Jenny Wiggins, 12 October 2015

Lindsay Maxsted, chairman of toll road group Transurban and big-four bank Westpac, is pushing for changes to the way Australia pays for roads, claiming the present system of fuel taxes and registration fees is opaque and inequitable.

Using fuel taxes, vehicle registration and licence fees to pay for roads no longer makes enough money to meet road spending requirements, Mr Maxsted told Transurban’s annual general meeting in Melbourne.

“Revenue from fuel excise is in decline as we move to more fuel-efficient cars,” he said. “The system is complex and it is opaque, with road users largely unaware of the contribution they make to fund the roads on which they drive.

“This means Australians are unlikely to appreciate the inherent inequities of the current system and the growing need for a solution. Reform to the funding model is critical and some difficult decisions will need to be made if we are to protect the liveability and productivity of our cities.”

Transurban is trialling alternative forms of road pricing, such as rate-per-kilometre charges and fixed charges a trip, in a study in Melbourne with 1200 drivers during the next eight months.

The company plans to use the data to engage in the debate on road pricing.

Transurban said proportional toll revenues rose 18.9 per cent in the September quarter to $446 million, driven by a 16 per cent rise in Sydney toll revenues. Average daily traffic in Sydney rose 10.3 per cent to 622,000 trips.

Average daily traffic on Transurban’s Melbourne toll roads increased 2.4 per cent, and was up 10.5 per cent in Brisbane.

Investors raised questions of Transurban’s investment in United States toll roads at the AGM, with one investor asking if the investments were “worth the money”.

Transurban owns two toll roads near Washington DC, the 495 Express Lanes and the 95 Express Lanes.

Mr Maxsted acknowledged that investors were yet to see “tangible results” from Transurban’s US investments but said the company had “a great portfolio of assets” and had no plans to divest them.

The Australian Shareholders Association (ASA) questioned Transurban’s decision to use its auditors, PwC, for consulting work and pay the professional services group about $244,000 in additional fees on top of the $2.5 million it was paid for auditing services.

Mr Maxsted said PwC had “the best expertise” for the consulting work that was undertaken.

Proxy groups CGI Glass Lewis and ISS, as well as the ASA, recommended investors vote in favour of all resolutions ahead of the AGM, including the remuneration report, which was easily passed with 98 per cent of votes in favour.

But CGI Glass Lewis raised questions over non-executive independent director Rodney Slater, who was up for re-election this year.

Mr Slater, a former US Secretary of Transportation, is a partner at US law firm Squire Patton Boggs and co-head of its transportation, shipping and logistics practice.

Transurban disclosed in its annual report that it paid Squire Patton Boggs $US150,208 in fiscal 2015 for lobbying-related services.

Mr Slater was re-elected with 1.27 billion votes in favour. But some 6 per cent of votes cast were against his re-election.

Transurban has a seven-member board after the resignation of former Orica chief executive Ian Smith, who left in August to head off a potential challenge by investors concerned about his business track record.

Mr Maxsted said he hoped to announce one or two new non-executive board directors later this year or in the first quarter of next year.

Extracted in full from the Sydney Morning Herald.