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Business Environment Profiles - Australia

Capital expenditure by the government

Published: 24 January 2025

Key Metrics

Capital expenditure by the government

Total (2025)

97 $ billion

Annualized Growth 2020-25

3.4 %

Definition of Capital expenditure by the government

This report analyses the level of total general government expenditure on fixed capital. It includes any spending on fixed capital on national defence and non-defence projects by the Federal Government, and any spending on fixed capital by state and local governments. Expenditure by state and local public corporations is excluded. The data for this report is sourced from the Australian Bureau of Statistics and is measured in billions of seasonally adjusted, 2021-22 dollars.

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Recent Trends – Capital expenditure by the government

IBISWorld forecasts capital expenditure by the government to climb by 1.8% in 2024-25, to reach $97.4 billion. Capital expenditure by the government consists of three components: national defence projects, national non-defence projects, and state and local government capital expenditure. Capital expenditure by state and local governments is forecast to inch upwards during the current year. This reflects funding for infrastructure investments, particularly from Victoria, New South Wales and Queensland. For example, within the 2024-25 budget framework, the NSW Government has pledged to allocate $4.0 billion over a span of four years to social housing initiatives. Meanwhile, the Victoria State Government is concentrating on enhancing the healthcare sector through its Hospital Infrastructure Delivery Fund. Additionally, the Queensland Government has committed to investing $19.0 billion in renewable energy projects. Capital expenditure on defence is also forecast to grow strongly in 2024-25, fuelled by ongoing investment as part of the Federal Government's 2024 National Defence Strategy.

Government capital expenditure has grown strongly over the past five years. Capital expenditure by state and local government has climbed over the period, partly driven by infrastructure projects in Victoria as a part of Victoria's Big Build, which includes the Melbourne Metro project and the Level Crossing Removal Program. The NSW Government's new and improved transport infrastructure funding totals up to $72.3 billion, including $7.9 billion for the Sydney Metro to Western Sydney Airport line.

Defence capital expenditure has trended upward over most of the past five years, particularly following the introduction of the 2020 Defence Strategic Update (DSU) and 2020 Force Structure Plan (FSP). This outlined the Federal Government's plan to ensure that the Defence industry can respond to new challenges as they emerge. The Federal Government committed to spend approximately $575 billion on defence over the next decade, of which $270.0 billion will be dedicated to new capability investment. Even so, shifts in the spending priorities as part of the 2023 Defence Strategic Review (DSR) contributed to a slump in defence expenditure during 2022-23. Overall, IBISWorld forecasts capital expenditure by the government to rise at a compound annual rate of 3.4% over the five years through 2024-25.

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5-Year Outlook – Capital expenditure by the government

IBISWorld forecasts capital expenditure by the government to drop by 1.4% in 2025-26, to $96.0 bi...

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