ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Government Drops $30m on Western Sydney Land Worth $3m

4301891b-e7a7-4d1c-8b97-8af8280a0f44

The federal government paid almost $30 million for a parcel of land next to the proposed Western Sydney Airport, which was only valued at $3 million, the auditor general has found.

The Commonwealth purchased the 12.26-hectare land parcel, known as the Leppington Triangle, with the aim of eventually using it as part of the airport's second runway in 2050.

In a damning report released on Monday, the Australian National Audit Office (ANAO) found that in July 2018, the federal government paid $26.7 million more than the land’s ‘fair value’.

The deal was undertaken by the Western Sydney Unit, which sits within the Department of Infrastructure.

It was the department’s 2018-2019 financial statements that valued the Leppington Triangle land at just $3.06 million—a tenth of the price it had paid eleven months earlier, triggering an investigation by the ANAO.

▲ The land in question sits adjacent to the Western Sydney International (Nancy-Bird Walton) Western Sydney Airport site. It was valued at $3 million less than a year after being purchased for $29.8 million.
▲ Taxpayers' money: The land in question sits adjacent to the proposed Western Sydney International (Nancy-Bird Walton) Airport site. It was valued at $3 million less than a year after being purchased for $29.8 million.


Acquisition details show the department of infrastructure paid landowner—the Leppington Pastoral Company (LPC) $2.4 million per hectare.

This figure “22 times higher” in price per hectare than that proposed by the NSW government for its portion of the ‘Leppington Triangle’.

On the date of purchase, the land was leased back to LPC, led by billionaire third-generation dairy farmers Ron and Tony Perich, for 10 years.

The land was valued at $920,000 for lease-back purposes.

Single valuation

The ANAO audit, led by federal Auditor-General Grant Hehir, found that decision-makers were “not appropriately advised”.

“The approach taken by the department of omitting key information in the briefings to decision-makers and ministers was inappropriate and inconsistent with acting ethically,” ANAO states.

ANAO notes that the department's approach was focused on “incentivising an unwilling seller to dispose of their land some 32 years in advance of when it was anticipated to be needed”.

The department had claimed that an early purchase would help it capitalise on “goodwill” from the landowner.

The Perich's company had previously challenged land acquisitions at the airport site, and been in legal proceedings for more than ten years with the department.

Nine valuations of the Leppington land site were in the department’s records. But of concern was why a single valuation of the land was obtained jointly with the vendor prior to the sale.

The valuer was also suggested by the landowner, in which the department agreed to, providing there were “no conflicts of interest” between the parties.

The report also found that the department gave the valuer inappropriate instructions on the valuation approach, ultimately increasing the cost of the Western Sydney land purchase.

“A sales comparison method was used that assumed a highest and best use reflected in speculative industrial re-zoning potential that was highly unlikely to occur given existing legal restrictions and the requirements associated with the future development of the airport,” ANAO states.

“Negative impacts on land value, for example, airport noise, and restrictions associated with development controls affecting land around airports were not reflected in the valuation,” the audit notes.

“The resulting ‘restricted valuation’ was that the value of the land would likely fall within the range of $28.5 million—$32 million, should a fully researched valuation be undertaken, which did not happen.”

Comparison of the price paid against nine valuations of the land

ANAO analysis of Department of Infrastructure records.
ANAO analysis of Department of Infrastructure records.


In its response to the ANAO, the department claimed that the difference in price paid and the land value was “attributed to a substantial premium paid to purchase the land, based on an unwilling seller who had previously successfully challenged a compulsory acquisition declaration.”

The federal government had tried to purchase the Leppington Triangle in 1989 as part of a larger parcel of land. But following a 10-year dispute with the company, the federal government agreed to exclude it from that acquisition process.

The audit notes that the departmental decision-maker was appropriately advised in 2016 when giving approval to purchase the Leppington Triangle by compulsory acquisition, but that decision-makers were not advised as to the method of acquisition when the land was purchased in agreement with LPC in 2018.

The same unit within the department is also responsibile for administering the federal government's investments of $5.3 billion in the Western Sydney Airport and $2.9 billion in the Western Sydney Infrastructure Plan.

A spokesperson from the Department of Infrastructure said the department had agreed to all recommendations contained in the ANAO report, and that an independent review of the transaction would take now place.


ADVERTISEMENT
TOP STORIES
advertise with us
The Urban Developer is Australia’s largest, most engaged and fastest growing community of property developers and urban development professionals. Connect your business with business and reach out to our partnerships team today.
Article originally posted at: https://theurbandeveloper.com/articles/gov-pays-29m-in-western-sydney-airport-land-deal-audit-