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Melbourne's future Suburban Rail Loop will begin at Southland Shopping Centre, which is one of six new train station locations picked by the Andrews Government for the project.
The full project aims to eventually link every major train line between Frankston and Werribee, via Melbourne Airport.
Next week's budget will include $2.2 billion for early works for the first 26 kilometres of the project.
No date has been set for completion, but the money announced today will allow early works to begin in 2022.
The Government has also announced the preferred site of six new underground stations for the first leg of the loop from Cheltenham to Box Hill.
Stations will be built next to Monash and Deakin universities, while a new station at Clayton will serve as interchange with V/Line services and Cranbourne-Pakenham trains.
"This is all about connecting people to where they work, where they live, less cars on the road, less trips to the city if you don't need to make those trips," Premier Daniel Andrews said.
"This project is real. This is exactly what we said we would do — we would get on and make this project real."
Mr Andrews said the project would "help drive the state's recovery" from the pandemic.
Despite the eye-watering bill for the early works, the Government has not revealed how much the total project will cost, saying a full cost analysis is still underway.
When the project was first announced at the 2018 election, the estimates for the entire loop exceeded $50 billion.
By comparison, the 9-kilometre Metro Tunnel project is budgeted to cost $11 billion, but is facing cost blowouts.
Without the project, freeway networks will not work: AndrewsMr Andrews said revealing the full cost of the project would compromise the competitive nature of a full tender process.
"It's not my practice to tell people who are about to begin bidding for this work, the number that would win them that tender," he said.
He said the cost of not building the loop would be "freeway networks that just do not work, at all".
"Pre-pandemic traffic will be nothing compared to what we will see in decades to come," he said.
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The owners and tenants of up to 300 homes and businesses have been notified that they may be impacted by the project.
The Government said because of the complexity of the project, there would be some "unavoidable disruption and land acquisition".
Mr Andrews said the project would create 800 direct jobs and, at the peak of construction, the project would support 20,000 jobs.
"It will take many decades to finish," he said.
"It's started by our Government, but it will be finished in decades to come by another Government.
"It's not about the electoral cycle, it's about getting people where they need to go."
This article first appeared on www.abc.net.au
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