Why We Believe the RAC is a Detriment to Western Australia, Deliberately Misrepresenting Itself as “Driving Positive Change” | A Detailed Report

Introduction

Disclaimer: We are not journalists or a research organisation and as such our data is limited. This report contains estimations based only on what we were able to find independently, and we may have gotten some things wrong. This is intended to start a conversation and nothing in the report should be assumed to be a fact.

The RAC wouldn’t send us a copy of their full financial report, so we have relied a lot on what’s included in their concise report. If we’ve gotten anything wrong due to a lack of clarity about figures listed in the concise report, that’s because the RAC have not responded to our request. We even sent a separate email from an RAC policy holder and they did not reply to them either.

 

This report investigates whether or not the RAC is the beneficial organisation they claim to be. The report is the result of our growing frustrations with what we perceived to be the RAC’s willingness to bulldoze natural areas for their holiday parks; their desire to lobby for political changes that they independently chose, but to present them under the guise of advocacy for the majority of Western Australians; and many other factors such as their continued publication of millions of paper magazines that go largely unread.

What we have found, was compelling enough to us to continue going to the significant effort of creating this report despite there being no financial incentives and frankly, having better things to do.

Table of Contents

Summary

The RAC is a misleading organisation, that engages in political lobbying against the interest of most West Australians.

The RAC claims that they represent 60% of WA households and that they are presenting the interests of the majority of Western Australians when they prepare submissions to state and federal government. The RAC do not take input from this cohort and deliberately conflate the figure of insurance policy holders, with those seeking to have their interests represented. This is deliberately misleading.

The RAC engages in public advertising as well as political lobbying for policies that are hypocritical compared to their own practices. For example, they position themselves as environmental advocates, despite knowingly producing up to 4.2 million pieces of single use plastic per year with the majority going to landfill.

As an organisation, the RAC claims to represent the best interests of their members, but simultaneously advocate for:

  • Increasing fuel prices
  • Introducing road tolls
  • Introducing a parking tax
  • Reducing the amount of roads
 

While claiming to exist for member benefit, they raise their insurance premiums while also spending excessive amounts of money on state government projects, when this money could be used to reduce or maintain insurance premiums.

 

Environmental Destruction – Despite Claiming That They’re Environmental Advocates

Horizons Magazine

The RAC produces and distributes magazines for 700,000 households1. As the Horizons magazine is published every two months, we can reasonably assume they’re producing 4.2 million magazines per year. One tonne of magazine paper requires 15 trees9, and the average magazine this size is estimated to weigh 400gms10, putting our estimate at 1,680 tonnes of paper, requiring 25,200 trees.   This doesn’t even consider the 4.2 million pieces of unrecyclable plastic packaging thrown away every year, likely making it to landfill.

80% of these magazines are believed to be discarded without reading. According to estimates from postal contractors4, 80% or more of these magazines are discarded, putting our estimates at 3.36 million magazines being totally unnecessary and unwanted, equating to over 20,000 trees on unread magazines. With 94% of Australians found to be making mistakes with recycling or not attempting it11, the amount of magazines going to landfill could be as high as 3.948 million per year, equating to more than 23,000 trees worth of paper not being recycled.

In summary, the RAC wastes 20,000 trees on 3.36 million magazines that are never even read. The RAC’s claim of 700,000 households reached, is simply 700,000 letterboxes reached and likely 140,000 households reached.

 

RAC Holiday Parks

It appears that once the RAC drive enough traffic to an area of natural beauty, through their digital content and magazines, they then seek to capitalise on the new levels of tourism.

The Monkey Mia conservation park is a world heritage listed, bio-diverse region needing protection, which is why the Department of Biodiversity, Conservation and Attractions (DBCA) has listed it as a conservation park to protect it. Except for the huge section bulldozed so the RAC could build their resort there and cover the rest of it in cracker dust for caravan parking.

