AI push to unlock $278bn construction pipeline

Australia's environmental approval system is emerging as a critical setback for a $278 billion pipeline of housing and clean energy projects, with new research suggesting artificial intelligence (AI) could play a key role in easing delays.

A report by the Committee for Economic Development of Australia (CEDA), developed in partnership with TechnologyOne, finds that increasing complexity, outdated processes and workforce shortages are slowing project delivery and constraining project growth.

The study argues that even modest improvements to approvals processes could deliver significant productivity gains, helping accelerate both housing supply and the transition to renewable energy.

Environmental approvals are required at multiple levels of government and often involve lengthy assessments, creating uncertainty for developers and investors. As demand for new infrastructure grows, the system is struggling to keep pace.

The report comes as Prime Minister Anthony Albanses has committed $45 million in the upcoming Federal Budget to streamline approvals, signalling growing policy focus on the issue.

CEDA said the use of AI and data-driven tools could help modernise the system by automating routine assessments, improving data sharing between agencies and enabling faster, more consistent decision making.

TechnologyOne, which contributed to the report, said digital platforms could reduce administrative burden and allow regulators to focus on more complex environmental considerations, rather than manual processing.

The findings highlight a broader shift towards integrating technology into public sector processes, particularly in areas where delays have economic consequences.

With billions of dollars in projects awaiting approval, the report warns that without reform, inefficiencies in the system could continue to slow investment and limit Australia's ability to meet housing and climate targets.

This research also ties into concerns raised in a separate CEDA research report around declining business dynamism.

Recent analysis shows fewer Australians are starting businesses that grow and hire staff, with structural barriers such as complex regulation and administrative burden cited as key constraints. Inefficient approvals processes can compound these challenges, particularly for smaller developers and new market entrants with limited resources to navigate lengthy requirements.

Streamlining approvals through technology could therefore not only accelerate major infrastructure projects, but also lower barriers to entry for emerging businesses, supporting innovation, competition and job creation across the economy.