Victorian Labor scraps secret transport levy after auditor-general expose

On Wednesday, Victoria's auditor general tabled a report in parliament that exposed something the state government had kept hidden for nearly two years: a levy on public transport fares that no one was supposed to know about. The charge—a 1% annual increase layered onto Melbourne and regional Victoria's already-rising ticket prices—had been collecting money since January 2025. By Thursday morning, Premier Ben Carroll stood before reporters and announced he would scrap it.

"There was no transparency in its creation and implementation," Carroll said, committing to abolish the levy through proper cabinet process. "Victorians do deserve better public transport. They also deserve to know what their money is buying." The statement came after days of political pressure following the auditor general's findings, which revealed not just the levy's existence but also serious questions about whether the Suburban Rail Loop's first stage—a 26-kilometre stretch of twin tunnels running from Cheltenham to Box Hill—could actually be built on time or within budget.

The levy was designed to fund major infrastructure projects, particularly the Suburban Rail Loop East. According to the auditor general's calculations, the charge was expected to raise $8 billion over 37 years in today's dollars. Of that, $4.8 billion was earmarked for SRL East, making it the single largest source of value capture revenue for the tunnel project. The government had planned to fund one-third of the tunnel's total cost through value capture mechanisms, and this hidden levy was supposed to be the backbone of that strategy.

What made the arrangement particularly striking was how deliberately it had been obscured. When the government announced its value capture funding model in December, it named other revenue sources but made no mention of the levy. Transport Victoria's public communications about fare increases in 2025 and 2026 similarly omitted any reference to it. Deputy Premier Gabrielle Williams, who announced the December fare increase, later said she had been aware of the levy but was "unaware of any decisions taken about deliberately obfuscating the structure of our fare increases." She conceded the secrecy "did not pass the pub test."

Carroll's own relationship to the decision remained murky. He was public transport minister when the levy was first approved in 2021, but he insisted on Thursday he had not been involved in creating it. He was not on the state's four-person budget and finance committee in December 2023, when he said the levy had been formally approved. However, by November 2024—when further decisions about the levy were discussed by government—he had been added to the committee. When pressed, he declined to "relitigate the past," pivoting instead to promises of future transparency and accountability.

Both Williams and Carroll eventually apologized to Victorians after reporters repeatedly asked them to do so. The opposition seized on the moment. Jess Wilson, speaking for the Liberal-National coalition, called the levy revelation "the final nail in the coffin" for the government ahead of November's state election. "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," Wilson said. "He's not sorry. He's sorry that he got caught."

The immediate problem facing the government is the $4.8 billion hole the levy's abolition creates in the Suburban Rail Loop's funding plan. Carroll said on Thursday he would not detail how the shortfall would be made up, though he noted he had already pledged earlier in the week to reduce the project's overall cost by $2 billion. That leaves a gap of at least $2.8 billion unaccounted for, and the auditor general's report has already cast doubt on the project's ability to stay on schedule or within its existing budget. The government now faces the task of finding alternative funding sources while managing public anger over a tax that was collected in the dark.