The Great Capex Catch-Up: When Infrastructure Pipelines Meet a Commodity Gale

Australia | Feb 10 2026

Australia’s infrastructure pipeline has never been larger, or more visible. It is also, paradoxically, becoming harder to build.

• The five-year major public infrastructure pipeline now sits at a record in Australia
• Resurgent resources capex cycle is equally hungry for extra labour
• Challenge for contractors is to avoid logistical nightmares
• Focus on disciplined managers of risk

By Lily Brown

According to Infrastructure Australia, the five-year major public infrastructure pipeline now sits at a record $242bn for 2024–25 to 2028–29, up 14% year-on-year.

While transport remains the $129bn gorilla in the room, utilities spending (driven by the energy transition) has more than doubled to $36bn. Layered on top is a $163bn ambition for renewable energy projects, much of it scattered across regional Australia.

To the uninitiated, these figures suggest a golden age for contractors. But for the battle-scarred investor, $242bn looks less like a bounty and more like a logistical nightmare.

The tension is palpable: backlog visibility has never been stronger, yet margin certainty is being squeezed by a structural labour deficit and a resurgent resources sector that is hungry for the same pair of hands.

From balance sheet pain to “gainshare”

Recent history is a graveyard of fixed-price hubris. Sydney Light Rail roughly doubled from $1.6bn to about $3.1bn. Melbourne’s Metro Tunnel expanded from around $9bn to more than $13bn. Brisbane’s Cross River Rail lifted from $5.4bn to over $7.4bn. The West Gate Tunnel cost $10.2bn, almost twice the original estimate, and opened years later than originally projected.

Between all these blowouts, the industry has spent the better part of a decade learning that aggressive bidding is a fast track to equity destruction.

The scars of the past have finally forced a structural shift in risk allocation. NSW data shows collaborative contracting models (alliances and target-cost contracts) rising from 18% to 30% of projects in just two years.

These “painshare/gainshare” mechanisms mean risk hasn't disappeared, but it is being shared more transparently.

The catch is these new models require sophisticated management. Investors continue to discount headline pipeline numbers because history shows how quickly a record backlog can become a liability if the contractor lacks the discipline to price in the next spike in materials or wages.

The commodity “crowding out”

This is where the story gets complicated. The resurgence in commodity prices —specifically in future-facing metals like copper and lithium— has reignited the mining capex cycle.

For the ASX-listed contractor, this is a double-edged sword.

The boon: Increased demand for mining services and minerals processing, typically offering higher EBIT margins than public civil works.

The bane: A “crowding out” of the labour market. When a Tier-1 miner offers swing-shift salaries in the Pilbara that a metropolitan road project simply cannot match, the labour shortage (forecast to hit -300,000 workers by 2027) shifts from a headache to a crisis.

In this environment, volume is vanity. The real winners are not those with the biggest order books, but those with the pricing power to outrun a commodity-driven wage spiral.