VIDEO: The Spirit of Tasmania fiasco

ELLEN COULTER, REPORTER: Plying the treacherous waters of Bass Strait for decades, ferrying trade and tourists from mainland Australia, the two Spirit of Tasmania ferries are crucial to the prosperity of the island state.

SAUL ESLAKE, ECONOMIST: They're a critical part of Tasmania's infrastructure, connecting it with the rest of Australia and for exporters to the rest of the world. 

ELLEN COULTER:  But the ageing ferries are overdue to be replaced. 

Two new ships were scheduled to be in service by now, carrying an extra 400 passengers and about 40 per cent more vehicles but the process has been far from smooth sailing.

JOHN ALEXIOU, SUPERMARKET OWNER:  There's a bit of angst, and people are always questioning, when are they coming? How long is it going to be? 

ELLEN COULTER:  Down the road from the East Devonport ferry terminal, John Alexiou put in a new coffee machine in anticipation of more customers in the coming months.

JOHN ALEXIOU:  But obviously the new Spirits aren't quite ready yet, so we'll still see a good trade, but it would have been more of a trade if we had the Spirits ready. 

ELLEN COULTER:  Across the road, locals at Cindy Schmidt’s bakery are also wondering why the bigger, better ferries aren’t here. 

CINDY SCHMIDT, BAKERY OWNER: It's been a lot of frustration, I think, within the local community because everyone was very positive and really looking forward to the new boats coming. 

So, I guess it's soured a bit for a lot of people. 

DEAN WINTER, TAS. OPPOSITION LEADER:  This is nominally the biggest infrastructure project in Tasmania's history, and it's also the biggest infrastructure stuff up in Tasmania's history. 

ELLEN COULTER:  The state-owned company that operates the ferries, TT-Line, began the process to replace them in 2017.

Then, the estimated cost of the new ships was $714 million, and they were due in 2021. 

A German shipyard won the contract, but in 2020, they went bust.

A new builder in Finland was locked in.

They were meant to build the ferries for $850 million, with the first ship due in 2022 and the second, the year after. 

But as the contract was about to be signed, the then-Liberal premier pulled out of the deal and instead got a taskforce to investigate whether an Australian company could build the ships.

SAUL ESLAKE:  I think it was a very curious decision. It was never likely that those ships could be built in Australia. 

ELLEN COULTER:  After a nine-month inquiry, the Tasmanian Government went back to the Finnish shipbuilders. 

SAUL ESLAKE:  In the meantime, however, the slot which the Finnish shipbuilding company had assigned for commencement of the construction of those ships had passed. 

ELLEN COULTER: Economist Saul Eslake was commissioned by lobbyists to write a report on the government’s decision to back out of the deal. 

SAUL ESLAKE:  The estimate I made about four years ago was that delays to the commencement of the replacement Spirit's operations could cost Tasmania's tourist industry up to $350 million a year. 

That's a significant loss to the Tasmanian tourist industry at a time when it's struggling still to recover from the COVID pandemic and the associated lockdowns. 

ELLEN COULTER:  The delay contributed to the project getting caught up in a global inflation surge.

TT-Line paid the Finnish shipbuilder an extra $8 million as the price of steel skyrocketed. 

But the shipyard’s financial woes continued, and this year TT-Line handed over an extra $80 million to keep the Spirits build going.

With the first new ship finally due to arrive within months an even bigger debacle has emerged. 

The new berth for the bigger ferries doesn’t exist.

DEAN WINTER:  I didn't believe this story when I first heard it. So, this is almost a billion dollars’ worth of ships that don't have anywhere to berth. 

ELLEN COULTER: TT-Line is supposed to be building a new permanent berth at Devonport, not far from the current terminal. 

In 2020, the estimated cost was $90 million for a berth that was expected to be finished this year. 

In June, it was revealed the cost for the new berth had blown out by almost $300 million and it won’t be ready until 2026 - a year after the first ferry arrives. 

The government claims it was blindsided as TT-Line ditched its preferred tenderer and went back to market over rising costs.

MICHAEL FERGUSON, TAS. TREASURER (October 9):  In my opinion, that threw out the opportunity to get that infrastructure ready for August and the government was not advised.

The government should have been advised. It’s a further indication of the culture and the attitude in my opinion.

ELLEN COULTER: TT-Line blames the delays on the state-owned port authority, TasPorts, claiming it denied them access for crucial geotechnical works. 

TasPorts rejects that, and says they’ve offered TT-Line plenty of support. 

STEPHEN BRADFORD, TASPORTS CHAIR (August 12):  They have chosen at all points to do it themselves. That is their choice.

ELLEN COULTER:  In August, the state government told the TT-Line chairman, Michael Grainger, to hand in his resignation or he’d be sacked. 

MICHAEL FERGUSON:  We didn't want to ask anybody for their resignation but that's where it got to. Your patience stretches only so far. 

ELLEN COULTER:  Two months after Mike Grainger stood down, he's come out swinging at a parliamentary inquiry.

MIKE GRAINGER, FMR TT-LINE CHAIR:  I worked with six premiers and 10 government ministers from both sides of parliament and have never witnessed such an appalling lack of support from government as experienced over the previous 12 months.

ELLEN COULTER: TT-Line's chief executive has also quit.

The Minister overseeing TT-Line and TasPorts for much of the debacle was Michael Ferguson, holding both the Infrastructure and Transport portfolios. 

DEAN WINTER:  You can bet your bottom dollar that if this project had been delivered on time and on budget, Michael Ferguson would have been there to cut the ribbon. 

But it's gone in a very bad way, and because of the way that it's gone, he wants to be seen nowhere near it. 

ELLEN COULTER:  The Minister insisted he was kept in the dark being regularly assured by TT-Line that the project was on track.

MICHAEL FERGUSON:  I was very worried, and I was the one holding them accountable through that period. 

MIKE GRAINGER:  I said, minister, our single biggest risk in this whole project is TasPorts and berth three.

Minister Ferguson replied that I needed to learn to play in the sandpit with TasPorts.

DEAN WINTER:  I think that's a real failure of leadership and a failure of governance.

ELLEN COULTER:  In August, Michael Ferguson relinquished his infrastructure portfolio but by yesterday evening, the pressure had become too much. 

Rather than face an impending vote of no-confidence, he resigned from his other positions as Treasurer and Deputy Premier.

MICHAEL FERGUSON, FMR TAS. TREASURER:  I recognise that there have been some really significant failures and problems with the delivery of, in particular, the infrastructure to support the new ships at Devonport, and I own that. I take responsibility for it. 

ELLEN COULTER:  Amid the political carnage, a temporary berth solution has been flagged but it would mean the new ships can’t operate at full capacity until 2026. 

The government is still figuring out how much that would cost, how long it would take and if it’s even possible. 

CINDY SCHMIDT:  We don't want to blame anyone, like we're kind of past that now. We just want to move on, and we just want the terminal to be built for everyone's sake.