Victorian Premier Ben Carroll has announced $2 billion in savings for the first stage of the Suburban Rail Loop (SRL East), a project long championed by his predecessors. The cuts include scrapping certain station features and ordering an independent technical review to find further reductions. The announcement comes as the state's auditor-general revealed that the government had secretly raised public transport fares to help fund the project and questioned whether it can be delivered on time and within budget.

$2 Billion in Savings Announced

Carroll said on Tuesday that the government would cut about $1 billion worth of "unnecessary additions to the project's scope," reducing the total estimated investment to $33.3 billion. A further $1 billion in savings would be identified through an independent technical review, which the government hopes will bring the project's cost closer to $32.3 billion. According to the 2021 business case, SRL East was budgeted at up to $34.5 billion.

The changes to the project's scope include scrapping underground station interchanges at Box Hill and Glen Waverley, with surface transfers planned instead. A second station entrance at Clayton will be removed, and complex pedestrian bridges in Burwood and Cheltenham will no longer be built. The government will also find "alternative ways to deliver sufficient parking in Glen Waverley," where a multilevel car park had been planned. The SRL Community Projects Fund will be wound up after the current round, and some future precinct works will be scaled back.

Carroll described the changes as "commonsense" and said they removed project "bells and whistles." "Overpasses, walkways, car parks, community grants are nice to haves but they are not needed to build the orbital railway line," he told reporters. He also said the changes showed he "respects" taxpayer money and that the SRL will be built on time and under budget.

Auditor-General Reveals Secret Fare Levy

The auditor-general's report, tabled in parliament on Wednesday, revealed that the Victorian government had secretly increased public transport fares to raise money for the Suburban Rail Loop and other Big Build projects. The report found that the government did not disclose it had introduced a levy on all public transport fares on 1 January 2025. The levy is a 1% annual increase on all fares on top of inflation adjustments, and the government plans to allocate 60% of its revenue—estimated at $4.8 billion in net present value to 2062—to fund SRL East. This fare levy is the project's largest source of value capture revenue.

The auditor-general also questioned whether SRL East can be delivered on time or within budget, noting the project has experienced significant delays of up to six months on early works and that station contracts are yet to be awarded. The report said the project is "more likely than not to exceed its publicly disclosed cost of up to $34.5bn". The funding plan for SRL East, which relies on $11.5 billion from the Commonwealth, $11.5 billion from the state, and $11.5 billion through value capture methods, was described as "not transparent and some funding sources are uncertain."

Experts and Opposition React

The cuts have drawn mixed reactions. Daniel Bowen, spokesman for the Public Transport Users Association, said the changes risked the project not realising its potential, calling the interchanges "essential" rather than "nice to haves." Graham Currie, transport expert at Monash University, said each of the features would have benefits to users and local residents, but their value for money should be re-evaluated. He called the loop a "visionary project."

Former Labor senator Stephen Conroy called the project "a dog of a project," while David Hayward, public policy expert at RMIT University, said the move was "politically shrewd" and proceeding was a "no-brainer" given the federal government had committed $6 billion and the $1.8 billion estimated cost of ripping up contracts.

Opposition Leader Jess Wilson, who has promised to pause and review the project if elected in November, said the government has not explained whether cutting these extras will impact the cost-benefit ratio. Opposition public transport spokesman Matthew Guy demanded that all contracts related to the rail line be made public before the election. Wilson said, "We don't have the visibility that the premier has."

Project Background and Future

The Suburban Rail Loop is a planned 90km orbital line stretching from Cheltenham in Melbourne's southeast to Werribee in the outer west via the airport at Tullamarine. The 26km eastern section from Cheltenham to Box Hill was slated to cost between $30 billion and $34.5 billion, with a target delivery of 2035. The entire loop was estimated to cost $50 billion when announced by Daniel Andrews in 2018.

The government has allocated $11.8 billion to SRL East, and the federal government has provided $6 billion, including $3.8 billion in May's federal budget. About $14.5 billion worth of contracts have been signed. No more contracts will be awarded until the independent technical review is complete, but tunnelling between Burwood and Glen Waverley will begin next month, and the changes will not slow works.

Carroll, who replaced Jacinta Allan as premier in late July, has sought to differentiate himself from his predecessors. In his first week as premier, he said he would not tear up the project's contracts but would not rule out redirecting funds to other projects such as Melbourne Airport rail. On radio appearances on Monday, he suggested other projects, including Airport Rail, Melton electrification, and fixing potholes, were more important to Victorians. His cabinet reshuffle abolished the transport infrastructure and Suburban Rail Loop portfolios.

The Suburban Rail Loop Authority will be folded into the Victorian Infrastructure Delivery Authority, a move that was already under way prior to Carroll becoming premier.