Privatising the profits 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 is the front-runner to buy Sydney’s WestConnex toll road, which means it will own the bulk of Sydney’s toll roads. From The SMH:

…one of the bidders for the [WestConnex] motorway – Transurban – already owns the concessions for the bulk of the city’s toll roads. What does it mean to have so many of our motorways in the hands of one company? What might it mean to have more?..

Within the last decade, Transurban’s share price has almost doubled, giving it a market value of more than $25 billion. Of the 99 kilometres of toll roads in Sydney, 95 kilometres are either majority or half-owned by Transurban…

People wary of Transurban’s rise refer to the way in which the company has appeared able to get governments to do what it wants… “They’ve been able to invest so that they’re in a monopoly position for the future,” Tony Harris, a former auditor-general, says of Transurban…

“There aren’t that many road projects in Sydney,” says one infrastructure advisor. “If Transurban wins WestConnex, they have effectively locked up the east coast tollway market.”

In February, Transurban reported a massive lift in profits as Australia’s mass immigration ‘Big Australia’ policy continues to feed customers into Sydney and Melbourne:

The tollroad company is benefiting from higher revenues in its road development and tolling businesses…

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…

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 cities 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. Toll are contracted to rise by 4% per year for the 43 years, thus 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. It is interesting, isn’t it? The CGT is nothing other than socialising the profits and privatising the costs.

    I think an accurate description is we are privatising both the profits and costs and socialising both the profits and costs. Now, that’s what I would call balanced journalism.

    • Tassie TomMEMBER

      LOL – what CGT? The CGT that’s half the income tax rate? If you have to pay it at all (PPOR, inheritance).

      How CG ever got to be more lightly taxed than labor income is a mark of success to the wealthiest 2% for distorting the tax system to make themselves even wealthier.

      Now, a 75% CGT on all transactions that involve land or licenses – THAT would be appropriate socialisation of the gains which society has paid for. You could probably cut 5% off the income tax rates with that.

      • Are you aware that when you make capital losses you will be left with the losses without any tax credit?

        Ok, perhaps I should have stated “The CGT is nothing other than socialising the profits and privatising the losses” to be more precise.

      • You can utilise the losses againt future capital gains. Those privatised losses can be utilised in full. .

    • Stephen Morris

      Land value tax would capture only a fraction of economic rent and would do absolutely nothing to remedy Australia’s main inefficiency: inter-communal rent seeking.

      The worst rent-seeking is not individual rent-seeking but communal rent-seeking. To take a specific example (and this will really get up the nose of a lot of people here), the Australian system of fuel excise (a “tax on distance”) is a rent-seeking mechanism by which money is pulled out of regional and rural Australian communities (typically engaged in activities which enjoy a comparative advantage in world markets) and re-distributed largely per capita to metropolitan communities which do not. This is just one example. Many others are discussed at the end of this comment.

      Would a land tax fix that sort of rent-seeking?

      Probably not!

      It depend on how the proceeds are spent. To take an extreme example to illustrate the point, if the tax on land was spent entirely on the owner of the land (a “community” of one!) it would clearly have no effect whatsoever. Moving slightly away from this, if land tax collected by municipality is spent entirely within the municipality then it will do nothing to alleviate the rent-seeking of the metropolises.

      If the proceeds of land tax on metropolitan land are spent on the metropolis it will do nothing to alter the overall flow of rent from those regions and industries which enjoy a comparative advantage to those populations which do not.

      And this is Australia’s real problem of rent-seeking. It’s not actually rent-seeking by individuals but by powerful voting blocs which use the (non-democratic) system of elective government to re-direct rents to their own communities (in the ways outlined in the foregoing link). The result is misallocation of resources on a continental scale.

      And most economists wouldn’t even acknowledge the existence of the problem! In fact, many of them are beneficiaries of the rent flow.

