TT-Line may need government bailout

TT-Line might not be able to borrow all the money it needs to finance its new ferries and berth without a bailout, the state government’s finance arm chief says.

The newly built Spirit of Tasmania IV passenger ferry arrives at Port of Leith to be. mothballed for up to two years

TT-Line might not be able to borrow all the money it needs to finance its new ferries and berth without a bailout, the state government’s finance arm chief says.

Tasmanian Public Finance Corporation chairman Tony Ferrall has told state parliament’s Public Accounts Committee that increasing costs and delayed revenue may mean TT-Line could not borrow all the money it needed.

The government-owned ferry operator has faced delays to the delivery of its two new ferries because berthing facilities in Devonports aren’t yet ready.

Mr Ferrall said TT-Line’s financial position had changed over time.

“They’ve had I suppose what you might call a perfect storm in terms of all of the things that could go wrong have gone wrong and they all imply additional costs, additional borrowing and changed time frames,” he told the committee.

Tony Ferrall chairman Tasmanian Public Finance Corporation. GBE hearings 2024. Picture: Nikki Davis-Jones

“I don’t want to say that the business case won’t be still positive.

“TT-Line’s a good business, it’s profitable business, it in some ways runs a sort of an effective monopoly but it might be that even with those factors it’s still unable to support the level of debt that might be required now, in circumstances where you’ve got cost increases related to the project itself and you’ve got a longer period of deferred revenue

“We may find that from a Tascorp perspective, it’s difficult for us to support the level of borrowing.

“You might find that there needs to be a scenario where TT-Line doesn’t pay any dividends, that it might need additional equity from the government to reduce the borrowing.”

Mr Ferrall said the updated financials underpinning the TT-Line business case was not precisely known.

“It could well be that TT-Line is in a position where it needs some form of equity or other support because it’s not able to borrow the full amount that might be required going forward, but that’s unknown at this stage,” he said.

“The reality is, if they can’t support that level of borrowing, then given the nature of the vessel and it’s importance to Tasmania, then I think quite obviously, the government would need to provide some level of support if those costs are so high.

“We can’t ascertain what the future position will be until at least we have some projections from TT-Line encompassing the additional costs that they believe they will need to meet.”

Shadow Treasurer Josh Willie said: “The holder of TT-Line’s debt has revealed it is dead certain there will be further cost blowouts to the Devonport berth construction project, and the company still has no idea what the total cost will be.”

“The project is already half a billion dollars over budget and counting. Just how much more money is Premier Rockliff’s Spirits fiasco going to cost Tasmanians?

“Stunningly, TasCorp Chairman Tony Ferrall has also revealed that TT-Line’s borrowing limit will only get the through to September, and a state government bailout of TT-Line in the future is more likely than not.”