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Transport entity not ‘accounting trickery’

The NSW Treasury secretary has defended the controversial Transport Asset Holding Entity that has delayed the finalisation of the state budget.

Treasury secretary Michael Pratt has told a parliamentary inquiry into TAHE there are a number of issues that Treasury is working through with the auditor-general.

However, he declined to provide detail in order to avoid compromising the auditor-general’s position.

Margaret Crawford has not signed off on the state’s accounts yet due to concerns over TAHE and has been basing her evaluation on draft figures that Mr Pratt says will be finalised on Thursday afternoon.

The NSW government has been accused of using complex accounting to inflate the state budget by creating TAHE to hold $40 billion worth of transport assets.

Mr Pratt rejected the assertion it amounted to “accounting trickery”.

“TAHE was created to pursue government policy on micro economic reform to bring about the most optimal structure for the management of transport assets,” Mr Pratt said.

Claims of “accounting trickery” were among the “false narratives” circulating about TAHE that could undermine faith in the public service, Mr Pratt told the inquiry.

TAHE would produce “demonstrable and measurable” benefits for NSW, he said.

Former KPMG partner Brendan Lyon told the inquiry last month he had been pressured to change a report that suggested TAHE would leave the state budget $10 billion worse off.

Mr Lyon told Mr Pratt he was sick of “being bullied” by him in response to an email from the treasury secretary telling him to “correct the errors or remove all references to Treasury modelling”.

Mr Lyon told the inquiry that exchange was part of a year-long pattern of Treasury bureaucrats engaging in “very unprofessional, ongoing attacks” against him and his team.

Mr Pratt told the inquiry on Thursday that Mr Lyon was a consultant, not a qualified accountant, and KPMG had been engaged separately by Treasury and then Transport for different purposes.

Mr Lyon and his team strayed into an area “where there was no capability” for them to engage in the work they did and there “was a whole set of assumptions that were wrong”, he said.

“The work produced by Mr Lyon was requested by Transport … he’s not an accountant, he’s totally discredited. I stand by the findings we’ve got,” Mr Pratt said.

The advice given by Mr Lyon used Treasury modelling and data incorrectly, he said.

NSW Treasury executive director of transport Cassandra Wilkinson said Mr Lyon wasn’t asked to change his opinion, just to correct his figures.

“These were not instructions or directions … we were asked to provide materials which he misunderstood and misrepresented,” she told the inquiry.

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