Infrastructure spending will rise 11pc to a record $13.9b in 2008-09 alone, but there will also be increased spending in the key agricultural area of quarantine and biosecurity.

The foreshadowed spending, to be outlined in the State budget tomorrow, will increase borrowing by $21b between now and 2012-13, although this figure could be reduced if the Government succeeds in selling the state-owned electricity industry, now being debated in Parliament.

The heavy infrastructure spending program, coupled with pressures on government revenues from the weak property market and the downturn in financial markets, will make it difficult for the Government to keep the budget in surplus following recent rises in interest rates and pressure for public servant wage rises.

In last year's budget, the Government slashed its forward annual budget surplus estimate to around $500 million a year from around $1b a year achieved in the previous three budgets.

The pressures on tax revenues will squeeze the outlook further.

The Treasurer, Michael Costa, has already flagged that the State will miss a number of legislative targets under the Fiscal Responsibility Act because of the big infrastructure spending program now under way, due to the "structural imbalance" faced by all State governments from an ageing population that is increasing demand for services, and only limited access to higher tax revenues.

A large part of the projected increase in infrastructure spending is the $12 billion North West Metro. It is unclear whether funding for the flagged West Metro to Parramatta, to cost as much as $10 billion, is included in forward spending estimates.

The Government will also spend heavily on electricity; $3.5 billion is earmarked for transmission upgrades over the next four years.

Upgrading water will account for a further $2.2b, and $400m on ports.