Secret fare hike to fund suburban rail project revealed

Public transport commuters were secretly charged extra to raise money for a massive rail project, a financial watchdog says.

A report by the Victorian Auditor-General's Office into Melbourne's Suburban Rail Loop revealed a previously undisclosed levy was placed on all public transport fares in metropolitan Melbourne and regional Victoria.

SRL is a planned 90km orbital line stretching from Cheltenham in Melbourne's southeast to Werribee in the outer-west via the airport at Tullamarine.

The 26km eastern section from Cheltenham to Box Hill is slated to cost up to $34.5 billion, with a target delivery of 2035.

A third of project's total cost was expected to come from "value capture", such as elevated land tax revenue.

The state Labor government unveiled its five value-capture mechanisms in December but Victorian Auditor-General Andrew Greaves found the announcement "lacked transparency" as it did not disclose a "rail improvement charge".

The government-approved charge was introduced as an annual one per cent increase in fares, on top of yearly inflation rises, from the start of 2025 to raise new revenue to fund SRL East and other Big Build projects.

"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 terms to 2062, to fund SRL East," the report read.

"This levy will be the project's largest source of value-capture revenue."

While having relatively small impacts on fares initially, the report noted year-on-year annual rate increases were expected to ramp up over the medium to long term and grow revenue exponentially.

Treasurer Colin Brooks, who was sworn into the role in early August, denied the charge was part of SRL East's value-capture system and said he was first made aware of its existence by the auditor-general.

"We concede that in terms of the rail infrastructure charge ... we could have been more transparent about how we're investing that money," he told reporters on Wednesday.

"That charge is going back into ... public transport infrastructure and services across the state."

The Department of Treasury and Finance told the auditor-general's office in April 2026 that total revenue collected from the charge between January 2025 and the end of February 2026 was $6.2 million, well below forecast.