In a report earlier this year, former ACCC chairman Allan Fels and transport expert David Cousins bemoaned Transurban’s gouging of Sydney motorists. The report also urged the NSW government to regain control of the state’s toll roads.
Transurban controls 11 of NSW’s 13 toll roads, each negotiated under a distinct contract and with varying price increases.
According to Fels’ and Cousins’ report, NSW motorists will pay more than $123 billion in tolls over the next 37 years.
Transurban’s WestConnex motorway would be responsible for more than half of that total, collecting $61 billion in tolls by 2060. That is 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.
In the wake of the Fels and Cousins report, the NSW government is examining how to overhaul toll road fares in Sydney, which collect around $2.5 billion a year from motorists.
The Fels and Cousins report recommended that a single rate for all roads should apply. However, Transurban has proposed an alternative plan that would see toll rates vary by region.
Not surprisingly, Transurban’s method would be better for its investors, as it would be simpler and faster to introduce, while Fels has warned that adopting Transurban’s approach may not be in the public interest.
Jarden analyst Rohan Gallagher speculated that “whilst it is too early to know what detail will be agreed in the heads of agreement, it appears to us more likely consideration of a corridor-based approach could be adopted”.
The NSW government has little realistic hope of seizing back control of the toll road network without paying Transurban massive financial compensation ton the tune of tens of 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 to clear its books of capital expenditures and debt.
In the process, the government effectively supported a private monopoly over Sydney’s road network.
Transurban was explicitly created to profit handsomely off Australia’s foolish immigration-driven economy.
Here’s how the scam operates:
- Crowd the major capital cities with people, causing transport to become chronically congested and necessitating the construction of more roads.
- Build toll roads through public-private partnerships, charging exorbitant user fees to the resident population.
- Residents’ living standards deteriorate because all the government has done is tax them to move about while 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 (as a result of the aforementioned population growth).
- Transurban and its foreign investors get richer, while residents become poorer.
- Rinse, repeat.
Transurban’s whole business strategy is based on privatising the benefits from high immigration while shifting the costs to everyone else through what is basically private taxation.
It’s too late to complain about it now. Twenty years of foolish 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 to develop new toll roads to keep up with the ballooning population, resulting in increased private taxation of residents.
If you don’t like these arrangements, Alan Fels and David Cousins, maybe they should speak out against increased immigration and the transformation into megacities.
The mass immigration ‘Big Australia’ policy is literally designed to enrich companies like Transurban at the expense of incumbent residents.
