Local, state and private sectors are all competing for qualified candidates from a very small pool, causing months-long delays to infrastructure projects across regional New South Wales.

Lockhart Shire Council general manager Peter Veneris said there had been delays impacting his community in southern NSW, although no grant-funded projects had been scrapped due to the worker shortage.

"We're finding it quite difficult to get contractors and I'm sure we're competing for a lot of the same contractors with many other councils around us," he said.

"The biggest impact is just the delay in completing the project and what that means for local communities, particularly when it's a project on a recreation ground or other facilities where it's very much the focal point of the community."

Infrastructure boom

A recent report from Business NSW highlighted that the Riverina-Murray region had more than $20 billion worth of big infrastructure projects in the pipeline.

Six of these projects, Snowy 2.0, Inland Rail, Project Energy Connect, Snowy 2.0 Connect, VNI West and HumeLink, were estimated to be collectively worth more than $14 billion and require more than 5,000 workers during construction.

The report called the Riverina-Murray region the "canary in the coal mine for regional NSW", with so many projects under construction at a similar time, in an already stretched labour market.

"The Riverina-Murray is already struggling to meet businesses' need for skilled workers, and to provide sufficient housing," said Anthony McFarlane from Business NSW.

"These pressures, whilst being acutely felt in this region, can be found in almost any region in NSW."

Rachael Whiting from Regional Development Australia Riverina said while the infrastructure boom would be beneficial for the region, the projects would contribute to further workforce and housing shortages.

"Workforce shortages, housing prices, lack of housing, is like what we saw in those communities, but it's not in mining communities for the first time in Australia's history."

Competition for workers

Riverina Eastern Regional Organisation of Councils CEO Julie Briggs said there were severe skill shortages in areas such as truck driving, earth-moving, engineering and town planning.

"Our councils now are competing with some of those big infrastructure projects for people ... where the big infrastructure projects are very well resourced and probably in a much better position to recruit than our councils," she said.

"Councils are getting forced into a corner where they need to pay higher wages.

"It's a real dilemma."

Ms Briggs said some councils were reporting delays of six months or more for the delivery of infrastructure projects.

Critical shortage allowance

Ms Briggs said councils around Australia, including the City of Gold Coast, had implemented a Critical Skills Flexible Remuneration Policy.

It allows them to pay up to 25 per cent on top of a base wage to attract people with critical skills.

"If councils are going to stay competitive, and the competitor is private enterprise which can offer whatever they like, then councils need to take those kinds of steps just like Gold Coast has to address those shortages," she said.

"I think perhaps more foreign workers might ease a little bit of the problem short term, but longer term, councils are working hard to encourage people to consider a career in local government."