$30m payment for land worth $3m near Western Sydney airport a ‘bargain’, Michael McCormack says
Michael McCormack has defended the government’s decision to spend $30m on a parcel of land near the Western Sydney airport worth just $3m, arguing in time it will seem a “bargain”.
The deputy prime minister made the comments on 2GB Radio on Monday, after a scathing auditor general’s report accused unnamed officials in his infrastructure department of acting unethically over the sale.
In 2018, the federal government paid a Liberal donor, the Leppington Pastoral Company, 10 times the fair value and more than 22 times the rate paid by the New South Wales government for 12.26 hectares of land that will serve as the airport’s second runway after 2050.
Labor wants a separate parliamentary inquiry into the purchase and the former cities and urban infrastructure minister, Paul Fletcher, has blamed the department for failing to tell him and the deputy secretary the true value of the land.
But McCormack claimed the sale “eventually will be hailed as a good decision”.
“I appreciate that yes, it was very much over the odds, I appreciate there’s a review going on into how that actually happened,” he said.
Related: Minister agrees department acted unethically over $30m purchase of Western Sydney airport land
“But eventually when there is a need [for] more runways and more infrastructure to be built at Western Sydney Airport, they’ll look back and say, probably: ‘What a bargain that was’.”
The second runway will not be required until the airport has 37 million passengers a year – the current level of Melbourne’s Tullamarine airport.
The Australian National Audit Office found departmental officials acted unethically by failing to advise ministers how much they proposed to pay the landowner and for not providing accurate answers when it investigated the sale.
The department has launched an investigation into its staff over alleged ethical breaches and a separate review of the transaction.
McCormack conceded that “there should have been better processes around it”. “Yes it’s a lot of money but in time it will be a very good investment.”
The department only obtained one valuation and negotiations with the landowner occurred in coffee shops with only one official present and no minutes kept.
The overvaluation was the result of Leppington Pastoral Company’s request to consider the land’s “speculative industrial re-zoning potential”.
The valuer warned the formula would produce a figure “significantly higher” than current prices, reflecting a value that might be achieved 10 years in future.
In its response to the report, the department defended the “unorthodox” valuation, arguing it paid a premium to avoid costly legal disputes.
The department noted the ANAO’s view the purchase could have been made at a much later date, but argued “early acquisition provided certainty to stakeholders for long-term planning”.
The auditor general rejected the department’s fears the project could be “held captive” to a dispute, noting the federal government can compulsorily acquire land with appeals to determine correct compensation occurring after the sale.
Leppington Pastoral Company – operated by billionaire brothers Tony and Ron Perich – has donated a total of $176,600 to the Liberal party since 2002, including $58,800 in 2018-19.
The company, which operate one of Australia’s largest dairy farms, fought a 10-year battle against the commonwealth’s valuation when it sought to compulsorily acquire its land in 1989.
On Sunday the Sydney Morning Herald reported Leppington Pastoral Company was paid $21.5m, or $565,000 a hectare, for 38 hectares of land, to settle that dispute in 1999.
Two years earlier, the commonwealth had reportedly sold a 344 hectare farm a few kilometres up the road for $3.5m, or $10,000 a hectare.
