Australian taxpayers will shell out billions of dollars more in the federal budget to help fund Victoria's controversial Suburban Rail Loop.
Treasurer Jim Chalmers' fifth financial blueprint will include an extra $3.8 billion for the massive infrastructure project, for which preparatory work started in 2023.
Prime Minister Anthony Albanese said Suburban Rail Loop East - which will connect established train lines in the suburbs of Cheltenham, Glen Waverly, Box Hill and Clayton - would make Melbourne's economy more productive and improve connectivity.
The cash splash takes the Commonwealth's spend on the project to $6 billion - still $5.5 billion short of the amount the Victorian government wants from its federal counterpart for the rail line.
"Ensuring Victorians can get into greater Melbourne and across suburbs, rather than having to go into the CBD then back out, helps speed up travel times, get cars off the road and increases opportunities for businesses in Melbourne's east," Mr Albanese said.
Tunnelling for the project is expected to start by the end of 2026, with the project scheduled to be running by 2035.
But the rail loop has been much maligned for the first stage's $34.5 billion price tag.
The Victorian government argues the spending is worthwhile because it will reshape how people travel around Melbourne, creating new hubs in the suburbs and generating thousands of jobs.
Despite the criticism, the cost per kilometre is forecast to be similar to comparable projects such as Sydney's Parramatta-to-CBD Metro, which is under construction.
Victorian Premier Jacinta Allan praised her federal counterparts, saying they were a "partner in Canberra who gets what our growing state needs".
"The Suburban Rail Loop will slash travel times and cut congestion for busy families," she said.
The government angered farmers and regional leaders this week when it announced a major freight rail line intended to connect Melbourne and Brisbane would be cut short because of cost blowouts.
The budget will include plans to pare back the Inland Rail project and instead end it at Parkes in central NSW after analysis showed the cost had soared from $16.4 billion to $45 billion.
The federal budget will be handed down on Tuesday.
