Work has begun around Berriwillock and Sea Lake, as the re-sleepering of the Sea Lake to Korong Vale rail line begins.
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The Victorian government is spending nearly $50 million to replace more than 70,000 new sleepers on the 141-kilometres of track.
It's expected to be completed by April 22.
V/Line contractors will also be renewing rail fixtures, by replacing rail spikes in some sleepers.
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Federal Infrastructure Minister Michael McCormack said the project would keep rail freight moving efficiently for generations to come.
"In December last year, the federal government announced an additional $200.2 million for the Murray Basin Freight Rail Network, including $195.2 million for the most extensive package of works recommended by the revised business case undertaken by the Victorian government," Mr McCormack said.
"I'm pleased that work has now started on this important 141-kilometre track, which services two major Victorian grain terminals.
"These works will improve safety and reliability along the line, with four level-crossing renewals and maintenance on more than 3,000 joints."
Victorian Transport Infrastructure Minister Jacinta Allan said Victorian farmers were already seeing the Murray Basin Rail Project's benefits.
"Freight trains have returned to the Mildura and Murrayville to Ouyen lines, the Maryborough to Ararat line reopened after 15 years and we've seen significant upgrades to the Hopetoun, Manangatang and Yelta lines," Ms Allan said.
The Victorian government undertook a review of the original Murray Basin Rail Project business case, prepared in 2015, backed by industry engagement from farmers and freight operators who wanted to see works commence as soon as possible.
More than 23,000 sleepers will be replaced between Inglewood and Korong Vale and 28,000 between Dunolly and Inglewood.
But Rail Futures Institute president John Hearsch said the freight only part of Victoria's rail network needed to adopt a standard of "low maintenance" steel sleepers, as happening in NSW and other states.
Mr Hearsch said the RFI had written to Freight and Ports Minister Melissa Horne suggesting such sleepers should be gauge convertible, instead of the "outdated Victorian practice of using scarce timber sleepers and perpetuating on-going poor in-track sleeper life.
Timber sleepers had a life of 15 years, compared with steel at 50.
"Until this can be fully achieved, it is essential that sufficient on-going maintenance dollars are allocated annually for the freight lines," the RFI said.
"This is something we have been pushing now for several years.
"Victoria is now the only state still using large quantities of timber sleepers."
Redgum was not known for its long term durability but was probably the only hardwood timber left in any quantity that can be legally harvested.
"This is unsustainable, both on economic and environmental grounds,' the RFI told the minister.
"V/Line continues to resist the call to instead use steel sleepers which are considerably cheaper than concrete and are quite suitable for secondary lines.
"A gauge convertible version is available at marginal additional cost."
Mr Hearsch said the only line in the Victorian network, which had progressively converted to steel sleepers, was Benalla to Oaklands.
It was maintained by Australian Rail Track Corporation, under a management contract with the state.
"As expected, this has been very successful and has enabled ARTC to significantly reduce the annual cost of maintaining this line," the RFI said.
Derryn Hinch's Justice Party Northern Victorian MP Tania Maxwell said the project was hugely important and needed to be done properly.
"A half-measured approach threatens important future projects, such as the Ouyen Intermodal, and will continue to push freight onto road instead of rail," Ms Maxwell said.
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The Department of Transport has confirmed it is using wooden sleepers on the Sea Lake line, with only a small section at the end being replaced with new concrete sleepers.
It has recently replaced 30,000 sleepers on the Murtoa-Hopetoun freight line, while the 2019 maintenance of 90km of the Manangatang line now means trains can operate at 40 kilometres an hour.
Between Manangatang and Korong Vale (including Lalbert and Quambatook) there are about 70km of speed restrictions.
Sleepers will be upgraded between Dunolly and Inglewood later this year, helping to remove the speed track restrictions on this line.
A DoT spokesman said freight trains from Piangil (grain), Deniliquin (rice) and Bendigo (grain and flour) travel along the Bendigo line on an ad-hoc basis.
"When V/Line receives a request from a freight operator it timetables the services in-between existing services, which in many cases means services run at night to avoid impacting passenger services," the spokesman said.
There were currently no plans to re-open the rail spur from Shepparton to Dookie.
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