NSW coffers took a $20.3bn hit when the state government created a for-profit corporation to hold rail assets, a new report says.
The NSW Auditor-General said in the new report the “fair value” of the trains and rail network decreased by that amount when the state transitioned ownership of the assets to the Transport Asset Holding Entity.
“When TAHE became a for-profit entity, it was required to change its valuation approach,” Auditor-General Margaret Crawford wrote in the new report titled “Transport 2021”.
“The value of a for-profit entity’s assets cannot exceed the cash flows they might realize either through their sale or continued use.
“This change in the basis of valuation resulted in a decrease of $20.3bn in the fair value of the assets … because the cash flows, which support measurement under the income approach, were insufficient to support the previous valuation based on the current replacement cost of those assets.”
Labor’s treasury spokesman Daniel Mookhey called TAHE a “budget con gone wrong” and blamed Premier Dominic Perrottet, who was treasurer when it was created.
“TAHE now looms as the biggest self-inflicted fiscal disaster to hit NSW in recent history,” Mr Mookhey said.
“The public would be $20bn better off if Mr Perrottet never created TAHE.”
Treasury was previously slapped with an “extreme risk” finding by Ms Crawford and told to clean up its act after a disagreement over TAHE accounting practices resulted in the discovery of a $5.2bn hole that needed to be plugged with taxpayer money.
TAHE is a for-profit state-owned corporation managing rail assets that replaced a prior non-profit entity.
The rail corporation charges the train operators Sydney Trains and NSW Trains to use the rail network and trains and gets most of its revenues from government contracts.