The state-owned company that operates the Spirit of Tasmania ferries was insolvent when its books were audited in August, Tasmania’s Auditor-General has found.
TT-Line directors have rejected the finding, insisting the business remains viable despite ongoing financial pressures.
Auditor-General Martin Thompson handed down his verdict in a report on state entities released on Monday.
He said he concluded the government-owned company could not meet its longer-term debts when he signed off on its accounts three months ago.
“As a result, when I issued my audit report on 19 August 2025, it was my opinion that TT-Line was insolvent,” he said.
The company’s board has mounted a strong defence, pointing to hundreds of millions of dollars in untapped government loans and a recent $75 million bailout as evidence of its financial stability.
Chairman Ken Kanofski, in a statement, dismissed the auditor’s assessment.
“The board disagrees, based on specialist external advice, with the Auditor-General’s commentary on insolvency and remains confident of its position,” he said.
Kanofski said TT-Line had around $400 million in undrawn, government-guaranteed debt available, in addition to the $75 million bailout confirmed in last week’s state budget.
“And TT-Line has already almost fully paid for the new ships and has more assets than liabilities,” he said.
Under the Corporations Act, solvency assessments must consider whether a company can pay its debts as they fall due – a tougher standard than the 12-month ‘going concern’ test used in standard audits.
Thompson said his audit indicated TT-Line could likely pay its bills until August 2026, but he held serious doubts about its ability to service debts beyond that point.
The findings come as Tasmania’s government-owned businesses collectively recorded a $136 million drop in profit last financial year, while borrowings jumped by more than $770 million.
Interest expenses across state-owned enterprises nearly doubled, from $115.93 million in 2022–23 to $209.87 million in 2024–25, according to the report.
Direct government support rose by $52.84 million, while returns to taxpayers fell by $38.09 million.
“With the growing level of borrowings in the foreseeable future, interest expense will continue to rise,” Thompson warned.
He said mounting debt-servicing costs would further erode the ability of government businesses to generate profits, reduce their reliance on bailouts or pay dividends.
Kanofski acknowledged the new TT-Line board had inherited significant financial challenges and was developing long-term solutions to present to the government in coming months.
The state government is TT-Line’s sole shareholder and also provides and guarantees its debt, making it both owner and lender.
“We are very pleased that the government has confirmed its financial support for the company,” Kanofski said.
