Tackling productivity challenges in Australia's infrastructure industry

Australia’s stagnant productivity has been a worrying headline over the past 12 months. The issue has become increasingly critical as the nation and the world grapple with geopolitical conflicts, extreme weather events, high inflation, economic challenges and making efficient use of resources.

While low productivity is a challenge for many sectors, it has been a decades-long battle in infrastructure and construction.

Infrastructure Australia’s 2023 Market Capacity Report highlighted deep-rooted problems that have hindered progress in the construction sector. These challenges are multifaceted, ranging from skill deficits to systemic barriers that prevent the adoption of new technologies and innovative practices.

At the heart of improving productivity lies the critical need for a skilled workforce. The Productivity Commission has reported the necessity for a workforce equipped with robust cognitive skills, vital in a rapidly changing service economy.

Despite Australia's well-educated and affluent population, the nation underperforms in commercialising and adopting engineering innovations. This issue extends beyond just developing new technologies; it encompasses the struggle to adopt innovations that can lead to significant productivity improvements.

Engineers play a crucial role in developing and using data and technology, leading to substantial productivity gains. They create systems, products and services that enhance efficiency across sectors, enabling people to achieve more with less effort, time, materials, energy and environmental impact. However, developing these innovations is only part of the solution; implementing systemic changes to integrate them into best practices is equally important.

The adoption of new systems, products and services is essential, but enabling their integration remains a significant challenge. Speaking at the 2023 AFR Infrastructure Summit, I emphasised the need for the sector to prioritise not only safety but also to be digital, diverse and sustainable by default.

Diversity in the workforce is critical for innovation and effective project outcomes. Currently, only 14 per cent of engineers are women, indicating a significant gender imbalance that affects team dynamics and project success. A diverse team enhances innovation, improves universal access outcomes and fills blind spots in planning and risk management. 

The draft recommendations of the Federal Government’s 2023 Diversity in STEM Review assert that: “a diverse STEM workforce can help secure Australia’s economic future and keep pace with global technological change. Australia’s diverse population is our strength. If Australia is to maximise our innovation, we need to draw on and value the diverse perspectives currently underrepresented in our STEM community.”

Effective governance and planning are key to economic prosperity. Collaborative, long-term planning is vital, and greater cooperation with government at all levels is necessary for continuous improvement in project governance, planning, procurement and delivery.

The recent Federal Government review of Australia’s infrastructure pipeline, which focuses on achieving the best value for money and targeted outcomes, is a step in the right direction. Coordination between states, particularly in areas with skill shortages, is imperative.

The adoption of digital technologies throughout an asset's lifecycle is crucial for enhancing productivity in infrastructure delivery and operation. Digital tools like digital twins, smart sensors, building information modelling systems and digital engineering are essential for creating future-ready infrastructure. However, despite their proven benefits, these technologies are not yet standard in many projects, highlighting the need for widespread training and upskilling in digital skills.

Procurement reforms present a substantial opportunity to increase productivity, create jobs and foster innovation. The current focus on de-risking often leads to conservative approaches, hindering the adoption of innovative solutions.

Revising risk allocation and ensuring proportional liability can lead to better project outcomes. Additionally, increasing the involvement of small-to-medium enterprises and establishing a consistent procurement framework across government levels will improve consistency across states and territories.

Beyond technical and systemic solutions, addressing the mental health and well-being of workers in infrastructure is paramount. The stress associated with stagnant productivity, high-pressure environments and a lack of innovation can take a toll on employees. Creating a supportive work environment that prioritises mental health can lead to more engaged and productive workers.

Education and continuous learning are vital to equip the current and future workforce with the necessary skills. Educational institutions and industry bodies need to collaborate to ensure curriculums are aligned with the evolving demands of the infrastructure sector. Continuous learning and professional development opportunities will ensure that the existing workforce can adapt to new technologies and methodologies.

The Australian Universities Accord interim report released in 2023 stated: “to successfully tackle our big national priorities – including lifting economic productivity, making a clean energy transition, building a caring society, meeting the defence and security challenges of our region, and strengthening our democratic culture – our higher education sector must become much, much stronger. Scientists, engineers, qualified carers and others will be needed in larger numbers.”

To overcome stagnant productivity in infrastructure, a comprehensive, multifaceted approach is required. This approach should encompass the development and retention of a skilled and diverse workforce, the adoption of digital technologies, the implementation of best governance practices, the reform of procurement processes, a rethink of our educational offerings and the prioritisation of mental health and continuous learning.

By tackling these issues, Australia can set a new standard for efficiency and innovation in infrastructure development, crucial for our economic prosperity and global competitiveness.