Treasurer Tim Pallas was told the state’s ability to deliver a pipeline of major projects could be cruelled by soaring wages and materials costs.
Victoria was warned that a predicted skills shortage and the soaring cost of materials could constrain the state government’s ability to deliver on its pipeline of major infrastructure projects.
“OPV estimates that workforce shortages could delay in the order of $1.7 billion in jobs being hired which would flow on to the delay of $4.7 billion in total expenditure between 2023 and 2025.”The note also warned that future peaks in demand for concrete and steel, driven by the North East Link Program, Suburban Rail Loop and Melbourne Airport Rail were likely to coincide with higher “competing demand from other states”.
Speaking on the condition of anonymity to discuss internal party matters, they favoured putting the mega-project on ice and redirecting the cash to rural and regional road and rail projects. Other ministers were happy for it to continue, but with a later delivery date to reduce skills and supply chain pressures.
“If we were to change that order and restructure it would be disclosed through the normal ways ... but the bottom line is that we are committed to delivering this project by 2035,” he said. While acknowledging the state government had implemented strategies to address the skill shortage, OPV said the measures may be “insufficient” given the state’s record level of infrastructure investment and tight labour market.
In response, OPV urged Pallas to write to federal Treasurer Jim Chalmers requesting help to address skills shortages by boosting skilled migration and more action on the supply chain.
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