As at 30 June 2013 there was some $60 million in the TT Line tin to buy two new Spirit of Tasmania Ferries. TT-Line could afford loan servicing costs of about $10 million per year hence borrow a further $100 million.
Since then, interest rates have collapsed and $10 million a year in interest at 3% should allow you to borrow $300 million but the ships cost $850 million.
The public however will never be allowed to know the real cost of supply, for written into the contract is a floating $100 million that will never be properly accounted for under the auspices of goods supplied from Tasmania.
The deceptive Liberal Government will have to borrow $850 million in the next three years to pay for the Spirits and as a result it is I suggest, in breach of its fiduciary duty as it does not have the money.
The Treasurer Peter Gutwein’s budget forecast for Tasmania predicted a budget surplus in 2016/2017 as did the Federal liberals; theirs was a lie and Gutwein lied when he declared a surplus of $77 million for the financial year 2016-2017.
To achieve this miracle, he as the people’s director on the board of the GBE, TT-Line removed the money from the TT-Line account: money that was being saved up to buy the replacement ferries and put the TT-Line funds into TASCORP. This dodgy transaction was the source of the Gutwein miracle.
What did the directors of TT-Line a government business have to say about this?
Were they outraged or is the job only a maaates sinecure that pays well when you do the government’s bidding?
Did the Chairman of TT-Line try to defend this looting of his company funds by the Government Shareholder Ministers on his Board ?
A ray of light on this dodgy accounting was shone on by an Independent in the Legislative Council on Thursday 16 March 2017:
Ms FORREST ( Murchison ) – Mr President, I am not opposed to spending TT-Line funds on TT-Line business…
There are a number of ways parties with an interest in the company, in this case shareholders who own and control all the issued shares, can dictate and control how a company operates… I have never previously heard of shareholders compelling a company to hand over funds to be held by shareholders in a separate account, effectively in trust for the shareholders…
I cannot imagine, for example, BHP shareholders telling the board they do not trust them with the money on important and necessary future infrastructure so give us $40 million or $80 million or whatever it might be, and we will put it in a trust account to return to you at a later time, when we think you need it…
I would like the Leader to advise who initiated this process. Was it the TT-Line that suggested this course of action as proposed in the bill, or was it the Government?…
I asked the Leader why this process has not been proposed via an equity withdrawal. Again, a coincidence; an equity withdrawal would not have any effect on the Government’s bottom line. I bet my bottom dollar that when the Government decides to return the funds to TT-Line, it does so as an equity injection rather than a grant…
A grant would obliterate the bottom line where an equity injection has no effect. Another coincidence I suspect. You take it as a dividend, improve your bottom line; put it back as an equity contribution and no damage to your bottom line…
There is no long-term future in treating us like idiots, which appears to be what the Government is doing here. If the Government’s sole aim is to ensure the funds are only used to buy replacement vessels, I challenge the Government to take the funds out as an equity withdrawal and put them back as capital grants.
That is the question I have for the Leader. If the Government agreed to do that, then I would have some comfort that it is not just about propping up the bottom line and basically effecting an illusionary surplus. Put the Government’s bona fides on display for all to see…
To claim the Government is back on track and in surplus on the back of some sort of policy as this is disingenuous at best. Other members have raised similar concerns, so there are a number of questions that need answering. I believe that TT-Line has a very strong interest in getting its investment right and being able to replace the vessels.
The Treasurer said in his budget speech, or sometime around that, he did not want another party getting their grubby little mitts on this money. TT-Line know it has to replace a vessel at some stage. A former government gave TT-Line a dividend holiday to enable that which helped fund the refurbishment that the member for Apsley spoke about. TT-Line has acted responsibly. Why do we not trust them now?
If we had newspapers in Tasmania that were not clones of Government, a report of this theft of TT-Line money specifically reserved to pay for the two new ferries would have received proper comment and publicity.
Another third rate Liberal Minister, Rene Hidding, then Minister for Infrastructure now fighting a child sex allegation, was sent in to bat for the Liberal government:
… we are Building Tasmania’s Future by ensuring we can pay for the Spirit replacement vessels through our Vessel Replacement Fund.
This year’s Budget will include an additional $100 million to be allocated into the fund, ensuring Tasmania is well placed to meet the future replacement cost of the Spirits as the money will be locked away and only able to be used for that purpose.
This additional cash injection will comprise $80 million from TT-Line, and $20 million from the Budget.
Our strong financial position allows us to ensure the money will be available when the time comes for the ship replacements in the early 2020s, with the total amount in the Fund now projected to be $180 million by the end of the forward estimates.
When the transcript of the Legislative Council Estimate Committee of 3 June 2019, held before the pandemic the problem over the removal of the money became more apparent. The needle in the Liberal haystack, is again Ruth Forrest, who as the Chair asked a few salient questions of Peter Gutwein , Treasurer, Minister for Local Government, Minister for State Growth Department of Treasury and Finance and Tony Ferrall the bureaucrat in charge of his department:
CHAIR – The $40 million dividend that went twice to TASCORP, we were told last year the money had been transferred back to TT-Line to pay the deposit. The deposit still hasn’t been paid, as you say. Where is that money now? Is it still with TT-Line?
