Transurban’s “meta-monopoly” turns taxpayers into roadkill

While residents of Sydney and Melbourne are suffering from crush-loaded roads, trains, schools, and hospitals, as well as smaller and more expensive housing, toll road company Transurban is making out like a bandit.

Earlier this year, ABC News reported that 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…

And in May, The SMH reported that tolls on some of Sydney’s roads are rising at triple the rate of inflation:

Against a backdrop of low wage growth, the number of Sydney motorways on which tolls rise by 4 per cent a year will grow with the opening of the first major stage of WestConnex by August, followed next year by the second stage and the $3 billion NorthConnex tunnel.

Tolls on three existing motorways – the widened M4 between Parramatta and Homebush, the M2 and the Eastern Distributor – are also escalating by 4 per cent a year…

Martin Locke, an adjunct professor at the Institute of Transport and Logistics Studies at the University of Sydney, said… “If someone is struggling to pay tolls today, in 10 years time it will be significantly worse if the tolls increase at 4 per cent per annum…

The Grattan Institute’s transport director, Marion Terrill, said she was concerned that the NSW government was continuing to lock in “extremely long-lived arrangements” for toll roads, citing WestConnex’s concession deed lasting until 2060.

Crikey’s Stephen Mayne has done a great job further exposing the unbelievable extortion of motorists by Transurban, with the blessing of Australia’s governments:

Transurban was created by Macquarie Group and Transfield in 1995 to bid for Citylink, a major Kennett government toll road project in Melbourne. Macquarie pocketed a $25 million success from the deal and Transurban was floated in 1996 at the equivalent of $1 a share.

More than 20 years later, Melbourne’s Citylink project is the world’s second most valuable privately owned toll road. This has allowed Transurban to extract the following tolls from motorists over the past six years:

  • 2013-14: $535m
  • 2014-15: $577m
  • 2015-16: $660m
  • 2016-17: $687m
  • 2017-18: $780m
  • 2018-19: $813m

That, however, is dwarfed by the story in Sydney where Transurban now controls seven different toll roads which managed to lift total toll revenue from $1.34 billion in 2017-18 to a record $1.53 billion last financial year. This is primarily due to the addition of the M4 motorway, which is part of the monster $9.3 billion Westconnex privatisation deal sealed by the NSW Liberal government last year.

The story in Brisbane is more modest. Here, Transurban managed to lift tolling revenue from its five different toll roads from $629 million in 2017-18 to a record $644 million last year. All up, motorists in Australia’s three biggest cities were stung $2.98 billion for tolls by Transurban last financial year.

Are Australian motorists getting ripped off? After all, Transurban has been one of the five best performing ASX100 companies for shareholders over the past 20 years.

Well, the Liberal Party presumably isn’t too worried about that. Its biggest donor, the Cormack Foundation in Victoria, received a tasty $115,055 in dividends from Transurban in 2017-18…

Transurban is the Pac-Man of toll roads, snapping up ownership stakes in all but two of Australia’s toll roads… On Wednesday morning Transurban also announced it was paying $468 million to buy the remaining 34.6% of the M5 West project in Sydney that it doesn’t already own…

Only in Australia could a company which has seen its share price go from $1 to more than $15 have a history of never having paid corporate tax. Even James Packer has said this is a rort.

As it stands today, Transurban has $19 billion in debt and a market capitalisation of $40.7 billion, suggesting the enterprise value of this beast has now hit almost $60 billion…

Investors continue to throw money at the business because Transurban repeatedly outplays state governments by negotiating lucrative bolt-on expansions and acquisitions to its existing monopoly toll road assets up and down the eastern seaboard.

All of which is part of Transurban’s plan to control Australia’s road system and become the prime beneficiary of Australia’s mass immigration ‘Big Australia’ policy:

Toll road giant Transurban is positioning itself to manage the entire road networks of Australia’s three major cities as governments make the “inevitable” shift to road pricing.

A senior Transurban executive told a private meeting of investors this month that the company wanted to be viewed as the “natural custodian” of the nation’s motorways, in the likely event of motorists being charged to drive on them.

The Melbourne-based company has a near monopoly on private roads in Australia already, controlling 13 of the 15 toll roads in Melbourne, Sydney and Brisbane.

Analysts Morgan Stanley have described a Transurban-run, user-pays system across all roads as a “meta-monopoly”.

Such a move would further entrench the company – which owns Citylink in Melbourne, the M2 in Sydney and all of Brisbane’s toll roads – as a de-facto private sector planning agency in those major cities.

Few, if any, countries in the world have allowed a private operator to control so much of their road network.

Even Jeff Kennett, the man who in effect launched Transurban through its Melbourne CityLink contract in 1996, now warns governments against granting the company more toll road projects, arguing that taxpayers are being “ripped off”.

This is Australia’s rent-seeking economic model in all of its glory: privatising the gains from mass immigration among the ‘growth lobby’ while socialising the costs on everyone else via giant private taxes.

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