets.
Industry reported that government projects typically avoid risk and lack ambition. A systemic change would see making decarbonising a national priority. It also means seeing the work involved in leading low-carbon construction and setting minimum standards for government-leased buildings as a necessary investment.
Supporting manufacturers in hard-to-abate sectors with both incentives and disincentives for change is a cornerstone of government policy. This is important and must be continued and strengthened. Manufacturers also raised reducing carbon leakage as an opportunity.
Industries experiencing challenges with technological constraints are seeking new ways to lower their carbon emissions. Several stakeholders suggested that using ‘waste’ streams as raw material resources could be a promising way to decarbonise. However, regulatory constraints on how waste is classified, processed, and stored and how end-of-life products (resources) classified as ‘waste’ can be used has delayed developing lower-carbon products by years.
Stakeholders also identified opportunities to provide cleaner, more consistent recyclate, such as recycled crushed glass. This would allow more processing of reused materials to make construction products instead of using new raw materials.
The Technical Reference Group saw introducing a national value for carbon as an important impetus for decarbonisation. Some stakeholders said that it was not a ‘price’ as a tradeable commodity that was needed. Rather, it was an agreed value for carbon to use in business cases and decisions to prioritise decarbonisation.
Industry calls for government funding to support decarbonisation reflected the challenges of price premiums for low-carbon products and the possible benefits of offering incentives to decarbonise. Stakeholders raised the expense of research and development to create new products as a barrier, together with the rigorous testing needed to prove they are fit for purpose. A further suggestion was the development of sustainable finance instruments to support infrastructure projects.
Government and the private sector, large and small entities, commercial and consumer, do not understand decarbonisation as well as they need to. Education is one of the greatest missing links. It should cover simple fundamentals and case studies that highlight best practice, and help people develop the techniques they need to design, specify and install for low-carbon construction.
Industry identified an opportunity to partner with government to develop urgent solutions to this issue.
Industry also requested a guide which combines the findings of this project with information about how to build low-carbon infrastructure and buildings.
Governments across Australia are already acting on many of the issues raised in this report, to varying extent. However, more progress is needed.
The most urgent actions identified by the consultation, that should be acted on before
2025, include:
| Term | Definition |
|---|---|
| Aggregates | Aggregates for concrete comprising small stones, gravel and sand. |
| Asset | Physical entity forming part of a network and/or system that has potential or actual value to an organisation and its stakeholders. |
| Asset owner/manager | Organisation that manages and is responsible for providing, operating and maintaining a buildings and infrastructure network or asset(s). |
| Attributable emissions | Greenhouse gas emissions from services, materials and energy flows that become the product, make the product and carry the product or service through its life cycle. |
| Baseline | Scenario for what carbon emissions and removals would have been in the absence of planned measures aiming to reduce emissions |
| Biodiesel | A liquid fuel derived from vegetable oils or animal fats. Biodiesel can be blended and used in many different concentrations, from B5, which is 95% petroleum diesel and 5% biodiesel, all the way up to B100, which is pure biodiesel. |
| Biofuel | An alternative fuel that is developed from biological, natural, and renewable sources. Biofuels are an attractive option due to their high energy density and convenient handling and storage properties. Biofuels can be used on their own (with some precautions or restrictions) or blended with petroleum fuels. |
| Biogenic carbon | Carbon removals associated with Carbon Sequestration into biomass, including natural building materials (e.g. timber) as well as any emissions associated with this Carbon Sequestration. |
| Brownfield site | An industrial or commercial site that is idle or underused because of real or perceived environmental pollution. |
| Built environment | Collection of human-made or induced physical objects located in a particular area or region. |
| Capital carbon | Greenhouse gas emissions and removals associated with the creation and end-of-life treatment of an asset, network or system, and optionally with its maintenance and refurbishment. |
| Carbon Border Adjustment Mechanism | An emerging set of trade policy tools that aim to prevent carbon-intensive economic activity from moving out of jurisdictions with relatively stringent climate policies and into those with relatively less stringent policies. |
| Carbon budget | Estimated amount of whole-life carbon a system can emit. |
| Carbon dioxide equivalents (CO2-e) | A measure that quantifies the global warming effect of different greenhouse gases in terms of the amount of carbon dioxide that would deliver the same global warming effect. |
| Carbon intensity | The amount of CO2e emitted as a unit of production or output e.g., per $ revenue, full-time equivalent or m2 floor area. |
| Carbon leakage | A loss of competitiveness and/or relocation of trade-exposed, emissions-intensive industries as a result of carbon penalties applying in some countries but not others. Carbon leakage includes potential increases in global emissions due to import substitution and lost future investment in existing or new businesses. |
| Carbon management | Assessment, reduction and removal of greenhouse gas emissions during the planning, optioneering, design, delivery, operation, use, end of life (and beyond) of new, or the management of existing, assets, networks and/or systems. |
| Carbon offsets | An action intended to compensate for the emission of CO₂e into the atmosphere as a result of industrial or other human activity, especially when quantified and traded as part of a commercial scheme. |
| Carbon uptake (Recarbonation/ Carbonation) | Cement recarbonation or concrete carbonation refers to the process where CO2 is absorbed by concrete during its use and end-of-life phase. The amount absorbed is significant but less than the total emitted in cement production. |
| Carbon capture use and storage | Carbon capture, utilisation and storage – also referred to as carbon capture, utilisation and sequestration – describes processes that capture CO2 emissions from industrial sources and either reuses or stores it, so it will not enter the atmosphere. |
| CO2 | CO2 stands for carbon dioxide. It is a colourless, odourless, and non-combustible gas. It is a greenhouse gas that contributes to global warming. Formed by complete combustion of fossil fuels (coal, charcoal, natural gas, petroleum) and CO2-containing products (such as limestone). |
| Electric arc furnace | A furnace that heats materials using electricity. |
| Embodied carbon | Greenhouse gas emissions associated with materials and construction processes throughout the whole life cycle of a building or infrastructure being the sum of upfront carbon, in-use embodied carbon, and end-of-life embodied carbon, measured by CO2e. |
| Embodied energy | The total energy necessary for an entire product life cycle including raw material extraction, transport, manufacture, assembly, installation, maintenance, repair, disassembly, replacement, deconstruction and/or decomposition. This includes renewable and non-renewable energy. Embodied energy does not correlate to embodied carbon. |
| Emissions factor | Amount of greenhouse gases emitted, expressed as carbon dioxide equivalent (CO₂e) and relative to a unit of activity. |
| Emissions reduction | Quantified decrease in greenhouse gas emissions specifically related to or arising from an activity between two points in time or relative to a baseline. |
| Enabled emissions | The emissions generated from third parties using infrastructure. Examples include vehicles driving over roads and chemical processes occurring in factories. In practice, it is difficult to set a boundary on what is enabled by the built environment and what is not. This analysis assumes that primary industries (e.g., mining, agriculture and forestry) and solid waste treatment (e.g., landfills) are not significantly enabled by the built environment. |
| End of life | Stage which begins when the asset has reached the end of its design life and is ready for refurbishment, retrofit, disposal, dismantling, etc., and ends when the asset is recycled, reused, recovered or returned to nature (combustion, deterioration). |
