Every day, our office is contacted by people from around Australia that have incurred hundreds of dollars, and normally thousands of dollars in Administration Fees. One just last week had over $6,000 in administration fees for just over $700 in unpaid tolls. The administration fees represented 89% of the debt and were 707% greater than the amount owing in tolls.
Transurban CEO Scott Charlton told a recent Senate inquiry that the administration fees they charge their customers “ reflect the cost of the administration and of the systems that we have to put in place, which are the whole tolling systems, the back offices and everything to do with the enforcement and infringement side”. Interestingly, in addition to the administration fees they are pursuing this customer for, they added just over $1,000 in legal fees. We have seen this before, suggesting that administration fees do not go towards legal costs. This begs the question, what are they doing at head office that costs so much? Did it cost them $6,000 to send a few letters, yet only $1,000 to engage a law firm, who also prepared and filed a statement of claim, and served the customer? It is very troubling when the call centre’s costs are purportedly higher than the costs of engaging a law firm to prepare a case.
For Transurban to argue the administration fees they charge reflect the actual costs, including staff, systems, back offices etc, they would also need to argue that all of those costs are greater than the total amount in administration fees issued. Although Transurban say they do not profit from the administration fees, they will not publish any data on how many are charged, how many are collected, how many are written off as a tax benefit, and the total dollar amount issued each financial year. We know they have a large number of their call centre staff based offshore, where wages can be around $400USD per month, and that around 95% of their calls are fielded and resolved by their offshore call centre, and that most of their systems are computer automated. What we don’t know, is how much their entire customer service operation costs per year.
In Transurban’s response to our submission to the recent Senate inquiry, they were helpful by addressing our section focused specifically on administration fees, and confirmed that over 95% of trips do not incur administration fees. It would be safe to assume that it is no more than 96% that do not incur administration fees, otherwise they would have said over 96%.
So using Transurban’s FY17 Investor Presentation trip data for NSW and QLD, we ran some numbers on the potential amounts in administration fees Transurban have charged in the last financial year. Trip data for VIC was not available. It appears Transurban are essentially saying around 4-5% of trips do incur administration fees, and we have worked out the figures off this.
Based on the calculations we did, Transurban could potentially be charging hundreds of millions of dollars per year in administration fees, and it leaves questions.
– Are they receiving huge tax benefits when administration fees go unpaid?
– Could their collection activities really cost over one hundred million dollars per year, or
– Why did they hide the administration fee revenue from their financial reports?
– Would the shareholders be happy to discover that considerable amounts of money go
into collection activities, even if it is above and beyond what other companies spend on
– In the last financial year, if Transurban had not been charging all these administration
fees, would they have netted a $209 million profit? And would they have made a profit at
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