Earlier this year, former ACCC chairman Allan Fels and transport expert David Cousins released a report warning that Transurban is robbing Sydney motorists and urging the New South Wales government to take control of the state’s toll roads.
Transurban controls 11 of New South Wales’s 13 toll roads, each of which was negotiated under a distinct contract and with varying price increases.
According to the analysis, New South Wales motorists will pay more than $123 billion in tolls over the next 37 years, with Transurban’s WestConnex motorway responsible for more than half of that total.
The report’s analysis predicted that Sydney motorists will pay $61 billion in WestConnex tolls by 2060, more than tripling the project’s cost of $21 billion.
“Tolls need a big shake-up, no holds barred, and the NSW government needs to take back control of tolls”, professor Fels said.
“Transurban has a monopoly and there’s been insufficient focus on competition in toll setting”.
“The public interest factor needs to be injected”, he said.
Ross Gittins has penned an article arguing that Sydney’s toll road network is the worst example of privatisation, leaving residents significantly worse off:
“Public-private partnerships” [have] left Sydney ringed by 13 toll roads, 11 of which are majority-controlled by the ASX-listed giant tolling company Transurban, along with many minority partners”.
“Toll roads now make up almost half of Sydney’s motorway network. It has more toll roads than any other Australian capital city, which hasn’t stopped it from being the most congested. These toll roads have grown like Topsy, each with differing tolls and rules about how the toll is regularly increased”.
“Taken together, the toll road system is regarded as inefficient, unfair and lacking transparency”…
“Windfall gains are common, and the companies are cleaning up. But this is an unnecessary burden on motorists”.
To add further insult to injury, the New South Wales government has sought to reduce the gouging by directly subsidising the costs of tolls and capping the weekly toll bill for Sydney motorists at $60.
These types of taxpayer subsidies are the worst type of policy, as they financially reward monopolists like Transurban for gouging residents.
They are a direct financial transfer from taxpayers into the pockets of a private monopoly, which benefits because motorists can now afford to pay their high prices.
Gittins also notes that the New South Wales government is now seeking to renegotiate the toll road contracts to make them fairer for motorists, especially in Sydney’s West.
“This week’s final report recommends that it replace the hodgepodge array of tolls with a uniform system where the price is based on distance travelled, with those travelling longer distances charged less per kilometre”…
“The government says it will compensate the toll companies for losses from changes to their contract arrangements, but would transfer “traffic risk” and its windfall gains to the government. This would help cover lower tolls in the west”…
“The NSW government take back control of tolls by setting up a state-owned entity, NSW Motorways. Its changes to tolling arrangements would be overseen by the NSW Independent Pricing and Regulatory Tribunal”.
The New South Wales government has little realistic hope of gaining control of the toll road network without paying Transurban massive financial compensation in the billions of dollars.
Transurban already has commercial contracts in place that allow for toll hikes equal to or greater than CPI inflation (see here for details).
The NSW government foolishly agreed to these terms in order to clear its books of capital expenditures and debt.
In the process, the government effectively created a private monopoly over Sydney’s road network.
Ultimately, Transurban is emblematic of Australia’s population ponzi economy. The company was explicitly designed to profit handsomely from Australia’s foolish immigration-driven economy.
Here’s how the scam operates:
- Import huge volumes of people into the major capital cities, causing transportation to become chronically congested and necessitating the construction of more roads.
- Build toll roads through public-private partnerships, charging exorbitant user fees to the existing population.
- Residents’ living standards deteriorate because all the government has done is privately tax them via tolls to get around, whereas they were doing so for free prior to the people-stuffing.
- Politicians claim to be competent economic managers since GDP rises and governments take credit for easing congestion (which only came about because of their people-stuffing).
- Transurban and its foreign investors get richer, while residents become poorer.
- Rinse, repeat.
Transurban’s whole business model is based on privatising the benefits of high immigration while shifting the costs to everyone else through what is basically private taxation.
It’s too late to complain about it now. Because two decades of reckless government policies regarding immigration and privatisation have brought us to this place.
Given that high levels of immigration are projected to continue indefinitely, traffic on Transurban’s toll roads and earnings will forever increase.
State governments will also be pushed into building new toll roads to keep up with the never-ending population growth, resulting in increased private taxation of residents.
If Alan Fels and David Cousins don’t like these arrangements, then maybe they should speak out against mass immigration, which will turn our major capitals into megacities.