| Environmental Product Declaration | An independently verified and registered document that communicates transparent and comparable information about the life-cycle environmental impact of products and services in a credible way. An Environmental Product Declaration is compliant with the standard ISO 14025 and is known as a Type III environmental declaration. |
| Decarbonisation hierarchy | A decision-making hierarchy which identifies potential opportunities for managing and reducing whole life emissions for projects and programmes of work in the built environment. Value chain members are required to demonstrate that they have taken into account actions which ‘avoid’, ‘switch’ and ‘improve’. |
| Global Warming Potential (GWP) | Global Warming Potential is a measure of how much heat a greenhouse gas traps in the atmosphere relative to carbon dioxide (CO2). It has been developed to compare the global warming impact of different gases. The Global Warming Potential depends on how effective the gas is at trapping heat and how long it stays in the atmosphere before it breaks down. |
| Greenfield site | An area of land that has never previously had buildings on it or been used for industry |
| Greenhouse gas intensity | For a product, the total GHG emissions released in energy consumption for production and overhead, GHG emissions released by transport used for business travel and additional GHG emissions from the production process divided by the value of the product (i.e., the total factory gate price). Refer also to Carbon Intensity. |
| Greenhouse gases | Greenhouse gases are those gaseous constituents of the atmosphere, from both natural and anthropogenic sources, which contribute to the greenhouse effect, as detailed in the Intergovernmental Panel for Climate Change Glossary. Greenhouse gas emissions are often referred to as ‘carbon emissions’ in general usage. |
| Life Cycle Assessment | An analysis of the environmental and/or social impacts of a product, process or a service for its entire life cycle. It looks at the raw material extraction, production, manufacture, distribution, use and disposal of a product. |
| Life cycle stages | Defined stages throughout the life cycle of a building or infrastructure including the product stage, construction process stage, use stage, end of life stage and benefits and loads beyond the building or infrastructure life cycle, as outlined in EN 15978. |
| Nature-based solutions | Actions to protect, sustainably manage and restore natural or modified ecosystems that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits. |
| Net zero | Reduction of anthropogenic greenhouse gas emissions to zero or to a residual level that is consistent with reaching net zero emissions in eligible 1.5 °C pathways (hence time-bound) and neutralizing the impact of residual emissions (if any) by removing an equivalent volume of carbon. |
| Network | Combination of interconnected assets (buildings and infrastructure) that provide services (e.g., water, power, transport) to society as part of a wider system. |
| Net zero carbon | Net-zero is used throughout this document with respect to the industry and its products and relates to the reduction of CO2 emissions, across the whole life cycle, to zero. Carbon capture by industry at industrial plants is included in actions to reduce carbon emissions to zero. Offsetting measures such as planting trees or other nature-based solutions are not included in the calculations to get to net-zero. |
| Operational carbon | The emissions associated with energy used to operate the building or in the operation of infrastructure. |
| Programme of works | Defined set of projects related to the construction, maintenance, operation and/or end of life of an asset, network or system. |
| Reclaimed asphalt pavement (RAP) | Removed and/or reprocessed pavement materials containing asphalt and aggregates. RAP does not contain a detectable quantity of coal tar or asbestos. |
| Recycled crushed concrete | Concrete composed of rock fragments coated with cement with or without sands and/or filler, produced in a controlled manner to close tolerances of grading and minimum foreign material content. |
| Renewable energy | Renewable energy is energy that is produced from renewable sources such as energy from wind, hydro, solar, geothermal, tide, waves and biomass. |
| Scope 1 emissions | GHG emissions released to the atmosphere as a direct result of an activity, or series of activities at a facility level. Scope 1 emissions are sometimes referred to as direct emissions. Examples are:
|
| Scope 2 emissions | Greenhouse gas emissions released to the atmosphere from the indirect consumption of an energy commodity. For example, ‘indirect emissions’ come from the use of electricity produced by the burning of coal in another facility. Scope 2 Emissions from one facility are part of the Scope 1 Emissions from another facility. |
| Scope 3 emissions | Indirect GHG emissions other than Scope 2 Emissions that are generated in the wider economy. They occur as a consequence of the activities of a facility, but from sources not owned or controlled by that facility’s business. Some examples are extraction and production of purchased materials, transportation of purchased fuels, use of sold products and services, and flying on a commercial airline by a person from another business. Also referred to as supply chain emissions. |
| Supplementary cementitious material (SCM) | Supplementary cementitious material, or clinker substitutes, are a wide range of materials that can be used to replace part of the clinker in cement. They can either be blended with cement or used directly in concrete batching. They can be naturally occurring materials, industrial byproducts, or manufactured products. Examples include ground granulated blast furnace slag, fly ash, silica fume, calcined clays (metakaolin) and natural pozzolans (high-silica volcanic ash and pumice). |
| System | Collection and interconnection of all physical facilities and human interactions that are operated in a coordinated way to provide a particular service. |
| Upfront carbon | Upfront carbon: the greenhouse gas emissions and removals associated with the creation of an asset, network or system up to practical completion. |
| Value chain | Organisations and stakeholders involved in creating, operating and managing assets and/or networks. |
| Whole-life carbon | The total of all Greenhouse gas emissions and removals, both operational and embodied, over the lifecycle of an asset, including its disposal. Potential benefits or loads from future energy recovery, reuse and recycling are reported separately. |
Download a PDF of the full report or read the full report below
26 April 2024
As required under section 5DB of the Infrastructure Australia Act 2008 (Cth) (IA Act), Infrastructure Australia, during each financial year, must give to the Minister and table in both Houses of Parliament:
In 2022, the Australian Government undertook an Independent Review of Infrastructure Australia. Following the release of the Government’s response to the Review, Parliament passed legislative amendments to the IA Act in December 2023. This included the requirement for Infrastructure Australia to produce and publish these annual statements.
With the passage of the amendments occurring late in 2023, the Annual Performance Statement 2024 was developed using readily available data within the time available.
This first edition of the Annual Performance Statement sets out Infrastructure Australia’s advice regarding the outcomes being achieved in relation to the Australian Government’s Infrastructure Investment Program (IIP), which funds land
transport projects.
Agreed performance outcomes and measures across the nationally significant infrastructure sectors within Infrastructure Australia’s remit are yet to be determined. As a result, this year’s Performance Statement focusses on the IIP and its alignment to the outcomes sought through the Government’s Infrastructure Policy Statement (IPS).
Infrastructure Australia will work with the Australian Government to agree an approach to reporting in future editions of the Annual Performance Statement, including considering the establishment of performance outcomes and measures for the sectors in Infrastructure Australia’s remit.
The Statement also includes market capacity analysis and trends and insights gleaned from Infrastructure Australia’s evaluation of business cases for nationally significant infrastructure for consideration in the development of future infrastructure proposals.
Infrastructure Australia’s 2023 Market Capacity Report found that Australia’s major public infrastructure pipeline had slightly smoothed over the preceding 12 months, with projected expenditure more evenly distributed over the
forward estimates.
