Tasmania’s auditor-general says that Spirit of Tasmania operator TT-Line was insolvent in August, but the state-owned company has disputed that claim.
Auditor-General Martin Thompson released a report on Monday into the financial statements of state entities, pointing out the financial challenges facing TT-Line, along with the Motor Accidents Insurance Board (MAIB).
His assessment of TT-Line came after its borrowing limit was increased from $990 million to $1.4 billion, but before the government provided a $75 million equity injection.
Spirit of Tasmania IV, pictured, has arrived in Tasmania and is due to enter operations in October 2026. (ABC News: Monty Jacka)
The report stated that TT-Line could meet its short-term debts, but not for the long term.
“I developed reasonable grounds to suspect that the company would not be able to meet its longer-term debts that fall due after the relevant period,” the report reads.
“I issued my audit report on the financial statements of TT-Line on 19 August 2025. At that date, it was my opinion that TT-Line was insolvent, in that it had incurred debt that it did not have the ability to repay.”
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Over the past four years, TT-Line has gone from a $4.2 million underlying profit to a $24 million loss, while it provided no returns to the government in the past financial year.
Passenger numbers also declined by 4.9 per cent in the past financial year.
TT-Line is coming to the end of its scandal-plagued ferry replacement, with both new vessels expected to start operating in October next year.
It has also undergone major changes in its board and management, withdrawn its corporate plan, and is creating a new corporate plan, which it expects to provide to the government in the coming months.
It is yet to draw down on its $400 million increased debt capacity.
The company’s board disagreed with the auditor-general’s comment about “insolvency”.
Ken Kanofski refutes that TT-Line was insolvent. (ABC News: Monty Jacka)
Chair Ken Kanofski said the board “remains confident of its position”.
“TT-Line has already almost fully paid for the new ships and has more assets than liabilities,” he said.
“The directors and management, with the assistance of our specialist advisers, continue to work on developing a range of long-term financially sustainable options for the government to consider.”
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Ferry operator’s finances questioned
TT-Line’s finances faced extensive scrutiny during a parliamentary hearing last month.
During an exchange with Labor’s Dean Winter, Mr Kanofski agreed that — without the increased debt limit approved in July — the company would have faced insolvency.
Dean Winter: When did you raise concerns with the minister around the solvency of the business?
Ken Kanofski: In the lead-up to the debt refinancing … we had provided advice to the government that said we think we need that by September/October this year.
Mr Winter: Because you’re running out of cash?
Mr Kanofski: We were running out of borrowing capacity. Without that, we were out of cash.
Mr Winter: Unless you got that additional borrowing capacity, you would have been insolvent?
Mr Kanofski: I think that’s very clear on the numbers.
In a director’s declaration, TT-Line outlined why it believed it had the capacity to repay its short-term obligations.
Dean Winter questioned TT-Line’s finances during a parliamentary hearing last month. (ABC News: Ebony ten Broeke)
This included an expectation that shareholders — which includes a shareholder minister — would approve an equity injection and, if required, asset sales and a restructure.
TT-Line is expecting to sell Spirit of Tasmania I and II once the new vessels start operating.
In its latest annual report, the vessels were valued at $85 million each.
A restructure could also be part of the revised corporate plan expected in the coming months.
Risk increased for MAIB
The auditor-general’s report also highlighted a deterioration in the MAIB’s underwriting over the past five years.
The underwriting result has dropped from a $61 million profit in 2021 to a $41 million loss in 2025, expected to drop again to $49 million loss by 2029.
Its investment income is also forecast to drop significantly.
“The deterioration in the underwriting result means that MAIB’s insurance activities are no longer profitable throughout the forecast period and MAIB is reliant on positive investment returns to generate profitable operations,” the report reads.
“The increased reliance on investment returns and the volatility within those markets, increases the overall risk of operations for MAIB.”
Home and contents insurance would be on offer from TasInsure, the proposed state-owned insurer. (ABC News: Luke Bowden)
The government has proposed the creation of a new general state-owned insurer, TasInsure, as a commercial arm of the MAIB, leveraging the MAIB’s balance sheet.
It has set aside funds for a “scoping study”.
No business case was created prior to the TasInsure announcement in the election campaign, nor did a right to information request uncover any prior advice from treasury on the policy.
