Australian Infrastructure
Budget Monitor 2020-21

The 2020-21 Budgets delivered by Australia's Federal, State and Territory Governments have been perhaps the most important in living memory.

Overview

Message from the CEO
2020-21 rankings
Analysis
Jurisdiction rankings explained
Video: Snapshot
Report: Browse or download
Contact

Infrastructure Partnerships Australia’s Australian Infrastructure Budget Monitor measures infrastructure funding commitments by jurisdictions for the current Budget year and forward estimates (FY2020-21 to FY2023-24). 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. This report does not include figures from the Australian Capital Territory as its 2020-21 Budget has been deferred to early next year.

Message from the CEO

The 2020-21 Budgets delivered by Australia’s Federal, State and Territory Governments have been perhaps the most important in living memory.

Although the Budget season was delayed by six months, governments have responded decisively to the COVID-19 crisis, with $225 billion allocated for general government sector infrastructure funding over the four years to FY2023-24. This is nearly a $46 billion or 26 per cent increase over last year’s Budgets.

The infrastructure investments progressed through these Budgets will underpin the Australian economy over the coming years, boost aggregate demand, ensure construction boots hit the ground and deliver a lasting legacy of better, productive infrastructure.

In line with Infrastructure Partnerships Australia’s advice at the start of the pandemic, collectively Australia’s governments have made infrastructure a cornerstone of the economic response. In the short term, governments have focused their new expenditure on smaller-scale projects that can be deployed over the near term, while planning has been progressed for larger projects, providing a robust pipeline of work over the next decade. Pleasingly, governments have also resisted some shortsighted calls to change course on the existing program – a response which would have had a devastating and long-lasting impact.

In early October, the Federal Government laid out a record four-year spend, with infrastructure investment boosted by 68 per cent compared to last year’s Budget. Over the following eight weeks, seven states and territories answered the call to arms, with each jurisdiction boosting their infrastructure spending above last year’s levels and an overall increase of 26 per cent higher than in last year’s Budgets.

New South Wales and Victoria continue to drive Australia’s infrastructure pipeline, once again landing in first and second position in our infrastructure rankings for the third year in a row. For NSW, this is the fourth year in a row on top of the rankings. Both jurisdictions are leading the pack in terms of their share of infrastructure funding as a proportion of total general government expenditure, as well as their total infrastructure spending.

The Northern Territory has risen to third place off the back of an expanded pipeline. A mix of small-scale infrastructure stimulus in the immediate term alongside several major investments over the coming years sees South Australia also jump one position into fourth place. In fifth place, Tasmania has improved its ranking by two spots since last year.

Dropping down the rankings is Queensland, sliding from third to sixth place. Despite a 10 per cent increase in general government infrastructure funding compared to last year’s Budget, Queensland’s fiscal stimulus has been measured. This reflects a relatively constrained balance sheet and a continuing political reluctance to pursue reforms such as asset recycling.

Illustrating how the bar has risen for public infrastructure investment, Western Australia registered a $2.2 billion increase in its four-year spend compared to last Budget, but again trails the pack with only 8.4 per cent of its general government expenditure directed to infrastructure. This is some distance off the other jurisdictions and its own 10-year average.

The Australian Capital Territory is yet to release its 2020-21 Budget, and our analysis will be updated following its release in early 2021.

We hope you find the 2020-21 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. More detailed analysis of each jurisdiction’s Budget is available exclusively for Infrastructure Partnerships Australia members.

Adrian Dwyer

Chief Executive Officer

2020-21 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.
Source: Infrastructure Partnerships Australia calculations, based on 2020-21 and 2019-20 Budgets

View details of each jurisdiction in the full report.