In November 2023, the Australian Government announced changes to projects funded through one of its programs feeding into the public infrastructure pipeline, the IIP. The changes included allocation of additional funds, removal of funds, and deferral of funds. Infrastructure Australia has undertaken analysis to determine the effects of these changes on the public infrastructure pipeline.
Infrastructure Australia’s analysis below assumes a conservative position that all defunded projects are not going ahead, with this scenario resulting in a 2.3% reduction in the 5-year public infrastructure demand pipeline. However, in reality, some projects may still proceed at the discretion of each respective state and territory, without an Australian Government funding contribution.
Furthermore, the Australian Government’s cashflow contribution to the 5-year public infrastructure demand pipeline via the IIP is approximately 20%, with the remainder mostly comprising state and territory funding, including many projects which are not receiving Australian Government funding. Therefore, the impact of the announced changes to the IIP on public infrastructure construction capacity constraints will be properly understood after infrastructure pipelines from each state and territory have been updated.
| Scenario | 5-year total demand | % Change from baseline |
| 2023 Public infrastructure pipeline | $282.8 billion | baseline |
| with projects scaled by additional funds | $286.1 billion | 1.2% |
| with defunded projects removed | $276.4 billion | -2.3% |
| Pipeline with net IIP funding changes | $279.8 billion | -1.1% |
Under the assumption that all defunded projects will be cancelled, the revised IIP will slightly relieve the labour shortage in coming years. Labour demand for publicly funded projects will reduce by up to 8,000 full-time equivalents per month, representing up to 2% of current labour demand in 2024-25.
Figure 1: Public infrastructure workforce demand
The announced changes also reduces quarried materials demanded, although the effect of this impact will be in later years as its impact takes effect during the construction phase of project delivery. By 2027-28, annual quarry demand in the public pipeline drops by up to 3%, or up to 1.2 million tonnes per year.
Figure 2: Public infrastructure quarried material demand
Global supply chain pressures have eased, with steady improvements in international production, trade, and transport measures compared with 12 months ago. However, demand still significantly outweighs supply, and productivity for the construction sector remains stagnant compared to other industries.
The analysis above demonstrates that revisions of proposed infrastructure pipelines can have material effects on managing market capacity and supporting performance of the infrastructure construction market.
As part of normal yearly budget processes, Infrastructure Australia recommends governments carefully review their project pipelines, both within and across sectors. These reviews should ensure that demand is carefully matched to supply of plant, labour, equipment and material. This will ensure that governments are not competing against each other for scarce resources and provide a checkpoint for projects’ progress.
The Australian Government’s over $120 billion infrastructure pipeline aims to improve the productivity of Australia’s land transport networks by working with every state and territory to build much-needed infrastructure across a number of individual funding programs.1 The infrastructure pipeline comprises the IIP, financial assistance grants, equity, and other infrastructure investments.
The IIP, which comprises the majority of the infrastructure pipeline’s funding, ‘supports economic growth, makes travel safer, increases transport access and supports regional development. It increases the efficiency, productivity, sustainability and safety of Australia’s land transport infrastructure through programs and policy to improve connectivity for communities and freight.’2
The Australian Government recently undertook two significant reviews relating to its infrastructure investment – the Independent Strategic Review of the IIP, and the Independent Review of the National Partnership Agreement on Land Transport Infrastructure Projects.
The reviews recommended wide-ranging reforms to the Government’s infrastructure investments, including but not limited to:
Infrastructure Australia supports the recommendations from both reviews. It is anticipated that as the reviews’ recommendations are implemented, such as those related to improved performance reporting, additional data will be available to support future performance statements.
Within the IIP, the breakdown between the funding parties comprises 60% from the Australian Government, with 39% from state and territory governments, and the remaining 1% coming from other sources, such as local governments.i
i. Figures provided by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts. Includes IIP major projects with funding from 2023-34 (excluding unallocated funding) and excluding sub-programs of Black Spot, Heavy Vehicle Safety and Productivity, Bridges Renewal, and Roads to Recovery.
In terms of the modal breakdown of its investment, 69% of Australian Government funding (2023-24 to 2032-33) in the IIP is committed to road projects, with 25% allocated to rail infrastructure. The remaining 6% of funding is committed to the remainder of the IIP.ii Australian Government investment in infrastructure also occurs outside of the IIP on both road and rail infrastructure, for example Inland Rail.
ii. Figures provided by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts. Includes unallocated funding to applicable states. Also includes national unallocated funding which is held against the road allocation.
Future investments in the IIP will be guided by the Government’s IPS, which was released in late 2023. The IPS, in addition to defining nationally significant infrastructure, identifies three strategic themes that encapsulate the benefits the Government seeks from its infrastructure investments:
Infrastructure Australia undertook analysis of a subset of projects within the IIP to understand the alignment of the Government’s existing IIP investments with the policy outcomes in the IPS. It should be noted that for most, if not all of the projects we analysed, the IPS was not in place at the time funding decisions were made. The purpose of this analysis is therefore to demonstrate where governments may wish to focus future decision-making to help achieve the IPS outcomes.
The purpose of Infrastructure Australia’s analysis was two-fold and aimed at understanding projects’:
The analysis is based on Infrastructure Australia’s previous evaluations of project business cases. The business case data was developed by the relevant state or territory governments and provides a ‘before construction’ view of anticipated project benefits, as opposed to realised ‘after construction’ benefits. The analysis therefore gives an indication of the expected benefits of projects at or around the time decisions to fund them were made.
The data was considered current at the time Infrastructure Australia evaluated the business cases and does not account for any subsequent cost increases or scope changes. The data represents Infrastructure Australia’s position on the expected project benefits at the time the business case
was evaluated.
The analysis is limited to projects within the IIP that have:
Filtering out program and unallocated funding, 44 projects were deemed in scope and analysed.iii As they comprise significant projects within the IIP, this subset of projects provides a good foundation for analysis.
To undertake this work, Infrastructure Australia sourced data from the business case evaluation summaries (available on the Infrastructure Australia website) and analysed this data against the themes in the IPS.
iii. 17 rail & public transport projects; 27 road projects
According to business case data, Infrastructure Australia found that the analysed projects were expected to deliver a positive economic return, with a forecast return of $1.17 of economic value for every $1 of infrastructure spending nationally.iv Rail and public transport projects were found to have slightly lower economic returns, $1.13 for every $1 invested, compared to roads, $1.32 of economic return. This is because road business cases count higher productivity benefits, which are a greater share of overall benefits, while rail and public transport projects offer greater liveability and sustainability benefits.
iv. The economic return is the average of projects’ core Benefit Cost Ratio results, excluding wider economic benefits, weighted by the relative value of projects to represent a true economic return.
It is important to note that the economic analysis of a project is only one of several key inputs into Infrastructure Australia’s evaluations. Other significant and important considerations when making infrastructure investment evaluations include the proposal’s:
Infrastructure Australia’s analysis found that productivity is the main driver of project benefits in the projects analysed, comprising 73% of project benefits.
Across the projects, liveability comprised 24% and sustainability 3% of project benefits. Rail and public transport projects demonstrate higher liveability and sustainability benefits than road projects, representing 64% of projected liveability benefits and 65% of sustainability benefits, despite representing only 46% of the projected cost of the analysed projects.
