Treasurer Tim Pallas said the joint venture will likely be a 40-year arrangement, with the company to be responsible for upgrading VicRoads' IT system.

"This is not a privatisation, it's effectively a partnership," he told reporters on Friday.

"Our expectation is that motorists will be beneficiaries of this change, not just in terms of a better service but also in terms of a better functioning registration and licensing system."

The government will retain control of pricing, road access and safety, as well as motorist data.

The majority of revenue that comes from licensing and registration - about $1.8 billion annually - will also be controlled by the government.

Mr Pallas said successive state governments had failed to improve VicRoads' IT system.

"The private sector are much better at delivering these tools," he said.

Every affected VicRoads worker will be offered the opportunity to stay with the public sector or work for the new provider. About 100 jobs will be created in the short term.

Roads Minister Ben Carroll said the partnership would allow for a "digital transformation" of VicRoads that would enable teenagers to sit their learner driver test online.

"When you're doing your learner's (test) today, it's the same as it was 30 years ago when I did my learner's," he said.

"You go in, you do your questions and you walk out, and we need to change that."

The government will start talks with the private sector later this year once a suitable proposal is finalised.

Mr Pallas said he expected interest from superannuation funds, banks and IT firms.

"I expect where we'll see this come from is probably a super fund partnering with an IT firm," he said

"There have been ideas floated around to government previously in this area and that's where it's come from."

The Australian Services Union described the change as a "part-privatisation and a betrayal of workers and Victorian motorists".

"We fear this part-privatisation will see staff slashed, services fall, prices increase and be a genuine risk to the privacy of licence holders in Victoria," secretary Lisa Darmanin said.

She said no one voted for the Andrews Labor government thinking they would privatise an essential service.

"We deserve better than a Labor government following in the steps of Jeff Kennett," Ms Darmanin said.

Opposition spokesman Brad Battin said the government could not be trusted when it comes to privatisation or keeping Victorian's data secure.

"We have seen millions of data breaches in Victoria since the Andrews Labor government came to power in 2014 including a 16 per cent increase reported in 2019/20," he said.

Greens MP Sam Hibbins said the move would "put the interests of private profit over the public good".

"Neoliberalism is alive and well in the state of Victoria and the Victorian Labor government is addicted to privatisation," he said.

"It's time we had a debate on our state's economic ideology before every public asset that turns a buck is sold off by this government."

Australian Associated Press