Pre-paid E-Tags: Another NSW Rort

Ask Sonny: bad things happen at toll booths ©

Let me ask you a question. When you go to the supermarket, does the checkout chick relieve you of $80 before you've even bought anything? Didn't think so.

Or, when you've purchased $55 or more worth of goodies, does she demand a further $80, against future purchases? Thought not. And if you only ended up buying $40 worth of stuff, would you find it strange that she kept the remaining $40 forever? You bet. Then why is the NSW Roads and Traffic Authority permitted to sell e-Tags (its brand of electronic tolling tags) which do exactly this?

That slug you for $80 worth of tolls before you've even left their office (or website), and $80 more every time your account balance dips below $25? And keep the outstanding balance indefinitely?

Is it the credit risk? I can understand not wanting to chase up rogue drivers for the $4.28 it costs to traverse the Cross City Tunnel, or the $2.76 to tariff to drive under Lane Cove. Apart from the inconvenience, it’s tricky to pay these apparently random sums since the demise of 2-cent pieces.

However since these pre-payments are deducted from tag-owners’ credit cards this argument doesn’t hold. The whole idea of a credit card is to transfer credit risk from a vendor (e.g. a toll road) to the credit card company (or, technically, its issuing bank). So there’s no need for the RTA to worry about chasing me. They could just charge the tolls to my card as I incur them, and collecting the cash becomes my bank’s problem.

So if credit risk isn’t the reason, what is?

I think our beloved overseers have simply decided to award themselves free money. The scheme is simple: borrow money from e-Tag customers at zero interest and park it somewhere at commercial rates.

So instead of getting my $80 in dribs and drabs as I use various toll-roads, a process which might take a couple of months, they take the $80 from me in advance. This gives them, on average, $40 per month more than I actually owe, plus the $25 minimum account balance that they always have. Over the course of the year, this free $65 float is worth $2.86 in interest, assuming the RTA dutifully invests in NSW government bonds at current rates.

Small beer I guess, but multiply this by the number of e-Tag holders – let’s say 2 million – and you have a nice little earner. And, some might say, a nice little rort.

In the state that brought you Eddie Obeid, Joe Tripodi and a "puppet" Premier, I guess we should expect no more!