You don't need a tunnel - entering Canberra from the north would not add much time compared with tunneling directly through the ranges.
There is no need either for services running between Melbourne and Sydney to pass through Canberra, that's just silly.
The issue with Canberra has been this
1) Go via Canberra to Melborune, makes it attractive to users from either end or mid way as a method of travel to Canberra.
Downside, it makes the overall route longer and more expensive killing the viability of the main target audience, S-M
2) Leave it as a shuttle from Goulburn and/or seperate service from Sydney, lower overal CAPEX for whole project and the Canberra line can be built single track saving more $. Also doesn't impact on the main users.
Downside, less likely Canberra would be built and forces a change of trains which has a mental block for many riders and will make the trip longer from MEl and maybe less viable. You basically need a 3 way syncronised connection at Goldburn to make it work at its cheapest and most efficent for users.
I believe now the Project recommendation is to do No.2 and as others have posted Gippsland was so far down the list of consideration its not funny and the Mayor needs to focus on his own controllable issues of today and tomorrow, not the next generations.