There was no new cash in Tuesday's federal budget for the Victorian government's pet project, the Suburban Rail Loop, which is expected to cost up to $34.5 billion for the first stage alone.
The state has pledged $11.8 billion to build the eastern section from Cheltenham to Box Hill and is counting on the federal government to cover a third of the project's total cost but has only received a $2.2 billion commitment so far.
The other third of funding is expected to come from "value capture" revenue.
Fronting a state budget estimates hearing on Thursday, Mr Pallas said the Victorian government was working with the independent assessor for projects of national significance to secure more federal cash for the mega project.
Bill Shorten, Anthony Albanese, Daniel Andrews and Jacinta Allan announce the rail loop in 2018. (Penny Stephens/AAP PHOTOS)
"We know that the prime minister is a supporter of this project, and he was standing with the premier when we announced this project," the treasurer said.
"But we do need to recognise that, as a government, we will need to go through the appropriate processes of engagement with Infrastructure Australia and provide them with the surety and certainty of the work that's already been done around the business case that was produced a couple of years ago."
The Suburban Rail Loop, a planned 90km orbital rail line from Cheltenham to Werribee via Melbourne Airport, was not included in a federal review that led to the axing of 50 infrastructure projects in 2023.
The federal budget, handed down by Treasurer Jim Chalmers on Tuesday, tipped in another $3.25 billion to Victoria's North East Link project after the toll road's total cost blew out to $26.1 billion.
Mr Pallas blamed the cost overrun on a decision to extend tunnelling and inflated construction costs.
"The government has over $200 billion of capital works underway or commencing in this budget," he said.
"The total cost increase of that entire package is 3.9 per cent - 3.9 per cent is pretty impressive, given NELP (North East Link Project) makes up the vast majority of that overrun."
The treasurer said a 7.5 per cent consumer levy on short-stay accommodation such as Airbnb and Stayz did not appear as a line item in his 10th state budget, delivered on May 7, as the reforms were yet to pass parliament.
The forecast takings from the incoming tax were incorporated into "other revenue" and are expected to net the state $37.5 million in 2024/25 and $75 million for each financial year across the rest of the forward estimates.
The levy will be introduced to parliament in non-budget tax legislation and is slated to come into effect from January 1, 2025.
The latest state budget revealed Victoria's net debt is forecast to reach $156.2 billion by 2024/25 and rise to $187.8 billion by 2027/28, pushing up the daily interest bill to almost $26 million.
Mr Pallas reiterated the government was committed to reducing debt as a share of the economy and working diligently and consistently to convince credit rating agencies the state was on the right track.
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