Analysis

Nearly $225 billion has been allocated for general government sector infrastructure funding over the four years to FY2023-24 – a 26 per cent increase over last year’s Budgets
The increase in infrastructure expenditure accounts for 29 per cent of the increase in total general government expenditure nationally, with governments looking to infrastructure to underpin the economic recovery from COVID-19
New South Wales and Victoria collectively account for 68 per cent of total general government infrastructure spending – similar to last year
Average per capita expenditure on infrastructure is now $8,777 – increasing by 24 per cent over last year’s planned expenses

Record total of $225 billion in general government infrastructure funding

This year’s Budgets saw a record total of $225 billion in general government infrastructure funding allocated over the four years to FY2023-24. This is an increase of nearly $46 billion – or 26 per cent – compared to the planned spending in last year’s Budgets. This figure does not include spending by the Australian Capital Territory – which is slated to release its 2020-21 Budget in February 2021.

The figure below shows the breakdown of infrastructure funding in each State and Territory Budget, and how Federal Government funding bolstered State and Territory commitments.

Comparison of total infrastructure funding across jurisdictions, and Federal contributions

Source: Infrastructure Partnerships Australia calculations, based on 2020-21 Budgets

All jurisdictions have increased their infrastructure funding…

All jurisdictions have increased their infrastructure funding at a substantially higher rate than the total growth in general government sector spending (see figure below). These commitments show how governments have shifted their focus from surviving the crisis to rebuilding the post-COVID economy, and the critical role infrastructure spending will need to play in this recovery effort.

These Budget commitments will provide an important degree of continuity in the infrastructure pipeline. The importance of this continuity was reinforced during the pandemic, when project finalisation slowed considerably.

Percentage increase in infrastructure funding and total general government sector expenditure (GGSE)

Source: Infrastructure Partnerships Australia calculations, based on 2020-21 and 2019-20 Budgets

The pipeline is already starting to pick up pace…

Encouragingly, ANZIP data shows governments’ focus on an infrastructure-led recovery is already starting to transform into action, with a number of projects closing through the delayed Budget season. As with many other factors in 2020, this year was one of extremes, with both record highest and lowest quarters for contract finalisations in the last three years. The value of contracts that drew to a close in the fourth quarter alone – roughly $12 billion – was larger than the prior three quarters of this year combined

With a robust forward pipeline of work flowing from this year’s Budgets, this activity is likely to settle at an elevated level in 2021 and remain above-trend for the foreseeable future.

Value of construction contracts that have reached contractual close or preferred bidders have been selected

Source: Infrastructure Partnerships Australia

Jurisdiction rankings

Despite the dramatic and widespread impacts of COVID-19 on the economy, the domination of the south-eastern States continues.

New South Wales again ranks first for its focus on infrastructure, increasing their infrastructure funding levels beyond last year’s share. Over the next four years, 19.6 per cent of New South Wales’s general government expenditure will be spent on infrastructure.

In a strong second place finish, Victoria increased its spending on infrastructure by 45 per cent – the most for any State year-on-year, bringing its infrastructure funding levels to 18 per cent. Together, the top two states account for 68 per cent of the total infrastructure spend nationally.

Northern Territory has moved up to third place with nearly 15 per cent allocated for infrastructure over the next four years. Bringing its four-year share of total spending on infrastructure to 13.8 per cent, South Australia has moved up a place to take the fourth place in rankings this year.

With the second highest proportionate increase on infrastructure spend, Tasmania now ranks in fifth place – with a photo finish ahead of Queensland by just 0.005 percentage points. While the Queensland Government has increased its aggregate infrastructure spend by 10 per cent, its share of total general government sector expenditure remains at similar levels to last year’s Budget, and only just above its decade-average. Queensland’s slide has been a consistent trend over recent years, with the State missing out on the fiscal boost enjoyed by its southern neighbours through balance sheet reform.

Western Australia increased its funding on infrastructure by over $2 billion in this year’s Budget. However, the State remains in last place in our Budget Monitor for the fourth consecutive year. Western Australia is also the only jurisdiction to spend less than ten per cent of its Budget on infrastructure.

Beyond the rankings, each State and Territory has lifted their per capita infrastructure spend above last year’s Budget’s (see figure). At the higher end of this scale, Northern Territory is slated to spend over $17,800 per person on infrastructure over the next four years – four times as much as Western Australia. The national average per capita spend has also increased by 24 per cent, to $8,777.

State and territory per capital infrastructure funding