How we developed the strategy: Costs and benefits

Our recommendations are cost effective

We estimated the benefits and cost of each recommendation

Our recommendations have many economic, social and environmental benefits. We estimate that implementing all 45 recommendations can produce over $166 billion worth of benefits to Victorians. Some of the significant benefits of our recommendations include:

$35 billion in improved health and economic outcomes for children over their lifetime from investing in new schools and kindergartens (recommendations 2 and 3)
$27 billion in improved employment, health and social outcomes for those at risk of homelessness from building more social homes (recommendation 1)
$22 billion in travel time savings, fewer greenhouse gas emissions, and other benefits from public transport projects (recommendations 8, 9, 10, 11, and 12)
$15 billion in cost savings from using new digital technologies in constructing public housing and roads (recommendation 41)
$14 billion in additional economic activity, wages and profits from achieving more compact cities (recommendations 7, 36, and 37).

But producing these benefits also has a financial cost to the Victorian Government. We present our cost estimates as approximate ranges under each recommendation.

A long-term infrastructure strategy can help the Victorian Government achieve a stable investment profile. Our cost estimates help the government make informed decisions about infrastructure investments, project sequencing and delivery timelines. Before making an investment decision, the government should assess the costs and benefits of a project or policy based on its final design.

The Victorian Government will need to do more work to fully detail the costs of the proposed infrastructure, policies and reforms. This further planning and development can include design, procurement, construction, operation and maintenance of infrastructure.

Many of our recommendations will require the Victorian Government to coordinate with and fund local governments. In their submissions, local governments frequently called for strong partnerships between Victorian and local governments in implementing recommendations.

Our estimates include once-off and yearly costs

Some recommendations include capital costs, like the costs to design, procure, build and upgrade infrastructure. Some include the costs to develop policy or introduce reforms. Some include a yearly operating cost to run and maintain new infrastructure.

We also include the costs of staff or consultancies to develop and deliver plans or policies, or provide technical advice. In many cases, our recommendations can be delivered by Victorian Government staff as part of their existing duties. The government could also redeploy staff from other tasks rather than spending extra money on hiring more staff.

Our estimates do not include the costs of providing the services from social infrastructure. For example, we do not include the salaries of nurses providing care in upgraded hospitals, or teachers in new schools. However, we do include the costs of running extra transport services like trains, trams and buses.

We present many of our costs as a cost range. They are strategic, order of magnitude estimates (see below). They are approximate and typically based on available cost data for similar earlier projects. Our estimated cost ranges can be narrow or wide depending on our level of certainty. We include sources for our cost data, except where we have used confidential information.

All cost estimates are in real dollars as of June 2025. For example, this could be the cost of signing a contract to build infrastructure or starting a new policy in June 2025. To do the same thing in future years would require escalation to be added to the 2025 cost.

Estimating the cost of our recommendations
Order of magnitude estimates are initial cost estimates within a broad accuracy range and based on historical information. They are commonly applied in early stages of a business case where few details are available. Order of magnitude estimates are helpful in comparing high-level alternatives to determine the most feasible solutions. Real dollars measure the cost of something without increasing prices for future inflation. All our cost estimates are in real dollars. We have used real dollars to avoid introducing future price inflation as another source of uncertainty. Escalation adjusts the cost of something for future price inflation of inputs. Most of our recommendation cost estimates do not include escalation. However, several of our major transport project recommendations have escalation built into their cost estimates, reflecting their long delivery times (including recommendations 11 and 12, future option – Extend metropolitan trains to growth areas in Melbourne’s north and south-east, and future option – Reconfigure the City Loop for more frequent and reliable trains).

Estimating the cost of our recommendations

Order of magnitude estimates are initial cost estimates within a broad accuracy range and based on historical information. They are commonly applied in early stages of a business case where few details are available. Order of magnitude estimates are helpful in comparing high-level alternatives to determine the most feasible solutions.

Real dollars measure the cost of something without increasing prices for future inflation. All our cost estimates are in real dollars. We have used real dollars to avoid introducing future price inflation as another source of uncertainty.

Escalation adjusts the cost of something for future price inflation of inputs. Most of our recommendation cost estimates do not include escalation. However, several of our major transport project recommendations have escalation built into their cost estimates, reflecting their long delivery times (including recommendations 11 and 12, future option – Extend metropolitan trains to growth areas in Melbourne’s north and south-east, and future option – Reconfigure the City Loop for more frequent and reliable trains).

Estimating the cost of our recommendations

We proposed ways to fund each recommendation

Funding is the money needed to pay for infrastructure. Victorian Government funding can come from the community through taxes, from charging people when they use infrastructure or government services, or from debt. The Australian Government also raises money through taxes and can share some of this money with the states. This often helps fund infrastructure.

New or upgraded infrastructure can help some groups of people or businesses. A logistics firm might save money because a new road lets them move goods faster and at lower cost. New infrastructure can make land more valuable. Asking those who benefit to help pay can be fairer than all Victorians paying taxes to fund infrastructure from general government revenue.

