Terry McCrann: Transurban thumbs its nose at Melbourne drivers
If Transurban insists on lifting its Melbourne tollway charges by 4.25 per cent every year, then the government needs to hold it strictly to its West Gate Tunnel contract and penalise it appropriately, writes Terry McCrann.
Terry McCrann
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Toll-road monopolist Transurban appears to believe that the best way to win friends and influence people is to give the good old-fashioned two-fingered salute to all 25 million Australians.
Australians wondering whether they will have a job and how they are going to pay the bills have been effectively told by Transurban: we feel your pain, so here’s a bit more.
On Tuesday, Transurban told its investors that it would continue to lift all its tolls in Melbourne, Brisbane and Sydney every three months as it had the right to do under all its franchise deals.
Now this mightn’t be such a big deal in Sydney and Brisbane where the tolls rise only in line with quarterly inflation and that’s been running at around 0.5 per cent every three months (around 2 per cent a year).
Although you’d think, it equally wouldn’t cost that much to forgo such increases for three or six months, say, while we try to get through the virus disaster.
It’s though a very — far more painful — matter in Melbourne, where Transurban is now lifting its tolls by a thumping 4.25 per cent every year.
This is thanks to the “please take all Victorians to the cleaners” renegotiation by the state government of the Transurban concession, to get the West Gate Tunnel built on the (actually, very expensive) “cheap”.
Yes, Transurban has taken a hit with the lockdowns.
In the last week of March total daily traffic was down as much as 43 per cent in Melbourne.
But the drop was mostly cars; truck traffic was down just 11 per cent in Melbourne and only 3 per cent in Sydney.
Heavy tolls on trucks are where Transurban really creams it. The cost of those tolls flow through to every Australian.
Transurban is exercising its contractual rights when its fellow Australians are hurting. Fine.
But the state government must now hold it to the exact letter of the West Gate contract.
So if Transurban has to bear additional costs because of the soil problem or because the project is late, it must be hit with every single dollar of contractual penalty, up to and including winding back the concession period.
We will of course feel its investors pain.
ARE ASIC, ASX REALLY THAT STUPID?
The decision by the ASX to allow the big end of town to double-down on ripping off retail investors and self-managed super funds through selective share placements at huge discounts — and pocket millions of dollars to boot — is quite simply a disgrace.
Arguably, the bigger disgrace is the way our now grandstanding corporate regulator, ASIC, is effectively a co-conspirator. It should have told ASX “No Way”.
Instead, it just looked the other way.
There is a very simple tweak that could eliminate the rip-off. So is the failure of ASX/ASIC to adopt it deliberate, or just the consequence of simple, if breathtaking stupidity, on both their parts?
That the supposed operator of the market, ASX, simply doesn’t have a clue about the most basic functionalities of a market?
And that the supposed regulator of that market, tasked with enabling both efficiency and equity, ASIC, hasn’t a clue about what equity actually means and how it can be achieved without sacrificing or even hindering efficiency?
If a company wants to make a placement — at any time, but particularly in this time of plague where it needs new capital immediately to survive or even just limp through — that’s fine.
Provided it follows through with a renounceable pro-rata issue to any and all shareholders that were not offered the chance to participate in the placement, on the same terms — and crucially, proportionate to their pre-existing equity in the company and relative to the placement.
Although I usually feel like I’m trying to explain nuclear physics to a randy young male pig, none of this is actually rocket science. It should be simple to understand and even simpler to implement.
Provided of course, you are not totally in thrall to the big end of town — which, unlike the last time this raised its very ugly head so outrageously through the GFC, now includes the industry super funds. Talk about swapping cloth caps for top hats.
The pro-rata elements must apply whether the company opts to make a conventional pro-rata issue or does an SPP.
So if it’s an SPP it must be unlimited. The ceiling of $30,000 must be abolished — even though it would now only catch a tiny minority of retail/SMSF investors; and SPPs must switch from dollar amounts to a pro-rata structure.
The critical thing is to allow shareholders who don’t get to participate in the placement to be able to fully maintain their equity and maintain it at exactly the same price as those in the placement.
And if there are new shareholders via the placement, that should be compensated for by allowing existing shareholders to maintain their equity on the same terms, excluding the placement amount n not the placement equity.
In terms of efficiency, in terms of a company being able to access new capital urgently, nothing would change.
The only thing that would change would be that investment banks would have to be satisfied with gouging small shareholders rather than super-gouging them.