The MSIS is an equalisation scheme, aimed at encouraging the movement of container freight from road to rail: it is paid to four Victorian providers who largely transport agricultural products.

The state budget papers show the government would wind up the $3.5 million MSIS at the end of next financial year, due to the Port Rail Shuttle Network (PRSN) coming online.

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But state budget papers also show slow progress with the completion of the PRSN.

Only 66 percent of the funding for the project was expected to be spent this year, against the original 85pc target.

By the end of the 2023-24 financial year, only 67pc of money budgeted for the project was expected to be spent.

The papers reported the 2022-23 outcome was lower than expected, due to delays caused by flooding, availability of materials and workforce at the Altona project.

There were also delays with commercial negotiations between private parties regarding land for the Somerton project.

The federal government is contributing $38 million towards the project and the Victorian government $20 million.

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Apart from the slow progress, Rail Futures Institute president John Hearsch, alongside MSIS recipients Seaway Intermodal and SCT, have cast doubt on the government's reasons for cutting the scheme.

They said there was no connection between the MSIS and the PRSN as they served entirely different purposes.

Trains out of Merbein were "totally unsuited" for the port rail shuttle, Seaway Industry Advocacy and Strategic Products manager Ros Milverton said.

"When I speak to the authorities I always push regional export trains, because the shuttles are suited to import trains," Ms Milverton said.

"We are the foodbowl of Australia from the statistics that came out - we can't be categorised into the same conversation as import shuttle trains."

Mr Hearsch agreed the planned $58 million Port Rail Shuttle had nothing to do with the MSIS.

"MSIS is purely to support trains conveying exports from our regions," Mr Hearsch said.

Mr Hearsch said the RFI was still awaiting the day when the first genuine regular service of rail/port shuttles commenced.

"From personal involvement, I can vouch that serious planning for these services started in 2005 with detailed work within Department of Transport taking place from 2010 onwards," he said.

"$85m of combined state/commonwealth funding first appeared for this item in the 2014 respective budgets and was repeated in budgets for years thereafter, with no serious money actually committed to the project until 2020."

He said works within the Port of Melbourne area to accommodate rail/port shuttles were well underway and should be completed by 2024.

"However, while that and other state-funded works such as the rail spur at Dandenong South to connect the planned Salta development have progressed, the complementary private sector investments for rail/port shuttles at Dandenong South and Somerton are yet to become apparent," he said.

"My understanding is that at Dandenong South, the port/rail shuttle terminal itself is yet to start construction because the train paths needed for the shuttle trains. among frequent metro services. are not guaranteed.

"It's hardly surprising that no one would build a $100m terminal if rail access to it is uncertain.

"It's been at a stalemate for a couple of years now."

SCT Ports and Government Relations general manager Matt Eryurek said it was "well documented" the Port Rail Transformation Project was only intended to link rail to one of the terminals [Patrick's Swanson Dock East International Container Terminal].

"There are two others, DP World and the Victorian International Container Terminal, which are not part of the project," he said.

"Even though the PRTP is a great step forward, we believe that until all the terminals are on line [with rail] and have all the shipping lines supporting them, you are not going to get the same outcome."

A state government spokesperson said the MSIS was one of many initiatives aimed at moving more freight onto rail, while regional rail freight lines were upgraded to benefit primary producers.

"That's why we're investing a further $3.5 million to extend the Mode Shift Incentive Scheme until June 2024, at which point it will cease when the Port Rail Shuttle Network comes online," the spokesperson said.

"The Port Rail Transformation Project, which is part of the Port Rail Shuttle Network, will contribute to more efficient access to the port for all rail users including MSIS recipients."