A deeply flawed and potentially corrupt land purchase by the New South Wales government has prompted an investigation of 20 similar property acquisitions, an inquiry has heard.
A NSW parliamentary inquiry is currently probing the state government’s purchase of a contaminated block of land in the Sydney suburb of Camellia for $53.5m, just months after it was purchased at a fraction of the cost by property developer Billbergia.
The land is to be used for a depot for the Parramatta light rail project, but the state government did not bother obtaining a valuation or an estimate of the clean-up costs prior to its purchase. The state government accepted liability for remediation of the contaminated block without knowing how much it would cost, and has now spent more than $100m on clean-up costs.
The NSW auditor general last month issued a scathing assessment of the purchase, saying it was “unable to exclude the possibility that the transaction was affected by misconduct or corruption”.
The purchase was “rushed” and poorly informed, failed to use proper probity controls, lacked proper conflict-of-interest declarations, and the government could not demonstrate that $53m was value-for-money for the site. Records of negotiations and decisions were missing, no independent specialist was engaged for probity advice, and the government failed to create a proper probity management policy or plan.
Bureaucrats with Transport for NSW appeared before the transport and customer service committee on Tuesday to explain themselves.
The inquiry heard that, following concerns about the Camellia site, the agency launched a separate audit into other residential and commercial property acquisitions between 1 November 2019 and 30 October 2020.
The audit examined 20 acquisitions involving Transport for NSW. A draft report was being finalised late last month and will be handed to transport minister Andrew Constance.
The inquiry also heard that an independent investigation into the Camellia land deal by Transport for NSW has been placed on hold to allow a separate probe by the Independent Commission Against Corruption to run its course.
“I support the investigation by Icac, which I believe can ensure the matters can be finally resolved,” Transport for NSW secretary Rob Sharp told the inquiry.
“Icac has requested that Transport not take any action at this stage until Icac has had the opportunity to consider the matter and revert to Transport.”
Transport for NSW has been aware of concerns about the deal since 2019, when the Guardian posed a series of questions.
But Labor MP Daniel Mookhey said the auditor general had found that internal policies and procedures for property acquisitions “continue to be insufficient” and were “largely unchanged”, years after the flawed deal.
“How is it possible that we can have confidence that there have been improvements in Transport for NSW’s policies, when the auditor general is telling us the opposite?” Mookhey asked.
Transport for NSW said it was “still undergoing a process of reform” following a major overhaul and merger with Roads and Maritime Services.
The inquiry earlier heard from Billbergia development director Rick Graf, who said media reporting of the land purchase “conveys an incorrect impression” and “omits relevant facts”.
Graf said Billbergia had been, and remains, an unwilling seller of the land. He said the developer had been a strategic land owner of multiple blocks in the area and wanted the site in question “as part of our ongoing long-term strategy for urban renewal of the precinct”.
He said the company did not know, at any point, that Transport for NSW wanted to buy the site for light rail.
“At no stage in the 10 months that we sought to purchase the land … were we aware that TfNSW was interested in the site for any purpose,” Graf said.
