The NSW Budget confirms the impact of the global financial crisis, but the lack of progress on new state-building infrastructure projects shows that tough reforms will be required to get NSW back on track, says Infrastructure Partnerships Australia (IPA).

"Investments in the duplication and upgrade of the Pacific and Hume highways are obviously important to improve safety and efficiency of freight and passengers on interstate road networks. The funding made available for the Metro project is also important, because it signals to the infrastructure sector that the project is moving from Budget papers to tender documents," said IPA executive director, Brendan Lyon.

However, Lyon also believes that the lack of progress on new projects highlights the need for NSW to undertake important and critical reform.

"NSW needs transformational projects like new motorways, public transport options and freight networks."

The state will spend $18 billion on infrastructure in the next year, however, IPA believes that too little of this money will go towards next generation projects to ease congestion and enhance productivity. Instead, large sums are being invested in state-owned assets and services.

"Even with the current, modest infrastructure program, net state debt will reach 12 per cent by 2013, leaving little room for major new programs," Lyon said.