The Victorian premier, Ben Carroll, has announced he will abolish a levy secretly slapped on public transport users 18 months ago to help pay for the Suburban Rail Loop, as experts warn it is too late for the state to back out of the costly project.
The existence of the levy was revealed in an auditor general’s report tabled in parliament on Wednesday, which also cast 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.
Carroll on Thursday refused to say when he became aware of the 1% levy, which has been in place since 1 January 2025, but conceded there was “no transparency in its creation and implementation”.
“Victorians do deserve better public transport. They also deserve to know what their money is buying. Under my leadership, they will,” he told reporters.
Carroll was the public transport minister when the levy was first approved in 2021, according to the auditor general report. But he said on Thursday he was not involved in the decision at the time nor was he a member of the cabinet’s four-person budget and finance committee in December 2023 when it was again raised.
However, the auditor general report noted it had been discussed again by government in November 2024, when he had been added to the committee.
Carroll told reporters he would not “relitigate the past”, but under his leadership “transparency and accountability is fundamental”.
The opposition leader, Jess Wilson, told reporters on Thursday the levy would never have been scrapped if it weren’t for the auditor-general’s report.
“The only reason the premier has come out this morning and said that he will scrap this levy is [because] he was caught red-handed. He’s not sorry. He’s sorry that he got caught,” she said.
According to the auditor-general report, the levy was expected to raise $8bn in today’s dollars over 37 years, with 60% – or $4.8bn – to be directed to SRL East.
This would have made the levy the “largest source of value capture revenue” for the project. Under its funding plan, $11.5bn – one-third of the cost of building the tunnel – was to be funded by value capture.
The deputy premier, Gabrielle Williams, told reporters she knew of the levy when she announced the January 2025 increase to public transport fares in December 2024. But she said she was “unaware” there had been “any decisions taken about deliberately obfuscating the structure of our fare increases” and conceded doing so “did not pass the pub test”.
Williams said while the levy was approved to help fund the SRL East it instead funded an increase in public transport services.
The government has also noted due to several policy changes, including 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 charge has to date raised about $6.5m.
Both Williams and Carroll eventually apologised to Victorians when repeatedly asked to by reporters.
Carroll, however, would not say how he would make up the $4.8bn shortfall as a result of abolishing the levy, but noted he had pledged to reduce the project’s cost by $2bn earlier in the week.
He also repeated his pledge that he would not “rip up” contracts.
David Hayward, a public policy expert at RMIT University, said it would be “crazy” for Carroll to do anything other than press ahead with the SRL, noting the federal Labor government has committed $6bn to the project and the $1.8bn estimated cost of ripping up more than $14.5bn in signed contracts – according to a recent parliamentary budget office analysis.
“Cancelling it would actually send us into deficit for eight years in a row and with nothing to show for it,” Hayward said.
Jago Dodson, a professor of urban policy at RMIT, said a road user charge or congestion levy on certain areas of the city could also be introduced and would in turn “encourage people to reduce their car use in favour of other ways of travel”.
“The revenue should be used not to just fix the SRL problem but to help fund a proper, coherent metropolitan transport and land use plan.”
Dodson said while it was “too late” to consider elevated rail for SRL East, given tunnelling is expected to begin in weeks, the government should consider it for the next stages of the project.
“Elevated rail is about a third to half the cost of boring tunnels” he said.
Longtime public transport campaigner Daniel Bowen said adding additional stations between Cheltenham and Clayton could also generate further revenue for the government and provide more commuters with access to rail.
“Yes, it would cost a bit more money, but it potentially means more value in the long run,” Bowen said.
But he stressed transparency was key.
“They need to be honest with people this time. Explain what they’re doing and why, the what the benefits are to people,” Bowen said.
