Budget Monitor 2022-23
The 2022-23 Budgets delivered by Australia's Federal, State and Territory Governments increase infrastructure expenditure once again.
This report collates information from the latest Budget papers from Federal, state and territory governments to provide insights into their infrastructure investment programs beyond the headline figures.
Infrastructure Partnerships Australia’s Australian Infrastructure Budget Monitor (Budget Monitor) measures infrastructure funding commitments by jurisdictions for the current Budget year and forward estimates (being FY2022-23 to FY2025-26).
This report collates information from the latest Budget papers from Federal, state and territory governments to provide insights into their infrastructure investment programs beyond the headline figures. The purpose of the Budget Monitor is to inform the community, industry and researchers about historical and projected public infrastructure investment in Australia.
The strength of each jurisdiction’s infrastructure program is assessed according to the aggregate general government sector infrastructure funding commitment over the period FY2022-23 to FY2025-26 as a share of total general government sector expenditure. This methodology allows for comparison of small and large jurisdictions and provides insights into the relative importance of infrastructure as a government priority over time.
Message from the CEO
The 2022-23 Budget Season saw state and territory governments across Australia outline their fiscal plans for the next four years amongst growing economic and geostrategic uncertainty.
Despite this uncertainty, another high watermark in infrastructure spending was set, with $254.8 billion in general government expenditure allocated to infrastructure over the four years to FY2025-26. This is $6.8 billion or 2.7 per cent higher than the 2021-22 Budget Season.
For the second year running, Victoria has taken out top spot in Budget Monitor rankings with an $85.3 billion four-year allocation to infrastructure, which constitutes 22.7 per cent of the State’s total general government expenditure. Despite being $4.9 billion lower than its FY2021-22 allocation, Victoria’s allocation is comfortably above second place – New South Wales – which made an $88.4 billion allocation to infrastructure, equivalent to 17.9 per cent of general government expenditure.
Analysis of the infrastructure investments committed by Australian governments in the 2022-23 Budgets finds several strategies aimed at countering uncertainty. Most jurisdictions have reacted by only marginally increasing their spend, aiming to make more targeted investments that accompany the growth of their economies. Others have entered into newly expanded investment programs or maintained similar levels of high investment, acknowledging the difficulties in delivery in the current environment and accepting any underspends or reprofiling that may occur. Only two jurisdictions reduced their infrastructure allocations this year.
This year’s infrastructure allocations are also an accurate reflection of the cyclical nature of infrastructure investment, with most allocations directed to existing projects. The majority of new allocations have been directed to smaller, more manageable investments. The presence of a sustained major projects pipeline, appropriately complemented by smaller projects, should be a source of pride for the sector as it demonstrates a sophisticated market able to recognise capacity challenges and respond appropriately.
While uncertainty may be an overarching macro theme this year, this may herald upside for the infrastructure sector. Historically, governments have looked to infrastructure for ballast in navigating uncertainty. By developing and implementing important reforms – such as minimising embedded carbon in project construction or improving visa-conditions for skilled migrants – the infrastructure sector can lead the way in solving complex, persistent problems, and move the broader Australian economy forward.
We hope you find the 2022-23 Australian Infrastructure Budget Monitor useful. If you are interested in learning more about the infrastructure pipeline in Australia, you can find more information on our Australia and New Zealand Infrastructure Pipeline (ANZIP) and subscribe to our monthly Pipeline Reports. Further detailed analysis of each jurisdiction’s Budget is available exclusively for Infrastructure Partnerships Australia members at our 2022 Budget Hub.
Figure 1: 2022-23 Australian Infrastructure Funding Levels, ranked by share of Budget Expenditure
*The Federal Government primarily funds state infrastructure projects. As such it is not formally included in the rankings. We include it in the report to provide a comprehensive view of funding commitments.
A total of $255 billion in general government expenditure has been allocated to infrastructure over the four years to FY2025-26 – a three per cent increase over last year’s allocations.
For the second consecutive year, Victoria remains on top of the rankings. The Victorian Government will spend 23 per cent of its total general government expenditure on infrastructure over four years, a slight reduction on the 24 per cent share in last year’s Budget.
Victoria and NSW continue to dominate the pipeline of committed funding, accounting for 68 per cent of total general government sector infrastructure spending over four years.
Average per capita expenditure on infrastructure over four years is now $9,842 – an increase of two per cent on the planned spend in last year’s Budgets.
Infrastructure wave continues to build with yet another high watermark set in the 2022-23 Budgets
By allocating $254.8 billion of general government expenditure over the four years to FY2025-26, this year’s Budgets have eclipsed last year’s infrastructure spend of $248 billion – by 2.7 per cent.
While not included in the rankings, the Federal Government has again raised its infrastructure funding substantially – allocating over $61 billion in general government expenditure to infrastructure projects across the country.
Federal Government allocations to infrastructure have now increased 91 per cent since the 2019-2020 Budget.
The inside ring of Figure 2 shows each state and territory’s allocation of Federal funding, while the outer ring breaks down each jurisdiction’s funding by infrastructure asset class.
Figure 2: Federal Budget infrastructure allocations by jurisdiction and asset class
Source: Infrastructure Partnerships Australia analysis based on 2022-23 Federal Budget
After taking top spot last year for the first-time, Victoria has once again finished in first place in the Budget Monitor rankings with an $85.3 billion allocation to infrastructure – representing a 22.7 per cent of the State’s total general government expenditure. Victoria defends its position in top spot despite moderating its four-year allocation by $4.9 billion in response to a heated infrastructure market.
New South Wales takes second place allocating $88.4 billion in general government expenditure to infrastructure over four years. This represents a $2.8 billion or three per cent increase on the State’s 2021- 22 four-year allocation, however due to a 10 per cent increase in total general government expenditure, the State’s share of general government expenditure has declined from 19 per cent to 17.9 per cent.
South Australia and the Northern Territory have swapped places in this year’s rankings, with South Australia moving up to third place after increasing its four-year share of total spending on infrastructure to 14.3 per cent, while the Northern Territory takes fourth place by decreasing its share from 15 per cent to 13.8 per cent.
Similarly, Tasmania and the Australian Capital Territory have traded places, with Tasmania taking fifth place in its 13.5 per cent allocation to infrastructure. The Australian Capital Territory finishes in sixth place at 12.8 per cent, down from 13.1 per cent last year. Queensland remains in seventh place with 11.6 per cent allocated for infrastructure over four years.
Queensland’s rank comes despite a $5.8 billion, 19 per cent increase in infrastructure spending. The Western Australian Budget delivered an infrastructure funding share of 9.9 per cent of general government expenditure – above the 10-year average of 9.5 per cent. However, the State remains in last place in the rankings for the sixth consecutive year.
Per Capita Infra Spend Analysis
This year’s Budget season sees mixed results for per capita infrastructure spend, with most states delivering minor increases. A $1,400 per person increase in Tasmania and a $1,500 per person decrease in the Northern Territory provide exceptions to this rule. Despite this decrease, the smaller population and large geography of the Northern Territory sees it deliver the highest per capita infrastructure spend again. The moderation of infrastructure spending sees a $600 decline per person in Victoria, however this remains significantly higher than the historical average after the $3,000 increase delivered in the 2021-22 Budget. Figure 3 shows per capita infrastructure investment across Australia over the last two years.
Figure 3: Per capita infrastructure funding by state and territory
Source: Infrastructure Partnerships Australia analysis based on 2022-23 Federal Budget