The New Daily

Tolls are driving Transurban profits sky high

The massive road operator is earning big money providing the roads that city dwellers have come to rely on. But critics say there are cheaper ways to do it.

Motorists are driving Transurban profits. Photo: AAP

The stock market might be punishing banks and miners but the shares of toll road operator Transurban are at record levels as motorists fork out huge amounts on tolls.

The toll giant, which owns major roads like CityLink in Melbourne, the M2 and M7 motorways in Sydney, and Clem Jones and the Gateway motorways in Brisbane, just announced its half-year results which saw revenues jump a whopping 19.3 per cent to $990 million, while earnings were up 14.6 per cent to $729 million.

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Shareholders will cash in with a 12.5 per cent jump in the dividend to 45.5c per unit for the full year.

Transurban is a massive machine that feeds in concrete, tar and motor vehicles at one end and spits out money at the other. The more Australians drive, the more profitable it becomes.

The last half-year represents a case in point. Toll revenues rose by 19.3 per cent which was way higher than traffic growth – as the chart below shows.

0212transurbanIn Sydney, traffic grew nine per cent and toll revenues were up 14.9 per cent. In Melbourne, traffic was up only 1.9 per cent but tolls grew at 7.4 per cent, while in Brisbane traffic grew at 9.6 per cent while toll revenue grew at 11.4 per cent.

Its US operation had very big numbers but these are distorted by road expansions coming on stream.

The toll revenue grows quicker than traffic because of the formula the company uses to boost its tolls. Transurban has concessions from state governments to levy tolls on its motorways for set periods of time and these have escalation formulae in the contracts.

How much is enough


Sydney commuters are used to paying tolls over the Sydney Harbour Bridge. Photo: AAP

Transurban puts billions at risk with its investments which keep city roads moving, boosting economic growth and needs to earn a return.

But independent transport economist Dr Chris Hale says the tolling arrangements are too generous and there are cheaper ways to provide the infrastructure without over-rewarding .

“If it (CityLink) was a public project the tolls would have paid for it many times over. It would be paid off or the tolls used to build other infrastructure,” he said.

Dr Hale compared Transurban to Queensland’s passenger rail network which earns a return of about eight per cent on its capital. Transurban earns far more than that, with its earnings currently growing at 14.6 per cent.

“At the end of the day it’s not an efficient arrangement for the community,” Dr Hale said. “Transurban needs to earn a decent return, not an outrageous return.”

The magic profit formula

On Melbourne’s CityLink, for example, tolls can go up by the greater of the Consumer Price Index (CPI) or around 4.5 per cent a year. With inflation very low at 1.7 per cent, CityLink tolls are growing at almost three per cent in real terms.

In Sydney, similar formulae apply while in Brisbane, where Transurban bought a number of failed projects, the escalation rate is mainly the CPI.

There are other ways Transurban can push up its tolls. Last year it spent $1.1 billion widening the M2 and M5 in Sydney and in return for the capital expenditure the NSW government allowed it to kick up tolls by eight per cent.

There's money in roads. Photo:AAP

There’s money in roadways. Photo: AAP

In Melbourne, a project that is widening the Tullamarine Freeway will allow it to boost the tolls on trucks from 1.9 times the car toll to three times. Other capital works have been compensated by allowing the company to extend the length of its concession (the period over which it can levy tolls).

Its recent unsolicited $5.5 billion offer to the Victorian government to build the Western Distributor, a tunnel under the Maribyrnong River which will connect to CityLink, would be financed in part by extending the Melbourne concession by 12 years to 2047. Transurban and the state government are currently negotiating the proposal.

Add all that together and you get a significant and expanding revenue base that has seen the company expand its initial $1.8 billion investment in Melbourne 16 years ago to over $21 billion today.


  • very pissed off

    there shouldn’t be any toll roads period.

  • RGG

    The Liberal/National governments are looking after their rich donors. The toll operators are robbing everyone.

  • Samantha

    Before Australia had a huge social security system, it financed its own roads and infrastructure. Today, if we want the taxpayer to pay for all the things our Grand parents paid for themselves, then we either pay for roads or drive on dusty tracks. The taxpayer has to pay, either by volunteering their money, or having it taken from their pockets by regulation.

    • JarOfCornRelish

      The social security system has nothing to do with the provision of infrastructure. Unless you are referring to welfare provided to the business community.

  • OldPom

    The answer is to re-nationalise the road system. Take a brave decision Premier Annastacia Palaszczuk and if it is your last it will be a good one to remember you by. You will make an awful lot of friends in the voting public and the only losers will be the shareholders of a parasitic monopoly whose sole am is to extract as much money from the motorist as the market will bear. Pay out the shareholders at today’s price and it will cost a fortune – but a smaller fortune than it would in five years from now. Transurban only owns 62.5 % of our toll roads in Queensland so it should not be too hard . Roads, like schools, public hospitals, police forces, and telecommunications should still be owned by the population as a whole – not just a few rich shareholders. We are going down a path to being so divided a population financially that eventually we will invite a blood bath revolution to change things. As France did in the eighteenth century. See

  • fair_for_all

    Having just experienced the way they stiff interstate visitors for driving on any of their precious toll roads, with an upper limit of 30 measly days to cover the whole east coast of Australia, I’m relieved they haven’t got their filthy claws into Tasmania and will fight to my last breath to keep them out of here.

    All the shenanigans they are running must be having an adverse financial impact on the state governments ability to generate revenue from interstate or overseas visitors. If you cant go anywhere in the great outdoors without having to pay for the privelege, why bother going there at all.

  • JPM

    I think the most important statement was Dr. Chris Hale’s: “If it (CityLink) was a public project the tolls would have paid for it many times over. It would be paid off or the tolls used to build other infrastructure”. This seems to indicate that going down the private enterprise path has worked out to be the bad way to go. Even if it was run as a government owned enterprise, tolls and all, we would now have more roadway for the same outlay.
    I find it distressing when all talk and consideration of ‘efficiency’ seems to be forgotten when analysing the merit of privately owned enterprises, especially when it is so stridently loud when government owned projects are discussed.
    This seems to be a clear-cut case of “private” not being preferable over “government”.

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