The Spirit of Tasmania ferry replacement project, a costly endeavor fraught with delays and budget overruns, has left a trail of financial woes for the ferry operator TT-Line. With a staggering $717 million more than initially projected, the project's spiraling costs have sparked a parliamentary inquiry, shedding light on the complexities and challenges faced by the ferry operator. The inquiry, held by the Public Accounts Committee, revealed a series of factors contributing to the financial strain, including a change in shipbuilder, contract adjustments, and the impact of the Russia-Ukraine war. The revised budget for the new berth facilities at Devonport, a key component of the project, has ballooned to $493 million, an increase of $403 million from the original estimate of $90 million. This significant overrun is attributed to hull strengthening, fender remediation, and the construction of two new vessels, Spirit 4 and Spirit 5, which were built in Finland by RMC. The cost of these vessels alone has soared by $280 million, a figure that includes a change in shipbuilder, contract adjustments, and support for the shipbuilder. The financial strain on TT-Line is further exacerbated by the need to berth the vessels in Scotland and Victoria while their Devonport facility is under construction, adding to the overall cost. The company's growing debt has been a subject of scrutiny, with the state's auditor-general concluding that TT-Line became insolvent in July. The government responded by injecting $75 million in equity and increasing the company's debt capacity from $990 million to $1.4 billion. However, TT-Line disputes its insolvency, with the chairman, Ken Kanofski, describing the company's financial position as 'very challenging'. The company is now seeking support from the government, with Kanofski declining to reveal the details, citing cabinet confidentiality. The inquiry has highlighted the need for a sustainable solution to TT-Line's financial woes, with the company's ability to operate in the long term hanging in the balance. The ferry operator's struggle to navigate the complexities of the replacement project serves as a cautionary tale, underscoring the importance of careful planning and effective management in large-scale infrastructure projects. As the inquiry continues, the hope is that the lessons learned will help prevent similar financial setbacks in the future.
