ACT Government insists there's no conspiracy as Liberals question $50 million for Suburban Land Agency

The ACT Government has hit back at suggestions by the Canberra Liberals that there’s a cover-up afoot in light of the $50 million cash injection for the Suburban Land Agency (SLA).

The money had been announced as part of the mid-year budget review, which Chief Minister Andrew Barr said would accelerate land release.

Canberra Liberals leader Elizabeth Lee raised concerns over what she said was a lack of clarity over how the money would be spent and that it wasn’t tied to any tangible targets or outcomes.

“What is more troubling is that this amount is almost exactly the same as the shortfall of cash flow for the SLA,” she said.

“This so-called $50 million announcement appears to be nothing more than Andrew Barr trying to cover up the SLA cash flow shortfall of just over $50 million.

“Now it is clear why there are no clear outcomes or targets attached to this money. It will not provide any real boost to land supply. It is there to make up the shortfall.”

The cash flow shortfall for the 2022-23 financial year, which is publicly available in the SLA’s annual report, was $50.05 million.

The SLA’s surplus, or cash at bank for 2023, was more than $108 million, down from $166 million in 2022.

Ms Lee argued that it was ironic that there was a cashflow shortfall, which she said was because the SLA hadn’t released enough land.

“If Andrew Barr is serious about releasing more land, why did the SLA fail to spend $76 million allocated for development costs that are directly attributable to the production of land available for sale?” she asked.

“Andrew Barr needs to be upfront with Canberrans about this one-off payment and provide an explanation as to how this will ‘accelerate’ land release.”

The SLA, an ACT Government organisation with its own governing board, released just over 2400 dwellings in 2023, about 1600 short of its 4000 dwelling target.

The ACT Government has rejected the Liberals’ claims, stating it’s “misleading” and that while the numbers are close, they’re not related.

The $50 million ‘equity injection’ in the budget review was the result of 18 months of work to enable the SLA to be more responsive to changes in the market.

“Changes were made to the SLA capital structure in the Budget Review to provide the SLA with more flexibility to respond to risks and opportunities as they arise while maintaining prudent liquidity requirements,” a spokesperson said.

“These changes were made to better support the important role of the SLA in land development and release – that is distinct from private developers – being that the SLA delivers to the Indicative Land Release Program irrespective of market conditions.”

The cash injection is in addition to the government’s changes to the SLA’s dividend policy and capital structure to give the organisation better access to short-term finance. This means that the SLA has the capital to undertake due diligence in preparing land for sale while also maintaining its liquidity requirements.

The SLA’s receipts can be described as ‘lumpy,’ which means there’s no consistent guarantee of revenue, but everyday wages still need to be paid, and due diligence continues in the background to get land ready for sale.

The government spokesperson clarified that the $50 million was not for the SLA to acquire a particular site.

“The $50 million ‘equity injection’ provides the SLA greater flexibility to pursue market opportunities consistent with the government’s policy objectives as they become available,” they said.

“Changes to dividend policy and capital structure were needed to deliver more dwellings, which is why those changes were made.”

The explanation given for why the money isn’t tied to specific targets is because the funding and broader policy changes are designed to allow the SLA to be more responsive to market conditions. This is influenced by factors such as the RBA’s monetary policy and rate changes, as well the level of demand from buyers looking to develop land.