Tolls should be higher on harbour bridge and tunnel to help cut prices in western Sydney, report says

Drivers crossing the Sydney Harbour Bridge and tunnel should be charged in both directions, a review into the city’s toll roads has urged.

On Tuesday, the final report was handed down after 15 months from the New South Wales government’s independent review, which was aimed at tackling so-called “tollmania”.

It reaffirmed a bold plan to reset the patchwork of privately-operated toll roads by unifying them under a consistent “declining distance-based rate” in a bid to simplify pricing and cheapen commutes to and from Western Sydney.

The plan to more equitably spread the city’s toll burden – estimated to cost motorists $195bn over the next 37 years – could be in place as early as mid-2026.

However the independent reviewers – former competition watchdog chief Prof Allan Fels and David Cousins – warned the reforms would require the tolling giant Transurban and other private groups to agree to significant changes to their lucrative long term contracts. They recommended the government simultaneously bring in legislation to force changes to aid the power dynamic during bargaining.

Declining distance-based tolling

The establishment of a new state body called NSW Motorways “to take back control of tolls” is a key recommendation of the review. It would be tasked with making implementation and costs more efficient and easier to understand, and setting prices which could be determined by the state’s independent pricing regulator.

Sydney’s 13 toll roads have several different pricing structures – some charge a fixed fee, others charge for the distance travelled, or users pay an access fee as well as for the distance travelled. There are also roads where users are charged differently depending on the time of day, or day of the week and some roads only toll users in one direction.

Fels reaffirmed the need to unify the city’s toll roads using a “declining distance-based rate” model that would cut prices in western Sydney while tolling drivers in both directions on the government-held Sydney Harbour Bridge and tunnel, as well as the privately-held Eastern Distributor – these are currently only charged in one direction.

In addition to raising more money from the harbour crossings and Eastern Distributor, the move would mean all toll roads in Sydney would be charged in each direction.

The declining distance rate proposed by the reviewers would charge motorists entering any toll road 50c per kilometre for the first four kilometres travelled. For kilometres 4-8 of a trip, the rate would decrease by 15% to 42.5c per kilometre, with the charge decreasing by a further 15% for each four kilometre segment of a toll road travelled.

The declining distance-based rate of tolling would be charged in addition to a flat “infrastructure charge” for using a toll road in each direction, ranging from 50c for different stages of Westconnex but rising to $3 for the Eastern Distributor and Cross City Tunnel, and up to $4.20 for a Sydney harbour crossing during peak periods.

Fels said that while some commuters, particularly in the eastern suburbs, would pay more for some trips to help fund discounts for toll roads in the west, other trips for them would become cheaper, such as using the Eastern Distributor northbound.

The reviewers also urged the government to implement time of day tolling across more of the network, and make the pricing gaps between peak and off-peak travel more dramatic to incentivise price conscious and flexible motorists to delay or re-time travel and ultimately ease congestion on key corridors.

While the reviewers didn’t recommend time of day differentials for each road, they said the harbour crossings – currently the only roads in the network with dynamic pricing – should be more expensive during peak times (at $4.20 each way) but drop to $1.60 during off-peak times such as late nights and weekends (the lowest it currently drops is $2.67).

The other explicit dynamic pricing proposal was for trucks to get cheaper toll road access at nights, to push back against the rise of small freight operators using arterial roads to dodge costly tolls, damaging suburban streets and adding to peak congestion in the process.

Transurban and private operators

Across the city, there are 13 roads over 179km with tolled sections, which has led to claims that is Sydney is the most tolled capital city in the world. All but two of the toll roads are run by operator Transurban, along with other private investors, in an array of long-term agreements.

The state government will now consider the review’s recommendations, but has already allocated $17m to establish NSW Motorways. On Tuesday, NSW roads minister John Graham said he was “committed to taking back control of tolling”.

“That won’t be easy, but it is necessary. Without total reform, the truth is Sydney will become a more expensive, more congested, less productive city … that’s true already, but over the decades to come it will get far worse.”

When asked about the government effectively introducing a new toll on motorists using the harbour crossings and Eastern Distributor, Graham said the network-based approach couldn’t be adopted without charging for both directions on all toll roads.

“The report makes a strong case … if we’re going to fix the system, everyone’s going to have to help,” Graham said.

Fels said private toll giant Transurban and other operators had indicated they were willing to negotiate their lucrative contracts and achieve an in-principle agreement by the end of the year.

However there is one key sticking point. Instead of the network-wide declining distance rate approach proposed, Transurban have so far favoured a “corridor” approach, effectively splitting up the city into separate zones with different charges for accessing each part.

The reviewers believe it is possible to reduce the total amount motorists are estimated to pay to toll road operators – $123bn over the next 37 years – without concessionaires losing out significantly.

These savings could be achieved by the government taking on the risks of underutilisation and debt currently factored into tolling contracts, possible because the government has access to cheaper rates of borrowing.

Another negotiating incentive available to the government is offering contract extensions to some private operators in exchange for interim toll reductions, as well as efficiency savings elsewhere.

However the reviewers warned it was possible that Transurban and other private stakeholders with contractual rights may not come to a timely agreement.

As such, they recommended the government immediately introduce legislation that will give it the power to rejig toll settings and prices in the event a deal can’t be struck. By moving ahead with legislation, it would address the power imbalance during negotiations.

Graham did not rule out the possibility of the government paying Transurban and other private entities compensation to get them to agree to the overhaul, noting already “there’s significant taxpayer money going into toll relief”, effectively already compensating the tolling operators.

“Motorway operators should not expect the windfall gains that they have received in the past … They have a right to have their contractual rights respected but the giveaways are over,” Graham said.