Labor put the project firmly on its agenda in its "Project 10,000" transport blueprint released in November last year, promising to spend $300 million to begin planning the $9 billion cross-city rail tunnel, which was seen as vital to boosting the capacity of the City Loop. Graphic: Jamie Brown Although no timeframe was put on the project, Labor said it expected to contribute $3 billion, with the remaining cost equally shared by the Commonwealth and the private sector. On Tuesday, Mr Pallas said Labor was "not going to give up" on the rail tunnel, although he was not yet in a position to say when it might be delivered. "I've got say the few discussions I've had with the federal government, they've been pretty adamant about this. Quite frankly it is disappointing for rational transport infrastructure delivery if the federal government distorts its investment into only one form of infrastructure such as roads."

Transport formed a key battleground for the November 29 election, with Labor pledging to dump the East West Link road project if it won and instead embark on an ambitious push to remove 50 level crossings over eight years. Mr Pallas confirmed the western section of the East West Link was not on Labor's agenda "for this term". But he would not rule out the link, connecting the Tullamarine Freeway to the Western Ring Road, for a second term after the 2018 election. "You would never say never," Mr Pallas said. Prime Minister Tony Abbott has repeatedly vowed to claw back $3 billion of Commonwealth money set aside for both sections of the East West Link. But the new Labor state government appears confident it will convince the federal government to redirect the money into its level crossing removal program, which is mostly aimed at improving the efficiency of the road network. Mr Pallas last week told his federal counterpart, Joe Hockey, that Victoria had $2.7 billion worth of shovel-ready projects waiting to be built, including 15 level crossing upgrades and a new tolled truck ramp to the port to remove heavy vehicles from the West Gate Bridge.

He said if the Commonwealth were to withdraw $3 billion, it would cut Victoria's share of federal infrastructure funding from about 20 per cent to just 13 per cent, which would have profound ramifications. During the campaign, Mr Pallas promised not to raise taxes and charges and to maintain Victoria's budget position without adding to net debt. But on Tuesday he appeared to leave himself some wriggle room, saying the promise was to deliver Labor's election commitments without the need for an increase in taxes and charges. He said Labor would leave itself with capacity to adjust to changing economic circumstances. "If you are asking me if the government is locked and loaded for the next four years, it is not, it can't be," he said. "Our commitment to the Victorian people is that we'll deliver all of our commitments without the need for an increase in taxes and charges."