Half a million Aussie motorists to get AU$750 cash rebate amid rising tolls

Highlights

• NSW government intends to lessen the burden of Sydney’s tolls by offering cash rebates of AU$750 each year to drivers.
• The existing model has been deemed to be less fair.
• A distance-based approach was proposed by Premier Perrottet, which received major flak from residents.

As tolls are set to rise in the coming days, the New South Wales government has offered relief to Australian motorists in the form of cash rebates. Up to AU$750 a year will be offered in cash rebates for drivers to lessen the burden of Sydney’s tolls. The new changes to the toll system would be one of the major features of the state’s upcoming budget.

The rebate program, effective from July 1, will replace the existing half-price registration scheme. Perhaps the most striking feature of the latest rebate program is that it is likely to benefit over 500,000 drivers. Among these, most of the people are expected to belong to Western Sydney. The rebate would help lift off some of the inflationary pressures seen by the Australian population, including the soaring costs of fuel.

Most economies are facing rising energy prices due to soaring international spot prices of these commodities. These prices have risen in response to the supply shock seen by the global economy. The Russia-Ukraine war has only heightened tensions, with declining food security becoming a growing concern. Additionally, rising fuel prices have been a by-product of the heavy sanctioning against Russian exports.

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A closer look at the rebate program

Drivers spending at least AU$375 in tolls a year will be eligible for a 40% rebate, which starts at AU$150. Afterwards, these motorists can get a reimbursement of 40% of their toll value until they hit AU$1875 worth of toll expenses.

The existing toll model reduces the price of vehicle registration for some toll users. In this model, motorists must spend AU$877 a year on tolls to get half off their vehicle registration or AU$1462 for free registration.

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However, the new model is set to be a fairer and more equitable system that can allow users a return on the toll paid. Additionally, the rebate program will cover almost double the number of people who were covered under the previous system. However, as all good things come at a cost, the new scheme will cost the NSW government a heft amount of about AU$520 million.

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Rising toll costs

Transurban, the operator of most of Sydney’s toll roads, would be increasing tolls by 2% on some of Sydney’s motorways on July 1. The higher rates would affect people travelling on the M2, the Cross City Tunnel, the M7 and NorthConnex.

Transurban would be raising tolls on the motorways on a quarterly basis to match rising inflation. Notably, many motorists are already affected by rising toll costs, specifically those travelling from the western suburb into the city for work. Some motorists are even forced to pay multiple tolls a day, as many of these motorways connect with each other.

Shifting from region-based to distance-based system

The new system is a follow-up to the suggestions offered by Dominic Perrottet, the Premier of New South Wales. The suggestion was a topic of controversy as it involved a distance-based tolling system which could help reduce the cost of driving.

Despite the intentions with which the system was suggested, many residents were unhappy as it did not include those living in Western Sydney. Broadly, a distance-based system includes motorists paying for how long they are travelling on a toll road rather than on which road they travel.

The existing system is deemed unfair in this regard, as it charges motorists when the car drives through a toll gate, irrespective of how long the car has been travelling. In a way, the current system does not charge drivers on the basis of the distance they travel.

While a distance-based system might look a fairer way of charging motorists, it did not sit well with the Labor government as it felt that people living in Sydney’s outer west would be excluded from the scheme. Around 17 of the 20 suburbs currently paying the highest tolls belong to Western Sydney, where policy action has privatised state assets, leading to higher costs.

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