New South Wales auditor general Margaret Crawford has refused to sign off on the state's 2020-21 financial report due to significant accounting issues related to the Transport Asset Holding Entity (TAHE). The standoff threatens political careers and could put the state's credit rating at risk if unresolved.
TAHE, a state-owned corporation holding rail assets worth about $40bn, was created from the former RailCorp last year. The government argues it optimises state funds, but the auditor general has long warned that treating rail assets as commercial entities can artificially improve budget results.
Former auditor general Tony Harris noted that from 2015-16 to 2019-20, classifying RailCorp as a commercial corporation reduced budget expenses by $14.3bn, despite it never making a profit. He described the accounting as 'artificial'.
Treasurer Matt Kean faces difficult options: sign a qualified report, call a review, or reject TAHE's commercial status. The latter would likely delay the predicted return to operating surplus by 2024, embarrassing Premier Dominic Perrottet, who oversaw TAHE's creation as treasurer.
The dispute comes just days before the state's mid-year review, with the Audit Office months overdue on signing off the finances. The Greens and Shooters, Fishers and Farmers Party are leading an upper house inquiry into TAHE.
