Monday, 15 May 2023

Delivered by Infrastructure Australia’s acting Chair, Gabrielle Trainor AO—check against delivery

Good morning.  

Thank you to The New Zealand Infrastructure Commission, Te Waihanga for the invitation to contribute to the critical discussion about better infrastructure delivery. 

To start, I wanted to share a bit about who Infrastructure Australia is, and the role the organisation plays.

Infrastructure Australia is a trusted independent advisor to government, industry, and community on projects and reforms of national significance that will contribute to economic, environmental, and social prosperity.

We analyse data, work with stakeholders and conduct research to identify gaps and opportunities in the nation’s infrastructure to support better decision-making and planning for the sector, and ensure public funds are directed towards projects that will deliver the best outcomes for communities.

Recently, the Australian Government undertook an independent review of Infrastructure Australia with the intent of strengthening the organisation and cementing its place as the Commonwealth’s independent infrastructure advisor.

The Government’s response to the review sets out an ambitious and exciting program of evolution.  

These changes will include moving the organisation to a commissioner model, supported by an expert advisory council.  

Legislation is currently before the Australian Parliament to implement the changes, and we are also expecting an updated Statement of Expectations.  

We are also working closely with key stakeholders to implement the Government’s vision and ensure we position ourselves appropriately to support the Australian Government with rigorous, expert, and independent advice.

This review and the changes being implemented are coming at a critical time.

The industry is experiencing unprecedented demand from a massive major projects pipeline, while simultaneously dealing with the lingering symptoms of the COVID-19 pandemic.

Infrastructure Australia’s 2022 Market Capacity Report highlights Australia’s public infrastructure pipeline grew by at least $15 billion over the last year.

This growth in demand has coincided with several serious challenges impacting the sector’s ability to deliver including surging supply risks, continued inflation in the cost of construction materials, labour shortages and stagnant productivity in the sector.

It’s no longer a question of if a project will slip – the question is when, by how long and at what cost.  

No project is insulated, and no jurisdiction is immune.  

To begin to solve these issues, we first need to understand them.   

The good news though, is that there are positive changes the infrastructure sector can make now that will yield long-lasting benefits and support a more sustainable sector for years to come.  

The first and most immediate step governments can take to alleviate the pressure is to look at their current total pipeline.

We know many jurisdictions are doing this and of course, the Australian Government announced this month an independent review of its Infrastructure Investment Program.

This review aims to allow all levels of government time to consider which projects should be prioritised based on their cost and deliverability in the face of these current market capacity constraints. 

These are hard decisions.  

Delaying projects means communities need to wait longer for the energy, transport, digital, health and other projects promising to make their lives easier.    

But if immediate action isn’t taken, the result will be budget blow outs and delivery delays that will mean communities get less for their taxpayer dollars. 

Last year, public infrastructure projects faced a shortage of 214,000 skilled workers.

In 2023, labour demand is expected to increase by 42,000 to a peak of 442,000.

This is more than double the anticipated available supply.

At the same time, productivity in Australia’s construction industry has stagnated for three decades.

While productivity in manufacturing and transport are on an upward trajectory, the Australian Bureau of Statistics’ Multifactor Productivity Index shows construction is still exactly where it was in 1990.

Our centuries-old solution has been to push everyone to work harder and faster. 

The results: 

• Sixty-four per cent of construction workers chalk up more than 50 hours a week. 
• A six-day week is the industry norm.
• Fifty-nine per cent are unsatisfied with their work life balance. 

• Three quarters report moderate to high stress levels.  
• And we have an industry-wide suicide rate that is twice the national average. 

Despite our best efforts, construction remains Australia's most male dominated industry.  

Just 12 per cent of the workforce is female, and less than two per cent of on-site roles are occupied by women. 

Construction is an industry in desperate need of cultural reform. 

Since 2018, I have been leading the Construction Industry Culture Taskforce. 

The Taskforce’s genesis was the Construction Industry Leadership Forum, which has been working with governments to secure the sustainability of the industry in major project delivery.  

We have developed a Culture Standard to lift the productivity and performance of construction – and we are now working to embed the standard into procurement processes. 

We know multiple factors influence culture.  

But three issues influence the culture in construction above all others: excessive working hours, poor mental health, and lack of diversity.

These three issues are a Gordian knot that cannot be unravelled one by one.

We must untangle the knot by tackling all three issues together.

In 2021, the Taskforce commissioned a literature review which made this crystal clear.

Long work hours in construction were tied to stress, burnout, fatigue, disrupted sleep, poor mental health, and high suicide rates – all of which had an impact on productivity and performance.

Long work hours were also an impediment to women's participation in construction – and more broadly a source of structural economic disadvantage for women.

The literature review gave us focus areas for a Culture Standard.

Tackling long work hours could, therefore, deliver a 'triple win' – boosting productivity, diversity and wellbeing simultaneously.

The research pointed to the possibilities. But what about the cost?

We asked BIS Oxford Economics to crunch the numbers.