Why would the DBCA allow this? At a guess, I’m pretty sure it would have something to do with the fact that you have to go 20 metres into the conservation park, to access the resort. This means that for every person that the RAC brings in, the DBCA gets their ~$20 entry fee.

Would the DBCA be run in such a way where dollars are more important than doing the right thing? I don’t know, but I will say that the DBCA was put together by Mark McGowan, so that should be a pretty strong indication.

Once the RAC drive tourism to an area and start undermining it’s natural beauty, they then advocate for sealed roads to the area12. They do this under the guise of road safety, but conveniently reduce their liabilities for insurance pay-outs while simultaneously allowing more tourists to come use their facilities.

 

 

Political Interference (Lobbying) Against the Better Needs of Western Australians

The RAC Wants the Price of Fuel to Go Up Again

The RAC wants half of all motorist tax to go to public transport and transport systems2, arguing for an increase of these fees and levies2.

  • Tariffs
  • Stamp duty
  • Rego
  • Licence fees
  • Fuel excise

We have a “member owned” organisation claiming to act on behalf of its policy holders. Who are the members of the Royal Automobile Club? Quite obviously, it’s largely automotive policy holders, the same people who will get stung the most by stamp duty, registration fees, licence fees and fuel excise. Aside from forgetting what the A in RAC stands for, they seem to be conflating the Perth CBD with the rest of Western Australia.

Does additional public transport in the CBD help West Australians living in Punmu who are already paying $3.30/L for Diesel, or in Kunawarritji at $3.45/L by adding additional taxes to that fuel? What about the rest of the Pilbara? Or the Kimberley? Or even Perth at $2/L?

Trying to push our government into thinking that Perth is Melbourne and basing all policy around the one city, only serves to hurt real West Australians.

If any RAC board member or C Suite exec can show me that they even knew that Punmu or Kunawarritji even exists, I’ll pay them $1,000. I’ll personally hand it to Rob Slocombe so he can see it gets to the right person.

 

The RAC Wants Tolls on West Australian Roads

The RAC wants tollways (“Road use charges”) and area cordon charges instead of fuel excise2.

First they want fuel excise, then they don’t?

Western Australia has a long and proud history of being a bit different. Having always been remote and self-sufficient, it’s bred its own culture within Australian culture. Now we have an influential, WA based organisation trying to turn us into a clone of the Eastern states. Will the RAC be lobbying for pokies in pubs next?

And even if you think we’ll get away with only a few tolls on major arterial roadways through the metropolitan area, that’s not quite true. The RAC suggest “including those appropriate for regional areas”2. Not only are they calling for tolls in their Public Policy Report2, but they’ve also pushed this agenda in their Federal Budget Submission 23/243.

Those of you who have spent any decent amount of time driving in Vic, QLD and particularly NSW, will know that tolls do not equate to better roads. All they achieve is privatisation and profit for a few individuals.

 

 

The RAC Wants to Tax Parking

The RAC wants taxes on parking, to deter commuter traffic2.

 

 

The RAC Want Less Roads, By Turning Existing Roads Into Cycleways

They want to re-allocate road spaces for cycleways3.

I can’t speak for anyone else, but I am guessing that no one thinks the traffic and infrastructure situation in WA and particularly Perth, is that there are too many roads.

 

 

West Australian Motorists to Pay for Electric Vehicle Subsidies?

They push policy for inducing EV adoption in nearly every report and repeatedly call for subsidies and incentives. Which of the taxes that they’re advocating, will make up for the shortfall? It will be the average motorist picking up the bill, which by extension, must mean the majority of RAC members/policy-holders. Representing the needs of members indeed!

 

 

Misleading Representations and Hypocrisy

The RAC claim they’re the voice of 60% of households and advocating accordingly. That’s simply not true, they just have cheap insurance. That’s like claiming their magazine reached 700,000 households, when it only reached 700,000 letterboxes4. Horizons magazine is addressed mail, so even the people that don’t want to receive it and have “no junk mail stickers”, are still being harassed.

