The Suburban Rail Loop levy built into Victoria’s public transport fares is set to be abolished. The 1 per cent charge was approved to help fund SRL East but ultimately used to fund public transport, before being disclosed in a review by the Victorian Auditor-General’s Office.

Aerial view of Suburban Rail Loop East works in Box Hill Gardens
Archive aerial view of the Suburban Rail Loop East works staging area in Box Hill Gardens, Melbourne. Photo: Philip Mallis / Wikimedia Commons / CC BY-SA 2.0

Premier Ben Carroll said the levy would be removed because its creation and implementation lacked transparency. The decision requires cabinet approval and will leave a larger gap in the state budget.

The public transport fare levy took effect in January 2025 but was not separately disclosed to passengers. Instead, it was incorporated into annual public transport fare increases linked to inflation. It appeared neither in the state budget nor in a media release.

The levy was expected to generate about $8 billion over 37 years through to 2062, with $4.8 billion intended to contribute towards the Suburban Rail Loop. About $6.5 million has been collected so far, with public transport fares currently reduced by half for commuters.

Carroll was public transport minister when the charge was first approved in 2021. He said he had not participated in creating it and declined to specify when he first learned about it.

“I am not going to stand here and re-litigate the past. I am a premier who’s put accountability and transparency at the forefront,”

“And I am getting forward to abolish this charge because there was no transparency in its creation and implementation.”

Carroll has also instructed his department to determine whether any other undisclosed charges exist.

Suburban Rail Loop levy and its funding role

Deputy Premier Gabrielle Williams was public transport minister when the levy came into operation in 2025. She announced the dollar value of the fare increases at the time but did not disclose that the increases included the levy.

Williams said she had not known that the budget and finance committee had decided to keep the charge from being proactively disclosed. She said she learned about that decision only in recent days.

“What I was unaware of, was that, at any decision-making table, there had been any decisions taken about deliberately obfuscating the structure of our fare increases,”

Williams said she believed the levy would be made public and agreed that Victorians should have been informed.

“I believed at the time that it was going to made public,”

“This is clearly something that has not met the pub test. We all share concerns about that.”

“We want to do things differently. We’ve made that abundantly clear.”

Nick Staikos, who served as minister for the Suburban Rail Loop for four months in 2026, said he became aware of the levy only after reading the auditor-general’s report.

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SRL East cost cuts and project scope

The funding issue comes as the cost and scope of SRL East, the section of the Suburban Rail Loop planned between Cheltenham and Box Hill, are also under scrutiny.

Earlier in the week, Carroll said around $1 billion in savings had been identified, reducing the estimated project cost from $34.5 billion to $33.3 billion. Two underground station interchanges and a multi-level car park were among the elements that would no longer proceed.

The VAGO review found that the proposed interchanges had not been included in the project’s overall estimated cost in the first place. The amount budgeted for the Glen Waverley parking facility was also below its latest estimated cost.

The Suburban Rail Loop Authority told VAGO that those elements had been treated as possible future additions rather than approved parts of the project.

“These items represent potential future scope options, not approved project costs,”

“It is standard practice on major infrastructure projects for optional or additional scope elements to be identified, assessed and considered separately from the approved scope until a final decision is made regarding their inclusion.”

“Accordingly, no cost liability exists until government determines whether these items will proceed.”

A government spokesperson maintained that avoiding unnecessary scope would lower the total estimated investment to $33.3 billion.

The audit also showed that authorities had already been considering dropping the Glen Waverley and Box Hill station interchange options for several months.

Information provided to VAGO indicated that additional interchange capacity at Box Hill was not expected to be required for decades. At Glen Waverley, the authority questioned whether an interchange would represent value for money because of the age of the existing Metro station and the scale of upgrades it would require.

VAGO estimated the interchanges at Cheltenham, Glen Waverley and Box Hill would together cost $1.7 billion, although only $104 million had been included in the project’s total estimated cost. The Glen Waverley and Box Hill interchanges will not proceed.

The latest estimate for the planned multi-level car park was $137 million, compared with $84 million included for the facility in the project’s total estimate.

SRL East funding and remaining budget pressures

The government is seeking a further $1 billion in savings through a technical review. Carroll said additional details about the reductions were commercial in confidence.

The audit also found that the Suburban Rail Loop Authority had already used a significant share of the $9.5 billion contingency allocation intended to cover unforeseen risks. Carroll has announced that the SRLA itself will be abolished.

VAGO concluded that SRL East was unlikely to be completed both on schedule and within budget. The Victorian government rejected that finding and said sufficient contingencies remained in place.

The audit also recorded repeated warnings from the Department of Treasury and Finance and the Department of Premier and Cabinet that the state budget could not fully finance the project without either restricting expenditure elsewhere or failing to meet fiscal targets.

Context

Before the levy was slated for abolition, the government’s funding strategy for SRL East relied on three streams of about $11.5 billion each: the Victorian budget, the Australian Government and value-capture measures. VAGO said the fare levy was expected to be the largest source of value-capture revenue. As of June 2026, the Australian Government had committed $6 billion of the roughly $11.5 billion sought from Canberra, leaving a $5.5 billion gap in approved project funding.

Scrapping the Suburban Rail Loop levy will remove a revenue source that had been expected to generate about $8 billion over 37 years, including $4.8 billion intended to contribute towards the Suburban Rail Loop. Carroll has not said how the resulting revenue shortfall will be covered.

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