The Albanese government plans to compel states to fund at least 50 per cent of new road and rail projects.

Changes will reportedly be announced by Transport Minister Catherine King to instil greater state accountability for infrastructure delivery, curbing budget overruns.

The reform follows a review, led by former Infrastructure Department secretary Mike Mrdak, which found some projects lacked “national strategic rationale”. 

The release of the review's findings is expected unveil billions of dollars in cuts and delays nationwide.

King says the 100 per cent Commonwealth funding model will no longer be the default, advocating a return to a 50:50 preference. 

Under the proposed changes, federal contributions exceeding 50 per cent will only occur in cases of national importance. Additionally, a $250 million funding floor will be imposed unless projects align with key road and freight routes.

Recent warnings from the International Monetary Fund and the Reserve Bank about the nation's infrastructure spending exceeding capacity and contributing to inflation reportedly prompted King's negotiations with state governments. 

Construction lobby chief executive Jon Davies has expressed concern about cuts and delays but acknowledges the challenges faced by Australia, including a growing population, defence initiatives, and the transition to green energy. 

He has called for increased productivity in the sector, with the potential economic benefit estimated at $56 billion.