      • Absodamnedlutely!!!! Another big one is the A$ value. Note Deep T’s article today. The effect of this over-valued A$ CAD problem is a massive redistribution of income from rural and regional areas to cities.
        Again you won’t get much acknowledgement here!!!

      • + many Stephen ………… and you flawse too

        we screw the regions while the entitled capital city urbanites bitch endlessly and caste votes to ensure the system that is mucking up everybody (bar the top few %) continues ……… pathetic sheeple

      • Been to a baby’s funeral today so am not switched on. I am happy to consider arguments in favour of a LVT and such like. But all I see is taxes for corporations being lobbied down, and the taxes to pick up the population crush infrastructure tab being placed on wage earners whose salaries has been squeezed by flooding the supply side of the job market with immigrants.

      • DominicMEMBER

        While there may be merit in what you say, there are a helluva lot of subsidies that flow the other way i.e.
        – those in the metropolis subsidise postage to regional areas.
        – ditto the cost of flights (Qantas’s charter demands they maintain certain routes to remote parts of Straya, therefore it follows that those routes MUST be subsidised by passengers on the profitable/busy routes). If the taxpayer subsidises these routes directly it doesn’t change anything.
        – medical care is far more expensive to deliver to remote areas — the ‘scale’ determines this to be so.
        – the NBN is another example

        … and if I sat here long enough I’m sure I could come up with a host more.

      • Stephen Morris

        Australia has metropolitan rent-seeking at every level:

        a) at the State level, mineral royalties prop up Brisbane and Perth;

        b) top class health and education facilities are concentrated in the capitals;

        c) arts and sports funding is concentrated in the capitals;

        d) lucrative public works contracts are handed out to Mates in the capitals;

        e) at the federal level, company tax on commodity exporters is disbursed – largely per capita – to the capital cities;

        f) special imposts such as fuel excise act as a “tax on distance”, sucking money out of the regions (and even from the poorer outer suburbs which rely more on car transport) to be disbursed to the capitals;

        g) specific industry protections inflate metropolitan incomes. The policy of mandatory superannuation (for example) is now diverting over $30 billion a year into the hands of Sydney and Melbourne funds managers and their support industries. But just because thousands of people are running around in circles complying with the red tape of a needlessly inefficient pensions system does not mean that they’re producing anything of value. It is properly accounted for as part of the deadweight loss of rent-seeking: a pointless mis-allocation of resources that exists only so that politically powerful rent-seekers can divert income into their pockets; and

        h) the acceptance of oligopolies in major (metropolitan) industries further increases metropolitan incomes.

        And because people cram into the metropolis, trying to be within “lunching distance” of the Cabinet and the rent it disburses, we see projects like the $17 billion WestConnex which cost more to build that a green-fields city somewhere else!

        But hey!! That $17 billion of public spending further increases the incomes of the metropolis.

      • The capitalised value of land is the measure of the transfer of incomes from one group to another cause by landowners not compensating those they exclude for their opportunity loss. Whether you call that rent seeking or plain injustice is neither here or there. It amounts to around >$250bn per year. No doubt a fraction of total “rent seeking”, but a large one I’m sure.

        Road pricing, whereby the externality of congestion is internalised is really just a form of LVT. I agree taxes on fuel being a rather blunt instrument and a poor second best.

        As it happens, road pricing also applied to private roads would certainly be a nice way of deducting the “unearned” part of these toll road operators incomes.

  2. Read this weeks media. Apparently there is a housing crisis in parts of Sydney – a crisis I tell you!

    Of course, this would not be related to a policy of mass immigration and rent seeking by a new finance class and rent seeking elite would it?

    It could not possibly mean that our government has squeezed the Australian housing conditions by accelerating immigration and robbing citizens of a home. Because that would be class warfare wouldn’t it? And you’re not allowed to mention class warfare in Australia – even if it is class warfare. Even if the scum sucking crooks have been allowed to self regulate and rob people – it can’t be class warfare. It’s just trickle down economics without the trickle.

    http://www.abc.net.au/news/2018-04-30/supply-increase-in-sydney-rental-market/9709018

  3. Why has the ACCC not stepped in?

    Transurban must be made to divest some of the toll roads it controls.

