A key index of Australia's nation-wide infrastructure investment has posted a 35 per cent year-on-year decline for the 2012/13 fiscal year.

The Australian Infrastructure Metric, released by Infrastructure Partnerships Australia, indicates that Australia saw a 35 per cent decline in public infrastructure investment for the 2012/2013 fiscal year as compared to the previous fiscal year.

While IPA’s data indicates that there was a mild rebound in activity during the June quarter, the figures for the year overall remain dismal, with investment slowing as local governments dialed down spending.

According to IPA Chief Executive Brendan Lyon this precipitous decline threatens to hamper the economic performance of the nation as a whole.

“The year’s investment was around half 2010/11 levels, and substantially behind what should be invested to bolster the economy’s competitiveness.”

Lyon noted that fast dwindling investment on infrastructure in tandem with the end of the mining boom could have dire implications for engineers and skilled construction workers.

“These results are consistent with the recent layoffs in the construction sector, meaning Australia is at risk of losing highly skilled labour that could and should be moving off mining sites in the Pilbara and the Bowen Basin, and on to the major transport and other infrastructure projects that are needed across the major states.”

The IPA chief executive hailed the Abbot government’s commitment to lift spending on infrastructure – in particular plans to increase Commonwealth investment on transportation infrastructure by around 25 per cent over forward estimates, as it will help pick to up the slack created by the conclusion of the capital-intensive phase of Australia’s mining boom.

According to Lyon, however, the federal government must also pressure state governments to follow its lead, as Commonwealth investment accounts for a mere 10 per cent of all investment on public infrastructure.

“The national government must focus on leading the states through a comprehensive reform of public finances,” Lyon said. “There is a fundamental leadership role for the Federal Government to launch an increased programme of national investment, conditional on states undertaking reforms to their own budgets to sustain higher levels of capital expenditure.”