Sustainability benefits comprise 3% of project benefits, however this is not a true representation of the potential sustainability benefits of the projects analysed because:
Improvements to the quality and detail of sustainability data provided in business cases are required to accurately understand the sustainability benefits of proposals. This is discussed further under Trend 4 – Inconsistent assessment of sustainability and resilience, in the Trends and Insights section below.
Based on our experience evaluating business cases, we have identified six trends in project planning processes where there are opportunities to improve and support future Australian Government infrastructure investments.
Projects are growing in scope, scale, complexity and cost. Not only are projects getting bigger, the number of megaprojects (valued at over $1 billion) as a proportion of state and territory infrastructure pipelines is also increasing. This is backed up by Infrastructure Australia’s 2023 Market Capacity data, which shows the rapid increase in infrastructure pipelines over recent years, and jurisdictional reports showing the growing average size of projects.4,5,6,7,8
Across jurisdictions, project reporting shows that high value projects are more at risk of failing cost and time indicators, compared to other, lower value projects.7,5,9 Megaprojects are inherently more complex and riskier,10 and a growing national pipeline of megaprojects puts pressure on public and private sector delivery capability – heightening risks of cost overruns and schedule delays.
Infrastructure Australia’s experience in evaluating business cases has also identified that as well as a rising number of megaprojects, increasingly large projects are incorporating additional scope that is unrelated to the core problem the project was intended to solve. This risks eroding value for money where the planning context and strategic rationale for the additional scope is not robustly justified – for example, active transport add-ons to motorway investments that are not well planned, not sufficiently interconnected with local pedestrian and bike networks and/or are not demonstrated to have demand.
Ensuring that project scopes, and any subsequent changes, are consistent with the original investment objective is critical to achieving the performance objectives of the IIP and the IPS.
Although jurisdictions have infrastructure strategies and long-term infrastructure pipelines, business cases for individual projects often do not consider the impact of project delivery and staging on that state or territory’s infrastructure program as a whole.
There is a disconnect between strategy and delivery, with individual project delivery decisions and implications not being considered in the context of the infrastructure pipeline, such that sequencing and coordination of individual projects is not maximising fiscal, delivery and investment outcomes regionally, state and nation-wide.
Infrastructure Australia’s 2023 Market Capacity data demonstrates that one in three megaprojects are planned to be delivered within 50 kilometres of at least one other megaproject. The density of nearby megaprojects is likely to result in hyper-localised shortages and supply risks that require integrated planning. This analysis incorporates the private and public project pipeline, demonstrating that a market-wide lens needs to be taken to understand demand and supply chain constraints.
Corridor planning and medium-term delivery planning are needed so that project-level outcomes and program-wide objectives can be better realised. Initiatives by the Australian Government to encourage a corridor approach to project planning and 10-year infrastructure plans by jurisdictions for land transport infrastructure will help. Ensuring alignment of business cases with these strategies is critical for reducing competition between interrelated projects within the same corridor and highlighting the trade-offs between market capacity and delivery pipeline. It can also achieve benefits from the infrastructure sooner, as well as minimising disruption due to uncoordinated processes leading to prolonged delivery and interface risks. Ensuring business cases choose an appropriate base case that includes committed and funded projects will highlight whether projects target the same beneficiaries and benefits.
To reduce cost pressures on projects and ensure outcomes are achieved, investment decisions should consider broader market capacity pressures and the interrelationship between projects, rather than considering each project in isolation.
In an analysis of 77 business cases submitted to Infrastructure Australia, 53% had only considered one option in detail. The Infrastructure Australia Assessment Framework (IAAF), which is consistent with the majority of national, state and territory guidelines for business case development, recommends at least two options are assessed in a business case. At least two feasible options for detailed development in the business case enables a rigorous and defensible analysis to determine the most appropriate investment response.
Evidence from some states and territories likewise indicates insufficient consideration and analysis of alternative investment options in the development phase of projects. For instance, project assurance reviews in NSW conducted in the 2021 and 2022 financial years identified ‘Quality of business cases’ as the worst area of performance among 6 critical recommendation themes. These reviews also highlighted deficiencies in the identification of alternative investment options (including consideration of both infrastructure and non-infrastructure interventions) and associated analysis of their respective benefits.9
Similar issues were identified in a Victorian review of major transport project business cases, which concluded that – while the development of project business cases was generally consistent with relevant government requirements and guidelines – the majority of reviewed projects did not include sufficient consideration and analysis of alternative investment options and their benefits.7
Another trend Infrastructure Australia sees in ‘options analysis’ (Stage 2 of Infrastructure Australia’s assessment process) and ‘business case’ (Stage 3 of Infrastructure Australia’s assessment process) submissions is that non-build options such as regulatory or technological solutions are often discarded early in the development phase. This leads to a preference for building new infrastructure rather than using what already exists more efficiently. Appropriately considering retrofits and/or demand management solutions can avoid GHG emissions during construction, environmental impacts, and community and business disruption costs. It may also lead to lower-cost solutions with smaller market capacity impacts.
Assessing more than one option in the detailed business case helps to achieve the most efficient infrastructure investment that bests support Government’s objectives, such as emissions reduction, productivity enhancement or regional connectivity. Considering more than one option increases the transparency of analysis by clearly comparing the societal and sustainability benefits that may be achieved in individual options. For example, an alternative option may be readily delivered using recycled content or a ‘no-frills’ scope that minimises embodied emissions. Regulatory interventions (such as road pricing) might also offer additional benefits such as encouraging public transport use and reduce GHG and noxious vehicle emissions.
Business cases which only assess one option remove government’s ability to properly consider alternatives and determine if the investment is the best use of taxpayer dollars. Often, an expensive ‘megaproject’ is brought forward for investment decision with no alternative, lower-cost options for comparison, which compromises the decision-making process and leads to a less diverse project mix within the investment program overall, thus increasing the program’s size and risk.
In response to changes to the IA Act in September 2022, Infrastructure Australia has developed and published a Guide to assessing greenhouse gas emissions, which sets out Infrastructure Australia’s requirements for project proposal submissions to consider the impact of infrastructure emissions on Australia’s national targets.
Since 2022, Infrastructure Australia has evaluated 14 transport business cases, representing a total outturn cost of $40.5 billion. Until recently, the quality of evidence to support assessment of emissions impacts has been lacking.
While all 14 business cases since 2022 provided evidence that the project reduced GHG emissions due to decreased or improved vehicle travel times or modal shift to rail, only 4 business cases recognised and monetised the disbenefit of increased vehicle GHG emissions from additional (induced) demand. As Infrastructure Australia’s Guide to Assessing GHG Emissions points out, including the positive impact on emissions of travel time savings and decongestion, while ignoring the corresponding negative impact of induced demand on increasing vehicle emissions, misrepresents the sustainability credentials of major infrastructure projects.
In terms of embodied carbon from construction, only 1 business case monetised embodied impacts as part of economic analysis, 6 business cases only qualitatively described them, and 7 omitted embodied impacts altogether. Embodied carbon is important to quantify and include in CBA because it can represent up to 90% of GHG emissions from the construction and operations of transport projects.v,11,12,13 Quantifying embodied carbon in the early stages of project development allows project teams and decision-makers to consider embodied carbon in the scoping phases, and thereby can help to consider lower emitting alternatives or to optimise carbon reduction opportunities through the remainder of project development.
