Victoria’s government faces renewed demands for a comprehensive reassessment of the Suburban Rail Loop’s first stage costs. A Labor-led parliamentary committee has urged the government to publish updated financial analyses and clarify the tax strategies intended to fund approximately one-third of the project.
The parliamentary accounts and estimates committee released its findings on the 2025-26 budget after a series of public hearings, where ministers and department heads discussed their funding priorities. The nine-member committee, which includes five members from the Labor Party, has called for a revised cost-benefit analysis of the $34.5 billion Suburban Rail Loop East. This analysis should encompass the total expenditures for the project and the proposed underground rail line connecting Cheltenham to Box Hill. Additionally, the committee seeks to determine whether the project will still yield a positive return on investment.
Another key recommendation from the committee emphasizes the need for the government to provide transparency regarding its value capture strategy. This approach aims to raise $11.5 billion through fees and taxes derived from the increased property values associated with the Suburban Rail Loop East. The original 2021 business case presented three potential options for value capture, including a charge on new developments, an increase in commercial stamp duty of up to 1 percent, and a congestion levy for owners of commercial off-street car parks. Despite proposing these options for implementation in 2025, the government has not confirmed which taxes and charges will actually be employed.
The situation has been further complicated by a project assessment from Infrastructure Australia, which advised against committing additional federal funding to the Suburban Rail Loop East beyond the $2.2 billion already allocated. This recommendation was contingent upon a new cost analysis and further details regarding the value capture strategy. The committee chair, Sarah Connolly, has urged the Allan government to provide an update on its response to Infrastructure Australia’s findings, highlighting the significant risks associated with the project’s size and lengthy construction timeline.
In 2022, Suburban Rail Loop Minister Danny Pearson maintained that the $34.5 billion cost estimate would remain intact, despite a reported 22 percent increase in construction costs since the business case was released. Newly appointed Minister Harriet Shing echoed this position during her testimony to the committee in 2025, attributing the stability of costs to the decision to divide the project into multiple work packages and improvements in contract negotiations.
The Allan government is obligated to respond to the committee’s report within six months of its release. Matthew Guy, the opposition’s major projects spokesman, has urged the government to be transparent about the “true financials” of the Suburban Rail Loop East, stating, “If there is nothing to fear, there is nothing to hide.”
The committee also recommended that the Department of Treasury and Finance update its guidelines for annual reports, requiring government departments to report on savings. Treasurer Jaclyn Symes has committed to identifying $3.3 billion in savings over the next four years, which could equate to approximately 1,200 jobs. Additionally, a review of the public sector led by former public service chief Helen Silver is expected to provide insights on cost-saving measures and potential mergers of Victoria’s numerous public agencies.
The current 2025-26 budget allocates $9.7 billion in contingency funds, which are not designated for any specific department. While this figure has decreased as a proportion of total spending since its peak in 2021-22, it still represents a larger share of the budget compared to pre-pandemic levels.
As this situation unfolds, transparency and accountability remain crucial for maintaining public trust in the management of taxpayer funds. The government’s forthcoming responses and analyses will be pivotal in shaping the future of the Suburban Rail Loop project.
