Dominic Perrottet accused of using ‘accounting trick’ to deliver budget surplus | New South Wales politics

A NSW government-owned transport assets holding company should be shut down to ensure taxpayers do not pay billions to keep it operating, a parliamentary committee says.

The state’s premier, Dominic Perrottet, has been accused by the committee’s chair of using an “accounting trick” to try to deliver a budget surplus when he was treasurer by moving the state’s transport assets to a separate commercial company.

This allowed the cost of running NSW’s network to be “off the books”. However, the government has had to pay to keep the company afloat.

The final report of the NSW upper house committee inquiry into the Transport Asset Holding Entity, published on Friday, is a bruising indictment of Perrottet’s strategy at the time.

The investigation, led by Labor and the Greens, generated a dissenting report from government MPs who argued commercializing the state’s transport assets delivered greater transparency and accountability for taxpayers.

But the committee chair, Greens MP David Shoebridge, called the whole affair “scandalous” while Labor’s treasury spokesperson, Daniel Mookhey, dubbed it a “huge fiscal fiasco”.

“The key recommendation from this inquiry is that [the] TAHE be unwound immediately,” Shoebridge said on Friday.

“The entire rail network of NSW was used as an accounting trick.”

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The state-owned corporation was established to hold transport assets, including railways and trains, which Transport for NSW entities then paid to use.

One uncertainty was whether the funding given to rail operators – Sydney Trains and NSW TrainLink – to pay TAHE would be sufficient to produce the required returns from the entity.

In the end, the government was forced to raise the cash injections it gave TAHE because the commercial returns were lower than expected.

Shoebridge said if TAHE was left operating, it would need annual cash injections.

Mookhey said the entity risked blowing a $10bn hole in the NSW budget over the next decade – money that could be spent on crucial infrastructure, including hospitals.

During the hearings, the committee heard accusations of bullying, with the former KPMG partner, Brendan Lyon, alleging he was pressured to amend a report critical of the model.

Evidence given by the NSW Transport secretary, Rob Sharp, in February alarmed NSW auditor general, Margaret Crawford, who said a recent audit of the state’s budget had been thrown into doubt by Sharp’s evidence.

The inquiry recommendations included axing TAHE, giving the Audit Office independent funding, allowing outside consultants to give “genuine independent advice” and for NSW Treasury to review how it engaged with the auditor general when she was reviewing the state’s budget finances.

The NSW treasurer, Matt Kean, said the report was a “concocted” political attack.

He pointed to an independent review already under way about how Treasury dealt with the Audit Office and dismissed safety concerns as “misleading”.

“The government will respond to the parliamentary inquiry in due course,” Kean said.

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