Notably, there is also some variation in the value of carbon used in business cases. Assessing business cases using a standardised national value for carbon ensures that the emissions impact of projects can be compared on a like for like basis by decision-makers. Infrastructure Australia released a Valuing emissions for economic analysis guide in March 2024 which provides national carbon values for use in infrastructure business cases – these values are required to be used in business cases for nationally significant projects seeking Australian Government funding being assessed by Infrastructure Australia.
To achieve the GHG reduction targets set by the Australian Government, governments must consistently and rigorously integrate decarbonisation into infrastructure planning as part of business-as-usual processes.
v. Excluding enabled emissions from downstream users.
There are examples of good sustainability practices across the infrastructure sector, such as the Victorian Government’s Recycle First Policy and generally a commitment by most states and territories to achieve an Infrastructure Sustainability Ratingvi for their major infrastructure projects. Circular economy policies and third-party accreditation help highlight sustainability opportunities and drive good practices in project delivery. However, mechanisms such as third-party ratings can see sustainability measures considered too late in the project development lifecycle, generally during the procurement/construction phases, with measures being driven by contractor innovation rather than intentional project outcomes.
Recognising opportunities to reduce operational and embodied emissions at the outset and as part of project planning, including assessing emission reductions in options analysis and business cases will ensure decision-makers can make net zero-aligned infrastructure investments. It can also highlight where existing procurement practices and engineering specifications require flexibility to enable the use of low emissions construction materials.
Lastly, the impact of environmental externalities, such as land clearing or tree plantings, which result in negative and positive impacts on biodiversity, as well as environmental costs and offsets, are not usually included in business cases. Although some of these externalities and costs may be small in relation to the project’s overall costs and benefits, proponents should attempt to describe them. Providing transparency of expected environmental impacts qualitatively can highlight opportunities to improve environmental outcomes, such as avoiding clearing remnant vegetation, which may have high conservation, biodiversity or other benefits but are hard to quantitatively assess.
vi. The Infrastructure Sustainability Rating Scheme is a rating system for evaluating economic, social and environmental performance of infrastructure across the planning, design, construction and operational phases of infrastructure assets. See https://www.iscouncil.org/is-ratings/ for more information.
Infrastructure Australia has also identified a need to better consider resilience in infrastructure planning and decision-making, through business case guidelines, capital asset planning and assurance processes.
An agreed methodology and guidance on how to value resilience in decision-making through the infrastructure lifecycle and the development of a nation-wide approach to quantifying risk, costs, benefits and performance of resilience assets and places is needed. This approach should be aligned across jurisdictions, referenced in policies and embedded in assessment frameworks and processes.
The risks posed by increasing extreme weather, mean temperatures, sea level rise and natural disasters (such as flooding and drought) will challenge the resilience of infrastructure built to existing standards and planning. Research has demonstrated that private infrastructure assets could see 27% loss in asset value by 2050 due to climate risks.14 Public infrastructure is similarly exposed – and this poses the risk of disruptions to services on which communities and businesses rely, as well as write-downs of public assets, impacting government balance sheets.
Given a major share of natural disaster costs arise from damage to critical infrastructure, estimates suggest $17 billion (in present value terms) may be required for the direct replacement of essential infrastructure during the period between 2015 and 2050 due to natural disaster damage.15 This does not include costs stemming from service disruption.
Despite an increasing appetite for change, infrastructure is being delivered that is generally not sufficiently resilient to future events, resulting in poor social, economic and environmental outcomes for communities and taxpayers. Governments are at different points in embedding resilience and climate adaptation into their frameworks and there are varying degrees of maturity across infrastructure bodies’ guidance and assurance processes.
It is imperative that projects being considered for development and delivery give regard to the long-term resilience implications of an asset’s operations, location, climate risks and the shocks and stresses that are likely to occur over the course of its lifetime.
As the scale and complexity of infrastructure projects grow, delivery schedules are lengthening and the footprint and extent of community impacts are increasing.
Disruption impacts include congestion and service disruptions due to construction, impacts on or access to significant places including aboriginal cultural heritage, and acquisitions of properties and relocation of businesses. The construction footprint of a project is often larger than the area of the asset itself, as land is utilised for workers facilities and equipment and materials staging and storage.
Disruption impacts have important equity considerations that should be carefully considered in the business case. This is because the communities who are impacted during construction may not be the beneficiaries of the project.
There are implicit trade-offs between proposed project benefits and disbenefits and to whom those benefits and disbenefits accrue. Further, short-term disruptions, especially if they are unplanned, can be disastrous for long-term economic benefits.
While some disruptions are unforeseen, many disruptions can be anticipated, and therefore attempting to describe and quantify all disruptions can reduce the probability of unplanned events by highlighting potential mitigants, including further planning, contractual considerations and community engagement.
Analysis of a project’s costs and benefits helps decision makers understand the balance of project (dis)benefits versus costs. Infrastructure Australia’s Assessment Framework recommends that disruption impacts are included in the CBA for projects where these costs are expected to be large. The costs are likely to be significant when building a major transport upgrade (light rail, rail or a major road expansion) through a highly urbanised and developed area.
While CBA describes the balance of costs and (dis)benefits, it does not provide transparency as to whom, when and where (dis)benefits accrue. Equity analysis that maps to whom and where (dis)benefits accrue can provide this transparency. Infrastructure Australia’s Assessment Framework recommends business cases describe and analyse distributional effects, including the scale of those effects at a spatial and temporal level. Maps, diagrams and charts can help illustrate the scale of those effects. State and territory governments should ensure that business case frameworks require disruption impacts in CBA, and distributional impact analysis, particularly for large projects in urban areas.
Infrastructure Australia has observed that business cases can rely on cherry-picked assumptions and data to bolster the economic case for projects. In Infrastructure Australia’s analysis of 77 business case evaluations, unrealistic or non-standard modelling inputs/assumptions was the third most identified issue in the assessment of project economic appraisals – being reported in 63% and 78% of road and rail business cases respectively.
Inaccurate assumptions can lead to misleading benefit-cost ratios that are inflated by benefits that may not materialise. Overstating project benefits undermines decision makers’ ability to allocate public resources efficiently and erodes the options analysis process, by preferencing foregone planning outcomes rather than robustly testing options.
Infrastructure Australia’s Assessment Framework stipulates the Australian Transport Assessment and Planning Guidelines16 and/or Austroads assumptions that should be used, to ensure business cases conform to nationally standardised assessment practices. Standardisation provides a common approach to measuring and evaluating projects, supports transparent funding decisions based on a consistent and agreed set of inputs, and enables governments to compare projects’ economic results on a like-for-like basis. As research on major project assessment has found, CBA as a decision tool is only reliable when the inputs and methodologies used are consistent, standardised and reliable.17,18
In Infrastructure Australia’s analysis of business cases, induced demand was cited as an issue in 40% of road and 60% of rail business case evaluations. In a study of a proposed road project in Denmark, researchers showed accounting for induced demand lowers travel time savings, increases negative externalities (e.g. noxious fumes) and results in a considerably lower benefit-cost ratio.19 From a GHG emissions perspective, appropriately accounting for induced demand is critical for identifying the impact of infrastructure proposals on Australia’s emissions targets.
