Hydro Tasmania’s Chair described the corporation’s 2025/26 financial result as “modest”. That is one way of putting it.
The underlying profit for the year was just $2.6 million. The budget target was $72.9 million. Hydro missed its target by 96 per cent. The previous year was hardly a triumph either, delivering an underlying profit of only $7.5 million.
These results are not just disappointing for a government business, they matter because Hydro Tasmania occupies a central place in the Government’s plan to repair the State’s finances.
Treasurer Eric Abetz’s Budget has a two-pronged strategy for returning the budget to a sustainable footing. The first prong is expenditure restraint, including efforts to ‘right-size’ the public service. The second is increasing returns from government-owned businesses.
Hydro Tasmania was expected to do much of the heavy lifting. The Government’s forward estimates assume Hydro’s underlying profits will rise from $72.9 million in 2025/26 to more than $500 million a year by 2028/29. Remarkably, that growth is expected to occur before Project Marinus begins contributing the additional hundreds of millions of dollars that have been promised to Tasmania.
If Hydro could not achieve $72.9 million in the first year of the recovery plan, how confident should Tasmanians be that profits will exceed half a billion dollars within three years? That is not simply a question for Hydro’s board. It is a question about the credibility of the State’s financial strategy.
The timing makes the result even more difficult to explain away. Unlike the previous two years, 2025/26 was not marked by the exceptionally poor inflows that plagued Tasmania during a period when storage levels fell to drought-like conditions. Inflows recovered to levels much closer to the long-term average. Water was not the primary problem.
Hydro’s Chair instead pointed to the loss of control of Basslink during the period when the interconnector was operated by its owner, APA Group, before its transition to regulated status. That explanation may account for part of the shortfall, but it raises further questions.
Basslink is often promoted as Tasmania’s economic gateway to the National Electricity Market. More energy is flowing across the link than ever before. Yet is Hydro making more money from those flows? Have increased transfers translated into increased profits, or have falling power prices offset the benefits of higher volumes?
The Annual Report provides only limited assistance in answering those questions.
That brings us to a broader concern: transparency.
Hydro’s 2025/26 Annual Report reveals less about the drivers of performance than many observers might reasonably expect. Readers can see the headline result. They can see broad segment information. But many of the details needed to understand why profits fell so far short of budget remain obscured. This is particularly significant because Hydro’s result sits at the heart of a much larger public debate.
The State Government’s fiscal recovery plan relies heavily on future growth in Hydro returns. The justification for investments such as Marinus Link, North West Transmission Developments and associated renewable energy projects is often linked to projections of substantial future revenues flowing back to Tasmania.
If the first year of the recovery strategy has delivered a 96 per cent miss against budget, surely Tasmanians are entitled to a more detailed explanation of what went wrong. Equally surprising is what the report does not discuss.
One of the most significant events affecting the Hydro system during the year was the fire at Tungatinah Power Station. By any reasonable measure, this was a material event for Tasmania’s principal electricity generator. Annual reports typically contain discussion of significant post-balance-date events and their implications for future operations, costs and risks. Yet readers searching for an explanation of the fire’s consequences will find virtually nothing.
What impact will the fire have on future generation? Even if fully insured, are there other necessary repair costs? What risks does it expose within the broader hydro generation fleet? What are the implications for Tasmania’s energy security?
The report is largely silent.For a government business that occupies such a central role in Tasmania’s economic future, that silence is difficult to understand.
Perhaps the most telling observation comes from the Auditor-General, who recently warned that government businesses “have performed poorly and as a result their collective financial position has continued to deteriorate.” That warning clearly deserves serious attention.
Hydro Tasmania’s latest result may prove to be a temporary setback. Future profits may well recover. The projections underpinning the State’s fiscal recovery plan may ultimately be realised. But optimism is no substitute for evidence.
Tasmanians are being asked to believe that Hydro’s profits can rise from $2.6 million to more than $500 million a year within three years. Before accepting that proposition, they are entitled to expect clear explanations, transparent reporting and credible pathways showing how those numbers will be achieved.
At present, the Annual Report raises more questions than it answers. And when a cornerstone of the State’s financial recovery strategy misses its target by 96 per cent, those questions cannot simply be waved away as a “modest” result.