THE cost of buying back Victoria's regional rail network blew out by more than $70 million and the State Government failed to do its homework on the real price, the auditor-general says.
The Victorian Government announced in April 2007 a $134 million buyback of the lease for the state's country freight and passenger rail networks.The full cost of the buy-back was estimated at $174 million but auditor-general Des Pearson said it was likely to exceed $200 million.
In a report, tabled in state parliament today, Mr Pearson said he could not guarantee that taxpayers got value for money in the buyback.
"The audit cannot give any assurance that the state paid the lowest reasonable purchase price obtainable ... and it is clear that the cost of the buyback exceeded the cost publicly announced in April 2007," the report said.
"When the state signed the non-binding agreement, sufficient advice had not been obtained to support its decisions about how much to pay, for example there was not an adequate business valuation."
The report said the Government agreed to use the "book value" of the network to determine the cost of the buyback.
This is despite advice from two experts that the market value was likely to be significantly less.
As part of the deal, the government also gave inflated discounts to the lessee to access the network, adding to the cost burden on taxpayers.
The auditor-general has recommended a full analysis and disclosure of the actual cost savings of the buyback.
