Tasmania’s Treasury has often failed to give the treasurer the advice needed to properly oversee the state’s struggling government businesses, an audit report has found.
The report, tabled in parliament on Tuesday, reviewed more than 250 pieces of Treasury advice and analysis.
It found the advice often did not critically analyse information from the businesses, set out options, outline risks or make clear recommendations.
In some cases, the report found, advice came only after problems had already caused significant financial damage.
Auditor-General Martin Thompson concluded the framework governing the businesses was “not fit for purpose” because there was no effective monitoring of whether they followed the rules.
“We found that there is no requirement under the current framework for monitoring, reporting or enforcing compliance and that nobody effectively undertakes this role,” Thompson said in a statement.
The report found Treasury often summarised what the businesses told it rather than independently analysing it.
Treasury also relied on the businesses’ own forecasts, even when their track record warranted closer scrutiny.
In one case study, a business in urgent financial trouble modelled several rescue options.
The report found Treasury did not adequately assess the alternatives to the business’s preferred option.
In another, Treasury told the treasurer a corporate plan was “substantially compliant” despite it failing to explain how key risks would be managed.
The report said that business went on to suffer significant impacts.
Auditors also found one business paid $3.8 million in bonuses to non-executive staff without disclosing it in its annual report.
The report flagged a risk to the independence of advice because the head of Treasury also chairs the board of TASCORP, the state’s lender to government businesses.
It found returns to government had fallen from $423 million in 2018-19 to $159 million last financial year. Over the same period, borrowings rose from $2.63 billion to $4.85 billion.
In his statement, Thompson said recent reforms were positive but had not closed the biggest gap.
“Enhancing the guardrails and oversight of the sector is more important than ever given the financial underperformance and risks emerging across these businesses,” he said.
Thompson’s annual report on the businesses’ finances, also tabled on Tuesday, found they were a net cost to the budget of $584.6 million in 2025-26, up $351.5 million on the year before.
The businesses missed 64 of 128 financial performance targets in 2025-26.
The report noted TT-Line had disclosed uncertainty over whether it could continue as a going concern.
“What may have been missed in last year’s report is that TT-Line is not alone,” Thompson wrote.
In its formal response, published in the report, Treasury acknowledged there was “merit in considering additional measures to promote stronger compliance”.
Treasury secretary Gary Swain said the government’s proposed reforms, if passed, would give ministers new powers, including the ability to order independent reviews of businesses.
Treasury will advise the treasurer on improving compliance and transparency by June 30, 2027, after parliament considers the reform bill.
It has until December 31, 2027, to strengthen its internal processes.
During question time on Wednesday, Labor leader Josh Willie asked Premier Jeremy Rockliff: “Premier, how did you let it get this bad?”
Rockliff thanked the auditor-general and told parliament the government would work through the report.
He said the businesses were “enablers” for the economy. He pointed to TT-Line’s new ships, upgrades to the Port of Burnie and free bus travel on Metro.
Labor asked Rockliff to guarantee no other business would need a bailout.
He instead listed the government’s reforms, including “enhanced continuous disclosure requirements”.
The audit report found the reforms, including those still before parliament, did not require businesses to disclose significant matters to the public as they arose.
Rockliff rejected Labor’s claim in parliament that services were being cut to prop up the businesses.
“They’re not licensed to print money,” he said.
Later in question time, Labor MP and shadow housing minister Meg Brown said the auditor-general had issued Homes Tasmania a going-concern warning.
She told parliament the agency had racked up $142 million in losses, maxed out its borrowing limit and could only keep operating with taxpayer support.
Brown asked housing minister Kerry Vincent when he was first told Homes Tasmania’s future was in doubt and why parliament and the public had not been told before Tuesday.
Vincent said he first learned of the auditor-general’s findings about a week ago, when he received a draft of the report. He said there had been no formal briefings.
He said Homes Tasmania had little income beyond rent, which is capped at 25% of tenants’ income, so building more homes meant taking on debt.
“It’s a slow drip that we have to feed with debt and that will continue to happen. That’s our responsibility,” he said.
Vincent said 284 homes were under construction, with about 130 due to be finished before Christmas.
