Planned infrastructure spending fell by nearly $12 billion in real terms this year as skills shortages, cost blowouts and a shake-up of federal government grants forced premiers to rationalise project pipelines.

Just over $256 billion in spending is planned over the next four years, up just $1.8 billion on last year, state and territory budgets show. When adjusted for high inflation – in real terms – the amount is an $11.7 billion decrease.