WORK is expected to start soon on a long-delayed $1.7 million upgrade to Warrnambool's internodal freight terminal to increase capacity for more rail transport.

It will be followed next year by a new $10m passing loop near Colac which will enable longer freight trains and more passenger rail services to run betweeen Warrnambool and Melbourne.

State Transport Minister Terry Mulder yesterday also confirmed a new rail freight incentive scheme to start July 1 as part of support to get more vehicles off roads onto railways.

The Department of Transport is likely to recommend a successful tenderer for the terminal project to Transport Minister Terry Mulder later this month with work to start early July and run four months.

Hunter representatives of the Rail, Tram and Bus Union say they were caught off-guard with the State Government's plans for a major shake-up of RailCorp.

The Transport Minister, Gladys Berejiklian, this week announced 750 middle management positions would be axed under a plan to separate RailCorp into two organisations, one for Sydney and the other for regional rail.

The Union's Mick Schmitzer says he is sceptical about the Government's comments that no jobs will be lost from regional New South Wales.

He says he will be meeting with the Transport Department next Tuesday.

"I did see the Minister's media release where she talks about 750 voluntary redundancies that they would be mostly in Head Office, I'm still sceptical about those sort of things," he said.

An interim report into a fatal accident between a utility and a train in the Hunter Valley has highlighted the severity of the impact, with the ute's cabin crushed substantially.

The crash between a QR National Train and the utility happened on May 4 at a railway crossing at Glennies Creek, near Singleton.

The Office of Transport Safety Investigations (OTSI) has completed its Interim Factual Statement and has determined that a formal investigation into the incident is warranted.

Economists for the ARA says the registration rises for B-double trucks should have no impact on freight costs or increase prices for basic commodities such as bread, fruit and vegetables and clothing because rail freight can take the load.

ARA chief executive Bryan Nye said the registration fee rise for B-doubles was less than a 1 per cent, but the SARTA has claimed it is up to 30 per cent. Both organisations advocate limiting the number of freight trucks on the roads for safety.

"Before you race to put more semis on the road to meet our freight needs, why not put it on rail," Mr Nye said.

The number of jobs to be taken out of Railcorp at first seems extraordinary - 750 are to go in the initial swath of job cuts, with several thousand more to follow.

But this is less to do with a reckless and vengeful approach to rail reform than it is to do with problems for too long left in the too-hard basket.

Under previous governments, the rail system was allowed to become bloated with a gigantic mid-level bureaucracy.

Unfortunately, this over-staffing was not accompanied by a parallel rise in the quality of the service.