How can the productivity of infrastructure delivery in Australia be improved?

Stagnant productivity growth is a longstanding issue facing infrastructure delivery in Australia. Despite many initiatives to address it, the situation hasn’t improved.

According to the Productivity Commission, Australia is “running to stand still”.

As of June 2023, construction productivity and market capacity are defined by the federal government as a national cabinet priority.

In October 2023, the International Monetary Fund warned that a spending boom on infrastructure projects, mainly at state and territory levels, was pushing Australia’s economy beyond capacity and fuelling inflation.

In November 2023, the Australian government cut 50 projects from its Infrastructure Investment Programme (IIP).

The decision followed an independent strategic review, which found that the 10-year programme developed by the former coalition government was undeliverable.

The main reason behind the decision is a changed economic picture: high interest rates and labour shortages have since become critical issues in Australia.

The findings of the review were broadly accepted by the infrastructure sector – which has sounded warnings about the lack of capacity available to deliver the IIP – as it has provided clarity on which projects will take priority in the next decade.

However, the need to reprofile the pipeline due to serious market capacity issues highlights Australia’s infrastructure delivery productivity challenge.

Though productivity challenges in Australia are particularly acute, the country is not alone in facing these challenges. Globally, nations are facing the challenges of rising costs and diminishing workforces.

Call for insights

In an upcoming policy and research programme, the ICE will explore what needs to happen to improve the quality of outcomes (i.e. effectiveness) and reduce waste (i.e. efficiency) in Australia’s infrastructure delivery.

This paper is the first stage of that process. It provides the vehicle to gather evidence on what measures can be taken to improve Australia's productivity in infrastructure delivery and achieve the country's growth and development goals.

The ICE is issuing a call for insights from infrastructure experts to identify the challenges, solutions and global lessons in this debate.

Insights gathered from this exercise will feed into the research programme, including recommendations on policy approaches and supporting measures.

We invite experts involved in improving infrastructure delivery to respond to the questions below.

This consultation runs until 12 January 2024.

Responses can be made by emailing [email protected].

Questions:

1. How is Australia’s productivity challenge being defined?
2. How are policymakers tackling it?
3. How is the infrastructure sector tackling it?
4. Australia has experienced sustained construction productivity stagnation, despite multiple attempts to address this. Considering this, why is productivity not improving?
5. What learnings can be applied from countries that have faced similar productivity challenges?