Sydney’s toll roads: most expensive and extensive in world

By Leith van Onselen

While residents of Sydney and Melbourne are suffering from crush-loaded roads, trains, schools, and hospitals, as well as hideously expensive housing, toll road companies like Transurban are making out like bandits.

In fact, according to ABC News, Sydney’s toll road network is the most expensive and extensive in the world:

…transport experts have given the city the dubious honour of having the most extensive — and expensive — urban toll road network in the world.

Sydney has nine toll roads that include a total of 15 toll points, and will soon have even more when motorways under construction are completed.

Currently, motorists are charged when driving on the:

  • M2
  • new M4 WestConnex
  • M5
  • M7
  • M4
  • Eastern Distributor
  • Cross-City Tunnel
  • Lane Cove Tunnel
  • Sydney Harbour Bridge
  • Sydney Harbour Tunnel

There will be at least six additional tolls between now and 2023 upon completion of the:

  • M4 tunnels
  • M5 (from Beverly Hills to St Peters)
  • M5 East (Beverly Hills to General Holmes Drive)
  • M4-M5 link
  • NorthConnex

“In terms of the kilometres of tolls in the urban area, Sydney has the most in the world,” said Chinh Ho, senior lecturer with the Institute of Transport Logistics Studies at the University of Sydney.

“We have an expensive network of toll roads…

Fees range for cars from $1.67 on the Military Road e-ramp to $7.45 on the Hills M2 Motorway at North Ryde.

The WestConnex has a wide range of fees from $4.93 on the new widened M4 to $7.89 on the new M4 between Parramatta (Church Street) and Haberfield (Parramatta Road and City West Link).

Total toll charges on the WestConnex will be capped at $9.30…

Earlier this month, The Australian’s John Durie hailed Transurban’s CEO, Scott Charlton, for extracting “monopoly rent” from users:

When Scott Charlton started at Transurban six years ago the company had seven roads. It now has 17, with another nine projects under development…

In toll road terms this, combined with low interest rates for the foreseeable future, is about as close to heaven as you can get, and Transurban has average concessions on its roads totalling 30 years – up from 25 when Charlton started.

By contrast, Transurban’s international peer ACS has average concessions on its roads of 20 years, while French giant Vinci has 17 years…

Another way of describing toll road concessions is monopoly rent, because it’s the length of time an operator gets to collect on earnings before interest tax, depreciation and amortisation margins of 80 per cent plus.

And while motorists are being gouged, Scott Charlton is enjoying massive remuneration of $7 million.

This 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.

And it’s only going to get worse as our two biggest states double in size to around 10 million people by 2066, as projected by the ABS:

These are the hidden costs of a ‘Big Australia’: in effect giant private taxes, which fatten the ‘growth lobby’s’ wallets at everyone else’s expense.

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Unconventional Economist
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Comments

  1. Never understood how this was even acceptable to governments unless corruption is rampant. Governments can borrow at lower rates than the private sector. Tolls need to cover any debt financing costs at the private sector operators interest rate + their profit margin. Even if the government built it and collected tolls from it we would still be better off. Australia’s corruption at its finest in its most likely place – infrastructure building. I’m skeptical of any infrastructure project announced now that actually gets off the ground (e.g. WestConnex) especially if deemed uneconomic by the private sector (e.g. Badgerys) because most projects are there to funnel money from the public to vested private sector interests with “cost/budget overruns” and “contract claims”. Meanwhile actual infrastructure needs go begging (e.g. 110% capacity train lines, overrun hospitals, etc) because its harder to privatize gains and socialise losses on these investments.

    • Strange economics and 1% for us !MEMBER

      Once the Bankers got into government in NSW (think Greiner/Baird premiers) then got out again into bank jobs later
      it was a no-brainer financial win win.
      Govt claims a surplus and privatises roads.
      Fact that private interest rate is probably 6% and govt could have borrowed to finance at 3% adds 30 million a year for 20 years to each 1 billion project compared to if the govt funded it directly.
      Then 1 % for the brilliant finance managers of the billion for the idea …
      Buys a lot of Eastern Sydney real estate for the CEOs…

    • If we did not have neoliberal rent seeking theft we could have designed infrastructure with duel roles like having rail, tram or dedicated bus lanes running down the centre of freeways. However, that was never possible as politicians don’t give a stuff about the wider community and toll operators obviously want to maximise the rent they extract from a trapped user base. Also as the point makes above we could have used public funding. However, public funding is bad but private debt is so very rational. We are about to find out that the latter is very destructive.

  2. You have answered your own question – Corruption is rampant. Strongly recommend reading the book Game of Mates, it will open your eyes.

  3. Air should be privatised next, I don’t think its right, particularly people in Sydney’s west who drive cars to work, to use free clean air like its just some kind of birth right

  4. $15/day for tolls and fuel is a reality for many people from western Sydney travelling into the city. Sometimes more.
    At least you can get free rego now, which is another rip off.

      • The WestConnex is basically forcing people in Western Sydney to pay $$$ so property developers can make billions and billions from developing apartments on Parramatta Road. If the government is not so corrupted, they would have the property developers fund the whole ‘put Parramatta Road underground’ exercise.

      • But Western Sydney mostly paid off the bridge tolls over a 40 year period anyway. Understand paying the asset off once; but not twice. The government agreed to be shafted again by private operators – it should be visible on the public accounts so they get the political pain of it. Why not move the toll point to where the new tunnel starts? Probably because it won’t raise enough revenue that way.

    • When you consider the median income, I dunno how the hell people can afford it on top of the cost of everything else essential that keeps going up. Highly suspect it was magic housing money which appears to have run out. If the housing market doesn’t turn around, this is going to get very messy.