Mr GUTWEIN – It is held by TASCORP.
Mr VALENTINE – Is it in the overseas account in France, or wherever it is?
Mr FARRELL – No.
CHAIR – Was the money transferred back to TASCORP?
Mr FARRELL – TT-Line holds it. It’s on deposit with TASCORP. It has effectively re-deposited it…
Mr GUTWEIN – It was taken out of the Vessel Replacement Account and put into an account with TT-Line, which is managed by TASCORP.
CHAIR – How much of that $80 million in special dividends went into TASCORP from TT Line? How much of that is still in the TT-Line Vessel Replacement Fund?
Mr GUTWEIN – The estimate of the TT-Line Vessel Replacement Fund balance at the end of 2018-19 is $40.8 million, the difference between the $81 million paid out to TT-Line in the 2017-18 year, unless there’s further advice.
CHAIR – This is the money they put into the separate fund with TASCORP? There is still $40 million in that, and you are also committing some additional capital when they need it to buy the new vessels.
Mr GUTWEIN – There is, yes. We have bought TT-Line into line with the government standard dividend policy of 90 per cent rather than take special dividends from TT-Line, and the Budget is clear on this. All those funds over the course of this Budget will be deposited into the Vessel Replacement Fund and made available for TT-Line…
Mr FARRELL – I won’t guess. TASCORP placed the funds of $81 million in a foreign currency account because there was going to be an immanent settlement. As time went by it was moved back to an Australian dollar account. TASCORP has hedging arrangements in place for TT-Line for the vessel replacement and they have had to be revised a number of times with potential changes in the delivery date and timing.
As these dodgy pollies juggled our public money between accounts to cover their bungling, shonky political manoeuvring and lying they actually signed a Memorandum of Understanding to buy two new ferries from a small shipbuilder in Finland Rauma Marine Constructions, thanks I suggest to the lobbying of Paul Lennon.
Was Peter about to pay Paul?
The Chairman and the Chief Executive Officer TT-LINE Company Pty Ltd in their Annual Report 2019/20. Commented on this signing as follows:
Chairman
Though it occurred outside the reporting period,[July 2020] it is important to reference the decision by the Tasmanian Government not to proceed with the current proposed vessel replacement contract with Finnish ship builder Rauma Marine Constructions (RMC).
The government advised the Company that, given current and emerging economic problems caused by COVID-19, there needed to be further consideration of local content and manufacturing jobs in Tasmania and Australia as part of the overall vessel replacement project. As the Premier and Minister noted at the time of the public announcement, the decision was not a reflection of the quality of the business case developed by TT-Line, nor the ability of RMC to deliver the proposed contracts. It remains TT-Line’s view that it is essential that the vessels are replaced in coming years to support the continued growth in the passenger and freight transport needs of the State that exist despite the impact of the COVID-19 pandemic…
CEO
In February 2020 it was announced that the Flensburger Schiffbau-Gesellschaft (FSG) shipyard would not build TT-Line Company Pty Ltd new Spirit of Tasmania vessels. The decision was mutually agreed by TT-Line and FSG. [ They did not have Lennon as a lobbyist]
TT-Line then, with approval from our Shareholder Ministers, signed a Memorandum of Understanding with Finnish based Rauma Marine Constructions (RMC) and commenced contract negotiations and agreed final design specifications. The TT-Line Board submitted an updated business case to the Government, following a unanimous Board recommendation, for TT-Line to sign a new ship construction contract with RMC. That recommendation was considered and subsequently not endorsed by the Shareholder Ministers.
No mention is made that the board had its power over the purchase of the two new ferries had been removed via a Statement of Corporate Intent:
Financial Returns to Government
TT-Line’s shareholders have confirmed that TT-Line is no longer solely responsible for accumulating funds to meet the replacement cost of the existing vessels…
This Corporate Plan reflects the payment of a special dividend of $40 million in 2018/19… spiritoftasmania.com.au/media/718534/tt-line-statement-of-corporate-intent-1920.pdf
In this document the board of TT-Line gave the two shareholder ministers Gutwein and Ferguson control in June 2019. I can see no mention of this by either the Chairman or the CEO in the Annual Report for 2019/2020.
The shareholder ministers flexed their muscles when they then canned the Memorandum of Intent as they had no money and could not repay the funds to TT-Line, .
This was potentially a disaster for the lobbyist Paul Lennon but he is sufficiently powerful to get this article up in the Examiner on 5 Feb 2021:
Former Tasmanian Labor Premier Paul Lennon says a high speed catamaran across Bass Strait would not be reliable or safe, would damage Tasmania’s unique brand and cost the economy and community billions of dollars.
