Motorists would pay less per kilometre and the government would establish a state “TollCo” to “take back control” of tolls under recommendations of an independent review of the complicated pricing structure on Sydney’s 13 toll roads.
The recommendation was contained in the interim report of the review, led by former Australian Competition and Consumer Commission chair Allan Fels and former Victorian consumer affairs chief David Cousins.
It found Sydney motorists will fork out $195 billion in tolls between now and 2060 for projects that put the finances of private companies ahead of the needs of drivers, an independent review has found.
More than half the toll burden comes from WestConnex, a project for which drivers will pay “three times over in tolls”.
The recommendations were released on Monday and issues identified point to a system that doesn’t properly tackle traffic congestion and that most road users think is “unfair”.
Two-way tolling would be established on the harbour bridge, harbour tunnel and eastern distributor, creating a “fairer” system that would help reduce other tolls, the review recommends.
And motorists would be charged additional infrastructure charges of up to $6 per trip.
“Tolls need a major shake-up. Major reforms, no holds barred,” Professor Fels said.
“The New South Wales government needs to take back control of tolls.”
Under the recommendations of the interim report, the government would pass legislation to take control of tolls via an entity known as TollCo and set prices “taking into account the contractual rights of toll operators”.
Professor Fels argued that while Transurban, which operates 11 of the city’s toll roads, may not like his proposals, they may ultimately leave the company better off in the long run.
“Motorists are starting to withdraw from the system and clog up [other] roads to avoid having to pay those bills.”
In a statement, Premier Chris Minns said a “significant reset of the tolling network” was required.
“This isn’t fair. It’s putting a huge burden on Sydneysiders trying to get to work, drop their kids at school and go about their lives,” he said.
High costs push drivers onto toll-free roads
The report found that 87 per cent of drivers believe tolls are too high and that 70 per cent consider the cost of tolls to be unfair.
It found Sydneysiders may be reaching “toll saturation” and that rather than funnelling more of their cash into tolls, they are choosing toll-free roads and therefore adding to traffic congestion.
“The toll roads should help to relieve congestion across the metropolitan area,” the interim report said.
“This assumes that they attract traffic away from congested ancillary and local roads.
“However, if tolls are set too high, they may deter use of the tolled road and this effect may be muted.”
Respective governments have allowed operators to set prices that favour their bottom lines, rather than encouraging more motorists onto less-congested roads, the report found.
“The approach to setting tolls has been influenced more by the perceived need to cover the concessionaire’s financing costs than by the need to manage traffic on the roads,” the interim report says.
“It has also not had a strong regard to principles of efficiency and fairness in setting individual tolls.”
‘Generous’ rates of return
The report found that private operators increased tolls “at least in line” with inflation and often above it.
However, most of the government’s agreements with private operators contain a “floor” provision, meaning that even if inflation decreases, the tolls won’t.
The toll agreements are typically set for the life of the project, meaning the economic conditions at the time of construction are baked into the tolls for decades.
“Most of the concession agreements date from the 1990s and 2000s, and their built-in rates of return have reflected the higher costs of capital prevailing at the times the agreements were concluded.
“These rates can be regarded as generous compared to rates which would be considered should apply today.”
The interim report also identified missed opportunities to drive down tolls on projects like WestConnex, because potential buyers weren’t invited to offer lower tolls as part of the sales process.
Roads Minister John Graham said the city’s tolling system needs a major review.
“The Toll Review interim report confirms what millions of motorists have long suspected – the toll contracts were designed with guaranteed financial returns to their owners and operators as top of mind before the need for an efficient and affordable network for those who use it.
“Drivers came last in that equation,” he said.
Source: ABC