The RAC have a Tax Transparency report. They claim it’s voluntarily provided for the sake of transparency, but it’s a mandatory requirement from the ATO for organisations with $100M+ turnover.

Huge marketing efforts go into promoting their do-good EV and environmental policy, while they’re simultaneously trashing the environment with magazines and holiday parks.

The RAC Go app, is supposedly to help encourage safe driving practices. In reality, it’s data mining under the guise of coaching people for safety. See below in surveillance of members section.

 

 

Price Increases of 20% Due to Financial Mismanagement? – Blamed on Natural Disasters

The RAC’s biggest claim is that by being member owned, there’ll be a financial benefit to the customer. Claiming a $59.1M pre-tax profit from $1.386B turnover5, would be a profit of about 4.3%, which would be appalling if it were a business, but maybe it just means they’re running as cheaply as possible to benefit members? Or, could it mean that there’s a staggering amount of wastage, misguided use of funds, or high compensation for executives?

The “member focused” RAC, recently had a 20% increase in premiums6, which may seem fair enough in current economic circumstances, and they claimed it was due to inflation as well as natural disasters. But if it was because money is tight, then why engage in this type of spending:

  • $2.7M to state government projects1. This was in roughly the same period that we saw the first treasurer ever to be more unjustifiably overconfident in their financial abilities since Paul Keating. Mark McGowan handed down the “budget that is the envy of every other state”. Maybe it was “the budget we had to have”? If we were that flush with cash as a state, then why was the RAC paying for things? I speculate a lot of things about why an insurer would be funding almost 3 million dollars of state government projects, but I won’t speculate on it having anything to do with how they’re able to get away with being the only ones that seem to be able to bulldoze conservation areas for their own gain. I won’t speculate on that, because without having proof I’d likely receive an angrily worded letter, with a date to have a public debate of sorts. So, let’s assume there’s nothing to that theory.
  • $350k to local government projects1. It’s impossible for me to know if this was money well intended or not, seeing as they would not share their financial report with one of their own members. The Shire of Dardanup includes the large suburb of Eaton and they collect a huge amount in rates annually. Why then, is the RAC forking out members’ money to revitalise the former Dardanup depot, as if this were a beneficial thing to a small rural community, when it’s actually a very populous, urban shire? The “small town of Dardanup”? The Shire of Dardanup was home to WA’s first 24 hour Kmart13.
  • $300k to paint rural towns, “town team movement”.
    What does this even mean? Just send us your financial report or stop making dumb statements.
  • Sponsor RAC arena.
    I’ve got to wonder how much this costs and whether it’s necessary when premiums are going up by 20%.
  • $13M in consultant expenses1. Again, this is purely speculative because they have failed to provide their financial report: I do wonder if all these misguided, pointless, un-requested, virtue-signalling, useless reports they keep pushing out account for a large percentage of this figure. Or do they have an internal team dedicated to wasting their time by misrepresenting Western Australians?
 
 

Surveillance of Members | Member Data Sent Overseas

The RAC offer discounts on insurance in exchange for using their own security cameras that broadcast to their own app (Appendix 1).

Separate from the app mentioned above, the RAC Go app purports to foster safe driving practices. What it actually does, is gather your personal data. The FAQs for the app claim that information gathered through the app won’t affect premiums, but they don’t state they can’t use it to deny a claim or reject a policy application. Their terms and conditions7 as well as their privacy policy8 also omit anything that prohibits them from using the data to reject a claim. They can also use your location data for advertising purposes8. Been spending a lot of time at your girlfriends’ house? RAC condoms might be the next arm of their business, (more on their extra businesses below). Once they’ve collected all this data from you, they send it to Belgium8. Even if none of this was included in the terms and conditions when you first signed up, they can change these at any time, merely by updating the document on the website, and as soon as you use the app again it’s considered an agreement7.

