Spirit of Tasmania ferry operator to be in debt until 2052, inquiry hears

The operator of the Spirit of Tasmania ferries is expected to remain in debt until 2052, a parliamentary committee has heard.

State-owned company TT-Line faces a troubled financial state as it wrestles with the fallout of the botched delivery of its two new Bass Strait ferries, which are expected to come into operation in October after years of delays.

The project has cost $717 million more than was forecast when it began in 2018, largely due to cost blowouts for the new berth facilities in Devonport.

This year, the Tasmanian government announced the company would receive a $506 million bailout, with $200 million of that included in the 2026–27 budget.

TT-Line's borrowing limit was also increased by $400 million to $1.4 billion.

On Monday, representatives from state-owned financing company TASCORP appeared before parliament's public accounts committee, which is looking into the ferry replacement project.

TASCORP chair Gary Swain told the committee TT-Line was a business that would have a "high level of debt for a considerable period of time", which will have to be "monitored very carefully by the lender … TASCORP".

Asked about the company's debt levels, Mr Swain said "meaningful debt reduction" by TT-Line was not expected until the early 2040s.

He said that debt was not expected to be cleared until 2052.

TASCORP chief executive Heath Baker told the committee that debt levels were expected to drop below a billion dollars by the 2030 financial year, aided by the state government's cash injection.

Committee chair Ruth Forrest asked the pair if they were confident TT-Line would be able to continue operating under that level of debt.

Mr Swain said while the company would likely be "constrained in what they can do from a capital perspective", it was "highly unlikely" any government would allow them to fail.

"The reason that the business is in public ownership in the first place is it's a service that's required by the community,"

he said.

He said the company's financial position would continue to be monitored closely, and that "the level of risk and uncertainty is removing or reducing, because the vessels will be in operation and the berths will be complete".

Mr Swain said TASCORP was confident TT-Line would be able to pay the debts owed to it, when due.

"Yes … within the context of the government guarantee, because if we didn't believe that, we wouldn't have lent them the money," he said.

Earlier in the hearing, the committee was told TASCORP expected to be in a position to make a recommendation soon on TT-Line's proposed longer-term borrowing limits and debt profile, following a meeting in September.

The committee heard that the long-term forecast would be more accurate than the one provided from TT-Line to TASCORP earlier in the year, which contained several assumptions and unknown costs.

"We don't want to conclude our assessment about the long-term sustainability of TT-Line until we've got the most recent up-to-date financial forecast," Mr Baker said.

Corporate regulator seeks update

In July last year, Tasmania's Auditor-General Martin Thompson formed the view that TT-Line was insolvent, arguing the company would be unable to address its debts in the long term — a claim repeatedly disputed by TT-Line.

The corporate regulator, Australian Securities and Investments Commission (ASIC), has since written to the auditor of TT-Line seeking an update.

"ASIC assesses all information it receives in accordance with its statutory functions and regulatory processes," ASIC wrote in a letter addressed to committee chair Ruth Forrest.

"If information raises concerns about possible non-compliance … ASIC would consider it to determine the appropriate regulatory response."