Plans to extend the Suburban Rail Loop to Melbourne’s west — eventually connecting Werribee — have moved a step closer after Infrastructure Australia added the major rail project to its updated national priority list.
The infrastructure watchdog this week classified the first stage of the orbital rail line, known as Suburban Rail Loop East, as an “immediate priority for delivery investment”, opening the door for new federal funding in the upcoming budget.
While the initial 26-kilometre section will run between Cheltenham and Box Hill, the broader plan includes future northern and western legs that would eventually link Sunshine to Werribee via Melbourne Airport.
The western section is particularly significant for residents across Melbourne’s west, with the proposed line expected to dramatically improve public transport connectivity to employment hubs, universities and major transport corridors.
Infrastructure Australia added the project to its priority list after receiving additional information from the Victorian Government, although the body has not yet received a full business case for the future northern and western stages of the rail loop.
The development comes despite earlier concerns raised by the watchdog.
In its most recent evaluation completed in January 2025, Infrastructure Australia said it had “low confidence” in the $34.5 billion cost estimate put forward by the state government and warned the project’s projected benefits may have been “overstated”.
The Suburban Rail Loop’s cost was originally calculated in 2020 and would equate to roughly $42.3 billion in today’s dollars, before accounting for the significant cost overruns and delays seen across major infrastructure projects since the pandemic.
There have also been questions about the need for a separate business case for the eastern stage given the line will operate for several years before other sections are constructed.
Infrastructure Australia chief executive Adam Copp says the organisation was now more confident about the project’s overall value.
“Now, we think it has merit – that’s why it’s on the priority list,” Mr Copp said.
While Infrastructure Australia did not receive the updated business case it had previously requested, Mr Copp said the state government had provided evidence outlining its proposed funding strategy.
After reviewing the additional information, Infrastructure Australia did not conduct a new formal evaluation but instead held a series of discussions with officials about the project.
The announcement comes as Prime Minister Anthony Albanese prepares the federal budget, with reports suggesting the government could commit as much as $11.5 billion toward the rail loop.
The Victorian Government has long argued the first stage will be funded through a three-way model involving the state government, the Commonwealth and “value capture” mechanisms.
In December, Premier Jacinta Allan revealed plans to raise more than $10 billion through developer contributions, land taxes and other levies tied to property value increases around new stations.
Victoria’s Suburban Rail Loop Minister Harriet Shing said Infrastructure Australia’s listing confirmed the project was ready for investment.
“The project, to be clear, is on time and on budget. The estimate in the 2021 business case was between $31bn and $34.5bn, and we are within that budget.” she said.
Ms Shing said the Albanese government’s ongoing engagement highlighted the national significance of the rail project.
“The commonwealth has confirmed they will be providing funding in this year’s budget, and we’ll continue to head toward that work by making sure the commonwealth has what it needs,”
“We worked really hard to provide the commonwealth with further information about the project.” she said.
Spokeswoman for federal Infrastructure Minister Catherine King says any further funding commitments would be confirmed through the government’s normal budget process.
“The federal government has committed $2.2bn to date towards early works on Suburban Rail Loop East and, as announced by the Prime Minister in November, the government will be making further investment through the upcoming budget,” she said.