Business cases are often not modelling demand based on post-COVID pandemic changes in travel patterns (including for peak road and public transport demand) or testing model results through post-COVID scenario analyses. Establishing a new normal to reflect post-pandemic office vacancies/journey-to-work patterns is critical to substantiating commuter demand and metropolitan congestion – especially in project base cases. Assuming a return to pre-pandemic levels may still provide a useful baseline against which to test CBA results using a post-COVID status quo.
The impact of overly optimistic demand projections on project economic outcomes is well documented. In a 2018 study, BITRE showed that 60% of the difference between before construction CBA and after construction CBA in 12 road business cases was inaccurate traffic forecasts and methodology errors.20,21
The Australian Government’s response to the Independent review of Infrastructure Australia (2022) recognised the need for post completion reviews to provide greater evidence that projects are achieving their intended outcomes.
Despite broad agreement on the merits of undertaking post completion reviews of infrastructure projects, including the application of lessons learnt and feedback for future investments, Infrastructure Australia’s research and engagement with jurisdictions demonstrates that these reviews are not consistently undertaken and rarely published.22,23
Post completion reviews identify important lessons for governments, communities and industry regarding project successes following project delivery. These reviews determine whether the desired objectives and/or forecast benefits and costs have been realised and can explain the reasons for any differences between the expected and actual outcomes. The aim is to draw appropriate lessons to feed into future infrastructure development and delivery processes.
A component of post completion reviews is after construction cost-benefit analysis, which helps to identify:
Conducting a cost-benefit analysis after construction can also be used to conduct benchmarking to help improve estimation techniques around costs and risks during planning, or to substantiate forecasts in the business case by comparing a portfolio of projects with similar characteristics. This can help reduce optimism bias during the planning phase of infrastructure projects, ensuring that scheduling, cost and risk of projects is better understood before funding commitments are made.
The analysis and insights provided in this Annual Statement are based on Infrastructure Australia’s evaluation of project business cases because post completion data is not currently available at a national level to assess project performance. Business cases provide a ‘before construction’ perspective of project performance that is based on expectations and probabilities. While useful for making decisions about the use of public resources in the future, this upfront cost-benefit analysis does not provide confidence that the forecasted performance was actually achieved.
Working with Infrastructure Australia and leveraging the well-defined guidance on benefits realisation
and cost review at the jurisdictional level, there is a clear opportunity for all governments to adopt a consistent approach to post completion reviews to gain a better picture of whether the IIP is achieving its intended impact.
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26 April 2024
| Recommendation 1: | Prioritise investment in project planning, development and business case proposals to support a sustainable pipeline |
| Recommendation 2: | Prioritise proposals focused on better utilisation, maintenance and renewal of existing infrastructure assets alongside potential new investments to ensure a more sustainable investment mix |
| Recommendation 3: | Prioritise proposals that support decarbonisation and the circular economy |
| Recommendation 4: | Prioritise place-based infrastructure planning proposals |
As required under section 5DB of the Infrastructure Australia Act 2008 (Cth) (IA Act), Infrastructure Australia, during each financial year, must give to the Minister and table in both Houses of Parliament:
In 2022, the Australian Government undertook an Independent Review of Infrastructure Australia. Following the release of the Government’s response to the Review, Parliament passed legislative amendments to the IA Act in December 2023. This included the requirement for Infrastructure Australia to produce and publish these annual statements.
With the passage of the amendments occurring late in 2023, the Annual Budget Statement 2024 was developed using readily available data within the time available.
This first edition of the Annual Budget Statement reflects on current infrastructure challenges and provides advice on the types of infrastructure proposals Infrastructure Australia recommends be considered during Budget processes. It considers recent observed trends both globally and in Australia, and evidence across infrastructure sectors, in particular for land transport. This advice is based on Infrastructure Australia’s own research, together with structured analysis of recent evidence from states and territories and the research community.
Future editions of the Annual Budget Statement will use Infrastructure Australia’s products, such as a targeted Infrastructure Priority List, to inform advice to Government on recommended projects for consideration in future Budget processes. Infrastructure Australia will also work with the Government to consider how broader Government reforms to infrastructure investment planning and decision-making and the availability of other data sources can inform future statements.
Australia’s infrastructure networks and systems are vitally important. Secure and resilient infrastructure is critical to connecting people and businesses, powering the Australian economy and supporting communities in an increasingly unpredictable natural environment.
The environment in which infrastructure is planned, delivered and operated has changed significantly over time. Domestic and global challenges such as climate change and extreme weather events, global availability of resources and materials and changing movement patterns can create an environment of risk and uncertainty.
However, there are significant opportunities to evolve our approach to infrastructure planning, delivery and operation. Development of new technologies, increased use and access to data, modern methods of construction and a greater focus on renewables and recycled materials can transform our infrastructure system and assist in overcoming the challenges we currently face.
Figure 1: Key infrastructure challenges
Capital infrastructure investment is growing across Australian jurisdictions in sectors such as transport, social infrastructure, energy and buildings, driven by factors including growing populations, changing needs, and emerging priorities such as housing supply and the energy transition.1,2,3
There is also clear global and jurisdictional evidence of a trend towards an increasing number and scale of ‘megaprojects’ (cost over $1 billion) in recent years.4,5,6,7,8
This growth in spending has ramifications for project delivery across infrastructure sectors in terms of cost and risk, and longer-term ramifications due to a growing asset base and maintenance liability.
Figure 2 illustrates the significant increase in combined public and private sector infrastructure investments over recent years and the scale of the forward pipeline. The 5-year, $690 billion combined pipeline comprises building and transport investments of $427 billion and $210 billion respectively, and a further $53 billion utilities pipeline that includes an expected four-fold increase in energy investments over the next four years. This rapid growth in energy projects will need to compete for resources despite being overshadowed by building and transport investments.
Figure 2: Combined Infrastructure (public and private sector) - annualised investments by sector.
Source: Infrastructure Australia (2023).
Notes:
Figure 3: Recent trends in Australia’s public infrastructure investment across sectors
There are signals of shifts in investment trends. For example, Infrastructure Australia’s research indicates that energy sector investment is expected to grow nationally at around four times current activity levels.9
Jurisdictions such as Queensland are also seeing significant uplifts in energy sector funding.2
There are also indications of a greater balance of investment across sectors going towards regional areas. Infrastructure Australia’s 2023 Market Capacity Report indicates that regions across NSW, Queensland, and the Northern Territory will experience extraordinary growth in the three years from 2024-25, with investment up to three times higher than the three years prior in some regions.9
Both in Australia and globally, there is a heated infrastructure market resulting from growing demand pressure as well as market constraints in terms of labour, skills and materials.10
Australia will continue to see prolonged pressure on construction capacity because of sustained cross-sectoral demand.