    Breaking up BAA: Competition at last – The Economist

    19 Mar 2009

    IT WAS one of the biggest, and most heavily leaked, trust-busting decisions in British corporate history. On March 19th the Competition Commission confirmed its provisional decision that BAA, the firm that monopolises Britain’s big airports, should be dismembered, selling off two airports near London

    We would probably be better off if we were ruled directly by the British again.

    Less corruption, much less immigration, no more road tunnels, much better railways, and Corbyn as patron saint.

    • Britain has a host of very serious problems but Theresa May is a PM with some good ideas.
      Malcolm Turnbull, on the other hand….

    • Tassie TomMEMBER

      There’s no competition between toll roads anyway. It’s not like there are three different toll-roads in competition with each other that get you from Penrith to Sydney CBD, and the punter chooses the one they want based on price and service.

      Each toll road is effectively a monopoly service provider for that particular trip (or is competing against a free route which has been deliberately sabotaged by the corrupt government to try to make the toll road relatively better value).

      Privatisation of monopoly service providers is almost always bad.

      Toll roads increase the value of property of the already wealthy who live in the inner ring, as it is generally well serviced by public transport/ bike paths etc and often inside the toll road zone, while reducing the state tax for the landed gentry of the inner ring as the state govt does not have to pay for the road. The cost of the road has been passed onto the already poorer inhabitants of the outer suburbs, who have no options (poor public transport & bike paths), and are often working FOR the wealthy inhabitants of the inner ring thereby making them wealthier. For example, driving into town to work in the late Richard Pratt’s cardboard factory.

      Any government that allows a toll road to be built in their state is the lowest form of scum.

      • What do you call the ones that allow a toll road and then take a post politics position with the toll company?

        Australian politicians, state and federal, are out of control.

        Given the resistance I’ve seen here for any political accountability for what banks have done, no one should be surprised.

        Unless we start demanding politicians lose when we lose, we’re going to continue giving our entire country away.

    • sydboy007MEMBER

      Lol. Telling an of home see you have over 2 years of legal action and then fined, with the judge saying the city determines the context, not the person who’s actions are in question.

      Or maybe you’re a teenager posting some rap lyrics and you’re fined and put under curfew.

      Maybe your a black woman critical of Islam and go to the police to deeper death threats and get told it’s your fault and maybe if you didn’t say those things you wouldn’t get death threats.

      The UK is an anarcho tyrannical state.

  4. What really annoys me is that the freeways are tolled which incentives rat runs, which means the local roads remain choked, pretty much all the time. These toll roads should be free outside peak hour.

      • Very true!

        Someone driving from Blacktown to North Sydney at 5pm on a Sunday – better for everyone if they have a low toll and use the M2 and Lane Cove Tunnel, rather than driving through countless local suburbs to save themselves $10.52 in tolls.

        Or someone driving from Bondi to North Sydney – so many people avoid the Cross City Tunnel and instead drive through Darlinghurst, Kings Cross, the CBD and Wolloomooloo, to avoid paying $5.67 to drive 3km underground.

        Crazy. Like those suburbs want that traffic when there is a perfectly good expressway!?!!?

  5. Stephen Morris

    It is indeed all about privatisation in the most general sense.

    Elite theologians love to talk in honeyed terms about the “end of borders”, but they don’t really intend to abolish borders. All they are really doing is replacing “national borders” (over which the mass of ordinary citizens might have had some control) with “private borders”: elite private property.

    The Elite do not intend to rub shoulders with the plebs. They retreat to their private mansions, their private country estates, their private campuses, their private gated communities, all surrounded by private borders marked with “KEEP OUT. Trespassers Will Be Prosecuted!” signs.