 

 

Why So Many Business Divisions?

The RAC have a surprising number of business divisions, for an organisation making a profit of 4.3%. Is it really all going back into reducing premiums? It probably can’t be, seeing as they went up 20%.
Is it just a very poorly run business? They have a very competent board who would have swept the whole executive floor if that were the case. Even before Babylonian merchants were shaving gold from coins between transactions, the answer to these types of questions has always been that someone is making a lot of money.

If you think I’m being cynical, then please explain how all these profitable business models could all be adding up to 4.3%.

  • Travel agency, selling cruises.
  • Development finance. When was the last time you heard of an Australian financier not making good returns?
  • Term deposits. As above.
  • Debt consolidation loans. As above.
  • St Ives retirement living.

St Ives is the only division in a group that otherwise uses a “branded house” approach to their marketing, that has a separate brand. Is this because their determination to seek lifetime value would be too obvious? As anyone in marketing or business will tell you, increasing the lifetime value of a customer is one of the most profitable things you can do. You can increase revenue without adding acquisition costs, greatly increasing margin.

By using “driver safety” programs, the RAC can start recruiting customers at the age of 16. Most people stop driving in their mid to late 70s, meaning no more car insurance, but will stay in their home (likely with home and contents insurance) until their early 80s. It’s at this point they generally transition to assisted living or permanent care, which is when they are no longer of any value to an insurer. This is where St Ives comes in to keep the process rolling. They can sell you insurance from 16, term deposits from 18, home and contents sometime in your 20s, cruises in middle age and then finally into “retirement living”.

It’s a brilliant business model, I wish I was doing it because it’s so lucrative. But, because it’s so lucrative, it does beg the question of why they’re so unprofitable, because we know it’s not going back into reducing the premiums which just jumped up so dramatically. I’m not saying I think there’s any corruption or embezzlement, I genuinely don’t believe that, but the further I look into this the more puzzled I get by their claims of being some wondrous, beneficial organisation that looks after the needs of everyday Western Australians.

 

 

Conclusion

It appears that the RAC has lost sight of their original and portrayed intentions. Even if their advocacy for environmental change and enhanced urban mobility is well intentioned, they seem to have forgotten who their members are (and what the A in RAC stands for) and consequently, who they should be advocating on behalf of. Policy holders of motor vehicle insurance are unlikely to be seeking advocacy on topics such as re-allocating road space for cycle paths or for the introduction of toll-ways, even if they are cleverly spun as “road use charges”. Further, regardless of social and political ideology, it’s unlikely that consumers wish to be paying higher insurance premiums so their insurer can be spending that money on printing one million unread magazines or painting a regional town.

The RAC are a good insurer, but a misleading organisation that are a detriment to their own members and Western Australians in general. They should stick to insurance so I can stick to normal blog posts.

 

 

References

  1. RAC Concise Report 22/23
  2. RAC Public Policy Report 22/23
  3. RAC Federal Budget Submission 23/24
  4. Survey of three independent contractors for Australia Post, who wish to remain anonymous. The average (mean) estimate of wastage was 80%.
  5. RAC Tax transparency report.
  6. https://thewest.com.au/news/wa/rac-insurance-hikes-company-blames-inflation-natural-disasters-for-hike-on-premiums-c-11105612
  7. RAC Go app T&C
  8. RAC Go app Privacy policy
  9. https://ribble-pack.co.uk/blog/much-paper-comes-one-tree
  10. https://measuringly.com/how-much-does-magazine-weigh/
  11. https://www.sustainabilitymatters.net.au/content/waste/news/study-reveals-94-of-australians-are-messing-up-recycling-942352916
  12. RAC State Budget Submission 23/24
  13. https://www.abc.net.au/news/2014-11-26/kmart-24-hour-shop-opens-on-bunbury27s-outskirts/5919082
 

Appendices

Appendix 1.

Appendices 2 and 3.