Treasurer talks tough as airport rail stoush deepens

Victoria is threatening to shift some of its business away from Melbourne Airport to Avalon Airport after hitting the brakes on a rail line to Tullamarine.

In his 10th budget, treasurer Tim Pallas on Tuesday revealed Melbourne Airport Rail will be completed at least four years later than its original 2029 target.

Construction on the mega project has stalled as the government and airport remain at odds over whether the Tullamarine station should be underground or elevated.

Mr Pallas said the airport's operator also wanted to be compensated for disruption stemming from construction and it should instead get busy delivering a third runway.

"I'm getting increasingly concerned about whether or not as a state we shouldn't be putting an each way bet around Avalon and starting to think about what they can do in terms of provisioning for our transport needs," he told reporters on Wednesday.

"You want to be a good corporate citizen - you better stump up and demonstrate that you're prepared to look after the interest of the Victorian public."

Avalon is Victoria's second largest airport and owned by Linfox, the company of trucking magnate Lindsay Fox who has strong links with former premier Daniel Andrews.

Fronting the business community to sell his budget, Mr Pallas defended restricting a $400 bonus to families of 650,000 students in public schools and another 50,000 from non-government schools with a concession card-holder parent or parents.

He said the $287 million scheme was effectively means tested through concession cards eligibility and proper means testing would have left less cash in the kitty.

"It doesn't matter exactly how well you're doing," the treasurer told the Victorian Chamber of Commerce and Industry event.

"Everybody's doing it tough at the moment under the rigour of inflation."

Earlier, Premier Jacinta Allan revealed the scale of electromagnetic interference from trains at a now-shelved Melbourne medical precinct only became apparent weeks ago.

The Arden development was scrapped in Tuesday's budget after technical work showed nearby interference would wreak havoc upon sensitive medical equipment.

Ms Allan said engineers provided updated advice the problem was worse than first thought.

"It was in the last couple of weeks as we were considering ... the delivery of the Arden precinct," she said.

Labor committed up to $2.5 billion to the $5 billion to $6 billion plan before the 2022 state election and spruiked it as "the biggest hospital project in Australia's history".

Ms Allan said the government knew electromagnetic interference had to be managed before receiving the updated advice.

She said the plan to instead redevelop the Royal Melbourne and Women's hospital sites at Parkville would deliver the same amount of space and Arden would be freed up for housing.

In another delay, the statewide rollout of universal four-year-old kindergarten, known as pre-prep, will be finished in 2036 instead of 2032.

Ms Allan said the government could not stubbornly push on with the previous timeline in the face of mass workforce shortages.

"We've just had to take a more gradual rollout as we achieve a full 30 hours of four-year-old kinder in the years ahead because we need to be able to train and scale up the workforce," she said.

Opposition Leader John Pesutto said broken promises and cuts to services were becoming clear as the dust settled on the budget.

"We see ... commitments to childcare, commitments to hospital projects all canned or put on the never-never simply because Labor can't manage money," he said.