    The Elite do not intend to stand, crushed cheek-to-sweaty-cheek with the prols on inadequate and overcrowded public transport. They whizz from their private mansions to their private offices in private cars (often along private roads which have been tolled or “road-priced” out of the reach of the masses.)

    And from behind their private borders they peer out and sermonise piously on the supposed intolerance of those outside!

    On all fronts the trend is the same: the end of the 20th Century ideal of public rights – over which the citizens used to have some say – and their alienation to elite private interests.

    As for Transurban, it isn’t a toll road company.

    Transurban is the re-incarnation of Ferme Generale of the ancien regime. Its ring of tolling points are a high-tech re-creation of the Wall of the Farmers General .

    As strategic monopolies, essential services, critical databases and valuable tax revenues are steadily transferred to the new Magnates, politicians must go cap-in-hand to them for money every time they wish to do anything.

    And when one remembers that these magnates are the ones who pay the campaign expenses and provide retiring politicians with their million-dollar-a-year directorships and consultancies (the modern equivalent of the “pot de vin”), what hope is there for the common citizen.

    The 20th Century – the Century of the Common Man and Woman – was an anomaly.

    The future is the past.

    We are being refeudalised.

    • I think it is called invisible borders. Some streets in many US cities are just that.

    • Should start putting some names to it.

      The entire LNP, most of Labor, some Greens. Turnbull’s, Lisa Wilkinson, Peter Fitzsimons. Top two tiers of every corporation in Australia. MSM, ABC and SBS journalists.

      Wages at the top should be one of the core issues the rest of us should be fighting.

      Dick Smith on channel 9 any minute.

    • Completely this. I’ve been calling it the return to feudalism for a few years. When we let those at the top accrue more and more wealth, and make it more and more difficult for those at the bottom to gain wealth by opening jobs to a worldwide audience, and make it easier and easier for people in the middle to lose their wealth through taxation applied to wages and ordinary consumption… that’s what’s going on.

      It is very astute of you to discern that the elites’ “no national borders” globalisation obscures a shift to “private borders” unaligned with national borders and controlled solely by the elites.

  6. The sting in the tail will be if inflation takes off (via a housing or banking crisis). Although the 4% would probably get negotiated up, given the sway Transurban has.

      • “John Howard has strongly hinted he supports Tony Abbott’s call to slash immigration, calling for a civil, open debate about the level and composition of the increasingly controversial annual 190,000 intake.

        In a wide-ranging interview with The Australian, the former prime minister also backed nuc­lear power, warned against the growing dominance of apparat­chiks in the political system and cautiously endorsed US President Donald Trump — “if you look through the tweeting and some of the apparent tantrums”.

        “I can’t for the life of me see why we can’t have a sensible debate about the level of immigration,’’ he said. “I’d like to hear the debate. I really would. One of the problems with political discourse at moment is we’re losing power to discuss something.”

        Mr Abbott prompted national debate over immigration in February, calling for a significant reduction in the permanent intake to ease congestion and give governments time to build infrastructure.

        “No country will accept what it apprehends to be unlimited immigration. That’s the lesson out of Europe,” Mr Howard said.

        “We ought to be able to discuss the composition and volume without on the one hand being branded a racist or on the other hand as somebody who wants to have completely unlimited immigration,” he said”

    • “No country will accept what it apprehends to be unlimited immigration. That’s the lesson out of Europe,” Mr Howard said.

      We usually learn what HASN’T worked overseas and that’s what we implement here.

    • The aim has always been to flood the market with migrants to push down wages in the service sector. It was under the guise of ‘skilled migration’ but knowing the qualifications and experience from China and India wasn’t go to translate in the Australian market. Wages go down, the economy gets a sugar hit from the new consumers, and the states and the Treasury of the future deals with the mess that comes from infrastructure, education and healthcare difficulties. Simples.