The Victorian Government can also partner with the Australian Government, and private and not-for-profit sectors and share infrastructure costs. For example, businesses can invest in the construction of new hospitals in return for the development of new on-site commercial facilities.

We assume the Victorian Government can start funding our recommendations in its 2026–27 budget. We assume the government can start spending that money from the 2026–27 financial year. We also assume the government will start acting on our recommendations within 5 years. The government might deliver some of the recommendations over a longer period than the initial 5 years.

Victorian Government departments and agencies should consider how to fund and lower costs when they plan infrastructure investments. This can help reduce the reliance on general government revenue. The government can also consider shifting spending from other initiatives to infrastructure investments.

We estimated the total cost of Victoria’s 30-year infrastructure strategy recommendations

Victorian Government infrastructure investment has been at record levels in recent years. It peaked at $24.2 billion in 2023–24 and will average $17.9 billion each year from the 2025–26 to the 2028–29 financial years. The government’s investment was around $15 billion in the 2020–21 financial year. The government aims to get back to this level by the 2028–29 financial year.

Only 28 of our 45 recommendations need Victorian Government capital investment. Very few are major projects that require high upfront investment. Many recommendations upgrade or replace infrastructure that is not running efficiently. The other 17 recommendations call for policy work, legislative reform and better planning.

We estimate that the cost to the Victorian Government to implement all recommendations is around $65 billion to $75 billion. Most of this spending would happen before 2035. Around 75% of the total cost is for 7 recommendations with capital-intensive projects that improve social housing, kindergartens, schools, public transport and hospitals. Table 7 includes a summary of costs by infrastructure sector.

Table 7: Costs to the Victorian Government of recommendations by infrastructure sector

Infrastructure sector (recommendations)	Cost (millions)
Across sectors (6, 36, 37, 38, 41 and 45) Recommendations for better infrastructure planning, use, maintenance, and funding.	$1,900
Climate change, water and circular economy (25, 26, 28, 29, 39 and 40) Recommendations to build climate resilience, advance integrated water management, and improve waste and recycling infrastructure.	$700
Community infrastructure and justice (5, 17, 22 and 27) Recommendations to deliver community and justice infrastructure, including libraries and aquatic centres, prison health facilities, and open space.	$700
Education and training (2, 3, and 4) Recommendations for better education and training infrastructure. New kindergartens cost between $3.9 and $7.2 billion and new schools cost around $5.7 billion.	$13,900
Energy (30, 31, 32, 33, 34 and 35) Recommendations on the energy transition, including improving coordination and environmental assessments, more batteries and encouraging household electrification.	$3,400
First Peoples (23 and 24) Recommendations to support First Peoples having self-determination and equal outcomes to other Victorians. Costs of between $1 billion and $1.4 billion to build social homes for First Peoples is covered separately in the Housing and planning category below.	$600
Health (18, 19, 20 and 21) Recommendations covering health infrastructure improvements for community health, rehabilitation and withdrawal facilities, digital healthcare and public hospitals.	$7,500
Housing and planning (1 and 7) Recommendations to deliver more social homes and rezone near infrastructure. Delivering more social homes is the most capital-intensive recommendation, costing between $12 billion to $19.5 billion. Including land costs adds $6 billion to $9.5 billion.	$23,800
Transport – public transport, walking and cycling (8, 9, 10, 11, 12, 13, 14, 15 and 16) Recommendations that improve access and support the strategy objective of keeping Victorians healthy and safe, including large train, tram and bus capital projects costing: between $4.3 billion and $5.7 billion to extend metropolitan trains in Melbourne’s west between $4 billion and $5.7 billion to extend Melbourne’s trams between $3 billion and $3.7 billion for a new bus rapid transit network.	$15,200
Transport – roads and freight (42, 43 and 44) Recommendations that identify smarter ways to manage traffic and move more freight.	$2,800
Total	$65,000 to $75,000*

Infrastructure sector (recommendations)	Across sectors (6, 36, 37, 38, 41 and 45) Recommendations for better infrastructure planning, use, maintenance, and funding.
Cost (millions)	$1,900

Infrastructure sector (recommendations)	Climate change, water and circular economy (25, 26, 28, 29, 39 and 40) Recommendations to build climate resilience, advance integrated water management, and improve waste and recycling infrastructure.
Cost (millions)	$700

Infrastructure sector (recommendations)	Community infrastructure and justice (5, 17, 22 and 27) Recommendations to deliver community and justice infrastructure, including libraries and aquatic centres, prison health facilities, and open space.
Cost (millions)	$700

Infrastructure sector (recommendations)	Education and training (2, 3, and 4) Recommendations for better education and training infrastructure. New kindergartens cost between $3.9 and $7.2 billion and new schools cost around $5.7 billion.
Cost (millions)	$13,900

Infrastructure sector (recommendations)	Energy (30, 31, 32, 33, 34 and 35) Recommendations on the energy transition, including improving coordination and environmental assessments, more batteries and encouraging household electrification.
Cost (millions)	$3,400

Infrastructure sector (recommendations)	First Peoples (23 and 24) Recommendations to support First Peoples having self-determination and equal outcomes to other Victorians. Costs of between $1 billion and $1.4 billion to build social homes for First Peoples is covered separately in the Housing and planning category below.
Cost (millions)	$600

