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

Questions have been raised about Ben Carroll’s knowledge of a “secret tax” the Victorian government has slapped on public transport fares to help pay for the Suburban Rail Loop and other Big Build projects.

The existence of the levy was revealed in an auditor general report tabled in parliament on Wednesday, which also threw doubt on 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.

In place since 1 January 2025, the levy involves a 1% annual increase on all public transport fares in metropolitan Melbourne and regional Victoria, on top of existing adjustments in line with inflation.

According to information provided to the auditor general by the Department of Treasury and Finance (DTF), it will be in place until 2062, when daily full fare in zone 1 and 2 would have risen to $39.20.

“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.

The auditor general said the levy will be SRL East’s “largest source of value capture revenue” but it was not made public.

“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 report reads.

Instead, the government held a press conference in December 2025 to announce that $11.5bn in revenue for the project would be raised through five other 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.

The opposition leader, Jess Wilson, described the levy as a “secret public transport tax” and a “scandal of the highest order”.

“When VAGO handed down this report today, I expected to see cost blowouts. I expected to see delays to this project, but never in my wildest dreams did I think that there would be secret taxes levied on Victorians,” she told reporters.

Wilson blamed the new premier, Ben Carroll, who was public transport minister at the time the levy was approved in 2021.

“Ben Carroll signed off on this tax, went to an election refusing to tell Victorians about it, and has stood up every single day since saying that he has integrity when it’s very clear he does not have an ounce of it,” she said.

The Greens leader Ellen Sandell said the affair proved why “trust in the major parties is collapsing”.

“Victorians were never told they were being hit with a secret levy to fund Labor’s Big Build, which has been shrouded in secrecy from the start,” she said. “The stench around Labor is becoming impossible to hide.”

Senior government sources have sought to distance Carroll from the decision, saying the policy was approved at meeting of the state’s four-person budget and finance committee in December 2023, when he was not a member. At the time, members included the former premier Jacinta Allan, the former treasurer Tim Pallas and ministers Danny Pearson and Jaclyn Symes.

The auditor general report notes the government “first approved the levy in August 2021”. At the time, Carroll was public transport minister.

It said the levy was also confirmed by government in “December 2023 and November 2024 when it made further decisions on the project’s value capture revenue package”. Carroll had been added to the committee in 2024.

Carroll, who became premier last month, issued a statement in response to the report saying he would “lead a government that levels with Victorians”.

“I’m a premier taking the state in a new direction and Victorians deserve to know what their money is buying. Under my leadership, they will,” he said.

“When costs change, we’ll tell you. When we find savings, we’ll bank them.”

The report notes the levy has generated $6.2m between January 2025 and the end of February 2026, “significantly” less revenue than forecast. This is 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 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” 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”.

The report comes a day after Carroll pledged to deliver $2bn in savings for SRL East.