Transurban continues to privatise gains from 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 toll road revenues as Australia’s mass immigration ‘Big Australia’ policy continues to feed it customers.

According to Transurban:

  • Average daily traffic (ADT) grew by 2.7%; and
  • Proportional toll revenue increased by 9.3% to $1,286 million.

As usual, the migrant hotspots of Sydney and Melbourne drove the gains, as illustrated in the below graphics:

The Australian’s John Durie hailed CEO Scott Charlton’s ability to extract “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.

It helps to run an asset where you are the only one in the play pit.

Charlton wants to maximise the assets he has and it must be said that so far, he has done the job superbly.

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

Charlton’s total pay in the year to June 2018 was $7.05 million mostly because of a 17 per cent increase in his short term incentive, which was valued at $2.97 million. The STI is paid half in cash and half in securities that are subject to a two-year restriction period.

His total pay is now higher than three of the big four bank CEOs, according to the latest available data published by the Financial Review.

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 disgraced NAB chairman, Ken Henry, explained this model in a speech:

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 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 (sold to Transurban) has seen 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 love mass immigration because they 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.

These are the hidden costs of a ‘Big Australia’: in effect giant private taxes, which are being conveniently swept under the rug.

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  1. If you can’t beat em, join em. Going long TCL stock would be a natural hedge against all your pounding the table to shut teh gates!

    • Made losses initially – so there was operational risk associated. IMHO its a nebulous argument, at the end of the lease, take the assets back, and put it back in public hands. But the real truth is, it will be sold to the highest bidder for another 30 years!

      • The actual real truth is the roads will exceed capacity long before the lease expires, requiring expansion and a new even less favourable lease to be agreed. Or even better get a toll on a currently untolled road like the m4.

      • Call me cynical but I can see a situation whereby the only ingress to Mel is on bike or foot without copping a huge backpocket pickpocket (though trains/buses might be a good ROI for commuter)

        Tolls on the Eastern, Tolls on the Calder, Ringer, Hume, South Eastern.
        Please enjoy

      • @HadronCollision

        Don’t tell. Soon they will introduce a bicycle toll booth. With RACV supporting bicycle superhighways, that is the next logical step to fund it.

    • Yep. Why is NSW not demanding Quebec-style caps on immigration?

      Gladys said “You’d hardly expect them to be supportive of a pause in our migration”. Them meaning developers. So how is it a good idea to allow developers to give money to politicians? What a complete joke.

      Quebec wants to throw out 18,000 skilled-worker applications as part of immigration overhaul

      Bill 9, tabled Thursday, puts emphasis on French-language skills

      Indian guy demands the right to move to a French-speaking part of Canada:

      If french language is too much important then Quebec will not be a good choice. Quebec should selects

      because of one state whole nation needs to suffer.

      He makes no sense. He is welcome to go to an English-speaking province of Canada and overburden it. Time for NSW to have Welsh language requirements. That will cut the numbers!

    • Lifetime pension, perks and privileges, highly paid positions post politics. I think they are smarter than me. Work job, get average wages and no perks.
      Having complete disregard or contempt for the electorate is a completely different thing to being stupid.

      • “Having complete disregard or contempt for the electorate is a completely different thing to being stupid.”

        Absolutely. Not once have we been asked whether we want mass immigration and you’re not going to get people marching in the streets about this – can you imagine the racist slurs that would be hurled against anyone who dares? So both sides of govt can keep this policy up ad infinitum.

        The only possible option is to vote for Sustainable but until they put Population back in their name, and until they seek out and gain more publicity we’ll continue to get more of the same, except that with more and more it will get worse and worse.

  2. Personally it’s not the Monopoly toll roads that irks me but rather the undisclosed side deals that effect alternative routes.
    I travel regularly through the Epping area heading to Ryde when coming down from the Central coast.
    The only section of Toll road that i could use is the M2 from Beacroft to LaneCove Rd, it costs $7:50 (I believe, for to 4 kn section) but it is of zero value in getting to my destination because I end up on Lane cove rd which is almost always a traffic disaster.
    There’s only really one other way to go and that is over Epping Railway station bridge which is also a complete disaster, if my information is correct than it turns out that our trusty government has signed a side deal that it will not improve the Epping railway bridge as part of the Toll Rd development package.
    All of this might have made some sense 10 years ago but with the transformation of Epping from single story houses to 5 story apartments it’s a complete joke that these stupid side agreements exist and that they are being honored speaks volumes about the corruption of government
    Lets be honest Transurban needs government cooperation to run it’s business, so where are the politicians with the nads to hold their feet to the fire and demand the renegotiation of terms especially wrt side deals, In just who’s interest are “our” politicians acting?

    • You think that’s bad, when they put the eastern distributor in they actively blocked alternate surface routes that were viable alternatives.

      Edit: In whose interests? Theirs of course. Why would you expect anything else. As they say, back self interest at least you know it’s trying.

    • That is what this sentence alludes to:

      “Charlton wants to maximise the assets he has and it must be said that so far, he has done the job superbly”

      These guys are very close to state governments and their main job is to lobby to ensure that viable alternatives – including public transport – aren’t developed, allowed to become run down and over-congested, or even closed off entirely.

      • I agree, but in my case actually taking the Toll road puts me in a worse situation than not taking it, so I end up with two bad options. It’s not like there’s one fast option that costs money and a slower option that’s free…I only have two bad options and it sucks that some bone headed bureaucrat has signed a hidden agreement that results in this outcome especially when the route I’m taking is not that unusual.

      • The only way to get the roads privately funded is with these stupid agreements. The government wants the road built privately far more than anyone wants to build it so they lose the negotiations. You want them stopped, then the government is going to have to go back to actually doing things itself, but I wouldn’t hold your breath.

    • Nasty. In the 90’s I travelled from Cambridge (UK) to London every weekday for a year. 6 hours commuting.
      Nowadays I have only 3 rules:
      1 Live near a station
      2 Live nearer a station
      3 Make sure your work is: near a station not too far away.

      • In Sydney you have to be careful with this strategy, as areas nearby stations are being targeted for high rise, high density residential precincts (if they aren’t already). Particularly avoid anything slated to be on a Metro line.

      • Yeah as Dan said places like Epping with the two Metro lines has become an apartment mecca. I’d hate to live there and be putting up with the extra traffic when all those new apartment are’s going to be a terrible place not least because of these apparent side agreements to not develop the non toll road infrastructure around these apartment hubs. Someone certainly wasn’t thinking ahead because no one benefits from this stupidity when entry and exit to the toll roads becomes so constricted that the toll road offers zero benefit.

  3. It’s a stock to have as none of the pollies will back down on turbo immigration. We all know this, and it’s the new must have in your allocation. The risk is so many cars we’ll stop using their toll roads in the big cities. Transit time now are crazy and you really don’t want a job a long way from home with no public transport.

  4. Ah, but will Transurban be another MIG.

    MIG thought it had found the magic way to profits without cashflow until it tried to use the same tricks outside Australia and blew-up pretty well in the GFC.

    TSL, like most Oz mate driven businesses, could not survive in the real world.

    • Random PunterMEMBER

      Not saying I disagree with you, but MIG used some pretty shady accounting tactics, including regularly revaluing assets upwards and booking the increase as income. Is Transurban playing the same game?

  5. Both sides of government are destroying this country. Crush loading with place with load after plane load of migrants, in cities that were never designed for it.
    As much as I hate the coolition, if they tap into this hot button issue and change tack just before the election, they may just pull it off.