Sydney has the highest transport costs of any city in Australia and the most tolled roads, most of which are operated by the country’s biggest tollroad company, Transurban.
So when Transurban released years of detailed data that it had previously kept private, showing where cars and trucks are entering and exiting its Sydney roads every 15 minutes (it had previously only released quarterly traffic data), number crunchers rejoiced.
The data dump on the new website NSW Toll Road Data was part of a deal by Transurban with the competition regulator to seal its $9.3 billion acquisition of the Sydney tollroad project WestConnex, so its competitors can accurately analyse traffic flows when competing to build or buy future tollroads.
Macquarie analysts, among the first to download the Transurban data, say growth in the number of vehicles coming on and off ramps into the company’s tollroads has hidden an underlying trend of softening traffic.
Analysts are unsure whether the softening is due to people baulking at paying increasingly high toll fares, some of which have been rising faster than wages or inflation, or whether the economy is slowing as construction activity (including building of homes) falls.
Sydney’s faltering housing market is well-publicised, with housing prices down 12 per cent from their peaks in 2017, according to the Reserve Bank. But unemployment in NSW is at record lows, with the January unemployment rate dropping to 3.9 per cent.
David Hensher, the founding director of the Institute of Transport and Logistics Studies at the University of Sydney’s business school, says the institute’s research has shown drivers do get to a point where they are no longer prepared to use tollroads – even if they save time – when they believe the cost has become too expensive.
“The toll saturation is a major factor influencing people’s preparedness to more and more use the tollroads and hence the amount of traffic is dropping,” Hensher says.
“It’s getting dearer – even anecdotally, you talk to people and they say, ‘It’s getting ridiculous, we just cannot afford to spend all that money on tolls so we’re starting to move out of the tollroads for some of our trips’.”
The average Sydney household spends $82.20 on tolls each week, well above the $51.10 spent by Brisbane households and the $49.20 spent by Melbourne households, according to the Australian Automobile Association’s transport affordability index, which assumes that one member of a Sydney household uses tollroads only two days a week.
While the NSW government has tried to address concerns over constant increases in toll fares by giving free vehicle registration to households that spend more than $1300 in tolls annually, Hensher (who advised the government on its WestConnex sale) says it needs to reassert control over what toll fares are charged so it can adjust prices to manage demand.
“The government has lost control of the road network and it’s run by Transurban,” he says. Transurban operates seven tollroads in Sydney, and is building two more – WestConnex and NorthConnex. The only tollroads in Sydney it does not operate are the Sydney Harbour Bridge and the Sydney Harbour Tunnel.
NSW is planning to build tollroads, such as the Western Harbour Tunnel, that would link into Transurban’s existing network.
Because most of Sydney’s tollroads were built as separate projects with private investment, each is financially structured to make specific returns, which is why roads like the M2 and the Eastern Distributor increase toll fares by at least 1 per cent each quarter – more than double the current rate of inflation.
The current tollroad concessions do not allow different fares to be charged in peak and off-peak periods, which could encourage people to travel at times of the day when the roads are less congested.
If the NSW government cannot agree on more flexible pricing schemes with private operators, it should pay for new tollroads with debt or use so-called “availability” public-private partnerships (PPPs) to build them to reduce the cost to drivers, Hensher says.
Governments, rather than private developers, take on the financial risk in availability PPPs that traffic will not meet forecasts, and make regular payments to developers based on performance targets.
Marion Terrill, director of the transport program at the Grattan Institute, says NSW toll revenues have risen 67 per cent in the past 10 years, much faster than revenues from drivers’ licence fees or vehicle registration fees. “It may be that tolls are just getting too high for people,” she says.
Research on Australian cities released by the Grattan Institute in October found that people prefer to adapt working patterns rather than commute longer distances or travel for longer periods as cities become more congested.
In NSW, more people are choosing public transport to commute to work, rather than driving, while Sydney’s population has also been falling, with the city losing 18,000 people in 2017 partially due to the high cost of housing, Terrill says.
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