The cover-up of a ‘financial mirage’ that has inflated the NSW budget and may put rail safety at risk
The NSW government has attempted to cover up how it artificially inflated the state’s budgets by tens of billions of dollars after it shifted the rail network’s costs onto a corporation – known as the Transport Asset Holding Entity (TAHE) – that still hasn’t been able to properly operate six years after it was launched. TAHE was part of a plan hatched in 2014 to set up a shell corporation to shift billions of dollars of expenses off the state budget and into a new rail body.
Highly confidential documents and whistleblower testimonies reveals NSW Treasury pressured accounting giant KPMG to delete or amend aspects of a report commissioned by Transport for NSW that found the plan could end up costing the state’s coffers more than it saved.
“It’s a financial mirage because you are seeing something that isn’t there,” Former NSW auditor-general Tony Harris said. “It was designed to avert the prospect of the state losing its AAA credit rating by creating an apparent surplus through an accounting gimmick.”
Whistleblowers also fear the new structure will fragment accountability and could eventually lead to train disasters on the scale of the Waterfall or Glenbrook tragedies, which claimed the lives of 14 passengers. Senior transport officials feared the new structure could repeat the 1990s carve-up of NSW railways and the resulting gaps in safety and investment accountabilities; key factors in both tragedies.
“When they created this construct, they did it knowing there were safety risks, and they did it anyway in the hope they could find a way to manage it,” one of the whistleblowers said. “The fact now that the numbers don’t stack up, and they try to cover that up, just makes the whole thing wrong.”