Road Tolling Inquiry

13 March 2018

The Hon. JOHN GRAHAM ( 17:50 ): This is a fantastic report and I thoroughly enjoyed my time serving on the Portfolio Committee No. 2 – Health and Community Services inquiry. I have served on quite a number of committees—my colleagues have generously volunteered me for a range of them—but this has been my favourite. I will choose a couple of report recommendations that are particularly important. First, we are more transparent now about how we deal with contracts—the truth is that probably both sides of politics have not been transparent about these issues in the past. The report says that should change. It calls for the contract summary of the WestConnex M4 widening project deed to be published—as it should be. The report also calls for the future publication of the base case financial models for the NorthConnex and the WestConnex projects, and that should happen. Governments have done that in the past for similar toll models, and the same should occur for these projects.

Secondly, I support recommendation 4, which calls for the consumer price index be considered as the default position for road toll escalation. There should not be a 4 per cent increase when inflation and wages are low. There is no reason that tolls in Sydney should increase by 4 per cent, year on year. No case has been made for that increase while wages remain low, and we support that recommendation. I also support recommendation 5, which calls for transparency and accountability on the part of the Sydney Motorway Corporation. This is fundamental because the Sydney Motorway Corporation was set up in such as a way as to hide it from the normal accountability measures that apply to Ministers, public corporations and government departments. That must cease.

The organisation was constructed to shield if from public view and, in the end, that has led to far more questions than would otherwise have been raised. One question is how much the person who runs the organisation is paid. It was only when the committee called a somewhat reluctant chief executive officer to appear before it that it became clear to the public exactly what that person was being paid, largely with public money. That information should be known. If it is defensible, it should be made public and defended. These are complex projects and there is no need to apologise for paying for them to be done properly. But if the figure is defensible, it should be made known. Both sides of politics should adopt that approach. I acknowledge the recommendation and the fact that the Sydney Motorway Corporation has indicated it will publish annually the remuneration of its senior executives.

I turn to a matter that became clear as the committee worked through the issues: what the toll means for Western Sydney motorists who use the widened M4 as part of the WestConnex network. It became apparent that this part of the network—it is not a new road; just a slight improvement costing approximately $500 million—will paid off by tolls in two or three years. But how long will the tolls—which will increase by 4 per cent, year on year—be paid? The people of Penrith will pay not for two or three years but for 43 years to drive along a small, slightly wider section of road—which is welcome, but not worth 43 years of tolls. During the inquiry it was revealed that the toll revenue that will be collected from the people of Penrith and the western suburbs was described as "the rivers of gold" by project insiders with the knowledge of the financial case. That is exposed by the committee report. Committee members representing both sides of politics applied good process to reach agreement in a very difficult area. Paragraph 2.86 states:

The extreme level of cross-subsidisation from the M4 widening project to the broader WestConnex network breaches the government's toll funding principles. Residents in one area of Sydney, who may not use the rest of the network, are bearing an unfair proportion of the cost of the project.

The tolls charged on the network breach the Government's tolling principles. Road tolling principle 5 states that tolls charged will reflect the cost of delivering the motorway network and principle 7 states that tolls will be applied consistently across different motorways, to the extent practicable, taking into account existing concessions and tolls. Those principles do not apply in Penrith, but they should. If the principles were applied in this case, the people of Penrith would pay tolls for only two or three years; not 43 years, with a 4 per cent increase each year. They would not bear the burden for drivers travelling from Rozelle to St Peters. But that is what will happen. I loved taking part in this inquiry. However, I was alarmed to see reports on 22 February that indicated the Government is considering imposing more toll roads, in this case potentially on the M12. The roads Minister said:

We will be considering all options going forward to be able to construct this in an envelope that all governments can afford. We are not ruling anything out.

The point is that 80 per cent of the funding has already been provided by the Commonwealth. This looks like it will be the latest toll imposed on Western Sydney motorists, who are already being charged for a duplication of Elizabeth Drive. It is not known whether this toll will be imposed for two, three or 43 years, like for the M4 widening. That would be a disgrace—but it would not be a surprise, given what has happened with the other project. I love the report, and I commend it to the House.