'Insolvency' scare: did TT-Line consider halting new Spirit bookings?

Updated 17 days ago by Matt Maloney

Treasury head Gary Swain has told a parliamentary committee that TT-Line's board considered not accepting new bookings for the Spirit of Tasmania this year due to the company's financial difficulties.

But this has been denied by the head of the board.

Appearing at the Public Accounts Committee's inquiry into the Spirit vessel replacement project, Mr Swain stated that the department had been informed in July that the state-owned company was considering a range of options to reduce its financial obligations.

"They had separately been considering their own position in terms of things like accepting new bookings and whether that was appropriate in all the circumstances," he said.

Mr Swain said that, as the board was made up of new members at the time, every financial liability held by the company was under consideration, including payments for capital works.

Later in the hearing, Treasurer Eric Abetz said he had received advice from TT-Line's chairman Ken Kanofski that "at no point has TT line considered ceasing ticket sales".

"So I don't know where that has come from," Mr Abetz said.

Public Accounts Committee chairwoman Ruth Forrest replied: "From your secretary."

After the hearing, a TT-Line spokesman said the board considered scenarios around preserving the revenue from ticket sales beyond the time the company had secure funding.

"This was ultimately not required as funding was provided," he said.

The board's considerations over company finances were made after the state's Auditor-General expressed his belief to Tascorp in July that the company was operating while insolvent, or unable to pay off its debts.

Tascorp subsequently contacted TT-Line's board on the matter.

In the same month, the company's borrowing limit was increased from about $990 to $1.4 billion.

Mr Swain said following the July election, Treasury advised the incoming government about the need for an equity payment to TT-Line due to its significant financial difficulties.

"We advised the incoming government that it should make an equity payment in this budget and may need to do more in a subsequent budget," he said.

"We had had some indications from the business that it would be seeking $100 million, but we would typically take the view that you don't want to put excess equity into the business.

"So looking at the other pressures on the budget and other calls for equity from other businesses, we recommended a lesser amount than that, which was $74.5 million.

"The intent there was to send a strong signal ... that the government would act, and it has acted at the earliest opportunity."

TT-Line's management is undertaking a full review of its finances, and Mr Swain said this would inform whether more financial assistance was needed from the government, and if so, how much would be needed.

"We will receive more information from TT-Line in January in relation to that work, which will then allow us to form a view and provide some advice to the Treasurer in the lead-up to the next budget," he said.