After three days of gruelling Senate Estimates hearings about the bungled Leppington Triangle land purchase, senior public servants are reflecting on how government processes need to change.
Disturbing details have emerged about how a two-year, cross departmental process to purchase a 12-hectare slice of land adjacent to Western Sydney Airport ended with taxpayers forking over $29.8 million, roughly 10-times more than relevant valuations.
Questioned about the Department of Finance’s role in the purchase on Wednesday, secretary Rosemary Huxtable flagged consideration about whether expenditure thresholds should be overhauled to increase scrutiny on large deals.
“All secretaries will be looking very carefully at their processes coming out of this,” Huxtable said.
“… I expect the secretary of PM&C will also seek to have some discussions with the secretaries around these issues.”
That there were significant failures in the purchase process has been known to departmental secretaries for some time; senior leaders from PM&C and infrastructure have already spoken at length about the original audit, published in September.
Huxtable pointed to an ongoing review of the Land Acquisition Act (LAA) as a vehicle for reform, legislation which quickly became a focus in Labor Senator Katy Gallagher’s attempt to discern how involved finance was in the purchase.
Huxtable said while finance was aware of the final agreed $29.8 million purchase figure, it was not across the valuation strategy cited by the audit office as responsible for the inflated valuation, and so was not in a position to judge whether it was appropriate.
“We can’t reach in and be the decision maker, clearly that’s not our role. Now clearly, if we were acquiring land within the finance portfolio then I would have responsibilities and my offices would have responsibility to ensure A. that the Land Acquisition Act was followed and B. that the PGPA Act was followed,” Huxtable said.
The department said finance’s responsibilities under the LAA extended to providing infrastructure with advice about how to follow processes under the act, participating in the initial compulsory acquisition approval in 2016.
Auditors found infrastructure later changed the acquisition strategy from compulsory to by-agreement in late 2017, and on Wednesday finance said they learned about this in early January 2018, when a finance official issued a pre-acquisition declaration for the Leppington Triangle.
But finance sought to distance itself from this decision, saying infrastructure was the decision maker.
“[Infrastructure] sought procedural advice about how the process should change … but the decision was theirs [infrastructure],” a finance official told estimates.
In its response to the Auditor-General’s report earlier this year, infrastructure agreed the valuation strategy was “unorthodox”, but said it was “developed in consultation with the Department of Finance”.
This statement drew a terse rebuke from Huxtable on Wednesday.
“You think infrastructure was stretching the friendship a bit there when it says ‘however we note was developed in consultation’?” Gallagher asked.
“This is a statement from infrastructure, infrastructure considers the strategy was unorthodox … I didn’t have any visibility of the acquisition strategy,” Huxtable said.
Finance minister Mathias Cormann said the Auditor-General made no findings or recommendations to his department, pointing to previously identified issues within infrastructure.
“I think that infrastructure should have reached out in a better, different way in the context of this process,” he said.
“My very firm advice from finance is that it [the valuation strategy] was not developed in consultation with finance and that the infrastructure department accepts that,” Cormann later said, referencing a briefing note he received from the department on September, 21.
In that briefing note, finance also advised the minister that infrastructure’s statement was an “inaccurate characterisation” of finance’s role, and that Infrastructure had amended their talking points to reflect this.
Huxtable confirmed she had spoken with Atkinson on September, 29 about infrastructure’s statement, but did not ask him to correct the record.
“I did say to Mr Atkinson I agreed we were involved in the acquisition strategy but I didn’t consider that we were involved in the valuation strategy,” Huxtable said.
Earlier in the hearing Huxtable said an ongoing review of the Land Acquisition Act –started independently from the scandal– could serve as a vehicle for reform, in addition to process changes already underway within the department of infrastructure.
“The LAA review, given it is not only on foot but well advanced, is a perfect opportunity to really get ahead, I guess, on what changes could be made there,” Huxtable said.
Asked whether expenditure thresholds could be implemented to increase visibility of large deals among senior leaders, Huxtable said it would be considered, adding that divergent state and territory models are informing whether federal laws are fit for purpose.
“[We would] underpin that with the evidence around what those thresholds might be, looking at the whole range of land acquisitions that occurs,” Huxtable said.
“You’ve got to walk the line here between having that appropriate scrutiny but also enabling processes to proceed.”