Transurban’s Lindsay Maxsted: Price hikes ‘stark’ under low inflation

Transurban chairman Lindsay Maxsted says the company’s deals with governments are being independently scrutinised.

Transurban chairman Lindsay Maxsted at the company’s annual general meeting. Picture: AAP

Transurban chairman Lindsay Maxsted says the company’s concession agreements with state governments are being independently scrutinised as the toll road operator revealed that double-digit revenue growth in the first quarter was underpinned by higher charges.

Transurban yesterday reported a 10.8 per cent jump in underlying revenue for the September quarter as higher charges and improved traffic combined to lift sales.

Traffic growth was 4.9 per cent across its broad network, which includes major roads in Melbourne, Sydney and Brisbane.

There have been suggestions that Transurban’s grip on its flagship Melbourne CityLink asset could be challenged if it exceeds the return hurdles designed to protect the state’s taxpayers from so-called “windfall” profits at their expense.

Transurban has been administering the CityLink concession for 20 years.

Mr Maxsted said the company’s toll increases, set in concession agreements, were seemingly “more stark’’ in the current period of low inflation.

“In the end we understand if you are paying increasing tolls every year and the service is poor in relation to how we manage the roads through etags and with congestion, then we have an issue,’’ he said after the annual meeting in Melbourne yesterday.

“We are obliged under the concession to report annually to the government with regard to key conditions within the concession. That is, what we are doing in terms of pricing, concession length and the rates of return on the road ... We are (also) getting scrutiny from our auditors ... And I assume on the other side the auditor-general is looking at these things too.’’

He believed the toll increases were sustainable, for both truck and car drivers.

Tolls for truck drivers have risen more steadily in recent years and will continue to increase, but chief executive Scott Charlton said they would also be the biggest beneficiaries of the billions of dollars Transurban is spending on new road networks.

Mr Maxsted, who has served on the Transurban board for 8½ years and as chairman for six, revealed yesterday that he was unlikely to serve another full three-year term.

“It is a possibility. I am not calling it for like tomorrow or 2½ years’ time or whatever but I wanted to make the point that we are taking succession planning very seriously,’’ he said after the meeting.

Mr Maxsted, who is also chairman of Westpac and a director of BHP Billiton, has been viewed as a potential candidate to replace Jac Nasser as the next chairman of the global miner.

Asked if the revelation on his Transurban tenure made that prospect more of a possibility, he replied: “You certainly shouldn’t read that into it. The BHP board will make its own decisions in whatever timeframe it wants to. There was not supposed to be a lead-in to anything else from this other than just good governance.’’

Transurban’s shares, which are up 5 per cent over the past year but have been under pressure recently, closed 4c higher at $10.66.