Deloitte Access Economics Investment Monitor

8 FEBRUARY 2026: The cost of major public sector infrastructure projects has blown out by $130 billion, piling pressure on stretched government budgets and an economy grappling with supply constraints, as Australia’s data centre construction boom competes for limited construction capacity and adds to future energy demand.

Releasing the latest edition of Deloitte Access Economics’ quarterly Investment Monitor report, Deloitte Access Economics Director and lead author Sheraan Underwood said: “This edition shines a spotlight on the rising cost of Australia’s largest publicly funded projects while highlighting an increasingly complex investment environment.”

“Australia is now a globally significant destination for data centre investment. This, alongside rising business investment and tightening government budgets means that rising costs are increasingly influencing what gets built and when.”

Across 13 publicly funded projects valued at $10 billion or more, the latest cost estimates are collectively around $130 billion higher than initial estimates – equivalent to more than the entire value of residential construction work done across Australia in the past year.

Chart 1: Cost overruns at selected public infrastructure megaprojects

The Investment Monitor database contains more than $415 billion of definite public infrastructure projects, with a further $160 billion in planning. That pipeline is more than double its pre-boom size, and public infrastructure has accounted for around three quarters of the growth in the database since 2015.

Sheraan Underwood continued: “Cost revisions are not new in major construction. However, the frequency and magnitude of recent upward revisions indicate that cost pressures are reshaping the project pipeline, with potential implications for already-stretched state government finances.

“Overall, the scale of Australia’s current infrastructure investment program, combined with increasingly constrained state government budgets, has heightened the fiscal consequences of cost overruns.

“When major project costs rise, governments are forced to make trade-offs across the pipeline. These can include narrowing scope, deferring lower-priority projects, or funding overruns through additional borrowing. Those choices are becoming more consequential as state balance sheets tighten.

“Western Australia is now the only state with a AAA credit rating. Aggregate state and territory net debt is projected to rise from around $660 billion in 2025-26 to almost $900 billion by 2028-29, and average state credit ratings have fallen to their lowest level since 2000, reflecting the combined pressure of large capital programs and broader spending growth.

“Recent overruns are due to a combination of factors: early budgets set before scope and risks are fully defined; persistent delivery constraints, skilled labour shortages; and the increasing size and complexity of projects. The increasing scale of projects means that even small percentage changes now result in large dollar impacts.”

Data centre boom leads business investment rebound

The total value of projects in the Investment Monitor database rose to $1.14 trillion in the December quarter, with the investment outlook continuing to be shaped by the transition to net zero, ongoing public infrastructure investment and the artificial intelligence-led expansion of the digital economy.

The total value of projects in the finance, property and business services industry – which includes data centres – has risen by 57% over the past year. Almost all of this increase reflects the addition of around $28 billion worth of data centre projects to the database.

Sheraan Underwood continued: “Business investment has shifted from laggard to leader. Total business investment is expanding at its fastest pace in more than four years, supported by energy infrastructure and digital investment.”

“Data centre development has pushed machinery and equipment spending by IT firms to record levels. However, developers are increasingly facing constraints – most notably access to reliable electricity – prompting further investment in generation, storage and network infrastructure.”

“The vast majority of these projects remain in the planning stages, meaning the pipeline has yet to translate into a sustained lift in construction activity. Progress will depend on continued growth in the use of AI, as well as access to a stable and cost-effective supply of electricity.

“Nonetheless, data centres now represent one of the fastest-growing segments of the national project pipeline and a potentially significant source of future investment.”

What else the database shows this quarter

• The total value of projects increased by 1.3% in the December quarter to $1.14 trillion. Upward cost revisions added around $36 billion to project values and, together with new projects entering the database, more than offset $46 billion worth of projects completed or removed.
• Definite investment (projects under construction or committed) rose by $18 billion to a record $526 billion. Planned investment fell modestly to $611 billion, though the planned project pipeline remains almost 10% higher over the year, supported by continued growth in utilities and data centre developments.
• The utilities industry now accounts for around 30% of total project value, reflecting the energy transition. Transport remains the largest single industry, though its share of definite investment is expected to decline as megaprojects near completion. Health investment has lifted to a record $51 billion, while data centres remain one of the fastest-growing segments.
• State outcomes continue to diverge. New South Wales recorded growth driven by data centres and renewable energy. Queensland now accounts for around one fifth of definite investment, with major cost revisions across transport and health projects. Victoria’s pipeline eased as several large developments reached completion, while Western Australia remains central to the national resources investment task. Activity in South Australia, Tasmania, the Northern Territory and the ACT was more mixed, with movements reflecting a smaller number of large projects.

Deloitte Access Economics’ Investment Monitor is primarily a source of information for businesses and others about major engineering and commercial construction projects and their promoters. It is also a barometer of structural change in the Australian economy, and of the investment climate – now and in the future.