A controversial state-owned NSW transport body will be made into a not-for-profit entity, under a plan by the state government to save the budget over $4 billion.
The Transport Asset Holding Entity of NSW (TAHE), is responsible for managing the state's rail assets including property, trains and infrastructure.
It was previously slammed by an auditor general's report as being "unnecessarily complex", while an Upper House inquiry found it to be a drain on the state's finances and recommended scrapping it all together.
On Saturday, the government announced it will convert TAHE into a non-commercial public non-financial corporation, similar to Sydney Trains, NSW Trains and Venues NSW.
The decision came after a request by TAHE for a further $615 million in funding in 2023-24 to cover contractual arrangements with the Public Rail Operators.
Treasurer Daniel Mookhey said the changes mean the extra funding is not required, and will also save the government a further $4 billion intended for TAHE under the previous operating model.
An initial hit leaving the budget $384 million worse off under the change is hoped to be offset by savings down the line, according to the government.
“This government prefers to spend the public’s money fixing the state’s essential services, not propping up a budget con that went terribly wrong," Mr Mookhey said.
“The state’s reputation for budget honesty was tarnished unnecessarily by the previous government’s decision to use TAHE to hide the true cost of operating the railways from the state’s accounts.”
The government intends to introduce legislation by June 2024 to remove TAHE’s status as a state-owned corporation, as well as rename the entity.
TAHE previously relied on a circular network of government money, where the vast majority of its revenue came from licensing assets to state-owned Sydney Trains and NSW Trains, which were paid for with taxpayer-funded government grants.
Shadow treasurer Damien Tudehope accused Mr Mookhey of having a "political obsession" with TAHE.
"There is a real danger that the Treasurer’s obsession with TAHE’s accounting treatment and structure will derail TAHE’s focus on managing our transport assets for the benefit of the whole community, especially affordable housing projects," Mr Tudehope said.
"There’s no detail as to how this is different to the former government’s plan to make our transport operations safer and more commercially efficient; this is all smoke and mirrors from a government who have to provide distractions from their wages blackhole."
One of the main new focuses of TAHE will be making better use of transport assets, particularly surplus land near railway stations that could be made available to help solve the housing shortage in NSW.
