Experts say planned infrastructure spending has dropped by nearly $12 billion in real terms this year.

The drop has been linked to skills shortages, cost overruns, and changes in federal government grants. 

State and territory budgets show a modest increase of $1.8 billion in the planned spending over the next four years, but when adjusted for high inflation, it translates to an $11.7 billion decrease. 

Only eight new projects valued at $6.6 billion were added in 2022-23, a significant decline from the 24 projects worth $25.3 billion added the year before. 

This stagnation is the first since 2015-16, and it follows the Labor government's directive to the states to reduce or postpone spending due to a 41 per cent cost increase in federally-backed projects.

New South Wales exemplifies this trend with Treasurer Daniel Mookhey aiming to lower spending to 2 per cent of the state's gross product by 2026-27, down from 3.1 per cent in 2019-20. 

CEO of Infrastructure Partnerships Australia, Adrian Dwyer, suggests the federal government's infrastructure review and the nationwide energy transition have contributed to the decline. 

Dwyer warns of a “boom and bust” cycle with major projects nearing completion, such as the Sydney Metro, Perth Metronet, Melbourne Metro Tunnel, and West Gate Tunnel. To avoid this, he says efficient pipeline management is essential.

Among the projects added to the Australian infrastructure pipeline this year, two have values exceeding $1 billion: the Royal Melbourne Hospital and Royal Women's Hospital Expansion Program ($2.3 billion) and the New Northside Hospital in the Australian Capital Territory ($1 billion). 

Other projects in the pipeline include the Fairfield Hospital redevelopment ($550 million), Canterbury Hospital redevelopment ($350 million), and Penrith Stadium redevelopment ($309 million).