Big business is moving to head off any law changes that override existing deals for tolls on Sydney’s motorways, arguing it will knock large investors’ trust in the NSW government and risk undermining future infrastructure projects.
A review led by former competition watchdog chairman Allan Fels has urged the government to pass legislation to create network-wide tolls to replace a patchwork of charges for motorways set under individual contracts with Transurban and other investors over decades.
The nation’s peak business group has told Fels that it is “deeply concerned” about the proposal to use legislation to override existing toll road agreements.
Eleven of Sydney’s 13 toll roads are controlled by Transurban. Credit: Anna Kucera
Business Council of Australia chief executive Bran Black said companies had entered into contracts with government in good faith and changing legislation to now override them unilaterally presents a “tangible case of sovereign risk”.
“It would also create legitimate and serious questions around whether the NSW government could be trusted to abide by any long-term contractual arrangements,” he said in a submission to Fels.
Black, the former chief of staff to ex-premier Dominic Perrottet, said it risks undermining future infrastructure projects and major national priorities such as a shift to net zero carbon emissions.
“If the NSW government cannot be trusted to honour agreements, then the state will cease to have access to the private capital it needs,” he said.
Professor Allan Fels has laid out plans for a major shake-up of Sydney’s patchwork of toll roads.Credit: Kate Geraghty
Black said any change to existing contractual arrangements for motorway tolls should be done by way of agreement between the parties involved.
Roads Minister John Graham said the government welcomed the contribution from the Business Council, just as it wanted to hear from motorists who paid tolls every day.
“Those motorists will pay a combined $195 billion in tolls up to 2060,” he said. “Encouraging public discussion was the aim in releasing an interim report of the independent toll review. We are committed to remaking a fairer toll network, but first we look forward to receiving the final report from Allan Fels and David Cousins.”
The final report is due in about four months.
Following the release of Fels’ interim report in March, Graham said at the time that the government “will not be afraid to legislate to ensure a fairer system”.
Transurban, which is a member of the Business Council, declined to comment on Friday, saying it would be making its own submission on the tolling review shortly. The company controls 11 of Sydney’s 13 toll roads.
One of Fels’ main recommendations is that the government legislate to create a state-owned authority to set tolls across Sydney’s motorway network and ensure greater market competition.
Fels has said legislation is needed to make Sydney tolls more consistent because too many parties such as investors, debt issuers and banks were involved to allow that to happen voluntarily.
However, Macquarie’s analysts have warned the use of legislation is likely to result in Transurban and other large investors taking legal action against the government for breaching long-term tolling agreements.
Infrastructure Partnerships Australia, an industry body, has also previously said that unilaterally legislating to alter existing contracts was reckless and should be ruled out.
Under Fels’ proposed shake-up, two-way tolls would be introduced on the Sydney Harbour Bridge and Tunnel, as well as the Eastern Distributor, to help lower fees across the rest of the network.
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