Secret levy slapped on public transport fares to help pay for Suburban Rail Loop

August 26, 2026 — 10:00amA secret levy slapped on public transport fares by the state government in a bid to bankroll the Suburban Rail Loop has been exposed by the Victorian Auditor-General.The scathing report also revealed the mega-project is set to cost at least $36 billion and is already at risk of missing the government’s promised 2035 completion date, after an in-depth investigation into the costs and benefits of the project.The Victorian Auditor-General’s Office released its report into the Suburban Rail Loop on Wednesday.Paul JeffersThe hidden levy, which was introduced on January 1 last year, involves a 1 per cent annual increase on all public transport fares on top of existing adjustments in line with inflation.“The government plans to allocate 60 per cent of the revenue it collects through the levy, estimated at $4.8 billion in net present value (NPV) terms to 2062, to fund SRL East,” the Victorian Auditor-General said in a report tabled in parliament on Wednesday morning.“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.”Auditor-General Andrews Graves warned the project was already behind schedule, putting at risk its promised 2035 completion date.“SRLA has made significant progress planning SRL East precincts and delivering early rail infrastructure works … However, delays, cost increases and emerging risks mean this is not reasonably assured at this early stage,” the report says.“The project has experienced significant delays. SRLA finished one early works package around six months late and procurement processes for the stations packages are delayed by around one year.“This puts the government’s target to start running trains through SRL East by 2035 at risk.”The rail loop was announced in 2018, and a business and investment case produced by the Andrews government three years later argued the first two stages of the project – through Melbourne’s eastern and northern suburbs – would deliver a positive return on investment.This was calculated by estimating both stages would cost up to $50.5 billion if delivered together, a figure which has been questioned because SRL East – the first stage from Cheltenham to Box Hill – had a budget of $34.5 billion.An individual cost-benefit analysis of the first stage through the eastern suburbs was never completed or reported publicly despite requests to do so by Infrastructure Australia.According to the watchdog’s report, SRL East is “more likely than not to exceed its publicly disclosed cost of up to $34.5 billion” – potentially costing taxpayers at least $36 billion overall.The auditor-general said extra costs had been added because of unexpected ground conditions and contamination, and because of government decisions to slow down spending on the project to manage debt.It also said pricing for the linewide and station contracts had “higher than expected market pricing”.Labor has promised to pay for the project with a three-way funding split between the state government, the federal government, and so-called value capture measures.The government unveiled five value capture measures in December, including existing land tax revenue in SRL East precincts, existing windfall gains tax revenue in the 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 announce the public transport levy, and that it was “not fully consistent with the state’s value capture framework”.In a written response to Greaves, Department of Transport and Planning secretary Jeroen Weimar said the levy – which he called a “rail improvement charge (RIC)” – was intended to contribute to funding the broader public transport network.“The report mischaracterises the RIC as a funding mechanism for SRL,” he said.He was backed by Chris Barrett, the new Department of Premier and Cabinet secretary appointed by Premier Ben Carroll, who told Greaves that the levy “does not form part” of the funding strategy for SRL East.Treasurer Colin Brooks conceded the government could have been more transparent about how the government spent the levy, even as he maintained it was not directly contributing to the SRL. Brooks, who has been the treasurer for about four weeks, said he did not know about the levy prior to the report.It has been released in the same week that Carroll pledged to deliver $2 billion in savings for SRL East. He committed to more than $1 billion in savings from changes to station interchanges and by dismantling the Suburban Rail Loop Authority, taking the estimated cost down to $33.3 billion, while another $1 billion in savings will be sought through an expert review.Opposition Leader Jess Wilson has pledged to pause and review the project if the Coalition wins November’s state election.Our Breaking News Alert will notify you of significant breaking news when it happens. Get it here.From our partners