The federal government is set to tip an extra $3.8 billion into Victoria’s Suburban Rail Loop project.

Prime Minister Anthony Albanese will make the funding announcement on Friday, bringing the Commonwealth’s total contribution to Victoria’s most expensive project in history to $6 billion.

It has fallen short of the state government’s hope that a third of the $34.5 billion project will come from the federal government.

Last year, then-Victorian minister for the Suburban Rail Loop, Harriet Shing, refused to discuss back-up plans or exit strategies if Canberra rejected a $9 billion funding request.  

A map showing a proposed rail loop for outer Melbourne suburbs

The plan for Melbourne’s Suburban Rail Loop. (Supplied: Infrastructure Victoria)

The Victorian government is contributing a third of the funding for stage 1 directly, planning to raise another third from value capture via a levy on local development around each station, and is relying on the remainder to come from the Commonwealth.

Tunnelling to start in 2026

The extra federal government funds will help deliver the first phase of SRL East — a 26-kilometre underground rail line running through Melbourne’s eastern and south-eastern suburbs.

Victorian minister digs in on funding plan for Suburban Rail Loop

Victoria’s minister for the Suburban Rail Loop is confident the Commonwealth and developers will get on board with the state’s plans to transform transport and housing in Melbourne.

It will create interchanges with four of Melbourne’s established lines at Cheltenham, Glen Waverley, Box Hill and Clayton and connect rail lines in four directions.

“This project is a game changer for the city of Melbourne and the state of Victoria,” Mr Albanese said.

“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.”

The project is expected to support the delivery of 70,000 new homes over the next 30 years, according to the government, as well as reduce urban sprawl.

In March, Australia’s top infrastructure body placed the SRL project on the highest priority list for the nation despite previously raising serious concerns about its business case.

Tunnelling for the project will start at the end of 2026 and it is expected to be complete in 2035.