How Victoria fared in budget: See what money has been promised to the state and what has not

There was no new cash for the Allan government’s $34.5bn Suburban Rail Loop East in Treasurer Jim Chalmers’ Budget — which now looms as a major federal election issue — but money for roads and the airport rail link.

Victoria’s share of federal funding has soared by a whopping $14bn since Treasurer Jim Chalmers brought down his third Budget just 10 months ago.

But there was no new cash for the Allan government’s $34.5bn Suburban Rail Loop East, which now looms as a major federal election issue.

The Albanese government’s decision to drastically hike Victoria’s percentage of overall Commonwealth cash highlights the state’s dire financial position, and comes ahead of a May poll where federal Labor is under pressure to hold a swag of marginal seats.
It was largely driven by a hefty redistribution of GST allocations, which economist Saul Eslake says shows Victoria has “become a poor state”, but also includes an extra $4bn being splashed on road and rail projects.

New infrastructure spending in Victoria includes $2bn towards the airport rail link project, which Prime Minister Anthony Albanese pledged during the Herald Sun’s Future Victoria campaign.

This will help unscramble regional and metro rail lines around Sunshine station, paving the way for the new Tullamarine line to be built by the early 2030s.

Other big ticket spending items include $1bn for the Western Freeway, and an extra $1bn to fix potholes and upgrade roads, also revealed during Future Victoria.

The biggest infrastructure winner was Queensland, which secured more than $7bn for safety upgrades on the Bruce Highway, by far the largest commitment from $15.6bn in new road and rail spending.

In May last year, the Allan government resisted publicly criticising Mr Chalmers when he handed down his third Budget that revealed Victoria was getting $187bn from the Commonwealth between 2024-25 and 2028-29.

This represented 24.1 per cent of total federal funding to states.

Works underway on the Suburban Rail Loop site at Heatherton. Picture: Mark Stewart

This year’s Budget shows that over those same four years, about $201bn will now go to Victoria, or 25.3 per cent of the pie.

When the 2028-29 funding is added, Victoria’s next four years will reap $213bn.

But the Allan Government’s plea for the PM to pump more money into its signature new rail project was ignored, leaving the project that will link Cheltenham to Box Hill via a 26km tunnel facing a $9.3 billion funding black hole.

The snub sets the scene for fresh questions about whether either major party would top up cash for the most expensive rail project in Victoria’s history — above $2.2bn promised at the last federal election and recently handed over — if they won the May poll.

Mark Knight's take on the federal budget

The Allan Government has tied the future of the state to the project, arguing it would drive new housing around six new stations to squeeze an extra 70,000 people into middle suburbs and avoid endless sprawl as the state’s population booms.

Budget papers show Victoria is expected to keep growing steadily over the next four years, despite lower overseas migration targets, with more people expected to move here from other states and territories than the number expected to leave.

Overall, Victoria’s population is expected to rise from almost 7.2m people this year to almost 7.6m by 2029.

There is some money for road repairs but not as much as Queensland. Picture: Jake Nowakowski

The Allan Government has spruiked its SRL East as a key program to deal with population growth, and has begun calling the SRL the country’s largest housing project.

Last week, Infrastructure Australia warned the project risked going over its $34.5bn budget due to construction sector price carnage, and also cast doubt on the Allan Government’s capacity to raise a third of the SRL East funding by taxing land value increases around stations – known as value capture.

Infrastructure Australia warned against an expansion of Commonwealth funding beyond $2.2bn promised at the last federal election without a new assessment of project risks, including any cost changes and its value capture strategy.

Asked if the funding door was now closed for SRL, Treasurer Jim Chalmers said the Government would continue to work with all states on its $120bn infrastructure pipeline and that “we work closely and enthusiastically with the Allan government in Victoria”.

Opposition Leader Peter Dutton is yet to reveal a formal position on the SRL, despite some of his colleagues criticising the project and the state opposition calling for it to be cancelled.

Originally published as How Victoria fared in budget: See what money has been promised to the state and what has not