The Victorian government has ruled out standardising the Sea Lake and Manangatang rail lines, in a blow to farmers and freight operators.

The broad-gauge lines were to be converted to standard gauge under the $440 million Murray Basin Rail Project, but work stalled in 2019 with the upgrade half complete.

A revised business case was released late last year which outlined plans to rectify some of the mistakes made during initial works and re-sleepering works on the Sea Lake and Manangatang lines, but not standardisation.

At the time, the federal government provided $5 million to plan for future standardisation and asked Victoria to match the commitment.

Standardisation will not happen

But speaking to the ABC, Victorian Transport Infrastructure Minister Jacinta Allan has revealed the current government will not standardise the network.

Ms Allan said the use of the rail network had changed since the original project business case was completed in 2012.

"There were significant deficiencies, significant problems with the original business case that was completed the best part of nine years ago," she said.

"It obviously could not take into account the significant investments that have been made since that time in both freight and passenger rail services in north-west Victoria."

As it stands, standard-gauge trains running on the Mildura line can only access Geelong and Melbourne via Ararat.

If standardisation works were completed, those trains could travel via Ballarat, adding traffic to an already busy line.

Ms Allan said that was a problem for future governments.

"At a future time, future governments can consider the standardisation of that part of the network."

Farmers 'gutted, disappointed'

One of the loudest voices calling for standardisation of the network has been the Victorian Farmers Federation (VFF).

Its grains group president, Ashley Fraser, said he was outraged by the news.

"Yes, the network has changed in some ways, but that doesn't say that the freight problems are not there; the same problems that were there in 2012 are still there in 2021."

Mr Fraser said broad-gauge lines were not being fully utilised because of the need for freight operators to own and maintain two sets of rolling stock, meaning more freight was shifting from rail to road.

"It flies in the face of common sense not to have a standardised rail system, and we've got a crumbling road network that's under more pressure than ever.

"It really shows an absolute disdain for northern Victorian farmers and a complete disregard for regional areas."

Entire project in turmoil

Rail Freight Alliance chief executive and Culgoa farmer Reid Mather said not completing standardisation amounted to abandoning the whole Murray Basin Rail Project.

"If you don't do Sea Lake and Manangatang, you don't need to do the Geelong-to-Maryborough line or the interface in between; that's just simply not good enough," he said.

Farmers were already living with the impacts of governments delaying rail upgrades, he said.

"The capacity out of this region has gone down, we've got bigger and larger trucks coming out of this region, and we're living with the fact it's now costing more money to get our freight to market.

Mr Mather said Victoria needed an integrated transport approach in addition to a fully standardised freight rail system.

"You can't unravel regional and rural from city," he said.

"Once we start to have a threefold increase in containers at the Port of Melbourne in 20 years, and quite a large proportion of that bulk commodities, that is going to impact on liveability.

"We are already scheduling deliveries at our ports because there are so many trucks on Melbourne roads now."