Tunnel a $60m super black hole
Exclusive by Simon Benson
February 01, 2007 12:00

THE Cross City Tunnel has claimed its final victims _ 158,586 public servants and taxpayers, now exposed to a $60 million black hole in the state superannuation fund.

The Daily Telegraph has learned thousands of teachers, nurses, police and bureaucrats have had $60 million wiped from their retirement fund by the tunnel's collapse.

Because the scheme is guaranteed by taxpayers, the public will pay for any shortfall - adding to the state's unfunded super liability which stands at $15 billion.

"It is a hit but the performance of the fund is strong. When you lose money on any investment you are never happy,'' State Superannuation Trustee Corporation Pooled Fund CEO Don McLean said.
The exposure of taxpayers to a potential $60 million bill is yet another tunnel embarrassment for Premier Morris Iemma as he faces his first election.

Adding to the Government's credibility problem is the discovery a majority of ordinary investors were from the public service.

The Daily Telegraph has learned the state super scheme has written off its entire investment in the tunnel from the pooled funds of the public service, effectively wiping the equivalent of an average $400 from the retirement account of each member.

The fund is managed by Deutsche Bank, which is also one of the key lenders for the doomed project that went into the hands of receivers KordaMentha in December - owing the bank consortium $560 million.

The write-down follows the loss of $100 million incurred by key investor, Hong Kong based Cheung Kong Infrastructure.

A general memo from the State Superannuation Trustee Corporation, published on its website, revealed the fund had written its investment in the tunnel "down to zero'' following its financial collapse.

The STC, one of the largest superannuation schemes in Australia, claims to have 158,586 account holders with more then $25 billion in assets.

The STC claimed the tunnel was only a "small part'' of the fund's entire portfolio amounting to a loss of 0.2 per cent.

However, in cash terms, it amounted to a $60 million loss to investors.

It also said the investment write-down would have no impact on other investment strategies.

"Very few, if any investments are totally risk free,'' the memo said.

"The fund's investment in the tunnel has been written down to zero so the small impact of this asset on returns has already been reflected in fund earnings and declared rates of return.''

The STC consists of funds from four now closed public sector super schemes and does not include funds from the new State Super scheme established in 1990.

The STC claimed it had enjoyed strong growth rates over the last four years - averaging 12.3 per cent.

Opposition treasury spokesman Barry O'Farrell said taxpayers had already paid enough for "Labor's infrastructure failures'' without being forced to pay yet again.

"Taxpayers can expect to pay compensation to the tunnel operators for reopening roads closed under Labor's flawed contract,'' he said.

"Taxpayers have already paid $25 million to delay the road closures associated with the Lane Cove Tunnel.

"Taxpayers have paid up to $14 million to the M5 East Tunnel operators because Labor got its figures wrong on traffic projections.

"It's no wonder investor confidence in NSW is rock bottom.''

The Daily Telegraph