Australia’s biggest ever infrastructure stuff-up just got worse

As if the saga of buying $1bn ferries but failing to build a wharf for them hadn’t hit enough rough seas, taxpayers may have to bailout a would-be operator.

Two new Spirit of Tasmania ferries face another year or more in mothballs - as well as an epic voyage home - at an eyewatering cost to taxpayers.

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As two new $930m Bass Strait passenger ferries face another 15 months or more in mothballs, there are growing fears taxpayers will have to bail out their debt-laden, would-be operator.

The potential bailout of TT-Line, estimated at “hundreds of millions of dollars”, is the latest twist in a saga dubbed the biggest infrastructure “stuff-up” in Australian history.

Finnish-built Spirit of Tasmania IV and V ferries have been handed to the state-owned TT-Line but cannot be used due to the state Liberal government’s failure to build a wharf for them.

Spirit IV is sailing from Scotland – where an estimated $5m-plus has been spent storing it since December 2024 – to Hobart, where it will sit in the River Derwent. Spirit V is also ready but is being stored in Finland, likely until after the Spirit IV crew have ­arrived in Hobart, rested and flown back to Europe to collect it.

Then both ships will sit in port or at anchor somewhere off Tasmania, gathering barnacles, until the new Devonport wharf is finally finished – in October 2026, at the earliest.

The new Spirit of Tasmania V in Finland. It will eventually come to Tasmania, but there is currently no suitable wharf from which it can operate.

TT-Line has been unable to find a suitable lessee for the new ships and can’t dispose of two old ships until the wharf is ready; leaving it funding four ships and slowly drowning in debt.

It expects to breach its $990m borrowing limit by October and has told state parliament’s public accounts committee it may need an equity injection before then. Multiple sources told The Australian a bailout of TT-Line was now a looming and very real proposition.

The Labor opposition – leading in opinion polls ahead of the snap July 19 state election – fears it will inherit a bailout crisis, on top of a looming $13bn in general sector debt, should it win government.

Labor Treasury spokesman Josh Willie on Thursday wrote to state Treasury secretary Gary Swain seeking an urgent briefing.

Mr Willie fears a bailout of “hundreds of millions of dollars” will threaten election spending commitments.

Labor Treasury spokesman Josh Willie at the Treasury Building in Hobart. He is demanding an urgent briefing ahead of the July 19 state election.

“I urgently seek your advice on the likelihood of an additional ­equity injection being required by TT-Line in coming months, as well as Treasury’s best estimate of the quantum of funding potentially ­required,” Mr Willie wrote in the letter, obtained by The ­Australian.

“Labor takes the responsible management of Tasmania’s finances extremely seriously, and I want to ensure all commitments made at this election will be ­delivered in full.

“Obviously, a bailout totalling potentially hundreds of millions of dollars would place the state budget under even further pressure.”

Mr Swain’s June 25 Pre-Election Financial Outlook Report warns the ferries fiasco is creating “financial and operational challenges for TT-Line” and could force a bailout. “There remains ­uncertainty in relation to TT-Line’s ability to service its debt funding requirements, so alternative options, including additional funding support, are likely to need to be considered by government,” the report says.

The Liberal caretaker government and Premier Jeremy Rockliff – who was this week lambasted by economists and insurers for ­announcing shock plans to create a new state-owned home and ­business insurer – declined to comment.

TT Line chair Ken Kanofski. Picture: Linda Higginson

TT-Line declined to comment on the feared bailout, beyond referring The Australian to evidence by its chairman Ken Kanofski to the public accounts committee in late March. Mr Kanofski told the committee that the TT-Line would “hit its current debt ceiling” of $990m around October and that an equity injection was one potential outcome, pending discussions with the Tasmanian Public Finance Corporation.

The ferries and associated wharf projects have been plagued by blowouts. The cost of the two ferries rose from $850m to $930m, on top of an $80m bailout of the Finish shipbuilder.

Devonport’s vital new wharf has blown out from $90m to $493m, while the lost economic benefits of not running the new vessels is estimated at $350m to $500m a year.