The 2017-18 federal budget on Tuesday outlined the government's seven-year funding plan, which includes the expensive commitment to uprade Australia's passenger and freight rail lines to "provide better connections for our cities and regions and create new opportunities".

The suite of measures, some of which have been previously announced and which is funded by increased borrowing, includes $8.4 billion earmarked for the Melbourne to Brisbane inland rail link, $5.3 billion for Sydney's second airport at Badgerys Creek, and significant money in Queensland for the Bruce Highway upgrade and Western Australia infrastructure.

In his budget speech, Treasurer Scott Morrison said the Western Sydney Airport corporation would not only build and operate the Badgerys Creek site, but the project would lead to the creation of 20,000 jobs by the early 2030s, and 60,000 jobs in the longer term. 

"We will inject up to $5.3 billion in equity over the next 10 years into this company," he said, indicating works on the 1800 hectare site would start in the second half of next year, with completion in 2026.

The Prime Minister's lauded Snowy Hydro 2.0 initiative would go even further, Mr Morrison said, with talks already underway with NSW Premier Gladys Berejiklian to buy back the state's share of the scheme.

Fairfax Media understands NSW is expected to take up the offer, with the Berejiklian government having signed an memorandum of understanding over the project. Talks with the Andrews Victorian government had not advanced as far.

"The Commonwealth is open to acquiring a larger share or outright ownership of Snowy Hydro, subject to some sensible conditions," he said.

Among those conditions were that all funds received by the states from the sale would have to be reinvested in priority infrastructure projects, while the federal government would commit to keeping the Hydro scheme in public hands and work with their obligations regarding water rights, without compromising environmental standards or controls.

In a vote-sweetner for Victoria, the federal government included a $1 billion package for new and upgraded infrastructure, including $30 million to develop a business case for a rail link to Tullamarine Airport.

A new $500 million Victorian regional rail fund would also include $100 million for the duplication of the Geelong-Waurn Ponds line, Mr Morrison said.

"Projects such as Adelink, Brisbane Metro, Tullamarine Rail link, Cross River Rail in Brisbane and the Western Sydney Airport rail link, all have the potential to be supported through (the $10 billion National Rail Program), subject to a proven business case," the Treasurer said.

"Our new Infrastructure Projects Financing Agency will help us make those right choices, recruiting people with commercial experience to ensure we use taxpayers' money wisely."

Infrastructure Minister Darren Chester described the initiatives as "a transformational next step in the Coalition government's record investment in infrastructure - improving connectivity, productivity and liveability in our cities and regions." 

"These investments will deliver an important economic boost, creating tens of thousands of new jobs during construction. On completion, these projects will lift national productivity and drive economic growth." 

In terms of regional investment, the government indicated a Regional Growth Fund would invest $472 million in regional projects that support their plans to adapt to modern economic changes.

This will include $200 million for a further round of the successful Building Better Regions Fund, according to the budget papers.