Privatising the gains (and socialising the costs) of mass immigration

By Leith van Onselen

While residents of Sydney and Melbourne are suffering from crush-loaded roads, trains, schools, hospitals, and prisons, as well as hideously expensive housing, toll road company Transurban yesterday reported a massive lift in profits as Australia’s mass immigration ‘Big Australia’ policy continues to feed it customers. From The AFR:

The tollroad company is benefiting from higher revenues in its road development and tolling businesses, with its shares rising 4¢ in morning trading on Monday to $11.39 after solid interim results.

Net profits for the six months to June rose 280 per cent from $88 million a year earlier…

Transurban makes its highest profit margins in Melbourne, where margins run at 88.5 per cent, and Sydney, where margins run at 81.2 per cent.

Group toll revenues rose 9.6 per cent to $1.13 billion, while construction revenues jumped 69 per cent to $462 million.

Toll revenue increases were driven by both traffic growth and higher toll fares…

This folks is Australia’s population ponzi economy in action. It’s a model of growth where corporate Australia privatises the gains from mass immigration and socialises the costs on everyone else.

Former treasury secretary turned NAB chairman, Ken Henry, explained this model in a speech last year:

Research NAB carried out earlier in the year showed that among our customers there’s not wholesale support for a larger Australia. For many, the prospect of a higher Australian population means more stress in the ability to buy a house, to live where you want to live, to get to work with a reasonable commute time. And many in the community are also concerned about our ability, as a nation, to maintain norms of Australian social and economic inclusion, and to continue to provide access to high quality services in areas such as healthcare and education.

These concerns are playing out against a backdrop of rapid technological advancement that’s seeing the digitalisation and automation of many aspects of our lives, including in the workplace – and with it, growing concerns about job security.

But what is the business perspective? The same NAB research showed that most of our business customers would strongly prefer a larger population, which supports better business growth.

With Australia’s two biggest states desperately trying to build infrastructure to keep pace with the population ponzi, private companies like Transurban are facing further strong profit growth, paid for by ordinary motorists like you and me.

For example, the Victorian Government’s $6.7 billion West Gate Tunnel Project will see Transurban contribute $4.4 billion towards the cost, but in exchange motorists will have to pay additional tolls on CityLink until 2045 estimated at $15 billion. It’s a sweet deal for Transurban, but a dud deal for Melbourne motorists.

In a similar vein, Sydney’s $17 billion WestConnex project will see existing free public roads like the state-owned M4 (that have already been paid off) being tolled to help fund the project, raising costs for residents.

Clearly, private businesses like toll road operators, retailers, banks and property developers get to enjoy the easy growth in revenue and profits that come from an ever expanding customer base, whereas households suffer from the increased competition and reduced bargaining power at work, rising housing costs, rising infrastructure costs, and longer and more expensive commutes.

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Comments

  1. reusachtigeMEMBER

    It’s good to see a company making decent profits. We all benefit from that via the well documented dribble down effect.

  2. The Kennett Government was warned of this back in 1994.

    See: https://www.scribd.com/document/174687044/Public-Equity-Private-Debt-The-Efficient-Financing-of-Roads-Complete-paper

    (Abstract paragraph 3, and para 24 et seq)

    For our pains we were removed as financial adviser to Vicroads and replaced by an independent adviser with a better grasp of the “right” answers that were expected of them.

    The idea of “independent” advisers is an absurdity. Even if an adviser were trying to act in the best interests of the public (and many of them seem to be more interested in currying favour with the bureaucracy, Ministers and private infrastructure firms) it will be of no use. If they don’t give the “right” answers, their report will be filed and someone else appointed. In extreme cases, they may be removed preemptively to prevent any embarrassing reports on the record.

    Meanwhile, Ministers and senior public servants (check the public records on this) are more concerned with the chairmanships, directorships, consultancies and other rewards they may expect upon retirement . . . provided they “play the game”.

    Shorten may talk hot air about Federal Corruption Commissions as much as he likes, but the fact is Australia is riddled with “soft corruption” at all levels of government and no Commission is going to eliminate it.

    • Yes. It is insane. It will be even more insane when the West Connex is sold to Transburban for below construction cost, not to mention the small stretch of road linking West Connex to the airport will cost the NSW taxpayer billions. The State government can use its ‘compulsory acqusition’ power, but they won’t.

  3. “You can’t eat your cake and have it”

    In Australia through the generations, the previous migrants have benefitted from the migrants who have come after them. Higher population means more demand for goods and services which ultimately leads to higher profits in absolute terms for companies.

    These companies then hire more staff, buy more material and services, pay more taxes and the economy grows.

    15% of the population depends entirely on the government for their income, and a very small proportion of these would be new migrants. So the economic gains and the taxes that these new migrants are generating are the ones that are paying for the benefits that the old migrants are now enjoying.

    • Wow. That sounds like the definition of a Ponzi scheme. Everyone enjoys great returns, paid for by newbies, right up until they don’t.

      Seriously mate, pull the other one.

      • Based on your definition all of social welfare including pensions are a Ponzi scheme, also all the economies of the world that rely on budget deficit and debt funding.

        Capitalism in the 20th century has been a ponzi scheme where debt has been serviced / paid-off with inflation and population growth.

    • I just wonder when this website worked out that Reusa is satire and if his first few posts were rightfully regarded as astroturfing.

  4. Australia’s on steroids ‘rent-seeking’ economy. Going to be epic when it all goes to the wall.

  5. Put a slab on & get your mates over to help tinker under the hood to hot up the Ol’ rule of 72 to max, then hang on for the ride…… Winning…… & if you aren’t winning, you’re……

  6. it’s not all fun and games – i seem to recall a few road operators going bust in brisbane – tho transurban did pick up the assets in a fire sale