Infrastructure programs are facing the axe as the Albanese government looks to curb tens of billions of dollars in cost blowouts and ease inflationary pressures in the face of another interest rate hike.

Infrastructure Minister Catherine King conceded on Monday that some projects will be cancelled under plans to “clean up” Australia’s $120 billion infrastructure pipeline, which ballooned under the Coalition and is plagued by at least $33 billion in cost overruns.

“This infrastructure pipeline has not been managed well,” King said.

“That is also causing inflation pressures.”

It comes as the Albanese government faces renewed pressure to help take the heat off inflation after robust price growth over the September quarter sparked new fears of another rate hike on Tuesday.

Most economists expect the Reserve Bank will deliver a November mortgage squeeze when it meets on Tuesday, which would add another $79 to monthly repayments on a typical mortgage.

The International Monetary Fund (IMF) has warned that such rate rises have been made more painful by federal infrastructure spending, which has risen to $30 billion a year.

But the government has stopped short of promising to cut the total level of federal infrastructure spending, with King suggesting they would look to higher-quality projects with greater benefits.

She said the pipeline had swelled from 150 to 800 projects under the Coalition, with the “largest amount” added before the 2016 and 2019 elections.

“It is simply not sustainable for the pipeline to continue in the way that it is after a decade of being used for political purposes,” King said.

“[There are] projects with not enough funding to really deliver a small amount of it, let alone a big amount.”

Economist Nicki Hutley said the government needs to strike a fine balance with infrastructure spending to ensure inflation doesn’t worsen while keeping up with population growth.

“Infrastructure should be disinflationary because it should improve productivity growth,” Hutley said.

“But it’s a question about how much you do and over what period of time – particularly as a response to COVID, there’s been a large increase in promised infrastructure programs.”

The $33 billion in cost blowouts uncovered in a fresh review of the infrastructure pipeline – that is yet to be publicly released – are unsurprising given surging construction inflation since COVID lockdowns.

Hutley said too many people are fighting over the same pool of materials and labour, which has put the industry under enormous pressure.

“When you put too much demand in the system and you don’t have the supply to meet it, that’s obviously going to be inflationary,” Hutley said.

Treasurer Jim Chalmers said on Sunday that “difficult decisions” were needed in the infrastructure portfolio in an effort to help cool inflationary pressures, which are easing but remain more persistent than the RBA is comfortable with.

“We’re going to need to make some difficult decisions about the infrastructure pipeline, which factors in those $33 billion of blowouts from projects announced by our predecessors and which factors in our inflation challenge,” he said.

“The comments from the International Monetary Fund are important, they are welcome, and they are consistent with the way that we are coming up [to address] this challenge.”

The list of projects facing the axe has not been released and King said on Monday that there were 200 projects subject to recommendations about cancellation, delay or further planning.

“It is really important that we continue to build infrastructure that enhances productivity,” she said.

“What I don’t want to do is promise people we’re going to build something that clearly isn’t going to be built.”