New documents show how the government came to pay 10 times the market value for the Leppington Triangle in Western Sydney. By Karen Middleton.
Buying the Leppington Triangle
Just before 5.30pm on Tuesday, too late for the news programs or daily newspaper deadlines, the government dumped a raft of documents in parliament that it had been trying to withhold.
With a single sentence, Attorney-General Michaelia Cash tabled 10 departmental and ministerial briefing papers that partly explained how the government came to pay $30 million in 2018 for a triangle of land valued at one-tenth of that, at the site earmarked for the new Western Sydney airport.
The briefs on the purchase of the Leppington Triangle, tabled on behalf of Urban Infrastructure Minister Paul Fletcher, show the department opted for trying to persuade the owners to sell rather than moving straight to compulsory acquisition.
In contrast, the owners were able to string out the process, choose their own valuer and jointly draft the valuer’s instructions.
The land purchase was the subject of a scathing report from the Australian National Audit Office in September last year, which revealed the inflated purchase price and accused departmental officials of providing false and incomplete evidence to its investigators.
The audit found the department had set an apparently arbitrary deadline of July 31, 2018, to finalise the sale – 30 years before the second runway would be needed – and agreed to pay the owners $218,820 a month if it was missed. The department argued that the price would be higher the longer it waited.
While the briefing papers detail what the department did, they do not explain why many decisions were made.
The auditor’s alarm at both the purchase price and the department’s alleged obstruction sparked a referral to the Australian Federal Police.
The senate then demanded the government produce the briefing documents. It refused, arguing that would hamper the police’s work.
But this week, after receiving direct advice this was not the case, it was forced to table them. The AFP told The Saturday Paper the investigation was “ongoing”.
The briefing papers are dated 2015 to 2019. They confirm the minister was not told until November 2019 – the year after the sale – about the huge discrepancy between actual value and price paid. This was only uncovered because the auditor’s investigation prompted a departmental officer to examine the original valuation and get a second opinion.
That 2019 valuation, by Jones Lang LaSalle, put the value about $4 million. Another, by valuers Colliers, found similarly.
The owners included the University of Sydney and two sets of property-baron brothers, Roy and Ron Medich and Tony and Ron Perich. The Perich brothers’ Leppington Pastoral Company (LPC) owned the key triangle of land required to create a public safety zone at the end of the proposed second runway. They are past donors to both the Liberal and Labor parties, but favouring the Liberals. Also donors, the Medich brothers have favoured Labor.
The departmental briefs say the Periches had made it clear they intended to hold on to their land until closer to the time the second runway was actually being built.
They show the minister was told in writing only in 2019 that the LPC had been allowed to choose the original valuer – MJD Realty Appraisals – and had jointly drafted instructions.
In an October 2016 brief, the department’s Western Sydney Unit told the minister it had recently made “encouraging progress” with LPC, which had been “initially unwilling to sell”.
In a sentence underlined by the minister, the unit’s brief notes: “The department will shortly commence a process to purchase a small parcel of land required for the second runway so that any future decision on the second runway cannot be held captive to a protracted land negotiation or dispute.”
It adds: “A small window of opportunity for the purchase exists because of mutual goodwill with the landowner and because funds for the purchase are available.”
In January 2018, the department reported it had agreed with the LPC on a 2017 joint valuation pricing the land at $30 million.
“We consider this figure reasonable and consistent with our own estimations, albeit reflecting the recent sharp increase in property prices in the area,” it wrote.
The documents show the New South Wales government pressed for compulsory acquisition from the start. NSW was involved because it needed to move a road.
It argued that forcing the owners to sell would allow NSW Roads and Maritime Services to “circumvent some of the more onerous requirements” with which it would otherwise have to comply and would be “a more timely process”.
Instead, the department pursued voluntary agreement, only wanting to consider compulsory acquisition if the landowners were “not willing to relinquish”.
The department has acknowledged its cautious approach with the Perich brothers was influenced by the fact they had waged an ultimately successful 10-year legal battle against compulsory acquisition of land nearby in the 1990s.
Once they started to resist in 2016, the department told the minister it considered the commercial principles it was applying reflected “a reasonable position” with “generally equal bargaining power … on equal terms”. It noted this with a caveat: the “Commonwealth’s history” with the company.
In February 2018, Minister Fletcher signed off on the sale, saying it seemed “perfectly sensible”. In parliament this week, he defended his decision and blamed his department for any mistakes.
This article was first published in the print edition of The Saturday Paper on Aug 7, 2021 as "Leppington bare".
A free press is one you pay for. In the short term, the economic fallout from coronavirus has taken about a third of our revenue. We will survive this crisis, but we need the support of readers. Now is the time to subscribe.