State eyes carve-out of existing taxes to help plug $11.5b SRL funding hole
The contentious proposal, confirmed by two government sources speaking anonymously to detail confidential discussions, raises fresh questions about the financing of the SRL amid other growing demands on the state budget.
Under a plan being discussed within the Suburban Rail Loop Authority and at senior levels of the government, a share of existing stamp duty and land taxes levied on properties near proposed SRL stations would be earmarked for the $34.5 billion first stage of the project.
The proposal to create what is known as a 'hypothecated' tax stream – a tax or levy dedicated for a specific purpose – to help pay for the SRL is a departure from the government's previous assumption that money raised through value capture would provide a third of the necessary funds.
It signals the government now accepts the SRL may depend more heavily on state finances. The latest Victorian budget figures forecast a net debt for the state of a record $194 billion by the end of this decade.
While the government is still finalising ideas for value capture – charges or fees through which the government reclaims a share of increased property values generated by a capital works project – a government source said SRL Authority and Treasury officials were grappling with concerns any additional tax burden on SRL housing developments would increase the cost of new homes in those areas.
A report canvassing a new statewide infrastructure charge has also been sitting with the government since March.
This year's state budget flagged the government's changing approach. In a section detailing updates on SRL East, the first stage of an orbital rail loop that will eventually encircle Melbourne's middle suburbs, it noted that value capture would supplement traditional state and federal funding but with a new focus on existing forms of income.
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