Treasurer Eric Abetz has defended TT-Line’s long-term debt, comparing it to a home mortgage and insisting the government will back the company no matter what.
During a heated question time this morning, Abetz faced repeated questions from opposition leader Josh Willie about the Spirit of Tasmania replacement project and its debt burden stretching to 2052.
The Tasmanian Public Finance Corporation told a parliamentary committee on Monday that TT-Line would not clear its roughly $1.145 billion debt until 2052 and would likely need continued government support for years to come.
Abetz likened the repayment timeline to paying off a house.
“I recall when I first had a house mortgage, it was to be paid off over a period of 25 years,” he said.
“The life of a ship is usually 30 years or more and it will be repaid within 25 years of the 30-year life of the ship.”
He said the remaining five years would allow the government to build up capital for the next ship replacement.
Abetz blamed former TT-Line management for a cost blowout exceeding $700 million, saying they “let down the people of Tasmania exceptionally badly.”
“We now have a new board, a new CEO, new management and we are seeing a substantial turnaround in the circumstances of TT-Line”
Willie pressed Abetz on whether more taxpayer bailouts would be needed on top of the $581 million already committed.
“One person’s bailout might be seen as somebody else’s equity injection,” Abetz said.
“At the end of the day, what do we have? Two brand new ships plying the waters of Bass Strait … serving our tourism sector, serving our productive sector, with a 40% increased capacity.”
When asked whether passenger fares, vehicle fares and freight charges would rise to service the debt, Abetz refused to guarantee they would not, saying government business enterprises largely set their own prices.
He also warned the opposition’s repeated questioning of TT-Line’s solvency risked scaring the market.
“People will say, is my deposit safe? Should I book a holiday in 3 or 6 months’ time? Will TT-Line still be operational?” he said.
“I’m here to tell the market that yes, the TT-Line is operational, will continue to be operational and we as a government will back it in.”
Abetz said there was currently no indication further funding would be required beyond what had already been committed.
