Page 5 - Wealth-Adviser-Issue-124 (FWP)

ISSUE 124
NOVEMBER 2025

As Firstlinks and The Conversation explain, in reality, Equity, Access, and the Reality of a “Tax on
“the risk is rarely shifted as cleanly as promised. Early Mobility”
contracts for roads such as CityLink contained guarantees The financial mechanics of Australia’s toll road network
and payment deferrals, turning nominal ‘private’ risk back have direct and far-reaching social implications. For many
into public obligations if returns slipped below set thresh- drivers, especially those in outer urban fringes or trucking
olds.” The legacy of these contracts remains visible today, sectors, tolls aren’t merely a minor inconvenience—they’re a
with governments continuing to be exposed to significant formidable overhead, one that further compounds inequal-
contingent liabilities. ity. “The burden of tolls is not spread evenly,” notes the
Moreover, the PPP approach has led to a system where Social Justice Australia analysis. “Drivers in Sydney’s outer
private operators, often dominated by a single corporate entity, west ... can pay tolls equivalent to 10–20% of a lower-in-
control vital arteries of urban mobility, leveraging their position come household’s weekly pay, while others avoid tolls
to negotiate further concessions, extended deals and, occasion- entirely.”
ally, monopoly-like power over metropolitan commuters. Increasingly, transport and social policy analysts describe
this as a “tax on mobility.” Unlike a progressive system
Financial Implications: Who Bears the True where contributions rise with the ability to pay, flat and
Cost? network-based tolls act as a regressive, privatised tax on
Despite promises that shifting road ownership to the the act of travel itself. Australians pay billions in tolls each
private sector would insulate taxpayers from risk, reality has year—costs that have surpassed traditional vehicle taxes and
often played out differently. The original rationale was ex- continually rise. This toll regime does not merely support
plicit: “Under this model, a private operator finances, builds infrastructure; it directly shapes the capacity of families
and maintains a road in return for the right to collect tolls – to access jobs, services, and opportunity. As highlighted
often for decades at a time.” Governments used the upfront in equity submissions and research, “differential pricing
payments from these deals to keep their budgets balanced, regimes across the network also gives rise to issues of equity
transferring both the visible costs and the less-obvious risks where motorists using different sections of the network pay
off their books. vastly different sums for similar functionality... programs
But these same contracts frequently included clauses further complicate any analysis of who pays what for roads,
that cushioned companies against losses, or set minimum and whether the costs borne by some transport users are
traffic guarantees—meaning that when toll revenue fell equitably distributed.”
short, the government (and therefore, the community) The structure of PPPs has layered new kinds of inequity
faced the bill. This perverse incentive led, as documented on top of long-standing issues in transportation policy.
in Firstlinks and The Conversation, to operators routinely Many inner-suburban residents, enjoying robust public
overestimating traffic volumes: “A federal review of 14 transport networks, can sidestep toll roads completely,
Australian toll roads found first-year traffic was an average while outer-suburban dwellers—often younger, less wealthy,
45% under forecast and was still 19% down after six years.” and more dependent on cars—must shoulder disproportion-
Social Justice Australia also highlights the hidden ate costs.
ongoing public cost: “What few realise is that the long- The impact isn’t just felt by households. Small business-
term profits extracted via PPPs ultimately come from the es, freight operators, and trucking companies also see toll
motorist; sometimes through explicit tolls, other times costs ballooning into tens of thousands of dollars annually
through backdoor public subsidies.” Meanwhile, the private per vehicle. Faced with high tolls, operators either detour
companies running the roads enjoy not only consistent cash onto suburban streets (increasing congestion and pollution),
flows, but favorable tax treatment, depreciation benefits, or accept higher costs, which are inevitably passed onto
and frequent opportunities to renegotiate terms. consumers through more expensive goods and services.
These arrangements have created substantial “windfall Firstlinks recounts: “For trucking companies, tolls can
profits” for the operators, especially where contracts were amount to tens of thousands of dollars per vehicle each year
extended or new projects bundled with existing tollways ... The first option risks turning local roads into freight corri-
without competitive tenders. As Firstlinks notes, “In some dors, with added safety, noise and air pollution problems for
cases, governments have extended Transurban’s conces- residents. The second filters straight into the cost of goods
sions in return for funding other projects, without putting and everyday living.”
the extensions to open tender ... an independent review Enforcement also raises its own set of challenges. In
commissioned by the New South Wales government con- Victoria, unpaid tolls can snowball into state-enforced fines,
cluded Transurban’s dominance has created a market with leaving some drivers staring down unmanageable debts. As
little genuine competition.” Social Justice Australia puts it, “The system creates hardship

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