If you use toll roads in Sydney, Melbourne or Brisbane, you’re undoubtedly doing business with a publicly listed company called Transurban (TCL). TCL owns 22 of these money-collecting operations, and if you think you pay too much, then you won’t be surprised to learn this road owner quadrupled its net profit!

TCL operates 11 of the 13 toll roads in Sydney, so you also won’t be surprised to learn that the NSW Government wants to change the payments system. This overdue interest in what TCL slugs drivers with makes is timely, considering Qantas has recently hit its former CEO, Alan Joyce, with a $9 million penalty for behaviour that has hurt the company’s brand.

However, Mr Joyce had an accessory to his alleged anti-competitive and consumer exploitative behaviour and that was the Federal Government!

I’m not a great advocate for government interference in markets and businesses where it’s competitive, however, when one or a few big players make huge profits and there’s no objective analysis of their pricing policies, governments have to run fairness tests.

These tests should be fair to both consumers, small business and the shareholders of the public companies involved in buying the goods or services of these big businesses.

Interestingly, TCL’s share price action over the past year hasn’t been great. This has been linked to the work-from-home trend and a lot of construction work on toll roads in Sydney and Melbourne, both of which have lowered its income from these cities. At $12.78, the stock’s price is down 9.1%.

Transurban (TCL)

The company is also facing other headwinds, such as less residential home building that reduces trucks using its toll roads. And now the Queensland Government is introducing the 50 cents public transport fare that should reduce cars on Brisbane’s roads.

Despite all that, TCL announced it will pay a 65 cents dividend (up 3 cents) and you can do that when your net profit quadruples.

The AFR’s Jenny Wiggins put the company’s position into context with the following: “First-half proportional earnings before interest, tax, depreciation and amortisation – a figure which reflects income from the company’s toll roads and is closely watched by analysts – rose 7.5 per cent to $2.63 billion but were below internal budgets.”

Explaining this, Wiggins told us: “The increase was due to higher toll revenues and bigger margins, which rose to 73.1 per cent from 72.4 per cent a year earlier. The company reported a net profit of $376 million from $92 million in 2023.”

Given the above, it’s not surprising that right now the NSW Government is planning to change the toll payment system following a review led by former chairman of the Australian Competition and Consumer Commission (ACCC) chairman Allan Fels.

Fels has recommended a new network regime to replace individual tolls on the motorways, which will benefit drivers from Sydney’s west. Meanwhile, Wiggins explains that “…drivers in Sydney’s north and east – largely Coalition electorates – would pay more through recommended two-way tolling on the Harbour Bridge, Harbour Tunnel and Eastern Distributor.”

These recommendations show that better and fairer pricing still produces winners and losers, but it doesn’t justify the fact that too many big companies in Australia, such as TCL, do take their customers for a ride!