Treasurer begins sell of tight Victorian budget

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Tim Pallas says the government is "recalibrating with a clear path forward". (Diego Fedele/AAP PHOTOS)

Victorian Treasurer Tim Pallas will attempt to ram home the reason major infrastructure projects are on a go-slow as he embarks on a tough budget sell.

The Victorian government is "recalibrating" its ambitious infrastructure agenda due to the rising cost of building materials and worker shortages, Mr Pallas told parliament on Tuesday while handing down the 2024/25 budget.

Melbourne's Airport rail link project has been delayed another four years and will not take passengers until at least 2033 amid a stoush with the airport operators, which insist the new station should be underground.

The Arden medical precinct has been scrapped, with extra health facilities to instead be built in Parkville after technical work showed electromagnetic interference at the proposed site would wreak havoc on sensitive medical equipment.

There will also be a six-year delay to level crossing removal works on the Upfield train line to Melbourne's north.

In his budget speech, Mr Pallas said the Victorian government heeded an International Monetary Fund warning to adapt infrastructure investment to economic capacity.

"We're recalibrating with a clear path forward, backed by disciplined decisions," he said.

Victoria's net debt is forecast to reach $156.2 billion by 2024/25 and rise to $187.8 billion by 2027/28, leaving a daily interest bill of $25.8 million.

The statewide rollout of universal pre-prep will be completed four years later than expected, while dozens of local mental health facilities will open slower than planned due to a shortage of 2500 specialist health workers.

Reducing government advertising and relinquishing office spaces were among $1.79 million in "savings and efficiencies".

There were few sweeteners in the budget other than a $400 credit for 700,000 students to spend on uniforms, excursions or extra curricular activities in 2025.

Not enough has been done to reduce debt or provide relief to families struggling in the cost-of-living crisis, the state opposition said.

"They use every excuse in the book simply to walk away from their own promises because they can't manage money," Opposition Leader John Pesutto told reporters.

Community and Public Sector Union Victorian secretary Karen Blatt said the budget struck the right balance, while the Greens claimed it would make the state's housing crisis worse.

"Labor's first budget under the new premier has no new money for housing and nothing to help with soaring rents," state party leader Ellen Sandell said.

Uncertainty surrounding the airport rail project prompted concern from the tourism sector and the Public Transport Users' Association.

A spokesman for the airport said the timing of the mega project was a matter for government.

Australian Associated Press