Breaking: Fares secretly hiked to fund Suburban Rail Loop, Auditor-General finds

Public transport fares in Victoria were surreptitiously raised last year to help finance the Suburban Rail Loop (SRL) East project, a major infrastructure undertaking that is now expected to be delivered late and over budget, according to a new audit. Premier Ben Carroll recently pledged to find $2 billion in savings for SRL East and assured its timely and cost-effective completion.

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The government plans to allocate 60 percent 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.

However, an audit by the Victorian Auditor-General's Office (VAGO) has challenged these assurances, revealing that the state government implemented a hidden levy on public transport fares to address a funding shortfall. The government intends to fund one-third of the project, which has seen its estimated cost reduced from $34.5 billion to $33.3 billion with further savings anticipated, through "value capture" taxes and charges.

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

VAGO reported that the government failed to disclose that this funding strategy included a new levy on public transport fares, set to begin in early 2025. This 1% increase was concealed within the standard annual fare adjustments tied to inflation. The report indicates that 60% of the revenue generated by this levy, estimated at $4.8 billion in net present value terms by 2062, is earmarked for SRL East, making it the project's primary source of value capture revenue.

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The government and Transport Victoria did not acknowledge the levy in their public communications about the 2025 and 2026 annual fare increases.

Despite the premier's recent announcement of $1 billion in immediate savings by removing non-essential features and initiating a review for further cuts, the VAGO report highlights significant delays. The procurement process for the project's six stations has been postponed by approximately one year, and an early works package was completed six months behind schedule. The audit concludes that SRL East is "more likely than not to exceed its publicly disclosed cost," citing factors such as soil contamination, higher-than-expected market expenses, and government decisions to slow spending to manage debt.

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The project has experienced significant delays.