The Liberal Party-associated Cormack Foundation could learn a thing or two from South Australia’s water minister David Speirs. 

When Speirs, discovered that a Macquarie Group fund had bought a 49% stake in giant irrigation property Cubbie Station last week, he immediately moved to sell his shares to avoid the perception of a conflict of interest. 

Speirs is fighting hard to maximise Murray-Darling water flows to South Australia and didn’t want to be seen to be personally profiting from the Queensland-based agricultural enterprise which uses more water than any other entity in the Murray-Darling Basin.

Similarly, the Cormack Foundation (a Liberal fundraising company) currently owns 268,267 shares in toll road giant Transurban — an investment  worth $4.08 million based on Tuesday night’s closing price of $15.23. Why does this matter? As shown by its 2018-19 financial results released on Wednesday morning, Transurban has comprehensively outplayed Liberal and Labor governments in Victoria, NSW and Queensland to make an absolute fortune.

The Liberal Party should not be directly benefiting from deals negotiated by Liberal state governments.

Winners and losers

Transurban was created by Macquarie Group and Transfield in 1995 to bid for Citylink, a major Kennett government toll road project in Melbourne. Macquarie pocketed a $25 million success from the deal and Transurban was floated in 1996 at the equivalent of $1 a share.

More than 20 years later, Melbourne’s Citylink project is the world’s second most valuable privately owned toll road. This has allowed Transurban to extract the following tolls from motorists over the past six years:

  • 2013-14: $535m
  • 2014-15: $577m
  • 2015-16: $660m
  • 2016-17: $687m
  • 2017-18: $780m
  • 2018-19: $813m

That, however, is dwarfed by the story in Sydney where Transurban now controls seven different toll roads which managed to lift total toll revenue from $1.34 billion in 2017-18 to a record $1.53 billion last financial year. This is primarily due to the addition of the M4 motorway, which is part of the monster $9.3 billion Westconnex privatisation deal sealed by the NSW Liberal government last year.

The story in Brisbane is more modest. Here, Transurban managed to lift tolling revenue from its five different toll roads from $629 million in 2017-18 to a record $644 million last year. All up, motorists in Australia’s three biggest cities were stung $2.98 billion for tolls by Transurban last financial year.

Are Australian motorists getting ripped off? After all, Transurban has been one of the five best performing ASX100 companies for shareholders over the past 20 years. 

Well, the Liberal Party presumably isn’t too worried about that. Its biggest donor, the Cormack Foundation in Victoria, received a tasty $115,055 in dividends from Transurban in 2017-18.

Life in the fast lane

Transurban is the Pac-Man of toll roads, snapping up ownership stakes in all but two of Australia’s toll roads. ConnectEast in Melbourne and the Sydney Harbour Tunnel are the only two Australian toll road projects it doesn’t fully or partially control. On Wednesday morning Transurban also announced it was paying $468 million to buy the remaining 34.6% of the M5 West project in Sydney that it doesn’t already own.

Perversely, the M5 West structure is currently paying tax so by moving to 100% ownership, Transurban disclosed on Wednesday that this will bring forward the timetable for when it will finally start paying corporate tax by two years. No corporate tax was paid in 2018-19.

Only in Australia could a company which has seen its share price go from $1 to more than $15 have a history of never having paid corporate tax. Even James Packer has said this is a rort.

As it stands today, Transurban has $19 billion in debt and a market capitalisation of $40.7 billion, suggesting the enterprise value of this beast has now hit almost $60 billion.

The board has now launched another $700 million capital raising, on top of $10 billion in raising over the past five years. Investors continue to throw money at the business because Transurban repeatedly outplays state governments by negotiating lucrative bolt-on expansions and acquisitions to its existing monopoly toll road assets up and down the eastern seaboard.

When John Howard attends his next Cormack Foundation board meeting, along with the seven other blokes on the board, perhaps he should acknowledge the perception of a conflict of interest.

Disclaimer: Stephen Mayne owns seven shares in Transurban worth $106.61.