The NSW budget is at risk of being threatened after the auditor-general refused to sign off on the state’s finances unless a solution over “significant accounting issues” linked to a $14.6 billion black hole.
The state government is set to hand down its half-year budget update this week but Auditor-General Margaret Crawford refused to sign off on it on Monday night.
The stand-off has arisen after warnings there could be a $14.6 billion budget black hole over the next decade as a result of the valuation of $40 billion in transport assets.
NSW Treasury is arguing that should be considered as part of a new for-profit agency known as the Transport Asset Holding Entity (TAHE).
The black hole is a correction of $5.5 billion in transport expenses as well as a further $9.1 billion in expected off-budget transport spending in the coming eight years.
Ms Crawford is almost two months late in signing off on the budget due to “major outstanding matters” with TAHE.
The TAHE debacle has been inherited by current Treasurer Matt Kean from his predecessor Dominic Perrottet, who is now NSW Premier.
It has been described by former auditor-general Tony Harris as a “vehicle of deception” and “sham accounting”.
TAHE was established in June 2020 under the guise of a commercially independent body to escape the budget, but remain under the control of the government, and owns all of Sydney’s rail assets.
Ms Crawford has fought for months over TAHE with the Audit Office warning the delay could impact Treasury and Transport for NSW.
But any attempt to abolish TAHE is set to blow out a $14.6 billion hole in the budget over the next ten years.
Labor leader Chris Minns exploded about the revelation on Tuesday, claiming the black hole is confirmation “Dominic Perrottet had been cooking the NSW books”.
The deficit would jeopardise the state’s fiscal strategy of returning the budget into surplus by 2024.
The Sydney Morning Herald reports the auditor-general made it clear she did not accept the financial modelling for TAHE and is looking for a solution.
Ms Crawford has also pulled out of an appearance at a parliamentary inquiry into TAHE on Thursday.