In today’s Australian Financial Review, Road Freight NSW was quoted regarding the extensive NSW toll road system:
Trucking groups are also urging toll fares to be overhauled, arguing that if fares rise more than 7 per cent, truck drivers won’t use toll roads.
Road Freight NSW chief executive Simon O’Hara said governments should be offering truck drivers cashback schemes, discounts and off-peak toll fares, and consider cheaper fares for trucks with low carbon emissions.“We need to incentivise truckies to use these roads,” he said. “The whole argument for toll roads was to get freight onto them and using them.”
The soaring cost of transport and education is further crimping the spending power of cash-strapped consumers and putting more pressure on states to overhaul tolling schemes amid forecasts of “unprecedented” increases in tolls.
Australia’s annual headline inflation rate is running at its highest level in more than three decades, jumping to 7.3 per cent in November, hitting household spending hard.
Tolls are a hot topic in the lead up to the March NSW election, with state Opposition Leader Chris Minns claiming that “tollmania” in the state will hit households in western Sydney the hardest.
Consumers are already struggling with high energy and grocery bills as well as paying more interest on their mortgages, and will also fork out more on toll fares, school fees and childcare this year, with childcare giant G8 pushing through another fee rise in late January,
S&P Global credit analyst Richard Timbs said that while Australians have experienced “the odd quarter” of inflation running at more than 1 per cent over the past two decades, they haven’t been used to multiple quarters of high inflation.
But the ratings agency is now forecasting “unprecedented” increases in toll fares over the next two years as inflation surges.
Most toll roads on the East Coast have government concessions that allow fares to increase at the rate of inflation, with fares on Sydney’s WestConnex network rising 6 per cent in January.
However, fare increases on Melbourne’s CityLink tollroad, which links Melbourne Airport with the city centre, are capped at 4.25 per cent annually until mid-2029 and the city’s new West Gate Tunnel will have the same fare structure.
Some analysts have kicked off 2023 by raising target prices on Transurban, which operates most of the nation’s tolled roads, amid expectations that the company will make more money as tolls go up.
Citigroup now has a target price of $15.70 per share on the stock, up from $14.52 previously, arguing that even if Australia goes into a recession, drivers are still likely to use its urban roads.
Mr Timbs is unsure how long drivers will keep forking out money for tolls, pointing out that many people have the choice to work from home following the COVID-19 pandemic and may try and avoid toll roads if there is a sustained period of inflation.
“There is a question now as to whether people maybe do reconsider some of their usage of the roads a little bit,” he said.
Any decline in toll road usage is not expected to impact Transurban’s credit rating, but could hurt dividends paid to shareholders if the company’s revenues fall.
NSW’s National Roads and Motorists Association has been agitating for changes to the state’s tolling system to make it fairer and is pushing for charges across the network to be standardised instead of drivers paying different rates depending on which road they use.
“We don’t want the system charging itself out of the market because then people will stop using it,” says NRMA spokesman Peter Khoury. “And if people stop using it, these things start to go broke.” Several toll roads have previously fallen into bankruptcy, including Sydney’s Cross City Tunnel and Brisbane’s Airport Link.
The NSW government has been reviewing the toll road network and is considering changes, but is not expected to announce the outcome of its review before the state election in March. A government spokeswoman declined to comment on exactly when the review would be released.
Mr Minns, the opposition leader, has claimed that rising fares mean that drivers travelling from Penrith into the Sydney CBD for work every day using the M4 toll road could potentially pay $3410 a year.
NSW motorists currently get a 40 per cent rebate for tolls paid once they spend more than $375 in a year up to an annual maximum of $750.
Mr Minns has called on the NSW government to extend a scheme that previously gave discounts on vehicle registrations to motorists who spent at least $877 annually on toll fares to tradies and owner-drivers for at least two years, and plans to oppose any attempt to privatise the state-owned Sydney Harbour Bridge and Tunnel.
Transurban has indicated that it is willing to discuss changes to its tolling structures with the government but that it would need to be compensated for any changes in income.
Trucking groups are also urging toll fares to be overhauled, arguing that if fares rise more than 7 per cent, truck drivers won’t use toll roads.
Road Freight NSW chief executive Simon O’Hara said governments should be offering truck drivers cashback schemes, discounts and off-peak toll fares, and consider cheaper fares for trucks with low carbon emissions.“We need to incentivise truckies to use these roads,” he said. “The whole argument for toll roads was to get freight onto them and using them.”
Victorian Transport Association CEO Peter Anderson said the industry group had been encouraging trucking groups to pass on rising toll fares to customers because it was not sustainable to absorb them.
“Prudent operators will always use the most productive road whether it is tolled or not,” Mr Anderson said. “If a driver can complete two or three times as many deliveries over an eight-hour shift on a toll road than that easily justifies the higher cost.
“However, operators will abandon toll roads where possible if the productivity gains are better on the public network.”
State governments sometimes force trucks onto toll roads, as will be the case when Melbourne’s West Gate Tunnel, which is being built by Transurban and is two years behind schedule, opens in 2024.
“We’re advocating for significant but sensible concessions from Transurban when this occurs, such as higher discounts for fleets and reduced or waived tolls for nighttime use when there’s less traffic,” Mr Anderson said.
With Liam Walsh