A new audit report by the Australian National Audit Office (ANAO) has revealed that the Federal Government paid almost ten times the fair value of a potential Western Sydney Airport runway site.
The Federal Government purchased a 12.26 hectare triangular parcel of land, known as the Leppington Triangle, for $29,839,026 in Bringelly NSW on 31 July 2018.
The land sits adjacent to the Western Sydney International (Nancy-Bird Walton) Airport site, and was acquired by the Western Sydney Unit within the Department of Infrastructure, Transport, Regional Development and Communications for a second runway to be constructed in a future stage of the project’s development.
For financial reporting purposes, on 30 June 2019, the Department of Infrastructure valued the Leppington Triangle land at $3,065,000 – a tenth of the price it had paid eleven months earlier.
The discrepancy between purchase price and value triggered the ANAO’s audit, which found that the department “did not exercise appropriate due diligence” and that its operations “fell short of ethical standards”.
The ANAO determined that there was a lack of an appropriate acquisition strategy, and that while a strategy was deployed, it was “focussed on incentivising an unwilling seller to dispose of their land some 32 years in advance of when it was anticipated to be needed for the airport expansion, an approach at odds with the department asserting that early purchase allowed it to capitalise on ‘goodwill’ from the landowner”.
ANAO found that the “the valuation approach inflated the value of the land, which in turn led to the Australian Government paying more than was proper in the circumstances”.
“Decision-makers were not appropriately advised on the land acquisition. Formal briefings omitted relevant information, such as: the purchase price; that the price exceeded all known market valuations of the land; and the method of acquisition,” ANAO stated in its report.
The Department of Infrastructure has now agreed to three recommendations laid out by the Auditor-General.
These recommendations were:
- Conducting more rigorous cost benefit analysis
- Introducing new procedures governing valuations
- Running proper meetings with landholders with minutes recorded on any discussions
To read the full Australian National Audit Office (ANAO) report, click here.