Tuesday, 4 February 2025

Suburban Rail Loop

Richard WELCH (North-Eastern Metropolitan) (18:14): (1356) It is a new year, but if Victorians held out any hope for a new approach or maybe a modicum of reflection or serious economic understanding of the problems with the Suburban Rail Loop project, that hope evaporated with our first question time this morning. The new Minister for the Suburban Rail Loop was clearly unprepared and unequipped for her brief and failed to answer questions on whether the federal government would fund $11 billion of cost and was unable to answer what year the SRL would reach Werribee – very basic questions. It was not a good start. It was not a good look. If that is the quality of ministerial oversight we can expect, it is going to be a very long year for anyone attempting to vainly defend the SRL project.

We already know there is an $11 billion funding shortfall because the federal Labor government will not fund it. The Victorian people need to understand there is another $11 billion that must also be raised in value capture taxes. Not only is this a financial black hole, it explodes the fantasy to rebrand the SRL as a housing project to build 70,000 new homes, because the building of those 70,000 new homes will be subject to value capture tax, $11 billion of tax against the cost of development of those properties. Raising $11 billion in value capture is effectively a surcharge on every apartment built, a surcharge that at this point only applies to SRL precincts. Eleven billion dollars divided by 70,000 equates to around $180,000 of added cost to each and every apartment. This more or less removes the economic incentive to invest in the precinct because they face a unique substantial extra cost that does not apply just 3 kilometres down the road. In this sense the government’s strategy is pulling in two different directions. On one hand you have abandoned our local residents, removing all planning controls to promote intense property development, yet at the same time you are taxing anyone who develops, to the point where the projects either become unviable to finance or the developer is forced to build high-end, high-yield properties only – luxury apartments – where the cost of the SRL value tax can be absorbed.

So the action I seek from the minister is to urgently provide certainty to the building sector and to the communities under the heel of the Suburban Rail Loop Authority and release the value capture formula. It is completely unacceptable to be this financially committed to a project with this level of funding shortfall and no clarity for investment. Hand in hand with this action is an update on the project costings, which have not been updated for more than two years and are clearly out of date and therefore cannot be calibrated against the value capture taxes required to meet that cost.