Sydney’s long-awaited review into the city’s patchwork of motorways reveals that motorists will pay $195 billion on tolls over the next 37 years, largely as a result of previous governments prioritising the financial concerns of tolling giants above managing traffic on the city’s congested roads.
Former competition chief Allan Fels will release his highly anticipated interim review into toll roads on Monday, which will highlight that “generous” returns for road investors came at the expense of motorists who have to pay to use their roads.
The new report details how much Sydneysiders will pay in tolls in the coming decades.Credit: Louie Douvis
The release of the interim report will spur fresh debate about privatisation in NSW. Critics of tolling say motorists pay an unfair burden through beneficial contracts, while supporters argue it is the only way for cash-strapped state governments to fund major infrastructure projects which ease congestion and reduce journey times.
Fels’ report highlights that agreements often favoured the private sector, such as ensuring that if the motorway traffic was less than had been expected, the operator would be topped up by governments.
In one example, more than $1 billion was paid over time to the operator of the Sydney Harbour Tunnel because of such a guarantee.
The M2 agreement, signed in 1994, included a provision to protect the operator from adverse impacts arising from a competitive public transport development, the review found.
Fels’ review will build on a review paper released last June, which said a combination of a charging system based on zones, more complex distance-based pricing of motorists, and different charges depending on the time of day was under consideration.
NSW Labor has ruled out placing charges on previously untolled motorways or a congestion charge for Sydney’s CBD, which was considered by the former government’s review into toll roads.
Sydney has 13 toll roads which have three different methods: fixed or flat rate tolls, distanced-based tolls and variable time-of-day charges.
Fels’ analysis of the “huge” burden of tolls, released by the government ahead of his interim report, shows that motorists will fork out $195 billion over the next 37 years ($125 billion in today’s dollars), with WestConnex accounting for about 52 per cent of that figure.
“Based on these figures, it seems that users will be paying for the cost of this [WestConnex] scheme three times over in tolls,” Fels’ review says.
The review says a major problem with the toll-setting process has been its lack of transparency, as well as a bigger focus on “financial concerns than on economic management of the roads”.
“The approach to setting tolls has been influenced more by the perceived need to cover the concessionaire’s financing costs than by the need to manage traffic on the roads,” it says.
“It has also not had a strong regard to principles of efficiency and fairness in setting individual tolls.”
The review surveyed 1500 motorists and found the vast majority (87 per cent) considered that tolls were too high and more than 70 per cent felt that the cost of tolls was unfair.
It said toll roads should help to relieve congestion across the metropolitan area, directing traffic away from congested ancillary and local roads.
“However, if tolls are set too high, they may deter use of the tolled road and this effect may be muted,” the interim review says.
“Overall, the toll roads, even at their busiest time in the morning peak hour in 2022, were found to move relatively freely with limited delays and only a few persistent congestion hot spots.
“However, the untolled roads were more crowded and congested on average throughout the day.”
Premier Chris Minns said the Fels report “lays bare the reality of privatisation, all at the expense of the people of Sydney”.
“Sydney is the most tolled city in the world. And now we know trying to fix it requires a significant reset of the tolling network,” Minns said.
“The toll burden is hitting families who can least afford it most, particularly parts of western Sydney that have fewer public transport alternatives to getting in the car and paying tolls.”
About $2 billion of tolls were collected across Sydney’s motorway network in the 2021-22 financial year. The greatest annual spend by households was in Horsley Park in western Sydney at more than $1900 per account, followed by Silverwater at about $1600.
Roads Minister John Graham said the interim report confirmed that toll contracts were designed with “guaranteed financial returns to their owners and operators as top of mind”.
“Drivers came last in that equation. Professor Fels describes the built-in returns to toll road investors as ‘generous’. It is clearly time to have a serious second look at how our toll system works – I want a better deal for drivers,” Graham said.