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Despite the misgivings, Ms Berejiklian and other senior ministers, including now-Transport Minister Andrew Constance, pushed ahead and shifted billions of dollars worth of trains and other rail assets into a corporation that is now under serious scrutiny by the NSW Auditor-General.
Sensitive government documents reveal that Ms Berejiklian and Mr Constance were briefed at length seven years ago when senior Treasury bureaucrats began hatching plans for the Transport Asset Holding Entity.
A confidential briefing document in 2014 shows Ms Berejiklian and Mr Constance were warned that creating the entity "would most likely change the level of risk over public transport assets, particularly around safety, customer benefits and network planning and development, performance and delivery".
At the time, Ms Berejiklian was transport minister while Mr Constance was treasurer.
Concerns about the safety implications of TAHE were highlighted two years later in a confidential cabinet submission, which warned of "safety risks if maintenance of metropolitan rail track is separated from operations".
"One concern is that splitting the maintenance of rail assets from operations is contrary to the recommendations of the Glenbrook or Waterfall inquiries," the joint submission from Transport for NSW and Treasury said.
"A second concern is it may be in TAHE's commercial interest to run down the assets."
The Herald has previously revealed that senior transport officials feared the creation of TAHE could repeat the 1990s carve-up of NSW railways and the resulting gaps in safety and investment accountabilities, key factors in the 1999 Glenbrook and 2003 Waterfall rail disasters, which claimed the lives of 14 passengers.
Labor treasury spokesman Daniel Mookhey said the confidential documents made it clear that Ms Berejiklian and Mr Constance had known about the "TAHE budget trick" since its early inception in 2014.
"Both the now-Premier and the Transport Minister turned a blind eye to two direct warnings that hiding billions of rail expenses from the budget came at the cost of greater risk to rail safety," he said.
A whistleblower, who has intimate knowledge of TAHE, said the state's transport agency warned about the corporation from the start but the allure of billions of dollars on the state budget was compelling to cabinet.
"TAHE is such a bad idea that most thought it would be closed before opening, particularly once the accounting rules tightened making TAHE effectively unworkable," the whistleblower said.
"Treasury's advice has left the cabinet in a very awkward position where the budget will be smashed, TAHE or no TAHE, with all their efforts now about trying to hide the hole for another few years."
Further warnings about TAHE were made in a confidential KPMG report commissioned by Transport for NSW last year.
A spokeswoman for Mr Constance said concerns raised through the establishment of TAHE had been resolved to the Minister's satisfaction given that Transport for NSW continued to oversee safety and maintenance.
"Transport for NSW is still required to meet safety standards set by the national regulator," she said. "The briefing documents referenced are seven years old. They have been superseded by current documents and are no longer relevant."
Ms Berejiklian's office referred questions about TAHE to the Transport Minister.
The latest revelations come as senior officials from NSW Treasury, TAHE and the state's transport agency will be grilled at a parliamentary inquiry into the controversial rail corporation on Friday.
The Herald has previously revealed that Sydney's rail network came within hours of being thrown into disarray last year because of safety concerns and the fact that TAHE was still not fully operational six years after it was launched.
A trove of sensitive documents tabled in Parliament and others obtained by the Herald show that Ms Berejiklian and Mr Constance were briefed in the months after Treasury developed a conceptual model for it in April 2014.
The briefings reveal that a key reason for setting it up was to bolster the "state's short and medium-term fiscal results", and "achieve a positive state budget position".
The following year, the move towards creating a fully-fledged for-profit rail corporation inflated the state budget by almost $2 billion.
A key concern in 2014, and one that remains today, is the level of control the for-profit corporation has over the state's railways.
A parliamentary hearing was recently told that former NSW Transport chief Rodd Staples had raised concerns about TAHE's impact on rail safety, months before he was sacked without cause.
Last week the state's pricing regulator also found that TAHE had overcharged rail operators for the use of rail lines in the Hunter Valley by $3 million over a two-year period, and failed to comply with asset valuation principles.
This article first appeared on www.msn.com
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