Tasmania’s Auditor-General has told a parliamentary committee he stands by his assessment that the state’s ferry operator is insolvent.
Martin Thompson ruled on July 11 that TT-Line could not repay its debts based on the company’s financial forecasts.
He reported the matter to the corporate regulator three weeks later. It became public this month.
“It was on the 11th of July that I formally formed a view that TT-Line was insolvent, in that the level of debt that they had at that point in time was not likely to be able to repaid based on the forecasts available,” Thompson said.
Asked whether anything had changed his view since, Thompson was blunt.
“Noting that we don’t have an ongoing monitoring obligation, but the short answer is no,” he said.
The government-owned company is dealing with spiralling costs from delayed ferry replacements and upgrades to the Devonport wharf.
It received a $75 million bailout in the recent interim state budget.
Thompson said he first raised concerns about TT-Line’s financial health in January.
By mid-May, after reviewing the company’s corporate plan, those concerns had only deepened.
“At that point, based on a review of that corporate plan, we had significant concerns about the viability of that plan,” he said.
He said TT-Line was formally notified of the breach in July and ASIC was informed on the last day of the month.
“… I had reasonable grounds to suspect the directors of TT-Line were in breach of the requirements of the Corporations Act,” Thompson said.
But Treasurer Eric Abetz rejected the assessment, arguing the government’s backing made insolvency impossible.
“No government, irrespective of its hue, would allow it to fail. It means that it will continue to be able to pay its debts because the government will ensure that that is the case,” he said.
Premier Jeremy Rockliff told a separate committee he became aware of the solvency concerns around July 21, while the government was in caretaker mode following the inconclusive election two days earlier.
New Labor leader Josh Willie said he was briefed on July 26 about a loan increase from $990 million to $1.4 billion, but wasn’t told about the insolvency finding.
“It is impossible to believe this was done for any other reason than to keep the scale of the company’s financial woes secret from Tasmanians until he had been returned to government with the support of the Greens,” Willie said.
TT-Line directors have rejected the insolvency finding, insisting the business remains viable despite ongoing financial pressures.
“The board disagrees, based on specialist external advice, with the Auditor-General’s commentary on insolvency and remains confident of its position,” chairman Ken Kanofski said earlier this month.
