A rail link to the federally-funded $5.3 billion western Sydney airport could eventually receive commonwealth cash but NSW will have to compete against rail projects from Adelaide, Brisbane and Melbourne.
The Turnbull government released details of how it will build a second Sydney airport at Badgerys Creek by 2026 in Tuesday's budget but it didn't commit funds for a rail link experts say is crucial.
Instead, Treasurer Scott Morrison flagged funding could come from a new $10 billion national rail program for projects connecting cities and regions saying the Western Sydney Airport rail link had "potential to be supported".
But it'll have to compete against Adelink, Brisbane's Metro and Cross River Rail and a link to Melbourne's Tullamarine Airport.
The budget was welcomed by NSW Treasurer Dominic Perrotett, but he raised concerns about the Turnbull government's school funding reform - dubbed Gonski 2.0.
"We have significant concerns about the funding implications for NSW schools and will be looking closely at the detail of the government's proposal when it is provided," Mr Perrotett said in a statement.
The Turnbull government on Tuesday announced the government-owned Western Sydney Airport Corporation would be established after June "with strong private sector expertise" with tenders for early works issued by the end of 2017.
"We will inject up to $5.3 billion in equity over the next 10 years into this company to get the job done."
However, opposition treasury spokesman Ryan Park said the budget didn't do enough for the housing affordability crisis in Sydney.
"No one is arguing the need to spend money on infrastructure, but what we are facing here in NSW, is for the first time in Australia's modern history, is an entire generation being locked out of a housing market," Mr Park told the AAP.
He noted the importance of the government's commitment to Western Sydney Airport, but said, "we want to make sure that the public transport is in place before they start operating".
The federal and state governments are also in talks about "Snowy 2.0" - an expansion of the Snowy Hydro scheme.
Mr Morrison on Tuesday said the commonwealth was open to acquiring a larger share or outright ownership of Snowy Hydro from the NSW and Victorian governments.
That's "subject to sensible conditions" including that the scheme would have to remain in public hands and Snowy Hydro's obligations under its water licence would be reaffirmed.
The federal budget papers put the infrastructure spend in NSW at $18 billion, including the new airport and ongoing initiatives such as the $2.9 billion joint Australian-NSW infrastructure plan for western Sydney.
