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AAP
AAP
Politics
Finbar O'Mallon

Calls to end NSW govt 'accounting trick'

A Labor-led committee has condemned a transport assets holding entity in NSW as a 'fiscal fiasco'. (AAP)

A NSW government-owned transport assets holding company should be axed so taxpayers don't keep paying billions over the next decade to keep it operating, a parliamentary committee says.

Premier Dominic Perrottet has also been accused by the committee's chair of using an "accounting trick" when treasurer, to try to deliver a budget surplus by moving the state's transport assets to a separate, commercial company.

This allowed the cost of running NSW's network to be 'off the books'. But instead, the government has had to pay up to keep it afloat.

The final report of the upper house committee inquiry into the Transport Asset Holding Entity, published on Friday, is a bruising indictment of then-treasurer Mr Perrottet's strategy.

The probe, led by Labor and the Greens, generated a dissenting report from government MPs who argued commercialising the state's transport assets delivered greater transparency and accountability for taxpayers.

But committee chair, Greens MP David Shoebridge, called the whole affair "scandalous" while Labor's treasury spokesman Daniel Mookhey dubbed it a "huge fiscal fiasco".

"The key recommendation from this inquiry is that TAHE be unwound - it be unwound immediately," Mr Shoebridge said on Friday.

"The entire rail network of NSW was used as an accounting trick."

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

One uncertainty was whether the funding given to rail operators, Sydney Trains and NSW TrainLink, to pay TAHE would be sufficient to produce the required returns from the entity.

In the end, the government was forced to raise the cash injections it gave to TAHE because the commercial returns were lower than expected.

Mr Shoebridge said if TAHE was left operating, it would need yearly cash injections.

Mr Mookhey said the entity risked blowing a $10 billion hole in the NSW budget over the next decade - money that could be spent on crucial infrastructure, including hospitals.

"Treasurer Dominic Perrottet, now Premier Dominic Perrottet, cooked the books," Mr Mookhey said.

During the hearings, the committee heard accusations of bullying with former KPMG partner Brendan Lyon claiming he was pressured to amend a report critical of the model.

In a statement on Friday afternoon, the consulting firm admitted it "did not get everything right" when advising on TAHE.

But the KPMG spokesman said the firm's work was of "high quality" as it reviewed complex, technical material.

Evidence given by NSW Transport secretary Rob Sharp in February alarmed Auditor-General Margaret Crawford, who said a recent audit of the state's budget had been thrown into doubt by the bureaucrat's evidence.

The inquiry recommendations included axing TAHE, giving the Audit Office independent funding, allowing outside consultants to give "genuine independent advice" and for NSW Treasury to review how it engaged with the Auditor-General when she was reviewing the state's budget finances.

NSW Treasurer Matt Kean slammed the report as a "concocted" political attack.

He pointed to a independent review already underway about how Treasury dealt with the Audit Office and dismissed safety concerns as "misleading".

"The government will respond to the parliamentary inquiry in due course," Mr Kean said.

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