Billions in promised funds for Melbourne's controversial Suburban Rail Loop will be included in the budget, while the federal government has declared support for the "zombie" East West Link project dead.
The federal government on Sunday announced the October 25 budget would deliver on $2.57 billion in election commitments for Victorian infrastructure projects.
That included $2.2 billion for the Suburban Rail Loop, which the state Labor government has promised to build but the opposition wants to scrap if it wins the upcoming election in order to prioritise funding for an ailing health system.
Victoria's independent budget office has said building the first two sections of the loop could cost $125 billion, with the cost-benefit ratio for those parts worth 60 to 70 cents for every dollar spent.
The state's auditor-general also savaged the business case for the project, finding the costs outweighed the benefits.
But federal Infrastructure Minister Catherine King said the government would honour its commitment to help fund early works on the project, which would be "transformational" for Victoria.
"We certainly know that the Victorian state Labor government is committed to it. I certainly hope the Liberals see the light," she told ABC's Insiders on Sunday.
When asked about criticism of the business case for the rail loop, Ms King said she had spoken to her Victorian counterparts and was very confident in the work they had done to ensure the project stacked up.
She said the government's pre-election pledge relied on Victoria's business case and she confirmed Infrastructure Australia was yet to properly review the project.
"There have been some challenges around that (business case), but this (funding) is for the early works of that project. We haven't made any further commitments and we'll talk to the Victorians around that as we go forward," she said.
Liberal state transport infrastructure spokesman Matthew Bach said Ms King's comments threw significant doubt on the project as the federal government had only committed to initial funding.
"Given that both the Parliamentary Budget Office and the auditor-general have thrown severe doubt over the business case currently being relied upon by (Premier) Daniel Andrews, it is hard to see how Infrastructure Australia will possibly endorse the project," he said in a statement.
"Without further federal contributions, the Suburban Rail Loop has a massive black hole in its budget, meaning either more debt or higher taxes - or both - if the project is to proceed."
Earlier on Sunday, Ms King and Prime Minister Anthony Albanese declared the end of "zombie" projects like the East West Link that the previous coalition government had kept in its budget.
The toll road project was supported by former Liberal premier Denis Napthine but canned when Mr Andrews took power.
Mr Bach accused the federal government of ripping $4 billion in funding for the East West Link away from Victoria, and said the coalition would work to reinstate funding to get the road project built if it won the election.
