Tolls have been a major political issue in New South Wales for some years, or rather I should say, Sydney.
It is sometimes claimed that Sydney has the greatest number of toll roads of any city in the world. That's not true. While it has 156km of toll road, Tokyo easily has over double that as does Dallas/Fort Worth (which has about the same length of full toll roads as Sydney, but the same again in tolled lanes/HOT lanes on otherwise untolled roads). Santiago, Chile has over 200km of tolled roads, as does Osaka, Japan.
Of course Sydney does have the longest length of toll roads of any city in Australia. Brisbane has around 90km and Melbourne 78km (although North East Link will add another 10km), so Sydneysiders may feel it is unfair.
Sydney's toll road network is impressive, but toll rates are un-coordinated. The map below depicts the tolled road segments only.
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| Sydney toll road network |
The Independent Toll Review for the NSW Government, released two years ago and led by Professor Allan Fels (former Chairman of the ACCC) as Independent Chair with Dr David Cousins as Deputy Chair, proved controversial, especially with toll road concessionaires.
I wrote about it in three parts: Background, Findings and Recommendations. in 2024.
It is telling that it has taken so long for the NSW Government to determine what was feasible—not merely politically and legally, but commercially—given that most of the state’s toll roads are locked into PPP concessions. This is a legacy of successive Coalition and Labor governments (it is simply not true that the results are just because of the Coalition's "privatisation" policies, when Labor embarked on multiple toll road concessions itself), and simply reflects the rather ad-hoc development of Sydney’s tolled motorway network over the past thirty years. Those concessions have locked in toll rates and, in particular, complex and expensive-to-renegotiate price escalations.
Notwithstanding these constraints, the NSW Government retains some flexibility. It owns two key toll roads (the Sydney Harbour crossings) and can negotiate with concessionaires. Some concessions are coming to their end.
It is therefore a relief that some decisions on toll reform have finally been made. While some may argue that the measures only scratch the surface, they represent a step forward.Note that Transurban, as the sole or part owner of virtually all the concessions in Sydney, is also publicising its role in the negotiations. So what is going to occur?
There are 12 toll roads in Sydney (if you count the Military Rd E-Ramps as being associated with the Lane Cove Tunnel), so the impacts vary across the roads.
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| Sydney toll roads linked to untolled motorways |
Tolls reduced or toll increased reduced
Four roads see tolls reduced for most users:
- Lane Cove Tunnel (10%)
- M2 (longer trips only) (10%)
- M7 (10% lowering of the distance cap)
- Cross City Tunnel (20% reduction when Western Harbour Tunnel opens).
Change vehicle class multipliers
Heavy vehicle multipliers on Sydney toll roads have varied from 2x to 3.47x the standard light vehicle rate. From 1 July 2027, all (except the Lane Cove Tunnel) will be standardised at 3.15x. This both simplifies tolls for trucks, but also ensures demand by heavy vehicles is more evenly spread between toll roads and untolled roads. For example, the Eastern Distributor is cheaper than the M7, effectively encouraging more truck traffic through that central corridor, compared to the M7/M2 corridor.
The other adjustment is to implement a 0.5x multiplier for motorcycles. This is a reduction for all roads, recognising that motorcycles occupy much less road space (and should encourage more use by motorcycle owners).
Two way tolling
This had already been agreed for the Sydney Harbour Bridge and Tunnel, so that tolling will be northbound as well as southbound, which will better regulate demand on both crossings. especially with the imminent opening of the Western Harbour Tunnel.
Two way tolling will also be implemented on the Eastern Distributor, once the Western Harbour Tunnel is opened. With the toll in each direction being 53% of the current one way (northbound) rate, this should also better regulate the flow of traffic in both directions on this corridor, and more importantly across the harbour.
Other measures
The press release indicates that toll concessionaires will pay A$75m over five years to help pay for the weekly toll cap, which is a recognition that it will increase demand on their roads.
The remaining two-lane each way (four lane) sections of the M7 and M2 motorways (Richmond Road to Old Windsor Road) will be widened, at taxpayer expense without a toll increase or extension of the private concessions.
The weekly toll cap will continue. It means that a NSW resident with a personal toll account (such as Linkt or E-Toll) and a privately registered vehicle is subject to a cap of A$50 per week in tolls. It works through lodging a claim for the excess quarterly through Service NSW.
The M5 Cashback programme will also continue (although you cannot use both the cap and the cashback on the same road. M5 Cashback effectively means M5 toll road users, registered with private vehicles in NSW, can claim back the toll quarterly.
Conclusions
It was hard to negotiate any changes with concessionaires, but from an economically rational point of view, several of the announced measures are a step forward.
Standardising vehicle class multipliers makes a lot of sense. For toll roads the multipliers should mostly reflect road space occupancy (and the capital of the capacity built to take the vehicles).
Two way tolling is more rational than one-way, particularly when there are alternative routes that see some southbound traffic use the Gladesville and Iron Cove Bridges, then the Anzac Bridge, to avoid tolls. Moving to two way tolls should rebalance those flows.
Everything else appears to be a subsidy or a cap on tolls charged. There is a point to capping or discounting heavy use of toll roads, as frequent users are undoubtedly over contributing towards the costs of that infrastructure, but blanket caps on private users and the M5 cashback subsidise demand. There might be a point to capping off-peak use, but there is nothing here about charges varying by time of day.
Sydney Harbour Crossings have peak, shoulder and off-peak charges, but that's because they are not subject to a concession. Wider application of time of day varying toll charges would obviously have an impact on congestion and spread demand, but the chances of toll concessionaires agreeing to this with countervailing reductions in tolls over longer off peak periods appear to be next to zero.
So a step forward? Yes.
Does it address all of the fundamental limitations and issues around tolling in Sydney? No.
