Transurban defends price hikes on toll roads

Transurban chief executive Scott Charlton has defended annual price hikes on its toll roads noting consumers have choice.

Transurban CEO Scott Charlton. Picture: Britta Campion

Transurban has defended annual price hikes on its toll roads and said some fees may be too low, given the amount of traffic congestion on its network before COVID-19 hit.

The transport operator has the right to increase tolls on some of its roads by either annual inflation rates or 4 per cent a year over the life of the toll concession under some of its contracts with state governments in NSW and Victoria.

Asked whether that was appropriate given the massive economic downturn and stagnating wage growth, Transurban chief executive Scott Charlton said not everyone uses its toll roads every day and consumers had to make choices about congestion and time savings.

“If you see some of the toll roads and how they’ve behaved when we are in congested times — CityLink or the M2 — where the average speed is pretty low because there’s so much congestion, that would suggest that the tolls are actually too low,” Mr Charlton told the Macquarie Australia Conference in Sydney on Tuesday. “Because people are choosing to be in congestion in a toll road environment as opposed to a free road.”

Transurban faced a barrage of criticism in April for pressing ahead with a rise in toll charges for cars and heavy vehicles on Sydney and Melbourne motorways, with NSW Transport Minister Andrew Constance demanding the company reverse its price rise and freeze tolls for three

In Queensland toll and fee prices increase in line with the Brisbane consumer price index. Brisbane’s headline inflation fell 0.1 per cent in the March quarter, but the Transurban boss was not worried about the delation trend.

“All of our roads other than the M7 have fixed escalation or it can’t go below zero. So it’s the higher of zero or the Brisbane CPI and all the rest of the roads are fixed escalators. We’re not hugely concerned about deflation in that context but we are concerned about deflation in the context of the economic environment.”

The Transurban boss said state governments also had to make choices, with revenue from price increases helping fund big infrastructure projects like WestConnex.

“Governments have chosen to do things like registration rebates, cash back and provide direct support to customers as opposed to looking at toll road reforms,” Mr Charlton said. “So I’m still comfortable with the escalators and the positions but we do have discussions with governments from time to time.”

Transurban has seen traffic plummet on its toll roads in the last six weeks but is starting to see a pick-up in Sydney and Brisbane as pandemic restrictions are eased.

months.

The company’s shares rose 1.25 per cent to $13.80 on Tuesday and have increased 25 per cent in the last month.