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AAP
AAP
Politics
Jack Gramenz

NSW Treasury head aware of funds transfer

Former NSW Treasury secretary Michael Pratt (centre) has faced an inquiry as a private citizen. (AAP)

NSW Treasury's former secretary knew more than a billion dollars would be moved into a state-owned corporation to avoid accounts being rejected by the auditor-general.

But hours before that happened - and unable to say that it would - Michael Pratt appeared at a parliamentary inquiry into the Transport Asset Holding Entity rejecting claims it was engaging in "accounting trickery".

Mr Pratt told the inquiry's final hearing on Monday the $1.1 billion he knew would be announced within hours of his earlier testimony was not a "black hole," but "money moving from one part of the balance sheet to another," which he was not able to comment on at the previous hearing.

"I was aware," Mr Pratt said, but "the treasurer had not released the budget, I could not talk to that number".

Initially intending to resign in the first half of 2022, Mr Pratt "came to an agreement" and departed Treasury in January after his replacement was found earlier than anticipated.

He acknowledged on Monday that meant he was terminated with a 38-week payout.

Summoned to appear again on Monday, this time as a private citizen, Mr Pratt told the hearing there was "no connection between my departure and TAHE".

Auditor-general Margaret Crawford approved the state's accounts in January, having previously delayed her decision, noting "significant uncertainties" regarding the entity.

The state-owned corporation was established to own transport assets including railways and trains, which Transport for NSW entities pay to use.

One uncertainty was whether the funding given to rail operators Sydney Trains and NSW TrainLink would be sufficient to produce the required returns from TAHE, which the other agencies would have to pay in order to use the trains and railways it owns.

"There was a lot of discussion around what would need to be done ... what would need to change to make the auditor satisfied," Mr Pratt said.

Those included lifting the government's expected shareholder rate of return from 1.5 per cent to 2.5 per cent and providing another $1.1 billion for the operators in the half-yearly review of the budget.

Mr Pratt agreed it was fair to say that was the only reason the state's accounts were subsequently approved by the auditor-general.

He was also "really surprised" by the auditor-general's report because many of the remarks made "had not been raised" with him previously.

Ms Crawford reported forecasts received from Treasury regarding the entity were "late, unsophisticated, and inaccurate ... which sought to support the desired outcome of higher projected returns".

Mr Pratt said he was sure there were errors "in a matter of this complexity and substance," but "not only errors by Treasury".

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