An embattled Bass Strait ferry operator, which has suffered delays and cost overruns to the delivery of two new ships, has been given a $506 million government bail-out.
The equity injection from the Tasmanian government to state-owned Spirit of Tasmania operator TT-Line will be provided across four years.
TT-Line's delivery of two new replacement ferries, which are set to be sailing in October, is years behind schedule and $717 million over an initial project estimate.
The saga made international headlines in 2024 after it was revealed the new ferries would have to sit idle because a new berth in northwest Tasmania wouldn't be ready in time for the ships.
TT-Line has been forced to fork out millions to hold the ferries in berths while the new berth is being constructed.
TT-Line was given $75 million by the government in November's interim budget, with the $506 million to be included in Thursday's 2026/27 budget.
The cash injection was to cover past capital cost overruns and was not TT-Line spending additional money, Minister for Infrastructure and Transport Kerry Vincent said.
"We know these decisions come at a difficult time, and it's no secret the capital cost overruns have put a strain on TT-Line," he said on Friday.
"This is about ensuring our vital infrastructure and a key tourism and freight link is supported and continuing to function as Tasmanians need and deserve."
The Liberal state government has flagged broad cuts in the 2026/27 budget as it tries to get a handle on ballooning debt.
"The half-a-billion dollar bailout is the most shocking chapter yet of the horror novel known as the Spirits fiasco," Labor MP Dean Winter said.
"Tasmanians will be paying the price for the Spirits for generations to come, and every job and essential service that Eric Abetz cuts in next week's budget is just the tip of the iceberg."
"The $506 million would help TT-Line reduce its debt and maintain a manageable and sustainable fiscal position," Mr Abetz said.
Mr Abetz and Premier Jeremy Rockliff haven't ruled out cuts to frontline services in the budget.
Flow-on impacts from the Russia-Ukraine war and a TT-Line payment to prop up the new ship's Finnish builder were among the cost overruns.
The price tag for the new berth in Devonport has blown out to $493 million from an initial estimate of $90 million.