This is the first in a multi-part series about the epic toll review.
“Motorists First” (PDF) is the title given to the latest report on tolling in Sydney. Led by Professor Allan Fels. Fels is best known as having been Chairman of the Australian Competition and Consumer Commission between 1995 and 2003. The focus of his career has been on breaking monopolies, and he took this opportunity of leading the Independent Toll Review for the Minns’ Government in New South Wales to try to do the same to Transurban – which has a stake in most of the toll roads in Sydney.
The review was announced in July 2023, three months after Labor won the state election, but it follows a long line of reviews of tolling in New South Wales (by which I mean Sydney as there are no toll road outside the greater Sydney metro region). The review posted this handy list of the reviews undertaken by multiple NSW state governments.
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| Major toll road openings and New South Wales tolling reviews over 21 years |
Why so many reviews? Sydney has one of the most extensive toll road networks of any cities globally, although I have yet to see any detailed research to identify whether it has the biggest tolled road network of any city (Santiago, Chile has quite a network).
Most people are aware of the Sydney Harbour Bridge, opened with tolls in 1932 and still tolled, but much of Sydney’s urban motorway network has been funded through tolling and financed through a patchwork of PPPs. The latest review notes that of 320km of motorways,156km are tolled. Although there are alternative routes, it is slow and inconvenient to drive from the north or south of Sydney towards the airport or city centre without using toll roads.
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| Sydney's tolled and untolled motorway network |
Untolled sections were mostly built in the 70s and 80s, whereas the tolled sections have been built since then, with more under construction (the
Western Harbour Tunnel and
Stage 1 of the M6, which eventually will bypass Sydney’s southern suburbs towards Wollongong).
The 382 page review has a lot of information in it, and so is worth pouring over for those who are interested. Here are some highlights that I found of interest:
• Only around 4% of journeys (using any mode) were made using toll roads, and 7.6-8.8% of car journeys are undertaken using toll roads at least once.
• There are 10 PPP concessions and 2 state government owned toll roads, Transurban has some shareholding in all of the PPPs (ranging from 50-100%).
•
56% of the toll retail market is held by the state operator
E-toll, and 44% by Transurban operator
Linkt. This suggests that a majority of toll road users prefer having the state as account manager, not the operator of most of the toll roads (only the Sydney Harbour Crossings are not at least partially owned by Transurban)
•
Westconnex has the biggest proportion of toll road traffic and revenue.
• Toll rates on all routes, except Westlink M7 and Westconnex are point charges (M7 and Westconnex have flagfalls plus a per km rate)
• Only the Sydney Harbour crossings have prices that vary by time of day (A$4.27 peak, A$3.20 interpeak and A$2.67 off peak), but there are only tolls in one direction on the crossings (and the Eastern Distributor).
• Toll escalation factors for the PPPs tend to be based on the greater of CPI or 1% per quarter.
The review includes this handy chart describing the ownership and key suppliers throughout the supply chain for all of Sydney toll roads:
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| Sydney toll road ownership/supplier distribution |
What's the problem?
What’s the problem?
Fundamentally there are public and political concerns that tolls are incoherent and unfair, largely because each toll concession has seen tolls set that reflect the cost of supplying each individual segment of tolled road at the time it was built. This has resulted in a network that isn’t priced like a network, but priced ad-hoc. The result of this has seen a range of interventions by the state government which are arguably also heavily flawed, including the M5 Cashback scheme, which gives refunds to regular users of that toll road, and was set up entirely for political reasons. That scheme alone costs around A$127m per annum.
What did the Review find?
16 findings were published by the review, which I will summarise in my next post...
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