Projects that increase water capacity and clean energy generation were included in a slimmed-down list of priority infrastructure proposals released by Infrastructure Australia on Wednesday.
The list of 68 proposals - less than half the size of the previous one - would help the government address critical infrastructure gaps and unlock economic opportunities over the next 10 years, said the body's chief executive Adam Copp.
"Unfortunately, we can't do everything, everywhere, all at once," he told AAP.
"So what we've done with our priority list is create an investment blueprint that looks at what we need to deliver in the short, medium and long term, over a 10-year time horizon.
"And it's responding to some of those mega-trends that are affecting the nation, like a growing and ageing population."
Australia's population is expected to exceed 30 million within a decade, putting already constrained transport infrastructure under added pressure.
Meanwhile, the rapid expansion of data centre construction and the need to deal with climate change would put extra stress on energy and water infrastructure.
Proposals included upgrades to water infrastructure in Western Australia's Ord River Irrigation Area and upgrading the Werribee water system in Victoria to boost the use of recycled water.
Some estimates suggest up to 12 per cent of the energy grid will need to be devoted to data centres, while one hyper-scale data centre could consume the equivalent water supply of three suburbs.
"But it's still a little bit of an unknown," Mr Copp said.
"I know states are inviting more and more data centre investment, but there is still some work to do about how to make sure that we can scale the energy and water needs appropriately.
"We don't want to gold-plate those networks either, if it all falls over and then we have to have user charges for the upgrades that were asked for."
Freight and passenger rail projects were also high on the list.
Melbourne's suburban rail loop and airport rail line, as well as extensions to Sydney's metro network and the Newcastle-Sydney high-speed rail were included.
Replacing trucks with trains would reduce the carbon intensiveness of freight transport by 16 times, but different standards across state lines discouraged more companies from moving goods by rail.
"If you go from Perth to Sydney as a freight train driver, you need to have four different hi-vis vests in your cabin as you cross different lines and put them on," Mr Copp said.
"It's all very strange and ridiculous."
Australian Industry Group chief executive Innes Willox said the list rightly positioned Australia to meet the challenges of digitalisation, decarbonisation and diversification.
