Capital Expenditure by State & Local Government

Capital expenditure by state and local government is forecast to increase by 1.1% in 2024-25 to reach $74.2 billion. Significant infrastructure, health, education and social housing spending by state governments is expected to support capital expenditure growth in the current year. In particular, strong spending from Victoria, Queensland and New South Wales will drive growth in capital expenditure by state and local government in 2024-25. For instance, as part of the 2024-25 budget, the NSW Government has committed to spending $4.0 billion over four years on social housing. The Victoria State Government has focused on uplifting the healthcare sector through its Hospital lnfrastructure Delivery Fund. Cost of living pressures have encouraged state and local governments to ramp up spending. The Queensland government’s capital expenditure budget on health and transport is set to swell as the government focuses on increasing bed capacity and rail works.

Over the past five years, the Federal Government has aimed to support economic growth through new infrastructure projects. This includes providing funding to state and local governments. As part of Victoria’s Big Build, Significant investment in large-scale infrastructure developments like the Melbourne Metro project, the Suburban Rail Loop, the West Gate Tunnel and the Victorian Government’s Level Crossing Removal Program has contributed to increased state and local government capital expenditure. Under the Level Crossing Removal Program, 110 dangerous and congested level crossings across Melbourne will be removed by 2030. As of October 2024, 84 level crossings have been removed. Continued population growth has also pushed state and local governments to boost investment in existing public infrastructure. IBISWorld forecasts capital expenditure by state and local governments to rise by a compound annual rate of 3.9% over the five years through 2024-25.