Former NSW Premier Gladys Berejiklian was warned that a government policy would threaten the safety of NSW train passengers but she doubled down on it, a parliamentary inquiry has heard.
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The man who raised the issues with her directly, Transport Secretary Rodd Staples, was sacked without cause a few months later.
Mr Staples on Monday gave evidence to a parliamentary committee looking into the Transport Asset Holding Entity (TAHE), a state-owned corporation set up to own NSW's transport assets.
Mr Staples was "very uncomfortable" with the risks of TAHE and remained so until he finished in his role this February, he said.
One critical aim behind TAHE was to provide a fiscal benefit to the state budget, he said.
However, it was unclear how accountability for safety and maintenance of the rail network could be established, given the constraints of the accounting standards TAHE needed to meet to deliver that fiscal benefit.
As an independent, commercial entity, TAHE would face a conflict between investing in rail assets and safety systems, and other investments that would generate a higher return like property investments, Mr Staples said.
He raised his concerns directly with Ms Berejiklian in a one-on-one meeting in August 2020.
By that point, he'd started to wrestle with his ability to effectively lead his department while holding his concerns about TAHE.
Ms Berejiklian listened "intently" as he warned her about TAHE's safety and fiscal risks.
She said she'd set up a meeting with Mr Staples, her treasurer Dominic Perrottet, then Transport Minister Andrew Constance, and others to examine the issues.
Documents tendered to the inquiry reveal Ms Berejiklian did discuss TAHE with those people the following month - but Mr Constance and Mr Staples were not at the meeting, and Mr Staples said he didn't know about it.
Ms Berejiklian was "unequivocal" that TAHE would go ahead, notes about the meeting record.
On November 6, Mr Staples was informed that he was to be sacked, with no reason given.
Around the same time, a KPMG report commissioned by Mr Staples was being finalised. It contained the explosive conclusion that NSW Treasury had miscalculated the benefit of TAHE to the state budget to the tune of $10 billion.
Instead of the $4.7 billion benefit over 10 years that NSW Treasury had assumed, the report found it would cost $5.3 billion.
Treasury Secretary Mike Pratt asked Mr Staples to have that section of the report removed.
Unbeknownst to Mr Staples, Mr Pratt also directly contacted the KPMG partner who'd prepared the report to pressure him to delete the section.
That was inappropriate, Mr Staples agreed.
Mr Staples also said he'd approached the NSW Auditor-General over TAHE - which he said was a "difficult" and "significant" decision that was out of character for the 15-year public service veteran.
Mr Staples told the committee his concern was that standards could slip with the passage of time if it wasn't made clear who was responsible for what.
The passage of time was the villain behind the Glenbrook and Waterfall disasters, he said.
The fact that the benefit to the budget had been booked immediately once the TAHE concept was agreed to in 2015 was one of the overarching problems, as it meant the public service had to work within that accounting constraint.
Mr Staples said it was also a problem that there was no independent oversight looking at the implementation of TAHE.
The parliamentary committee heard that even after TAHE became operational on July 1, 2020, it was not clear who was going to be responsible for maintenance of the rail assets.
Australian Associated Press
