Silence over Marinus Link deal defended, but it could cost Liberals government

Australia Broadcast Center

10 hours ago

The business case for Tasmania's biggest ever infrastructure project details significant power price increases for industrial businesses and warnings that the government may be exposed to "very significant" financial risk in the future.
But it also says proceeding now "maximises the opportunities from the state's natural competitive advantages in renewable energy, improves energy security and increases economic growth".
The state was signed up to Marinus Link on Thursday night by the Liberal government, which is governing in caretaker mode, and which promised — but failed — to release the business case beforehand.
The project is a proposed multi-billion-dollar undersea cable connecting Tasmania and Victoria, designed to futureproof energy and communications needs on both sides of Bass Strait.
Tasmanian Energy Minister Nick Duigan signed the deal on Thursday night and he and Premier Jeremy Rockliff announced it in Burnie as a summary of the whole-of-state business case was made public.
A decade in the making with the federal and Victorian governments, and signed as crossbench MPs and the Labor opposition cried foul about secrecy, it can now be seen by the public.
Mr Duigan said the silence was necessary during the negotiations to ensure the government did not "trade away Tasmania's advantage".
Mr Rockliff said the deal that had been struck was "a bloody good deal for Tasmania".
"We're not going to show our hand and give away Tasmania's best interests," he said.
He said the state's portion of the investment was capped at $103 million, for 17.7 per cent of the project equity, which can be sold back to the federal government once the project is completed.
Mr Duigan said the deal negotiated in recent weeks with the federal government included a $346 million GST-free grant to develop the north-west transmission lines that would feed power to the Marinus Link, which would deliver a "substantial benefit to customers".
However, he could not detail how that would affect the average Tasmanian household energy bill.
He did say the "typical household" would see an annual power price reduction of between $25 and $34, before the figures in the new deal were included.
Mr Duigan could not put a number on how the new deal would affect household power bills, but he expected them to be "somewhat better" off.
A 25-page executive summary was published by the Treasury department shortly before Mr Duigan and Mr Rockliff made their announcement.
Mr Duigan said the full business case — which is about 400 pages long — was still being worked through by Treasury, which he said needed to redact certain information that was not Tasmania's to publish.
The executive summary does detail how Marinus Link would affect electricity bills through the cost of building new transmission infrastructure, and wholesale energy costs.
"Future government policy on the Tasmanian regulatory framework and customer rebates, together with decisions of the Tasmanian Economic Regulator, will be critical in determining the final electricity bill outcome for Tasmanian customers," the report reads.
Although Mr Duigan has claimed lower power prices for households and small businesses, the report details "very large increases" for the state's major industrials — which include Bell Bay Aluminium, the Nyrstar zinc smelter and the Boyer paper mill.
Together, the major industrials would see their prices rise about $20 million in the years beyond 2030 with construction of Marinus, compared with the past financial year.
That is an increase of about 45 per cent on their combined spend of $42 million in 2024-25, and would come at a time "when there appears to be a range of pressures building on major industry nationwide".
Mr Rockliff said the project would provide an extra $470 million to the state's bottom line each year, in the form of Hydro Tasmania's trade in electricity.
He said this would allow for greater investment each year in the state's schools, hospitals and roads, and said it would create more than 2,000 jobs in the state.
But the business case notes further costs and the possibility of significant risk if the project does not proceed as smoothly as is hoped.
More than $100 million in equity contributions to the Marinus Link company after the final investment decision (FID) "may be required", which would need to be considered in this year's budget.
And the governments involved are exposed to "increasing financial risks and potentially very significant additional equity calls" if environmental or planning approvals are not achieved.
"The previously agreed sole underwriting of such risks by the Australian government fall away once notices-to-proceed are made to suppliers subsequent to a positive FID in the third quarter of 2025," the business case reads.
It also notes that Hydro Tasmania would face "increased competition" in the renewable energy space in the future, which may affect its potential revenue opportunities.
Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey welcomed the news the deal had been signed and said it would be "a pivotal moment" for the state.
"Tasmania's energy generation isn't keeping up with demand.
"Marinus Link will underpin new generation projects and help grow the economy and support businesses around the state that need more energy," Mr Bailey said.
The Tasmanian end of the undersea cable will be in Burnie.
The city's mayor, Teeny Brumby, said it was a "catalytic" moment.
"It unlocks unprecedented economic, environmental and social benefits for our region," Councillor Brumby said.
The announcement was also welcomed by Hydro Tasmania and the Marinus Link company, as well as by the state's telecommunications advocacy group, TasICT.
However, the announcement also signalled the end of independent Braddon MP Craig Garland's potential support of a future Liberal government.
Long outspoken against Marinus, Mr Garland said he now believed only Labor could deliver stable government for Tasmania.
For his part, Labor leader Dean Winter said Tasmanians "won't have confidence" in Marinus until all relevant information is released, and said the Liberals had been "needlessly secretive".
But Mr Rockliff said he would stand by Marinus, even if it cost him his job.