This includes uplifts in overall capital spending and/or accelerated delivery (where capital expenditure is brought forward to earlier than originally planned). In NSW, the number of projects in the state’s infrastructure program increased by 4.8% year-on-year in 2022-23, while increasing numbers of megaprojects are also moving into delivery, putting pressure on the market’s capacity to deliver (both globally and locally) and leading to cost increases on projects.11,1 Queensland has also seen substantial increases in overall infrastructure project costs, partly resulting from the accelerated delivery of capital projects such as rail and highway upgrades.2
Governments are recognising and acting to manage demand challenges, in both the short and longer term, for example through:
In an environment of increasing demand pressure, factors such as rising material costs, disrupted or under-supply of materials, labour and skill shortages in the construction industry, and increasing labour costs have been identified by multiple Australian jurisdictions as a major cause of cost increases and delays to the delivery of infrastructure projects and represent an ongoing challenge.8,12,13,2
Infrastructure Australia’s 2023 Market Capacity Report demonstrates that labour remains the top capacity constraint. Labour supply capacity is expected to recover to pre-COVID levels by mid-2024 and to continue to increase steadily. However, the expected rate of supply increase is not projected to close the construction sector’s labour gap indicating longer-term structural barriers. Further, the Report asserts the workforce must continuously upskill to keep pace with evolving job designs and ways of working, and that improving workplace culture in construction overall will unlock productivity benefits. However, a range of cultural problems such as inflexible and extended working hours, lack of diversity in teams and mental health issues, are reported to hinder women’s participation in the sector and increasingly, that of young men. Many of these issues may be addressed through reforms outlined by the Australian Government in recent months (see below).9
Key Australian Government reforms addressing structural barriers to labour capacity and productivity include:
Significant levels of public investment in priority growth areas such as energy, housing, heavy industries, and defence, will also compete for access to human resources. Our latest Market Capacity analysis indicates a shortage of 229,000 full-time infrastructure workers as of October 2023, with shortages in all occupational groups. These shortages are driven by heightened activity in public and private infrastructure investments. Labour demands total 405,000 full-time infrastructure workers, with transport accounting for 56% of total labour demand, buildings 34%, and utilities the remaining 10%. Further, extraordinary growth in public and private investments are expected to create labour gaps in coming years in some regional hot spots. The top five regional hot spots are Murray, mid-North Coast and the Riverina in NSW, the NT outback and central Queensland.
Industry research indicates concerns that the domestic capacity of materials supply – particularly steel and quarry products – cannot meet demand in particular hotspots.9 Acute quarry shortages loom in a few hotspots across the country, notably Melbourne, mid-North Coast NSW and South East Queensland. Quarry materials are important to a range of infrastructure projects including roads, bridges, houses, railways and other infrastructure. Projects carry the risk of higher transportation costs, vehicle emissions and schedule delays if forced to source quarry materials from further afield.
Productivity in the construction sector has not improved for over 30 years. This is partly due to the absence of diagnostic productivity measures, low participation of women in the workforce, inconsistent adoption of new technologies and modern manufacturing methods, and unfair risk allocation in procurement and contracting.
State and territory governments have initiated or are in the process of implementing reforms to increase industry productivity. However, joint effort by all governments is necessary to support ongoing work and raise reform outcomes to the national level. This effort should focus on developing diagnostic productivity measures, establishing a national productivity baseline, and creating national metrics and indicators to track progress. Regular progress reporting against these measures should be provided to relevant intergovernmental forums and/or Ministerial Councils.
Climate change impacts such as extreme weather, fires and floods are directly impacting existing infrastructure across sectors and jurisdictions and represent a significant and growing risk to assets, systems and user outcomes. There is growth in the frequency and intensity of these impacts, and this poses episodic but extreme risk to both developing infrastructure and existing assets.14
Increasing disaster and resilience events require investment in more resilient infrastructure, and create indirect impacts by requiring funding and resources to be diverted to increased operational costs, post-disaster maintenance and repair, reconstruction and recovery. As jurisdictions such as South Australia and New South Wales have observed, this places significant added pressure on already-constrained public finances as well as on market capacity for infrastructure delivery.17,7
As identified by Infrastructure Western Australia in their State Infrastructure Strategy, considering resilience not only includes a focus on the resilience of an individual infrastructure asset, but also the contribution that piece of infrastructure makes to resilience of the community overall.15 Fundamental to this is an understanding of likely future climate change impacts, auditing of existing infrastructure systems, adequate planning, along with appropriate consideration of resilience in existing and new infrastructure projects and networks.
Similarly, infrastructure planning, investment and design decisions need to be in step with national goals for decarbonisation and the circular economy. To date, the transition to more sustainable approaches to infrastructure, such as adoption of recycled materials as well as efforts to minimise embodied carbon through project delivery, has been slow and inconsistent.
For example, approximately 43% of conventional materials used in road construction could be replaced by a range of recycled materials. Cost savings from the application of recycled alternatives in roads infrastructure range from 2% to 83%. Supporting the increased uptake of recycled materials in construction can help to lower project costs, and support Australia’s decarbonisation efforts to reach Net Zero by 2050.
Efforts to reduce embodied carbon would make a significant contribution to Australia’s decarbonisation agenda. This can be achieved through the decarbonisation of building materials on the supply side, and changes in how Australia plans, designs and procures assets so that embodied carbon is considered early. Research by Infrastructure Australia shows that low carbon building materials and construction methods have the potential to achieve a 23% saving of upfront carbon from the public infrastructure pipeline over the next five years.
Infrastructure Australia’s 2021 National Risk Study highlighted that, both globally and in Australia, larger projects are more likely to face increased risks, costs and schedule overruns.14 This is reinforced by global research, which demonstrates that:
The performance of infrastructure projects in Australia is broadly in line with these global trends. Australian studies indicate that the average cost increases on transport infrastructure projects in Australia typically range from around 12-52%.19,20,21 This is reinforced by evidence from Australian jurisdictions. For example:
The evidence is clear that major infrastructure projects, irrespective of their types, sectors and locations, often experience cost increases and delivery delays. Infrastructure Australia’s 2021 National Risk Study highlighted key strategies in the planning, scoping and development of projects to manage these risks and their underlying causes, including:
The trend towards an increasing number and scale of ‘megaprojects’ (described earlier) adds to the risk in governments’ infrastructure portfolios because of their size, complexity and greater exposure to risk.4,7
Across sectors, megaprojects consistently exceed cost and time estimates to a greater degree than other lower value projects that experienced overruns.11 This global evidence is reinforced by recent infrastructure delivery trends observed in Australian jurisdictions.8,7
The increased risks associated with megaprojects are partly due to their unique characteristics. In particular, these issues relate to higher complexity – including planning and delivery within dense, built-up areas with extensive existing infrastructure, as well as challenges in the investment planning process – and longer project timeframes, resulting in greater exposure to cost and schedule risk.4,1,11
The trend towards increasingly large and complex infrastructure projects also has implications for the complexity of procurement and contracting processes. This trend is observed internationally, leading to greater prevalence of adversarial engagements and issues with risk transfer during delivery, impacting project delivery costs and delays.11 In recent years, states and territories have reported similar challenges with procurement and contract management processes as factors impacting on costs, timeframes and delivery confidence of infrastructure projects.12,1
Megaprojects in sectors such as transport can also represent much more complex, multi-dimensional urban development and renewal interventions than more typical road or rail infrastructure projects. This complexity can make approaches to investment planning, appraisal and business case development more challenging for agencies based on standard guidelines.
