A new economic report warns Australia must boost infrastructure spending and address youth unemployment as the mining boom subsides.

The Australian Local Government Association's latest State of the Regions report, produced by National Economics, examines how the fortunes of metropolitan areas relate to the mining boom between 2007 and 2013.

It notes the boom favoured construction activity, particularly in Perth, while Melbourne and Adelaide – the cities the report said were worst-affected by the downsides of the boom – are only gradually responding with infrastructure investment.

It finds Australia as a whole has serious deficiencies in its infrastructure capital stock and there is scope for governments to raise investment levels, especially in transport and communications.

It proposed an additional $346 billion in infrastructure investment effort over the next 12 years.

"The most promising investment opportunities in Australia at present, assessed from a long-run point of view, lie not in the private sector but the public," the report said.

In an international comparison, the report found Australia's private capital investment in capital stock was pulling its weight whilst public investment as a ratio of GDP was the fourth lowest of OECD countries in 2008, at 39 per cent.

"Over the next ten years, a reasonable aim would be to invest to raise infrastructure stocks in the deficit regions so that they approach those of the best practice regions," it said.

It recommended the investment would focus on New South Wales and Victoria's capital cities and other regions where the deficit is deterring economic growth.

Report calls for 'substantive action' to address unemployment

The report also calls for substantive action on youth unemployment, noting that in mining regions, outcomes for young people are patchy, with significant levels of youth disengagement from education and employment.

Far north Queensland, Queensland's Wide Bay Burnett region, Lingiari in the Northern Territory and the New South Wales mid-north coast were among those with the highest number of people aged between 20 and 24 not working and not studying.

"The worst performing regions have relatively poor educational facilities with poor access to tertiary education combined with businesses in the region that are reluctant to provide entry level jobs," the report said.

The report also noted that the abrupt closure of the local car industry is a "bad idea".

"Though one hopes that the skilled workers will be re-employed, the precedent of the closure of the textile, clothing and footwear industries during the 1980s is not very encouraging," it said.

It explained that equipment from closed factories is simply scrapped, wasting resources, and also noted Australia has a tendency to spend more on imports than it earns from exports.