A new report from the nation's infrastructure advisory agency is warning of massive workforce shortages, jeopardising hundreds of billions of dollars in infrastructure, housing and energy projects across the country.

Key points:

· Infrastructure Australia is warning about a shortage of construction materials

· Chief executive Adam Copp says there are not enough workers or materials to complete Australia's investment goals

· He says there needs to be a greater emphasis on using recycled materials

Infrastructure Australia's annual market capacity report has revealed there are only 177,000 workers currently in the system, despite there being enough demand for the equivalent of 405,000 workers.

The agency is also sounding the alarm over shortages of construction materials, with parts of the country struggling to access enough steel, rock and sand supplies for major projects.

"Over the next five years we're planning to deliver $230 billion in major public infrastructure, 1.2 million new homes and four times the investment in clean energy infrastructure," Infrastructure Australia's chief executive Adam Copp said.

"Unfortunately, we do not have the people or the materials to turn that ambition into a reality.

"Unless we really focus on managing this pipeline and expanding the capacity of the market, communities will miss out on the infrastructure they need, taxpayer money might be wasted and inflation will hit harder than it already is."

It is the third time in as many years that Infrastructure Australia has raised concerns about labour shortages.

The agency has made several recommendations to ease some of the shortages, including urging the government to tweak "immigration settings" to ensure the nation is "bringing in the workers that we need for the construction sector".

"But we really need to focus on the long term, and we need to look at creating a national workforce strategy to bring more people into the construction industry, invest in STEM subjects for people, and also make sure that people are retained within the construction industry so that our investment pays off," Mr Copp said.

Australia's major cities will bear the brunt of the workforce and material shortages, as well as the Murray, Mid North Coast and Riverina regions of New South Wales, central Queensland and outback Northern Territory.

"There's a range of investments occurring there — a lot of them are utilities like energy projects," Mr Copp said.

"The issue is not just that it's a large amount of growth, but it's a very large increase in growth — a super normal amount of growth in investment going forward."

Mr Copp said the federal government's recent infrastructure pipeline review was a direct response to previous warnings about the viability and sustainability of major projects across the country.

Emphasis on recycled materials needed as reliance on imports grow

Infrastructure Australia said the nation was becoming more reliant on imports of construction materials.

"Steel has increased 20 per cent over the last two years, and timber has increased at a similar amount," Mr Copp said.

"We're also starting to see quarried materials like rock and sand and other inputs to create cement are also starting to move into short supply in key areas, such as the Mid North coast and south-east Queensland.

"Governments need to build domestic capacity in terms of materials, but also domestic capacity in terms of skills."

Among the recommendations from Infrastructure Australia is for there to be a greater emphasis on using recycled material in major construction projects.

"27 per cent of materials used in road projects could be replaced with recycled materials," Mr Copp said.

"There are some pockets of good practice occurring around the country — Victoria with its recycled-first strategy has used procurement, making it a rule for the private sector to recycle some of their materials and use it in their infrastructure projects.

"But there is a little bit of a cultural issue in the sector, people think it isn't as high-quality, but that's just not true and there's some real opportunity for government to encourage better use of recycled materials going forward."