In a politically charged budget, Mr Pallas and Premier Daniel Andrews antagonistically accused the Turnbull government of dithering over state infrastructure projects, repeating a complaint that Victoria gets a meagre 9 per cent of the federal infrastructure carve up. Victorian Treasurer Tim Pallas. Credit:Jesse Marlow "I'm not sure the federal government knows where Victoria is, certainly their allocations don't seem to give much confidence that they do," Mr Pallas said. "Victoria seems to be treated as an afterthought in the mind of the Commonwealth … the depressing reality says that the electoral pendulum seems to be influencing where allocations are made." Mr Pallas has rejected federal offers of loans to fund the project, calling for a partnership with the Commonwealth instead to fund the project.

The state treasurer's advice to Mr Turnbull was "stop pretending you are a merchant banker and start pretending to be a prime minister". Illustration: John Spooner "While there was hope that Mr Turnbull would support the project, it is now evident that he is unwilling or incapable of doing so," Premier Daniel Andrews said. "We just can't wait. We are deadly serious about delivering this project, and we will deliver it, with or without the federal government."

Federal Major Projects Minister Paul Fletcher did not comment on Victoria's decision to entirely fund the metro project. But a spokesman said the Commonwealth was pleased Victoria had agreed to work with the federal government on a range of infrastructure projects. He said Mr Fletcher and Federal Transport Minister Darren Chester would be meeting with State Public Transport Minister Jacinta Allen and Roads Minister Luke Donnellan on Thursday to discuss the plan. The commitment to "fully fund" Metro Rail is the centrepiece of a budget that spends big on public transport and new roads, including $58 million to tackle congestion along Hoddle St, beginning with an overhaul of the Swan St intersection. As previously announced, the Andrews government has amassed a $9.2 billion war chest of surpluses in forward estimates, including $2.9 billion this year on the back of 6.9 per cent growth due to solid collections of land tax, payroll tax and a bigger slice of GST. Business will receive tax relief for the first time since 2002, with the payroll tax threshold to be progressively lifted from $550,000 to $650,000 over the next four years.

Regional roads and rail will get a boost with nearly $1.3 billion for regional rail, including duplicating the rail line between Melbourne and Melton and adding 170 V/Line services, with Mr Pallas conceding that the government knew it had to do better on regional train services after months of chaos. New schools will be built in the urban fringe and key inner city seats as part of $1.1 billion package. The government has put an extra $1.63 billion in the health budget to speed up elective surgery, and regional and rural health services will be able to draw on a new $200 million infrastructure fund to upgrade their services. Government debt, as a ratio to Gross State Product, is 5.9 per cent, dropping to 4.7 per cent next year, but the government has signalled that it is willing to go up to 6.2 per cent.

Victoria's response to the Royal Commission into Family Violence includes more than half a billion dollars for 65 of the commission's recommendations. Mental health programs will share in $356 million. And with law and order becoming an increasingly important political issue, the government is spending more than $500 million, including funding for 446 new police, including 40 new counter-terrorism experts. Loading Opposition leader Matthew Guy said the budget failed to tackle the challenge of population growth. "There is no plan to manage our state's population and that is what we need," he said. Shadow Treasurer Michael O'Brien said there had been a "massive blow out" in public sector wages under Labor. He said Mr Pallas had "taxed his way to surplus".