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

A secret levy has been slapped on public transport fares by the state government in a bid to bankroll the Suburban Rail Loop that has been exposed by the Victorian Auditor-General.

The 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.”

The scathing report also revealed the mega-project is more likely than not to go over budget and be delivered late, after an in-depth investigation into the costs and benefits of the project.

Auditor-General Andrews Graves warned delivery of 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 6 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.