Developers, land tax to pay for SRL as $6.7b contract locked in

1 week ago 2

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Skip to sections navigation Skip to content Skip to footer

Property developers will pay more than $30,000 for every new home they build around the Suburban Rail Loop East and revenue from existing taxes will be carved out to help fund the Allan government’s $34.5 billion project.

Premier Jacinta Allan announced on Thursday her government had awarded a $6.7 billion contract to the TransitLinX consortium to build the six stations and rail infrastructure along the underground line between Cheltenham and Box Hill – the largest component of the $34.5 billion project.

Premier Jacinta Allan says value capture charges will pay for one-third of the project.

Allan also announced the tax mechanisms the state intends to use to fund one-third of the SRL East’s construction cost over the next 40 years.

Experts have previously cast doubt on the state’s ability to raise $11.5 billion through so-called “value capture”, presenting a major risk to the project.

Under the plan announced on Thursday, existing land tax levied on property owners within the six SRL precincts will be hived off to fund SRL construction, raising an estimated $5.75 billion. Windfall gains taxes will raise $450 million.

A developer charge of $11,350 per new dwelling built in SRL precincts will apply from 2027 and jump to $33,924 from 2032, which is expected to raise $2.9 billion. The new rail line is set to open in 2035.

New charges will not apply to existing homes.

Victoria will raise another $1.6 billion by developing government-owned land, and $800 million by implementing a car-park levy from 2035.

Treasurer Jaclyn Symes said the tax plan was a “carefully considered, sensible and fair plan to build a project that will deliver more homes, cut congestion and keep Victorians moving”.

Victoria has claimed the project will be funded evenly, with the state and federal governments and value capture taxes each contributing one-third of the cost.

In January, Infrastructure Australia said it did not have confidence Victoria could raise $11.5 billion from value capture. The federal body said the Albanese government should put more funds to the SRL East until Victoria could demonstrate how this would be possible.

The Albanese government has so far committed $2.2 billion.