NSW budget approved despite uncertainties
NSW’s budget was approved despite “significant uncertainties” that could see the government spending billions on public transport over the next decade.
Auditor General Margaret Crawford approved state finances on Friday, after delaying approval of the budget due to “significant accounting issues … which could impact the Treasury and Transport clusters.”
She based her assessment on draft figures that had not yet been finalized.
Ms Crawford said on Friday she was now of the view that the financial statements ‘present fairly the financial position, financial performance and cash flows’ of the government, but she noted there were still ‘significant uncertainties’ about the Transportation Asset Holding Entity.
The Crown corporation was set up to own transport assets, including railways and trains, which Transport for NSW entities pay to use.
Treasury Secretary Michael Pratt told a parliamentary inquiry into TAHE in December that it “was set up to pursue government policy on microeconomic reform in order to put in place the most optimal structure for managing the assets of transport”, dismissing the allegations of “accounting trickery” as “false accounts”. “.
Treasurer Matt Kean welcomed the approval of state finances and said many teams “worked on the many complex accounting standards, including the accounting treatment of various state corporations”, including TAHE is part.
He says that the Auditor General’s approval shows that the government’s accounts faithfully and accurately reflect the state’s financial situation.
Opposition Treasury spokesman Daniel Mookhey said TAHE had gone from the “budget swindle” it has always been to a “full-fledged budget disaster”.
“Taxpayers will have to take on even more debt to prevent TAHE from unraveling state finances,” Mr Mookhey said.
TAHE expects to achieve pre-tax net profitability by the end of the next fiscal year, when it can start paying dividends to the government or reinvesting in more assets.
The government’s mid-year budget review provided an additional $1.1 billion to TAHE’s “key customers” – namely the Transport for NSW agencies – until June 30, 2025.
Ms Crawford says the spending review committee has been told an additional $4.1 billion is needed for the six years to 2031, but this has not yet been included in the government’s budget figures.
Its report also notes that “a significant portion of the required returns are earned” after 2031.
A meeting between TAHE and its “key customers” took place in December, during which the entity signaled its “intention to negotiate higher access and license fees to meet shareholder expectations of a return 2.5% and includes proposals for future indicative access and license fees”. .
The expected annual rate of return rose from 1.5% four days before the meeting was held.
The return is expected to be earned over the next 33 years, covering the estimated remaining useful life of TAHE’s assets.
Ms Crawford says there is a risk that operator funding will not be sufficient to pay enough access and license fees to meet TAHE’s profit projections and that the higher access and license fees are not yet reflected in binding contracts.