Victoria Scraps a Secret Public Transport Levy, Leaving a Hole in Its Biggest Infrastructure Project

On 27 August 2026, Victorian Premier Ben Carroll announced he would abolish a hidden levy on public transport fares — a charge expected to raise $8 billion over 37 years to help fund the Suburban Rail Loop and other major construction projects. The levy had been quietly added to fares since 1 January 2025, imposing a 1% annual increase on every public transport fare across metropolitan Melbourne and regional Victoria, on top of regular inflation-adjusted fare rises.

The public had no knowledge of the levy until it appeared in an auditor general report tabled in Victorian parliament on 26 August 2026. (An auditor general is an independent official who examines government spending and performance.) Carroll said the levy would be scrapped because there was no transparency in how it was created or applied (The Guardian).

The auditor general's report did more than expose the levy. It raised doubts about whether the first stage of the Suburban Rail Loop — known as SRL East — could be built on time or within budget. The report also traced the levy back to 2021, when Carroll was Victoria's public transport minister. Carroll has said he was not involved in creating the levy and was not on the state's four-person budget and finance committee in December 2023, when it was formally approved. However, the auditor general noted that further decisions about the levy were discussed by the Victorian government in November 2024, by which point Carroll had joined that same committee.

The funding consequences of abolishing the levy are significant. Sixty percent of the revenue — about $4.8 billion — was earmarked for SRL East. The levy would have been the single largest source of what the government calls "value capture" revenue for the Suburban Rail Loop. Value capture means extracting some of the financial benefit that new infrastructure creates for nearby property owners and businesses, then directing it back to the project. Under the funding plan for the rail loop, $11.5 billion, or one-third of the tunnel's construction cost, was supposed to come from value capture mechanisms. On 27 August 2026, Carroll said he would not say how the $4.8 billion shortfall from abolishing the levy would be covered.

The Suburban Rail Loop is Victoria's largest transport infrastructure project. Daniel Andrews announced it in 2018 at an estimated cost of $50 billion. The full network would run 90 kilometres from Cheltenham in Melbourne's south-east to Werribee in the west, via Melbourne Airport. SRL East, a 26-kilometre stretch of twin tunnels from Cheltenham to Box Hill, is due to open in 2035. On 25 August 2026, Carroll put SRL East's cost at $33.3 billion — within the $30–34.5 billion range estimated in 2021 but well above the original 2018 project-wide figure when adjusted for scope. Labor's May budget listed $14.5 billion in contracts already signed for the project.

The cost trajectory has drawn sustained scrutiny. A 2024 Parliamentary Budget Office analysis estimated that building SRL East and SRL North combined would cost $96.4 billion. The PBO also estimated that operating both stages for 50 years would cost an additional $120.2 billion. SRL North, running from Box Hill to Melbourne Airport, is due to open in 2053. SRL West, the final stage from Sunshine to Werribee, has neither a completion date nor a cost estimate.

The broader context here is one of mounting fiscal pressure on Victoria's infrastructure pipeline. The levy's abolition removes the largest single identified revenue stream for value capture on the Suburban Rail Loop, and Carroll's refusal to identify an alternative funding source leaves a visible gap in a project whose deliverability is already in question. With $14.5 billion in contracts signed and construction underway, the government cannot easily walk away from SRL East. Yet the auditor general's doubts about timeline and budget, combined with the PBO's far higher cost estimates, suggest the distance between the project's funding plan and its likely actual cost is widening, not narrowing.

Carroll's dual role is worth noting. As public transport minister in 2021, he held the portfolio under which the levy was first developed. As premier in 2026, he is the one dismantling it, citing the very lack of transparency that characterised its creation. Political accountability for both the levy's establishment and its abolition now rests with the same person.

The Victorian government had also committed to making public transport free statewide for seniors aged 60 and over on weekends from 1 January 2026 (Parliament of Victoria), and Carroll's most recent budget delivered over $4 billion in public transport investment (Parliament of Victoria). The levy's removal adds to the revenue foregone on the transport network, even as the state's most expensive infrastructure project continues to consume capital at a pace that independent bodies consider underestimated.