Mr BAYLEY – Auditor-General, Deputy Auditor-General, thank you gentlemen for coming in. I have a question in relation to your assessment of TT‑Line’s liquidity and your assessment that they are insolvent. Obviously, the Government has vehemently disagreed with you on that and pointed to a range of issues, including the fact that they would never let it become insolvent because it is so important.
What is your response to the government’s position in relation to TT‑Line?
CHAIR – Committee members, may I just remind you that it’s questions through the Treasurer.
Mr BAYLEY – Through you, Treasurer, I apologise.
Mr ABETZ – For the record, I’m very mindful of the fact that we have an independent statutory authority in front of us and I won’t be seeking to intervene in relation to any answer that is given. While technically the questions come through me, my role here is simply to be the conduit.
CHAIR – Thank you very much.
Mr BAYLEY – Or any question asked presumably then.
Mr ABETZ – Yes.
Mr BAYLEY – Thank you.
Mr THOMPSON – Thank you for that acknowledgement, Treasurer.
I don’t have a position on the government’s position as such, however, it would perhaps be worth reiterating the process and how I came to the conclusion and my opinion.
I have an obligation under the Corporations Act to notify ASIC where I develop a reasonable basis for a suspicion of the breach of the requirements. That’s a legal obligation on me personally. Under or through our audit processes, we look for evidence to support the assertion around both the going concern and the solvency issues. Solvency is simply defined under the Corporations Act as the ability to pay your debt as and when it falls due. It’s not time‑limited, so we need to consider that out into the foreseeable future. Going concern is limited to really, effectively 12 months after the issue of our audit opinion.
We formed a conclusion based on evidence that we deemed to be sufficient and appropriate in line with the relevant auditing standards, that there was a reasonable basis to suspect that the company would not be able to pay its debts after the relevant period – so, we’re talking about after October 26 – based on the evidence that was available at that point in time. To perhaps recap the evidence that it was available at that point in time: the corporate plan and the forecasts embodied within that corporate plan. We had substantial additional conversations and engagement with the entity in an endeavour to sort of explore that, but at no point in time were they able to provide any additional evidence to support the assertion.
Other people can form different conclusions and different opinions, but my conclusion was based on the requirements with the auditing standards in the legislation along with our own internal methodology. It went through a peer‑review process, a technical review committee process, so I’m very comfortable with the conclusion that I formed at the end as a result of this.
Mr BAYLEY – Since you’ve formed that opinion, government has made statements – I assume the corporate plan hasn’t changed, but the government’s pointed to the fact that surplus ferries will be sold in due course and so forth. Has anything new come to light in your mind that has given you cause to change your mind or change your view on the insolvency issue of TT‑Line?
Mr THOMPSON – I think, just to clarify, the proposed sale of the surplus of the existing ferries was embedded in those original corporate plan forecasts, so that was considered as part of my initial evaluation. I don’t have an ongoing monitoring role in relation to the operations of the company. I really need to form an opinion at a point in time, but I haven’t been presented with anything that would change that opinion at this point in time.
