Suburban Rail Loop: Victorian government secretly increased public transport fares to help pay for controversial SRL

The Victorian government secretly increased public transport fares to raise money to help pay for the Suburban Rail Loop and other Big Build projects, the state’s auditor-general has revealed.The auditor-general’s report, tabled in parliament on Wednesday, also questioned whether the first stage of the multibillion-dollar project – a 26km stretch of twin tunnels from Cheltenham to Box Hill dubbed SRL East – can be delivered on time or within budget.The auditor-general found the plan to fund SRL East – via $11.5bn from both the Commonwealth and state governments and $11.5bn through so-called value capture methods – “is not transparent and some funding sources are uncertain.”It said in December, the government announced five value capture measures: using existing land tax and windfall gains tax revenue in SRL East precincts, infrastructure contributions from property developers, revenue from state-initiated property development and a car parking levy.But the auditor-general said the government did not reveal it had already introduced a levy on all public transport fares in metropolitan Melbourne and regional Victoria on 1 January 2025.The levy involves a 1% annual increase on all public transport fares for nearly 40 years, on top of existing adjustments in line with inflation.Quick GuideVictoria’s Suburban Rail Loop – in numbersShow$50bnEstimated cost of the entire the Suburban Rail Loop when announced by Daniel Andrews in 201890kmLength of the loop, which would run from Cheltenham in Melbourne’s south-east to Werribee in the west, via Melbourne airport$33.3bnCost of stage one of the loop, dubbed SRL East, as promised by new premier Ben Carroll on 25 August 2026. It was estimated to cost $30-34.5bn in 2021$14.5bnWorth of contracts signed, according to Labor’s May budget26kmLength of SRL East, which runs from Cheltenham to Box Hill2035The year SRL East is due to open$96.4bnstimated cost of building SRL East and SRL North, the second stage of the project, based on a 2024 Parliamentary Budget Office analysis$120.2bnEstimated cost of operating SRL East and North for 50 years, according to PBO2053SRL North, which runs from Box Hill to Melbourne airport, due to open Date and cost unknownCompletion of SRL West, the final stage of project, running from Sunshine to Werribee “The government plans to allocate 60% of the revenue it collects through the levy, estimated at $4.8bn in net present value (NPV) terms to 2062, to fund SRL East,” the report reads.“This levy will be the project’s largest source of value capture revenue.”“The government and Transport Victoria did not acknowledge the levy in their public communications about the 2025 and 2026 annual fare increases. As at June 2026, they still have not announced it.”The opposition leader, Jess Wilson, described the levy as a “secret public transport tax” and a “scandal of the highest order”.“The independent auditor-general has exposed that Labor has taxed every single public transport fare since January 2025 and they never told the public about it,” she said in a statement following the report’s release.“What other secret taxes are Labor levying on Victorians without telling them?”Wilson laid the blame on new premier, Ben Carroll, who was public transport minister at the time the levy was approved in 2021.The auditor-general’s report said the work to find ways to generate $11.5bn through value capture began in April 2021 with support from the Department of Treasury and Finance (DTF). By August, DTF came back with a proposal that would raise about $6.5bn to 2062, which the report said “fell significantly short”.“To address the funding shortfall the government agreed to introduce an additional ‘rail improvement charge’ on metropolitan heavy rail fares by no later than 2025,” it reads.The report notes the levy is generating less revenue than forecast, due to policies such as making public transport free for children and free for seniors on weekends, free travel during the fuel crisis and half-price fares until the end of the year.The auditor-general said in April, it received advice from DTF that public transport fare revenue for metropolitan Melbourne was about 20% under budget in the 6 months to 31 December 2025 and total revenue collected from the levy between January 2025 and the end of February 2026 was $6.2m – “significantly below the forecast revenue from this value capture measure over this period”.The report also revealed the state government has approved budget funding of $23.3bn for the project but only publicly announced $11.8bn.A funding gap of $5.5bn also remains because the federal government has committed “less to the project than has been assumed and requested by the state”.The gap means the state “does not have sufficient funding approved to sign the contract for the second stations package”, the report said, which is contributing to “significant delays” putting at risk SRL East’s promised 2035 completion date.It said the project is “more likely than not to exceed its publicly disclosed cost of up to $34.5bn”, due to costs related to “unexpected ground conditions and contamination”, “higher than expected market pricing” pricing for the linewide and station contracts and “added project costs and delays because of government decisions to slow down spending on the project to manage the state’s debt levels”.In written responses to the auditor-general report, the Department of Transport and Planning secretary, Jeroen Weimar and Chris Barrett, the new Department of Premier and Cabinet secretary appointed by Carroll, denied the levy was a funding mechanism for the SRL. They both also maintained the project would be delivered on time and within budget.