Transurbans gravy train unstoppable after Western Distributor deal

THERE is one clear-cut and undeniable multibillion-dollar winner out of what is now effectively a done deal — it is CityLink owner and operator Transurban, writes Terry McCrann.

Traffic conditions leading onto the West Gate bridge

• High toll for Melbourne’s new road

THERE is one clear-cut and undeniable multibillion-dollar winner out of what is now effectively a done deal.

It is CityLink owner and operator Transurban and its security holders.

They saw the value of their investments surge by more than 2 per cent yesterday, on a day in which the rest of the market went down sharply.

The reason was simple: big investors could do the sums. Transurban has now locked in a huge new and — most critically — ever-rising source of revenue and profit.

First will be the extra revenue it gets from tolls on the new road and tunnel.

That in turn will boost traffic — and tolls — on the rest of the CityLink network, as the cars and trucks feed into or out of the new road and tunnel.

But most lucratively of all, Transurban will now get those higher revenues, right across its entire CityLink network, for an extra 10 or 12 years — seemingly the only area of negotiation left with the State Government.

The sums are staggering. Last year drivers on CityLink paid more than $550 million in tolls. By 2031 they will be paying around $1.8 billion for that year alone.

When the deal to build CityLink was first signed by then premier Jeff Kennett in the mid-1990s, that was the year when the tolls were supposed to end, when the Tulla and the Monash were supposed to become Freeways again.

Now the tolls will keep going — and rising — well into the 2040s. By then they will be running at more than $3 billion a year.

Assuming that we will see more deals like yesterday’s to add capacity to CityLink, by the mid-2040s, motorists could be handing over as much as $4 billion a year. And the theoretical end-date pushed out even further.

“User pays” is a good practical way to fund this sort of infrastructure.

But boy, are Victorians going to pay. In spades.