Tasmania’s government-owned ferry operator was on the brink of insolvency during July’s state election, forcing an emergency bailout from the caretaker government, a parliamentary inquiry has heard.
TT-Line informed the Liberal government on July 25 that it was facing a liquidity crisis and couldn’t wait until after the election for financial support.
The following day, the government provided a guarantee that allowed state lending authority Tascorp to lift the company’s loan limit.
New TT-Line chair Ken Kanofski told the Public Accounts Committee on Tuesday the company had initially believed it could hold off on the request.
“We changed our advice to the government and said ‘we no longer think we can wait until after caretaker’,” he said.
Then-treasurer Guy Barnett had described the approval as a “routine requirement as part of the ordinary course of business”.
The hearing also revealed a costly design blunder that will set taxpayers back $9 million to fix.
In mid-2023, TT-Line ordered changes to fender specifications at the new Devonport berth being built by TasPorts.
When TasPorts questioned the alterations and sought to confirm them with the shipbuilder, TT-Line refused permission.
“TT-Line insisted and said, ‘Dunno, we’re right, they’re our ships and we know what we’re doing’,” Kanofski said.
The mistake means $5 million will be spent replacing the fenders and another $4 million reinforcing the hulls of both new vessels.
Kanofski admitted the project had been plagued by weak oversight for much of its life.
“The project … did not have what I would call the normal checks and balances and governance that I would expect to see in a project of this scale,” he said.
TT-Line’s debt is now close to its original ceiling of $1.045 billion.
The company received a $400 million borrowing increase in July and is set to get a further $75 million to $100 million equity injection in next month’s interim state budget.
Kanofski said the current support would keep the company afloat for 18 to 24 months, but more government funding was likely to be needed after that.
The inquiry also heard that $60 million of the government’s promised $100 million in “local content” spending went towards Finnish, Swedish, UK and US-manufactured items ordered through an Australian intermediary.
Spirit of Tasmania V will leave Finland for Scotland this week, where it will be berthed at a cost of $600,000 a month.
Spirit IV is currently anchored off Geelong. Both vessels are due to begin Bass Strait services in October next year.
