A realigned Melbourne Metro Rail Tunnel worth up to $11 billion is the centrepiece of the Napthine Government's election-year budget.

Treasurer Michael O'Brien handed down the infrastructure-heavy outlook, saying it would help build jobs in Victoria and see the state through the mining downturn.

The Metro Rail tunnel, which has been rebranded as the Melbourne Rail Link, will cost between $8.5 and $11 billion and connect Southern Cross station to South Yarra station via Fishermans Bend.

There will be two new underground stations at Domain and Montague and construction is slated to begin in early 2016.

The route is different to the original Metro Rail plan.

Key details in the Victorian Budget: $7.5 billion spending on infrastructure in 2014-15 and average $6.6 billion over forward estimates



$7.5 billion spending on infrastructure in 2014-15 and average $6.6 billion over forward estimates $830 million for an $11 billion Melbourne Rail Link and Airport Link



$830 million for an $11 billion Melbourne Rail Link and Airport Link $3.2 billion for the $10 billion stage 2 of the East West Link



$3.2 billion for the $10 billion stage 2 of the East West Link Payroll tax to fall to 4.85 per cent



Payroll tax to fall to 4.85 per cent Stamp duty abolished on life insurance



Stamp duty abolished on life insurance Infrastructure program to create more than 10,000 jobs



Infrastructure program to create more than 10,000 jobs Net debt $23.4 billion (6.3 per cent Gross State Product)



Net debt $23.4 billion (6.3 per cent Gross State Product) Surplus $1.3 billion 2014-15

In that version, the new line ran from South Yarra to South Kensington through the city, creating five new stations, including one in North Melbourne and one in Parkville.

The Victorian Government says the change will enable an extra 35,000 people to travel at peak times and increase network capacity by 30 per cent.

"It's a significant uplift from the old Metro Tunnel which was 19,000 - 20,000 (people). So this gets more people on the system," Mr O'Brien said.

"We get the Airport Rail Link in addition and we don't have to close down the CBD for a number of years. It's a far better proposal."

The Premier indicated a new route was under consideration earlier this year because the original plan would create a "Berlin Wall" situation on Swanston Street for at least two years.

The new route bypasses the CBD altogether.

"We're going to start this tunnel in this budget. We're going to put the shovels in the ground and start work," Mr O'Brien said.

"In relation to North Melbourne and Parkville, we'll be having enhanced tram services. There are already good services to North Melbourne; we can enhance them.

"This is a far better option for Victoria."

The Government is providing $830 million over four years for the project, but just $40 million in the next financial year.

Sorry, this video has expired 730 Victoria's Josie Taylor speaks with Treasurer Michael O'Brien.

Parts of the line will start to be operational by 2023 but full construction is expected to take much longer.

Opposition Leader Daniel Andrews has labelled the new rail line through the city a "con", criticising the omission of three new stations from the original plan.

He says the Government is making big promises in an election year.

"This Premier, desperate Denis Napthine, panicked, making promises he really hasn't thought about," Mr Andrews said.

"He's making bad decisions because he's panicked and desperate."

The Melbourne Rail Link also includes the Airport Rail Link, which will link Southern Cross station to Melbourne Airport.

The announcement solidifies the Government's long-term plan to unlock mainly industrial land at Fishermans Bend to build a business hub with more than 40,000 residents.

East West Link funding

The budget also includes $3.2 billion in state funding for the second stage of the East West Link, which will join the eastern section to the Western Ring Road and create an alternate river crossing to the West Gate Bridge.

The Federal Government last week announced it would contribute $1.5 billion to the section, which is expected to cost up to $10 billion.

The Victorian Government still has not disclosed how much money it will put towards the $6-8 billion eastern section of the link, citing commercial reasons.

Already announced infrastructure projects include improvements to the Cranbourne Pakenham rail corridor at a cost of $2.5 billion and $200 million for track upgrades in the Murray Basin to enable better freight transport.

State of finances

The Government has forecast a $1.3 billion surplus for 2014-15, $416 million above what was expected.

It says the surplus will grow to $3.3 billion by 2017-18.

Taxation revenue is forecast to grow by 7.2 per cent in 2014-15 because of strengthening property taxes.

Net debt has grown to $23.4 billion, but is forecast to fall to $19 billion in 2016-17.

Yesterday the Government announced it will sell the Rural Finance Corporation, bringing in about $400 million.

The Government will also get billions from the sale of a 40-year lease for the Port of Melbourne; however, it will not disclose how much it is expecting.

Tax cuts and rises

From July 1, payroll tax will be cut from 4.9 per cent to 4.85 per cent, in a move the Government says will save Victorian businesses around $234 million over four years.

Stamp duty on life insurance will also be abolished.

Sorry, this video has expired Labor says budget fails Victorians

From September, first home buyers will receive a stamp duty concession of 50 per cent, rising from 40 per cent.

Earlier this year, the Government announced car registration fees would go up bringing in an extra $136 million.

The Government has also provided more than $14 million to find a new operator for myki services in 2016.

"I think Victorians still regard myki a little askance and I understand why," Mr O'Brien said.

"We'll see if we can use that tender process to drive better outcomes."

The Government says it is putting $1.4 billion towards health over four years and $2.8 billion towards schools.

Many health and education budget promises have already been announced, including 12 new schools and $73 million for Latrobe Regional Hospital