The NSW Transport Asset Holding Entity (TAHE) has come under scrutiny during a hearing by a parliamentary committee, where it was revealed that its CEO takes home a salary of $575,000.
Benedicte Colin, who joined the state owned corporation on September 1 after being headhunted from Keolis Downer, is the organisation’s third CEO since it was created as a state owned corporation in July 2020.
Ms Colin told the NSW Public Accounts Committee that she couldn’t confirm if the pay packet put her on par with the Secretary of Treasury but said it was “consistent with the remuneration of senior executives within the NSW government”.
The TAHE has been the subject of claims by the opposition and rail union that the state government created it to avoid paying rail expenses and to artificially inflate the government’s budget bottom line.
A hearing on October 1 heard TAHE manages $38 billion worth of assets including all the rail property assets, rolling stock and rail infrastructure in the Sydney metropolitan area.
Ms Colin told the inquiry its portfolio includes 4,000 operational tracks, 1,500 electric and diesel cars, 300 square kilometres of land, 400 retail outlets, and 1.3 million square metres of lettable area.
Land values for the rail operations amount to $11.1 billion and $300 million the land for property portfolios, the inquiry heard.
TAHE’s clients, including Sydney Trains and NSW trains, which make up 90 per cent of the organisation’s business, are expected to pay it between $700 million and $750 million a year for the next two years.
The committee heard the TAHE has “loose” delegation policies that gave Ms Colin almost unfettered powers with regard to capital expenditure, and authority spend up to $2 million on consultants.
“I am not aware of any person in the public sector who has this level of authority,” Labor MP Daniel Moohkey said.
“I have not come across any State-owned corporation that has had delegations policies that seem to be this loose.”
He questioned whether with was in line with ICAC policies.
“Did the board have any regard to ICAC’s policy on procurement here, which contains multiple warnings about the dangers of unlimited delegations?” he asked General Manager of Finance Peter Crimp.
Mr Crimp said he couldn’t speak for the board.
The committee also heard TAHE had been granted exemptions from corporate governance frameworks, quarterly reporting, and state taxes.
This was part of “embedding the operating model”, Ms Colin said.
Failure to disclose risks
Committee chair David Shoebridge asked Ms Colin and Mr Crimp to disclose all the key risks and liabilities for TAHE, saying this had not yet been done despite it being a requirement of the statement of corporate intent.
“You are holding $40 billion of assets in a highly politicised environment, where you did not have agreements even with your key customers,” Mr Shoebridge said.
“There are major tax considerations going forward. You do not have an answer on land tax, and none of that is being put forward in your answer about fully disclosing contingent liabilities and key risks.”
Ms Colin said she’d have to take the question on notice.
“We are in the process of developing our enterprise risk agreement and our risk management frameworks,” Ms Colin said.
Mr Crimp said COVID-19 and site contamination had been identified as risks in annual reports.
Mr Moohkey asked Mr Crimp If TAHE was undercharging its customers by $700 million a year as suggested in a secret KPMG report.
“Treasury has created this policy in order to minimise the impact on the State budget, has it not?” he asked.
“The reason why you are – certainly according to KPMG – undercharging your customers by what could be potentially billions of dollars is that if you charged them the full price then it would destroy the State budget, would it not?”
Mr Crimp said Treasury didn’t not agree with the KPMG assessment.
“There are differences between the KPMG calculation and the Treasury calculation, both as to what the return on equity should be and what the rate of return should be,” he said.
The RBTU has accused the government of trying to cover up the true financial status of the TAHE and using “financial trickery” by setting up a for-profit company to make money out of government owned businesses, and has described it as a “financial house of cards waiting to fall”.
Ms Colin told the committee TAHE “is all about ensuring we maximise the value of our transport assets, freeing up TfNSW to focus on strategy and rail operators to focus on providing better outcomes for public transport users and the New South Wales taxpayers.”
“This is the beginning of a journey. Our execution will not always be perfect and it will take some time to achieve maturity,” she said.
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