      • It’s an insanely expensive city. An average family with 2 kids with all the average living costs and mortgage comes to $90k/year outflows. Now the median household income equivalent for couple with 2 kids is $130k / year. After tax, super etc.. thats $85k / year. This simple maths shows people right on the line so its no wonder why retail is down, car purchases are down and 90+ delinquencies are up. Don’t forget, its boom times now.

  5. When was the last time London got a road tunnel? London got a congestion charge on 17 Feb 2003. It works.

    Stockholm got a congestion charge on 1 Aug 2007.

    Sydney needs to charge foreigners $40/day for a train ticket and $100/day for car parking.

    • London, Stockholm, NYC … have congestion charges that work perfectly for the rich – they cost them nothing relative to their income and make sure poor and middle class people are off the streets not making crowd

      fixed amount congestion charges are basically privatization of inner city streets – exclusive use charge

      • I think New York does not have a congestion charge. I doubt any city in USA does.

        The London one is from 7 am till 6 pm Monday to Friday. So you can still drive into the city on Friday night and on weekends.

        New York state has a mansion tax. Most people in Copenhagen or Amsterdam get around on bicycles – probably for free. The fake Greens need to build cycleways.

      • you are right that NYC doesn’t have one yet but there are some serious proposals and the key argument against is that is extremely regressive tax that makes lives of the rich much easier while not affecting their bottom line and makes poor miserable and poorer.

        Even introduction of income based surcharges (like traffic fines in Finland) would not work because rich don’t drive their own cars but either hire cars or company’s cars

        simply there is no fair solution to congestion problems – everyone should equally suffer and tolls should be removed and roads funded form general tax.

      • Even introduction of income based surcharges (like traffic fines in Finland) would not work because rich don’t drive their own cars but either hire cars or company’s cars

        in NSW, trafic fines are 3x higher for companies than fort he punters and double that (6x) for failure to nominate a punter.
        Repeat and car cannot be driven.

    • “Sydney needs to charge foreigners $40/day for a train ticket and $100/day for car parking.”

      How is that different from current?
      few pennies mate….

  6. our elite wants very high tolls so that commoners don’t make crowd on their private roads

    even for borderline rich who earn just half a million a year, $5 toll is nothing if they can save 5 minutes on travel
    truly rich wouldn’t mind paying $500 if they can save 5 minutes

      • they do travel to their expensive country retreats past Western Sydney (Dural, Moss Vale, Kangaroo Valley etc.) – they don’t want to share roads with these poor people while passing through – also toll roads have “sound barriers” which are in fact visual barriers so that they don;t have to see poor neither

      • also toll roads have “sound barriers” which are in fact visual barriers so that they don;t have to see poor neither
        I hadn’t thought of that benefit…but now that you point it out 🙂

  7. Don’t forget that you pay $0.45 a litre tax on fuel (Excise + GST), which is meant to pay for roads, but just gets taken by the Federal Government.

    • What is Gladys’s rego? If everyone just replaced their plates with dummy plates she might wind up with a large bill. Or better yet Bob Carr.

    • If everyone stopped paying, no doubt Transurban’s CEO would take the premier out for lunch and a quiet word. Your unpaid toll would be noted in the registration system and next time one of those plate scanning cop cars sees you, well, into the cells you go!

      • Yeah, but not if EVERYBODY stopped paying. They can’t lock everyone up.

        Stop paying…Transurban goes broke…free roads for all.

  8. Jumping jack flash

    Its just the gouge due to debt that everyone has… nothing to see here.

    If you had mountains of debt and the power to set prices for the use of an essential piece of infrastructure, what would you do?

    I wonder how much debt and how many investment properties Scott Charlton owns?

  9. So, state govt’s are building roads…which people then have to pay for by tolls to a monopoly private entity… on top of their taxes, which should ideally be for roads, etc…

    Ouch.

    Something is very wrong.

  10. alwaysanonMEMBER

    I live in the inner west and had to go to a customer in NorWest. I let Google Maps take me over all the toll roads knowing I could expense it (Bridge, LCT, M2, M7 etc). It was like $40 return. I was floored – can you imagine people who pay that daily and can’t expense it?

  11. One unfortunate thing about road pricing is that it is so seldom “done properly”. The prevalent issue is that drivers are “priced off”, when in fact an intelligently designed, real-time reactive pricing system keeps FLOW going. A highway lane can carry 1800-2300 vehicles per hour, but when flow has collapsed with congestion it can be <1000, even as low as 700. The crawling traffic on most urban highways looks like a "full road" with "no-one priced off", but the reality is that more than 1000 vehicles more per hour could be getting through on that section of road. If 500 more vehicles per hour were getting through, travelling at 100 km/h instead of 20 km/h, the road would look half empty and critics would be saying that "poor people have been priced off"!

    This is a particularly glaring example of a solution never getting adopted because it is too complex for the majority with their short attention spans and unwillingness to think in response to smarter people (whom they distrust, probably out of touchiness at their own implied ignorance) making suggestions.

  12. Personally I don’t care that much about the tolls but what I do hate is the effects on traffic flow that occur as a result of usually hidden side agreements.
    This is nothing short of despicable conduct, These agreements are designed to force all area traffic onto Toll roads even when the Toll road proves to be of zero net benefit to the motorist.
    These agreements usually forbid the council / state from improving certain road bottlenecks lest they compensate the Toll road operator. Sometimes the agreements are so cynical as to shut down all alternative routes as was the case with the Crosscity tunnel. in Sydney.
    So by all means allow Private toll road operators but don’t make them into monopoly owners of all a regions traffic flow through some side agreement that’s kept secret from the public. How can anyone assess the real cost to the society if the construction of alternate routes is forbidden by some hidden agreement.

    Only in Australia.