And the subsequent report, the Cost of Doing Nothing, found the cost of inaction amounted to just under $8 billion a year.

This is how much workplace injuries and fatalities, mental illness and suicide, and lost productivity due to consistent overtime costs our economy every year.

We also undertook market research to understand community sentiment.

Eighty-five per cent of the 1,500-plus people we surveyed said the construction industry needed to change its culture. 

The feedback from the 285 construction workers we surveyed was both heartening and hard to hear… 

78 per cent of this cohort were positive about the construction industry.

But they also felt sexism, lack of diversity, health and safety and bullying were big problems. 

Many people said they were considering a career move because they couldn’t continue with the conditions the industry imposes on them.

Our investigation into the attitudes of the next generation has even more alarming insights.

We tracked the perceptions of 250 trainees in NSW to understand the pain points that might stop them from pursuing careers in construction.

They told us the work was enjoyable and engaging.

And they gained great satisfaction from seeing projects come to life.

But one deterrent came up time and again--long working hours.

These trainees were working a standard 37.5-hour week – but they knew what to expect from observing their colleagues and co-workers.

And they told us they weren’t prepared to do the time.

Young people have different expectations of the workplace than their parents.

A new Culture Standard, therefore, is not about altruism.

It is about securing a productive and sustainable workforce for the future.

All our research suggests that even an incremental improvement will be appreciated by people currently working in construction.

But incremental improvement won’t attract the next generation.

At the core of the Culture Standard is a commitment that workers will work five days per week – preferably Monday to Friday.

The Culture Standard also commits to a cap of a 50-hour working week, which is out of step with the International Labour Organisation’s 38-hour recommendation, and makes flexible working a challenge.

But we chose a 50-hour cap because 64 per cent of the industry are already working above this.  

We believe 50 hours is realistic and achievable. 

• We currently have six projects putting the Culture Standard through its paces, for example, in Victoria, Fulton Hogan is testing the Culture Standard on the Brunt Road Level Crossing Removal McConnell Dowell is leading the Narre Warren Cranbourne Road Upgrade. 

We are already seeing positive results and competitive advantages from these early adopters.  

Workers are reporting that their family relationships are improving, and they can participate in their communities and engage in sport.

Naturally, this problem won’t be solved on one project and will continue to be explored over the long-term.

As I said earlier, construction hasn’t changed in decades.

This graph paints a compelling picture of not only the challenge, but the opportunity available to the sector.

Along with an improvement in culture, innovation is one of the key tools we must change to improve productivity and attract and retain diverse talent to work in the exciting industry that construction is.

A switch to manufacturing and off-site prefabrication is one way we can ease the physical burden for our construction workers.
 
This will drive a better work life balance while reducing safety hazards along the way.     

The adoption of digital twins which enable the simulation and rehearsal of all aspects of construction can identify hazards, or better ways of doing things, as well as reducing risks and costs.    

There is also a huge untapped opportunity when it comes to the use of recycled materials.  

An opportunity to not only improve sustainability in the sector but to also relieve current resource constraints.   

In fact, Infrastructure Australia has historically advocated for more sustainable practices within the sector, especially with regards to climate action.  

As of September, last year, our nation has a legislated target of 43 per cent reduction of carbon emissions below 2005 levels by 2030, and Net Zero by 2050.

Australia will only get there by working together across the public and private sectors and avoiding duplication. To that end, on the slide above we have summarised the stakeholder network and work programs we are a part of to pursue that end.

In terms of our work program, the Australian Government’s climate change reforms also included amendments to Infrastructure Australia’s governing legislation, the Infrastructure Australia Act.

As a result of these changes, our agency will now directly consider greenhouse gas emissions in our policy work, our advice to the government and in project evaluation.

This means that infrastructure proposals seeking Australian Government funding will need to consider the emissions in project design, options analysis and in the development of the project business case and economic appraisal.

In response to the legislative changes, Infrastructure Australia has released an interim guide to assessing greenhouse gas emissions that sets out our requirements for consideration of emissions in project business cases and economic appraisals.

Australia’s ability to achieve its climate ambitions will also depend on our success in tackling the more difficult areas of carbon abatement.

In that sense, embodied carbon in infrastructure is the next big challenge in our task to decarbonise our sector.

We know that embodied carbon in the production of building materials is responsible for 28 per cent of emissions from the building and construction sector globally.   

To that end, Infrastructure Australia is currently undertaking work that will calculate the embodied emissions footprint from our national infrastructure and buildings pipeline for the next five years, and further will consider the savings that can be achieved by swapping out traditional construction materials for low emissions materials.

This information will be able to be utilised by Governments and policy makers to best address the issues of embodied carbon and support a growing body of research and policy discussion focused on the sustainable reduction of carbon emissions. 

The issues facing our sector are complex and far reaching, but they aren’t insurmountable.

Do nothing and the delivery of the $237 billion national project pipeline is at risk.

By reprioritising the infrastructure pipeline, adopting cultural reform, and embracing innovative solutions; we can drive real change to ensure the industry delivers better infrastructure well into the future.

Thank you.