Almost $4bn more for Victoria’s contentious Suburban Rail Loop to be included in federal budget

Prime minister Albanese will announce the additional funding alongside the Victorian premier, Jacinta Allan, on Friday before the 12 May budget and as early campaigning for the state election heats up.

The new funding, to be delivered over the four-year forward estimates period, brings total federal government contributions to more than $6bn. State Labor in fact has already committed about $11.8bn for the first stage of the loop, known as SRL East – a 26km stretch of tunnels between Cheltenham and Box Hill – and it has signed $13bn worth of construction contracts. This includes two tunnelling contracts worth $5.3bn and $6.7bn to fit out the tunnels, build the track and install the signalling and other operating systems. Two more contract packages will be finalised in 2026 and 2027, according to Tuesday’s state budget.

The state opposition leader, Jess Wilson, has committed to pausing construction if the Coalition wins in November, after years of controversy about the massive underground rail project, to run 90km between Cheltenham in the south-east and Werribee in the south-west, and stopping at Melbourne airport. In fact, the two governments had been locked in negotiations for months over billions more from Canberra. State government sources said a “live option” being considered was a commitment of $9.3bn over a decade.

The project has been credited with helping Labor politically in Melbourne’s eastern electorates, which are areas to benefit first. But within the state Labor caucus, some MPs have expressed concern about the massive cost and the decision to leave construction in the western suburbs, home to safe Labor seats but less transport infrastructure, to later decades. The federal opposition this week also accused Labor of axing the beleaguered inland rail project to redirect funds to Suburban Rail, to help Labor’s chances at the November election.