Mr Lennon has prepared a submission for Rauma Marine Constructions in Finland to the state government’s taskforce considering replacements for the two Spirits of Tasmania which will report in coming weeks.
“Time is of the essence,” Mr Lennon said.
“Tasmania’s unique brand is under threat with our vital tourism and high value perishable freight industries rapidly losing business confidence given that the Tasmanian Government’s most welcomed original, highly scrutinised and correct decision has been paused with downstream industries rightfully voicing utmost concern on this and many other fronts, particularly the timing of delivery of the two new ferries, and their quality and reliability for Bass Strait’s treacherous conditions.
“Surely, the predominant interest of the Tasmanian Government through this process is to ensure we get the best available ships that will service Tasmania well for the next 30 years and will give confidence to our tourism operators and primary producers to invest, grow and create long-term jobs in those sectors of the economy.”
The only problem here is that there is no disclosure that Paramul Pty Ltd., the holding company for the Lennon husband and wife lobbying company https://lobbyists.dpac.tas.gov.au/lobbyists/paramul_pty_ltd , is retained by Rauma Marine Constructions along with: ARTEC; Federal Group; Midway Ltd; Steritech; Neville Smith Forest Products Pty Ltd; The Marriner Group; Patriarch Resources; UTAS, to promote their various causes within the Tasmanian political elite.
The final signing of the contract drew this comment from the European Ferry blog site Shippax:
The vaudeville to build two next-generation ro-pax ferries for Spirit of Tasmania’s Devonport-Melbourne Bass Strait service locally has definitively come to an end following the signing of a firm contract with Rauma Marine Constructions (RMC) in Finland.
Already last month, the Tasmanian government had given the green light to TT-Line Company to resume negotiations with RMC for a period of 30 days. In the event that TT-Line and RMC were not able to reach a contractual agreement in these next 30 days, the contract would have proceeded to open market.
In February 2020, TT-Line signed a Memorandum of Understanding (MOU) with RMC after Flensburger Schiffbau-Gesellschaft (FSG) and TT-Line had mutually agreed to cancel its double-order at the then financially troubled German shipbuilder.
Then, in July 2020, the Tasmanian government forced the TT-Line board to withdraw from the MOU it had signed with RMC. On account of COVID-19, state premier Peter Gutwein announced the government would rather explore local procurement and manufacturing options, making decisions that presented the greatest opportunity for local and Australian manufacturers.
Construction of the new 212m long ro-pax pair will start in spring 2022 with the first vessel to be delivered in late 2023 and the second one in late 2024. The MOU from February 2020 targeted a late 2022 delivery for hull number one and late 2023 delivery for the second ship, so about one year has been lost due to political interference.
Replacing the 1998-built, 1,140-passenger and 1,852-lanemetre capacity SPIRIT OF TASMANIA I and SPIRIT OF TASMANIA II, the new 48,000gt LNG-powered ro-pax ferries will have a capacity of 1,800 passengers and about 2,500 lanemetres on two freight decks. As a first for TT-Line Tasmania, the ferries will boast a separate upper car deck.
According to TT-Line Chairman Michael Grainger, the contract will include up to CAD 100 million of local content. He also said that despite some increases in material costs, at current exchange rates, the building price was likely to be cheaper than the previously negotiated price pre-COVID-19, without quoting an exact price on the basis of commercial confidence…
The agreement with TT-Line increases the yard’s orderbook to approximately EUR 1.6 billion. Last year, the Finnish shipbuilder’s net sales more than quintupled from EUR 38.1 to EUR 220.1 million, whilst operating profit soared from EUR 1.9 million in 2019 to EUR 6.7 million in 2020.
The ABC can claim some credit here when Leon Compton tried to shine some light on the matter as a major election issue on his morning breakfast program after Easter, nobody from the Liberal government would appear and within 48 hours the contract was signed by video link.
This with the claim that $100 million would in some way flow to Tasmanian companies. If a 10% commission is paid for getting the deal done to Paramul Pty Ltd this would see the majority of this money suitably accounted for within Tasmania. https://lobbyists.dpac.tas.gov.au/lobbyists/paramul_pty_ltd
Without the order from Tasmania this small shipbuilding company reliant solely on a Finnish Government contract for four ships to keep it in business would have had no orders by the beginning of 2022.
Maybe it was saved by the efforts of a former disgraced Labour Premier Paul Lennon at the last minute; if this is so I hope he is suitably rewarded!
Was Peter robbed to pay Paul?
John Hawkins was born and educated in England and now calls Tasmania home. He is the author of ‘Australian Silver 1800–1900’ and ‘Thomas Cole and Victorian Clockmaking’ and ‘The Hawkins Zoomorphic Collection’ as well as ‘The Al Tajir Collection of Silver and Gold’ and nearly 100 articles on the Australian Decorative Arts. He is a Past President and Life Member of The Australian Art & Antique Dealers Association. John has lived in Australia for 50 years.
TASMANIAN TIMES: Govt Announces Spirits Deal with Local Content.
