The federal government's estimated $5.6 billion of rebuilding projects following the devastating floods will add to a likely squeeze on the labour market, an independent forecaster says.

The latest Access Economics-Arup assessment of nationwide building projects shows that those underway or in planning already stood at an impressive $776.6 billion at the end of 2010, rising by $6.8 billion in the final three months of last year.

Resource projects again dominated proceedings in the December quarter.
The total value of definite projects in the quarter - those classed as under construction or starting soon - was $290.6 billion, a $21.7 billion increase on the September quarter.
Releasing the data on Tuesday, Access director David Rumbens said its latest Investment Monitor was ruled off before the scale of the infrastructure repair job in Queensland became apparent.

"That activity will no doubt be a feature of 2011, though the floods may also end up delaying some mining production and investment," he said.
Still, mining investment and associated infrastructure work will continue to dominate the landscape, as a profits surge from strong commodity prices will make new projects "irresistible".

While Mr Rumbens said this was "great news" for the economy, it also raises questions about Australia's capacity to meet such demand.

"Although the commercial and housing construction sectors are comparatively weak, Australia may simply not have the depth of skilled workers required by the mining sector," he said.

"The coming lift in engineering investment therefore threatens to generate similar shortages to that seen in the previous resources boom."

He said the fall in overseas migrant numbers means that employers will have to tough out the renewed commodity boom with only two-thirds of the migrant flows that Australia achieved in 2008.

This, and a strengthening economy, is likely to see the unemployment rate fall to very low levels over the next two years, putting upward pressure on wages and inflation more generally.

"The government is now scrambling to help undo the impact of its earlier cuts to the skilled migration intake by allowing special purpose visas to let mining and construction workers in from the rest of the world," he said.

"That should help but it may not help enough to stop skill shortages re-emerging and interest rates rising from here."