Australian councils face up to $280 billion in infrastructure renewal and upgrade demand over coming decades, according to a major new report highlighting the growing challenge of maintaining assets that are fit for purpose.
Released at the National General Assembly in Canberra, the 2026 National State of the Assets Report found councils face an immediate replacement task of between $65 billion and $68 billion for assets already assessed as being in poor or very poor condition.
The report, commissioned by the Australian Local Government Association (ALGA) and based on data from more than 460 councils, also found assets currently rated as fair represent a further $173 billion to $212 billion in future renewal and upgrade demand.
While around two-thirds of local government infrastructure remains in good condition, the report found many assets are becoming less capable of meeting growing freight demands, population growth and community expectations, despite remaining structurally sound.
ALGA President, Mayor Matt Burnett, said the findings highlighted the scale of the infrastructure challenge facing councils.
“Local government manages infrastructure that communities and businesses rely on every day, and these assets need ongoing renewal and investment to remain fit for purpose,” Burnett said.
“Assets in poor condition represent an immediate challenge, and councils also need to tackle the much larger task of planning for and funding the renewal and upgrade of assets that are currently assessed as fair.
“Councils work hard to maintain and improve their assets, but the scale of future demand highlights the importance of long-term funding certainty.”
Burnett said the report demonstrated that asset condition alone was no longer an adequate measure of infrastructure performance.
“Australia’s local infrastructure was largely built for a 20th century economy, but today it’s asked to support 21st century productivity,” he said.
“A bridge can be structurally sound but still struggle to meet modern freight requirements. A road can be in reasonable condition but no longer be suited to the traffic volumes and vehicle types using it today.
“Freight vehicles are becoming longer and heavier, communities are growing and changing, and infrastructure is being asked to do more than it was originally designed for.
“Condition alone no longer tells the whole story. The question is whether infrastructure remains fit for purpose.”
Burnett said infrastructure that cannot keep pace with community needs has significant economic and social consequences.
“In many communities there is no alternative route, no alternative bridge and no alternative facility,” he said.
“When local infrastructure cannot keep pace with demand, there are real impacts on connectivity, economic activity and community resilience.
“If Australia wants infrastructure that can support future growth and productivity, councils need to be funded to plan for the long term.”
Burnett said the report reinforced ALGA’s call for Financial Assistance Grants to be restored to at least one per cent of Commonwealth taxation revenue.
“Infrastructure has a lifespan measured in decades,” he said.
“Councils need sustainable funding to plan, build, maintain and renew the infrastructure communities and businesses rely on every day.
“Restoring Financial Assistance Grants to at least one per cent would help councils invest according to local priorities and ensure infrastructure remains fit for purpose into the future.”
The report also found overall infrastructure condition has continued to improve modestly since 2024, but risks associated with asset function and capacity are emerging more rapidly than those related to physical deterioration.
