This will include $500 million in new funding for local roads and community infrastructure as well as bringing forward $1.3 billion in financial assistance grants.
Nationals leader and Deputy Prime Minister Michael McCormack will announce the spending on Friday as a way to help the economic recovery from the COVID-19 pandemic.
"This package will improve road safety and bolster the resilience of our local road networks,which will get Australians home sooner and safer,no matter where they live,"Mr McCormack said in a statement.
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"Projects could include constructing or improving bridges and tunnels,street lighting and heavy vehicle facilities such as rest areas."
The guidelines for the Local Road and Community Infrastructure Program will be sent to local governments by the Department of Infrastructure,Transport,Regional Development and Communications.
The government has been on the defensive over the management of grants funds in recent months,with former sports minister Bridget McKenzie forced to resign after an audit of a $100 million sports funding program.