Treasurer Jim Chalmers has warned the government will have to cut back on some infrastructure projects to help trim inflation.

Economists from the International Monetary Fund (IMF) urged the federal government to scale back on its record $30bn a year of public infrastructure spending, warning the economy was running far above capacity.

The economic health check urged both state and federal governments should wind back infrastructure projects in order to stop mortgage holders being burdened in the inflation fight through higher interest rates.

Appearing on ABC’s Insiders, Dr Chalmers conceded some tough decisions following a long-awaited infrastructure review will be needed.

“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,” the Treasurer said.

“The IMF has made an important point which is that we need to roll out our infrastructure investment in a way that gets us value for money but also in a more measured and co-ordinated way.”

Dr Chalmers pointed to the unreleased findings of an audit conducted by Infrastructure Minister Catherine King which will help to determine which projects will be axed.

“That work that Catherine is doing engaging with the states is to work out how we get maximum value for money, and how we get the right infrastructure for our people and for their economy, without putting additional upward pressure on inflation, that is a key motivation for this infrastructure review that we will make public before long,” he told ABC.

Dr Chalmers also confirmed he has narrowed down a short-list of potential candidates for the new deputy governor of the RBA ahead of next week’s potential rate hike announcement.

The Treasurer said will seek to announce the new deputy governor before the RBA’s final board meeting on December 5, and flagged the release of new legislation to map out the central bank’s overhaul at the end of November.

He announced he will mandate that the RBA governor will chair the bank’s governance board for at least five years. This will move against a key recommendation to install an external governance chairman made by an independent review in April.

“We think, given that there is a big change management program that we’re asking the Reserve Bank to do, that it is appropriate, at least initially, for the governor to chair the three boards – payments board, the monetary policy board, and the governance board,” Dr Chalmers said.

“We think this lands the best combination in order to implement this change management program at the Reserve Bank.”

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