Victoria pockets another $1 billion from the TAC

The Transport Accident Commission will deliver Victoria another billion-dollar windfall this year, an $800 million improvement on forecasts in last year’s budget.

The Allan government insists the TAC remains financially sustainable as it receives its second dividend above $1 billion in as many years and forecasts a similar payment in 2029.

Victoria has received a $1 billion dividend from the TAC.Credit: Paul Jeffers

But the opposition has criticised the move as it lowers the commission’s insurance funding ratio, from well above its target to the middle of the range.

State budget papers show that in the 2024-25 financial year, the state government will receive a $1.13 billion dividend from the Transport Accident Commission, up from forecasts of $300 million in the last budget.

It is the second billion-dollar payment to come from the TAC in as many years after then-treasurer Tim Pallas requested a $1.08 billion dividend in 2023-24 which was approved.

The treasurer has the power to request a dividend or “capital repayment” from the insurer, after consultation with the organisation and TAC minister.

The most recent dividend means the Victorian government has now received $2.87 billion from the TAC since 2019, including capital repayments of $255 million in that year and $400 million in 2022.

The budget is also forecasting another $1.15 billion dividend in 2028-29, revising previous estimates that would have delivered yearly contributions in the hundreds of millions.

Accounting for all these payments, the government believes the TAC’s insurance funding ratio, a measure of its financial health, will be in the middle of its target range of 100 to 145 per cent.

Although the TAC has been a strong financial performer and is sustainable, a ratio in the realm of 120 to 130 per cent will still represent a deterioration compared to recent years.

The commission’s latest annual report shows the ratio was as high as 160 per cent in 2023 and fell to 151 per cent in 2024, primarily due to the $1.08 billion dividend requested by Pallas at the time.

That dividend was almost equivalent to the TAC’s $1.04 billion operating surplus in the same financial year.

Motorists fund the TAC through a levy on their annual vehicle registration – which for a car is between $446 and $573, depending on where the driver lives. It also earns money from investments in shares and other assets.

Opposition finance spokesperson Bridget Vallence said the government had “sneakily gouged” the TAC and should specify how it was using the dividend.

“With roads maintenance budget having been cut in real terms, and the cost of car registration increasing, Labor has to come clean about how it is using this extra TAC dividend, or if it is just to prop up their disastrous budget,” she said.

“The Allan Labor government must give confidence in the ongoing financial sustainability of the TAC.”

A Victorian government spokesperson said the dividend payments would not impact its road safety budget.

“TAC increased its investment in road safety programs in the last reporting year,” they said.

“In the last reporting year, the TAC made total claims payments of more than $1.8 billion and supported nearly 45,000 clients in their recovery and income support, as well as investing $152.5 million in road safety infrastructure, program marketing, sponsorships and engagement.”

Victoria’s Road Safety Action Plan includes $1.1 billion in funding out to 2028, including $350 million in new money for the TAC.

The TAC reported $2.2 billion in insurance fee revenue and $1.7 billion from investments in 2023-24, while it paid out $1.81 billion in benefits to 44,989 people injured in transport accidents.

In November, The Age reported that the insurer had spent more than $905 million on road safety infrastructure upgrades since 2019 and $561 million on marketing campaigns and research.

Budget papers show that the government will collect $2.1 billion in dividends this financial year, which includes the TAC payments alongside smaller contributions from government entities such as water corporations.

This will fall to $872 million the following year because of the drop-off in TAC dividends, growing by an average of 6.1 per cent a year over the next four years.

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