The Auditor-General has slammed the ACT Government’s Dickson land swap deal with the Tradies, finding that it did not achieve value for money, that the Economic Development Directorate did not conduct the tender effectively and may have breached the Planning and Development Act.
On 15 December 2014, the ACT sold Block 30 (formerly known as Block 20) Section 34, Dickson to the Canberra Tradesmen’s Union Club Ltd (the Tradies) for $3.18 million excluding GST, in return for the Territory agreeing to purchase from the Tradies Block 6 Section 72 for $3.55 million excluding GST; and Block 25 Section 72 for $45,000 excluding GST.
Auditor-General Maxine Cooper found that there was a high risk the Directorate had relinquished value up to an estimated $2.4 million to $2.65 million to the Tradies, due to significant inadequacies with how the negotiations and tender process were managed.
Dr Cooper said the deal did not achieve the sale objective of pursuing an open, contestable and transparent market process and there were indications it did not achieve value for money from the sale.
She said the Territory would end up paying the Tradies approximately $414,000, which is the difference in value arising from the land exchange.
“There is also a high risk that the Directorate sold Block 30 Section 34 to the Tradies in breach of the Planning and Development Act 2007,” Dr Cooper said.
Dr Cooper said there was no evidence that the decision to proceed with the transaction gave sufficient regard to these risks.
“Systems need to be implemented to prevent this occurring in the future; importantly, all staff involved in undertaking land transactions also need to have clarity regarding expected behaviours through well-articulated values, particularly with respect to managing the integration of probity and commercial considerations,” Dr Cooper said.
Dr Cooper found that there was no evidence that the economic benefits to the Territory of the final land swap arrangement and related commercial terms were ever assessed.
“While it is asserted that the acquisition of Blocks 6 and 25 Section 72 will provide land for future affordable housing, there is no evidence of how the Economic Development Directorate analysed the nature of these perceived benefits, or valued these benefits, in order to support the land swap arrangement,” the audit report said.
“The Territory sold Block 30 Section 34 on favourable terms to the Tradies (estimated to be in the range of up to $1.57 million to $1.82 million less than the potential value of the block) and acquired Block 6 Section 72 from the Tradies for an estimated $830,000 more than its potential worth. The lack of documentation associated with the assessment of the benefits, costs and risks associated with the land swap arrangement means that the value of the land swap arrangement to the Territory is not demonstrated.”
Dr Cooper found that during negotiations between the Directorate and the Tradies, the Directorate agreed to a rent-free period of 42 months.
“Capital Valuers Pty Ltd advised that by adopting the method outlined in the Colliers International April 2013 valuation of the block, a discount to the assessed value for a 42 month rent-free period would result in an estimated value of $2.42 million for the site, which is approximately $830,000 less than what the Territory agreed to pay the Tradies,” she said.
Dr Cooper recommended that deficiencies in the tender process be remedied, probity and governance be strengthened and that organisational values be reinforced.
Opposition Leader Alistair Coe said the report revealed what a terrible deal the land swap had been for taxpayers.
“When Canberrans hear about this scandal, they will rightly feel betrayed by the Labor-Greens Government,” he said. “The Auditor-General’s report is a grave indictment on the Chief Minister. Over the coming days, the Canberra Liberals will examine the Auditor-General’s report in detail.”
Mr Coe said the deal should be sent to the ACT anti-corruption body when it is set up.
“It is absolutely scandalous that $2.4 million has gone from taxpayers to the Labor movement. It’s a merry-go-round of money between the Labor Government and Labor mates. This extraordinarily dodgy deal shows just how deep the cultural problems in the ACT government run.”
Minister for Planning and Land Management Mick Gentleman said the Auditor-General had found no evidence of wrong-doing on the part of any ACT Government ministers or ACT Government officials.
“The ACT Government has previously acknowledged some poor record-keeping practices and decision making by the former Land Development Agency. Since a separate Auditor-General’s report in 2016, significant work has been undertaken to improve processes and governance for large land transactions. The staff in question are no longer members of the ACT Public Service,” he said.
Mr Gentleman said the Government had established two new entities to oversee land sales and city renewal for Canberra, with enhanced and robust governance frameworks including statutory checks and balances, and the oversight of the Director-General of the Environment, Planning and Sustainable Development Directorate.
To view the report go here.