Treasurer Scott Morrison has angrily rejected Victoria's demand that the Commonwealth hand over $1.46 billion, an amount equivalent to 15 per cent of the price.

Instead, Mr Morrison confirmed Victoria would get $877.4 million. In a growing row over infrastructure funding, he accused the Andrews government of failing to understand that the 15 per cent payment did not apply to the sale price but to an agreed "apportionment of funds".

"I think there has been some misinterpretation and wilful misunderstanding on behalf of the Victorian government , who always wants more money from the Commonwealth," Mr Morrison said.

When the scheme was announced in 2014, the former Abbott government made it clear the states would get 15 per cent of the price of the asset sold if all the proceeds were ploughed back to new infrastructure.

A detailed agreement with the states provided further information, confirming half the amount would be paid upfront based on an expected value of the asset, with the second half paid after the sale, plus "any adjustment" to account for the different between predicted sale proceeds and the actual sale proceeds.

At the time, the federal government placed few caveats on how the money should be spent, so long as it was reinvested in productive infrastructure.

In the case of the port, the Turnbull government set aside $877.4 million in the May budget. That suggested it expected the public asset to sell for about $5.8 billion - about 40 per cent less than the actual sale price.

But Mr Morrison said unlike other states Victoria had failed to reach an agreement on how the money should be spent, claiming the Andrews government was in no position to argue given it had wasted more than $1 billion dumping the East West Link contract.

A spokesman for Treasurer Tim Pallas said it was a clear case of "Sydney Liberals" doing over Victoria.

"The federal Treasurer is either deliberately misleading people or he doesn't understand what's in the agreement," he said. "Victorians are entitled to the full 15 per cent, to be spent on Victorian projects."

Victoria initially wanted to use the money for its $10.9 billion Metro Rail Project. But the Turnbull government failed to offer any direct funding for the project, with Victoria vowing to fund the project alone.

Mr Pallas then wrote to Mr Morrison saying Victoria wanted the cash for its Western Distributor road project. But the federal government rejected this, saying the money could only be used only for the Metro Project.

Victoria then wrote back proposing it use the money for its level crossing removal project. But this too was rejected, with an agreement failing to be reached.