A long-awaited inland railway line between Melbourne and Brisbane has been made a priority, with the Abbott government aiming to have it built within a decade.
The government has allocated $300 million for pre-construction works on what would be a costly multi-billion dollar project, possibly involving private investment.
Nearly $583 million has been allocated to develop the freight rail network and linking it to ports.
That is dwarfed by more than $11 billion in extra funding going to the nation's roads as part of the government's massive infrastructure package announced in the budget.
The 1,731km Melbourne to Brisbane train line is expected to cut seven hours off the time it takes to transport freight between the two cities and help remove more trucks off interstate highways.
The Southern Freight Rail Corridor in Brisbane, and sections between the NSW towns of Narrabri and North Star, as well as Parkes and Narromine, were being assessed as locations to fast track early works.
A 24-hour freight link to the Port in Brisbane was also being investigated.
Further advice on building the project would be given towards the end of the 2014.
"Our plan will increase the productive capacity of Australia's rail freight network meaning primary producers and major exporters will have greater access to key domestic and international markets through the easier passage of freight and other products," deputy prime minister Warren Truss said.
"Moving more freight onto rail will reduce road congestion and make our highways safer.
"It will also encourage jobs growth in the agricultural, transport and export sectors."
Australia's largest ports and rail operator Asicano's chief executive John Mullen last week called for the inland railway and greater government rather than private investment in rail and ports generally as part of nation building.
The next largest suite of funding was $119.6 million over five years to give Tasmania's freight rail system a boost.