Infrastructure sector (recommendations)	Health (18, 19, 20 and 21) Recommendations covering health infrastructure improvements for community health, rehabilitation and withdrawal facilities, digital healthcare and public hospitals.
Cost (millions)	$7,500

Infrastructure sector (recommendations)	Housing and planning (1 and 7) Recommendations to deliver more social homes and rezone near infrastructure. Delivering more social homes is the most capital-intensive recommendation, costing between $12 billion to $19.5 billion. Including land costs adds $6 billion to $9.5 billion.
Cost (millions)	$23,800

Infrastructure sector (recommendations)	Transport – public transport, walking and cycling (8, 9, 10, 11, 12, 13, 14, 15 and 16) Recommendations that improve access and support the strategy objective of keeping Victorians healthy and safe, including large train, tram and bus capital projects costing: between $4.3 billion and $5.7 billion to extend metropolitan trains in Melbourne’s west between $4 billion and $5.7 billion to extend Melbourne’s trams between $3 billion and $3.7 billion for a new bus rapid transit network.
Cost (millions)	$15,200

Infrastructure sector (recommendations)	Transport – roads and freight (42, 43 and 44) Recommendations that identify smarter ways to manage traffic and move more freight.
Cost (millions)	$2,800

Total	$65,000 to $75,000*

^{*Total is approximate due to rounding of recommendation costs within each infrastructure sector. Many recommendation costings include a range as they are order of magnitude estimates. For summary purposes, this table typically uses recommendation costs in the middle of the range.}

Funding for our recommendations does not need to come from the Victorian Government alone. The Victorian Government can partner with the Australian Government (see below – Making the case for strategic and evidence-based infrastructure funding) and other organisations, or funding can come through other sources like charging infrastructure users.

Federal partnerships, along with smarter use of existing government land, can help reduce the Victorian Government’s costs to implement our strategy recommendations to around $60 billion, including average spending of approximately $5 billion each year for the next 10 years. Our future options would add around $10 billion in capital works after 2030.

Making the case for strategic and evidence-based infrastructure funding
The 2023 Infrastructure policy statement details the Australian Government’s commitment to delivering high-quality and nationally significant land transport infrastructure that meet a set criteria. This includes investing in proposals that are supported by evidence and long-term strategic plans. A recently reformed Infrastructure Australia will also support improved infrastructure evaluation and decision-making. Many of our recommendations on land transport strongly align with the Australian Government’s focus on productivity, sustainability and liveability for infrastructure investment. The Australian Government has committed $19.2 billion to Victoria over 10 years under the Infrastructure Investment Program. Although this funding has already been committed to projects, maintaining this level of investment in Victoria would result in Australian Government funding of approximately $1.9 billion each year. Continued partnership between the Victorian and Australian governments could help to reduce the cost of delivering our future options by around $5 billion.

Making the case for strategic and evidence-based infrastructure funding

The 2023 Infrastructure policy statement details the Australian Government’s commitment to delivering high-quality and nationally significant land transport infrastructure that meet a set criteria. This includes investing in proposals that are supported by evidence and long-term strategic plans.

A recently reformed Infrastructure Australia will also support improved infrastructure evaluation and decision-making. Many of our recommendations on land transport strongly align with the Australian Government’s focus on productivity, sustainability and liveability for infrastructure investment.

The Australian Government has committed $19.2 billion to Victoria over 10 years under the Infrastructure Investment Program. Although this funding has already been committed to projects, maintaining this level of investment in Victoria would result in Australian Government funding of approximately $1.9 billion each year. Continued partnership between the Victorian and Australian governments could help to reduce the cost of delivering our future options by around $5 billion.

Making the case for strategic and evidence-based infrastructure funding

Our recommendations are realistic and achievable

We estimated overall costs, but this strategy is not a budgeting exercise. The Victorian Government’s published budget figures are for the next 4 years only. The government considers the state’s financial position and its fiscal policy when making decisions on raising revenue and spending money on infrastructure.

Delivering our recommendations is realistic and achievable within the planned government infrastructure investment range. Some of our recommendations might only use funds that are regularly spent on social and transport infrastructure anyway. Some of our recommendations include large-scale investment in infrastructure like kindergartens, schools and hospitals (for example, recommendations 1, 2 and 21). We designed these recommendations to meet current and future infrastructure needs that are difficult to avoid and are necessary investments to achieve Victorian Government policies.

Similarly, many of our transport recommendations (see recommendations 8, 9, 10, 11, 12, 13 and 42) improve access to opportunities for Victorians already living in new suburbs on the city's fringes based on past planning decisions. They also support more homes in inner and middle suburbs and help achieve the Victorian Government’s housing targets.

Investing in social housing (recommendations 1 and 23) to meet the current and future housing needs of low-income Victorians is one of our highest cost recommendations, even when delivered over a long period. The high costs of meeting needs for more transport, housing, and social infrastructure mean that the Victorian Government will need to carefully balance its policy ambitions with available funding in future.

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