It's claimed the $20 billion Building Australia Fund will improve major cities and lift national productivity but the Opposition says funding guidelines will need to be closely monitored.
State governments and businesses are putting forward proposals to be considered by Infrastructure Australia, which will compile a priority list by the end of the year.
Prime Minister Kevin Rudd today released a detailed "methodology" to be applied to all projects seeking funding under the $20 billion Building Australia Fund.
"The Rudd Labor government is reforming the way Australia plans, finances and builds infrastructure," he said in a statement.
"Through a combination of national leadership, long-term planning and genuine community engagement, we will reverse the decades of under-investment in the nation's critical economic infrastructure."
The Prime Minister says the proposals' social and environmental impacts will be assessed, along with their ability to develop cities and cut greenhouse gas emissions.
Opposition infrastructure spokesman Andrew Robb is wary of the audit process.
"Mr Rudd needs to confirm that the analysis which supports any project recommendations of Infrastructure Australia is made public before final decisions are taken by the Rudd cabinet," Mr Robb said in a statement.
"However, you can have all the guidelines in the world, but if politics is allowed to come in over the top the guidelines may be to no avail.
"As well, the guidelines need to be applied effectively."
Mr Robb said the dreadful state of the NSW government is a warning of what may come on the federal level.
"Given the sorry record of state Labor governments with infrastructure projects, and the dismal start by this government, great scrutiny will need to be applied to the Rudd government's infrastructure program," he said.
Infrastructure minister Anthony Albanese says the cost benefits of the proposals will also be examined to make sure that taxpayers' money is being efficiently spent.
The Opposition says the government needs to guarantee the projects will be chosen on merit and not based on politics.