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The nation’s potholes need a $1 billion-a-year funding injection, and the federal government has been urged to use its infrastructure review to redirect cash from big-ticket projects to repairing crumbling country roads.

Research by the independent Grattan Institute think tank shows federal and state governments have for years starved local councils of funding, to such a point that the road network in many areas is dangerous and holding back businesses and communities.

The Grattan Institute says the state of many roads is a “dangerous disgrace”.Credit: Peter Rae

Infrastructure Minister Catherine King will soon release a review of the $120 billion, 10-year pipeline of federally funded road, rail and port projects. Some are likely to be either pushed back or axed.

The review follows concerns that federal projects, on top of those being developed by the states, are adding to inflation pressures by pushing up the cost of construction.

But Grattan transport and cities program director Marion Terrill said King’s review should redirect cash from these major projects towards a desperately needed lift in funding for council roadwork.

She said councils, responsible for more than three-quarters of the nation’s roads, needed an extra $1 billion just to maintain them in their current condition.

“You don’t need to drive too far on a rural road in Australia to encounter a pothole, soft edge or other hazard. Our local roads, especially in the bush, are a dangerous disgrace,” she said.

“They need more funding and the money needs to be better targeted, with cleaner lines of accountability from the funding source to the end point of better, safer roads.”

Grattan found councils had been gradually squeezed by the states, which had in many cases restricted the ability of local governments to increase rates or required them to spend resources in other areas.

And a freeze on increasing federal grants in line with inflation, introduced by the Abbott government in 2014-15 and not lifted until 2016-17, had depleted the Commonwealth funds available to councils for their roads.

While federal and state governments have underfunded councils to maintain roads, they have increased expenditure on building new ones, which will ultimately cost councils even more to repair. Grattan estimates construction is just 20 per cent of the lifetime cost of a road.

It has left councils vastly underspending on maintaining their road networks. Grattan estimates councils in major capital cities underspend 14 per cent of their budget on road maintenance. This increases to 42 per cent for regional councils and 75 per cent for those in remote areas.

“Roads in regional and remote areas are not expected to meet the same standard as more heavily trafficked roads in densely populated areas. But we aren’t even spending enough to maintain these roads in their current condition,” the think tank found.

Climate change was making the situation worse. Heavy rain or extreme heat meant roads were more at risk of falling apart, even with light traffic.

According to Grattan, not only are councils struggling to maintain their roads, but many don’t have the engineers and staff to oversee the required work. Ninety per cent of councils have had difficulty finding staff, particularly engineers, over the past year.

As well as urging the federal government to use its infrastructure review to shift funding towards councils, Grattan said it should push more into areas such as Tasmania and the Northern Territory rather than densely populated parts of NSW and Victoria.

Australian Local Government Association president Linda Scott said King’s review of infrastructure spending was the perfect opportunity to deal with the Grattan recommendations.

She said the nation’s councils managed almost 680,000 kilometres of roads but collected less than 4 per cent of taxation.

“With the government looking at our future infrastructure investment pipeline and projects, it’s important this review also considers how we maintain our existing assets,” she said. “Without urgent funding, the state of our roads will continue to decline and only get more expensive to fix.”

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