At the same time, international research shows that integrated planning, business case assessments and front-end due diligence are some of the most important areas for improving the performance of megaprojects.4 In NSW, key identified causes of increased megaproject risks also include unclear project roles and responsibilities and inadequate approaches to risk management and procurement.1
Some jurisdictions indicate a growing challenge with ageing assets. The Queensland Audit Office reports that estimated actual capital expenditure across all agencies in Queensland was 14% higher than expected in 2022-23, in part due to additional costs required to maintain ageing infrastructure in the energy sector, as well as rising supply costs and severe weather events.2 Infrastructure NSW’s State of Infrastructure Report 2022-23 indicates that all infrastructure sectors in NSW reported issues with ageing assets, with evidence that more ageing assets are linked to an increase in high-risk safety incidents, maintenance challenges and impacts on service delivery.7
In addition to a growing challenge, understanding the problem at hand is another concern. Infrastructure WA notes that asset management practices, for the state’s approximate $159 billion asset base, varies considerably across government. This presents a challenge in determining both the size and cost of the backlog in maintenance across the state. Infrastructure WA also found that the variability of reported maintenance expenditure is suggestive of a large amount of reactive maintenance.15
Australian governments will play a critical role in meeting the challenges outlined above. As a major planner, funder, procurer and owner of infrastructure, governments have an important role in ensuring that infrastructure investments help to progress broader national goals and objectives, such as decarbonisation, waste action and improving productivity.
Productivity growth has slowed over the past decade in Australia.22 Infrastructure investments can support productivity and economic growth by improving the efficient movement of freight and people, increasing a network’s reliability and/or resilience, and reducing ongoing maintenance costs. Infrastructure Australia recommends that the Australian Government considers productivity benefits at the early stages of project planning and ensures that productivity-enhancing proposals form the majority of its investment portfolio.
Taking appropriate time to plan and select the right mix of infrastructure investments will improve the ability of governments to take these broader objectives into consideration.
For example, an appropriate mix of build and non-build investments can deliver greater capacity in our infrastructure with less resources, balance portfolio risk, support meeting Australia’s climate targets and assist with addressing significant market capacity demand. An important enabler to this is ensuring the consideration of a range of options when considering infrastructure interventions. Conversely, a portfolio comprising a large proportion of megaprojects can significantly increase risk and the likelihood of
cost overruns.
In concluding the 2024 Annual Budget Statement, Infrastructure Australia makes the following recommendations for the Australian Government to consider in determining and prioritising projects for investment.
Infrastructure Australia encourages the Australian Government to keep in mind existing pressures on the infrastructure construction market when contemplating new and additional investments in infrastructure. This includes considering:
As infrastructure construction market demand still significantly outweighs supply, active demand management will be an ongoing area for action. 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.
Infrastructure Australia is very supportive of government-led demand management initiatives such as the Australian Government’s recent review of the IIP to ensure the right projects are prioritised for funding and delivered at the right time.
With this in mind, and coupled with the priority of a sustainable, deliverable infrastructure pipeline, Infrastructure Australia recommends the Australian Government continues to work with jurisdictions, across all sectors, to prioritise the development of planning and business case proposals for consideration in the next Budget process.
This will assist in both managing existing market capacity constraints and ensuring that infrastructure proposals delivered in future are robustly scoped and costed, reducing the risk of scope changes and cost increases. It also assists in developing a clear, well-planned pipeline of work for the market to respond to and is particularly important to appropriately manage the increased risk associated with megaprojects outlined above.
In relation to land transport infrastructure, this approach also aligns with recommendations in the Government’s Independent Strategic Review of the IIP and the Independent Review of the National Partnership Agreement on Land Transport Infrastructure Projects.
The evidence of a growing imbalance towards capital expenditure over asset maintenance and renewals is a significant concern to the long-term financial sustainability of managing the existing asset base and the continued ability of infrastructure assets to serve the needs of the community.
Optimising current assets and networks can be a more efficient and cost-effective method of meeting current and future needs than constructing new expensive, long-lived assets that further add to the growing whole-of-life costs of asset portfolios and increase pressure on the market’s capacity to deliver. Ensuring an appropriate investment mix can assist in managing the infrastructure portfolio risk profile, derive lower cost solutions, lessen market capacity constraints and assist in reducing greenhouse gas (GHG) emissions.
Infrastructure Australia recommends that the Australian Government work with jurisdictions to prioritise development of proposals focused on better utilisation, maintenance and renewal of existing infrastructure assets alongside potential new investments. This includes potential enhancements required to improve the resilience of existing infrastructure assets.
Infrastructure is a key contributor to Australia’s GHG emissions footprint. It is estimated that 70% of Australia’s emissions are directly attributable to or influenced by infrastructure.23 Decarbonising infrastructure presents opportunities to reduce costs and improve productivity through design choices that minimise or avoid emissions, and through the use of low carbon and recycled materials.
To meet Australia’s emissions reduction targets, governments must integrate decarbonisation into business-as-usual infrastructure processes. This includes reducing the embodied carbon intensity of public infrastructure projects, the emissions associated with materials and construction and throughout an asset’s lifecycle, across all sectors.
Governments can leverage their purchasing power to create circular economy supply chains and lower the adoption costs of recycled and low emissions building materials. By encouraging innovation in construction practices and use of low emissions materials, governments can help make these materials more viable substitutes for use in the private sector.
In support of driving more sustainable approaches to infrastructure, Infrastructure Australia recommends the Australian Government prioritise new investments that clearly demonstrate an aim to maximise, where appropriate, the proportion of recycled materials used in project design and construction, as well as potentially recycling or reusing materials during the project’s lifecycle.
Infrastructure Australia supports the Government’s commitment to place-based, corridor and precinct planning through mechanisms such as the regional and urban Precinct and Partnerships programs and reforms to the IIP. It is recommended that the Australian Government continues to provide funding to projects and programs with a place-based, corridor or precinct focus.
Coordinated cross-sectoral planning across all levels of government is critical for the Australian Government to be able to identify ‘investments that ensure the planned development of cities and suburbs and regions by linking strategic planning, population growth, the supply and availability of housing and land transport infrastructure investment’ which forms part of the Australian Government’s Infrastructure Policy Statement.
For example, understanding the new or upgraded enabling infrastructure required to support the 1.2 million homes to be delivered under the National Housing Accord, such as transport, water communications and community facilities, will be critical to achieving the shared ambition of well-located, affordable homes.24
In addition, in an era of increasing investment in megaprojects, strategic planning can ensure that these significant investments are delivered in the right place and at the right time, sequenced appropriately, manage community disruption appropriately and maximise their wide-ranging benefits to the community.
This will be important for geographical locations where multiple government investments are being considered to facilitate different government priorities. For example, a geographical location earmarked for critical minerals development will also need to consider enabling infrastructure such as energy, communications, transport and potentially housing.
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