A new report reveals that fast rail connecting regional Victoria to Melbourne will unlock more jobs and stimulate the economy during the COVID-19 recovery.

Bendigo mayor Margaret O'Rourke said fast rail is needed to help move people around the state more efficiently.

"There are currently about 20 services to Melbourne each weekday that take approximately two hours one way," Mrs O'Rourke said.

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"The focus is not only on getting people from Bendigo to Melbourne but getting people out of Melbourne and into the regions more easily for work, education and tourism purposes."

A cohort of regional councils and lobby groups, the Stronger, Together alliance, said a new tunnel from Sunshine to Southern Cross Station would be the first step in unlocking the potential of fast rail.

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The alliance, which includes councils from Bendigo, Ballarat, Shepparton, Geelong and the Latrobe Valley has long pushed for the new tunnel to be part of the Melbourne Airport Rail Tunnel project.

The National Institute of Economic and Industry Research's report said the benefits of the tunnel include a five per cent increase in gross state product, a halving of the wage gap between regional and metropolitan Victorians and congestion savings.

By investing in fast rail to the regions, the report said over time, more people would move to regional cities, which would support job creation and attract more people.

The speed and ease in which people could move around cannot be underestimated

Bendigo mayor Margaret O'Rourke

"The productivity along rail corridors increases rapidly compared to no rail upgrades, with an increase after 30 years of around 15 per cent," the report said.

The benefits of the speed and ease in which people could move around with fast rail cannot be underestimated, according to Mrs O'Rourke.

"It would put time back into people's day and make it more appealing for Bendigo-based businesses to meet with clients in Melbourne or work between offices and vice versa," she said.