Transurban’s tentacles are around 14m Aussie wallets

Transurban is the downunder version of a Giant Vampire Squid, wrapping its tentacles around the wallets of the 14m citizens of Melbourne, Sydney and Brisbane.

Sydney had a positive growth year, with underlying traffic up 5 per cent. Picture: NCA NewsWire / Christian Gilles

The Melbourne of Chairman ‘Lockdown’ Dan was a disaster for Transurban through the 2020-21 year, but it was a disaster that still left the toll-road monopolist earning an extraordinary 82c of gross profit out of every single dollar of tolls.

Indeed, even more extraordinarily, the Melbourne profit margin was still higher than those of both Sydney and Brisbane, which both managed to scrape through 2020-21 with considerably fewer and lighter lockdowns.

For Sydney of course, 2021-22 is turning into a very ‘different’ new year. And it will be, for Transurban as well. But in 2020-21, the gross margins – EBITDA – were 81c in Sydney and ‘only’ 74c in Brisbane, compared with that 82c in Melbourne. If you really want ‘only’, though, note the gross margin Transurban made out of its Washington DC network – just 43c in the revenue dollar.

Why does Transurban make barely half over there what is makes right down the east coast of Australia?

There are two reasons. Over there it hasn’t been allowed to put a stranglehold on traffic. Here it has, progressively, in all three cities. You want to drive in any of our three biggest cities, you almost have to pay a toll to Transurban; and a toll that gallops along in comparison with inflation.

In the US, there are alternative low-toll or free options. Transurban has played downunder politicians and bureaucrats like a Stradivarius, and you - both as taxpayers and as drivers and indeed also even as consumers: who do you think really pays the even heavier tolls paid by the trucks? – pick up the never-ending ever-rising multi-billion dollar tab. Now, Transurban was continuing to play the pollies and the bureaucrats like a virtuoso into the West Gate tunnel project. Only to discover that industrial Melbourne’s toxic soils has now also left everyone -Transurban, its main subcontractor, the state government, and again most of all you, again as drivers, taxpayers and consumers – with a $3.3bn headache.

That’s now the – actually, Transurban’s - estimated additional cost of completing the West Gate tunnel project, so critical to giving Melbourne a second river crossing; and to cleverly upgrade Transurban’s revenues and margins.

Someone is going to have to pick up that tab; and while it looks as if it should be Transurban or the sub-contractor or some combination of the two, what’s the betting it will ultimately, again, be you.

Sydney had a positive growth year, with underlying traffic up 5 per cent. Picture: NCA NewsWire / Christian Gilles

That’s been the case at every stage of the Transurban story, our downunder version of a Giant Vampire Squid – the tag so perfectly applied to Goldman Sachs at the time of the GFC by the great and getting greater journalist Matt Taibbi, then at Rolling Stone magazine.

Taibbi described Goldman as wrapping its tentacles around the face of humanity; Transurban was content to wrap its tentacles only around the – these days, virtual reality – wallets of the 14m citizens of Melbourne, Sydney and Brisbane.

Sydney had a positive growth year, with underlying traffic up 5 per cent and underlying revenue by a stronger 7 per cent – those ever-rising tolls – compared with a 2019-20 year that of course included the June 2020 quarter national lockdown. The better indicator is the comparison over two years, with the pre-Covid 2018-19 year.

Sydney scored a 2 per cent underlying traffic growth and Brisbane just barely positive at 0.5 per cent. But over the two years, Melbourne’s traffic fell by staggering 33 per cent.

Transurban had detailed figures showing Melbourne traffic falling and falling mostly in double digits in virtually every week of calendar 2021, so far, compared with 2019.

Even in those periods when Melbourne was not in lockdown. Right now, incidentally, Sydney is ‘catching up’. And yet, to repeat, Transurban was still earning 82c in the revenue dollar in Melbourne: a tribute to its monopoly and its management.

Originally published as Transurban’s tentacles are around 14m Aussie wallets