‘Reflecting poorly on all of us’: Treasury secretary on his role in $30 million airport land deal

By Matthew Elmas

Tuesday October 27, 2020

Treasury
Steven Kennedy (AAP Image/Lukas Coch)

Former Department of Infrastructure secretary Steven Kennedy says he signed off on departmental financial statements before the auditor-general had completed its inquiries into the 2018 Leppington Triangle land purchase because he didn’t want to leave the job to his successor.

The now Treasury secretary was questioned about his role in the deal in Senate Estimates on Monday, confirming he was aware of the transaction but was not across the details.

The deal, which is now subject to a federal police and several internal departmental investigations, saw taxpayers fork over $30 million for a 12-hectare slice of land near Western Sydney Airport, only for it to be valued at just $3.065 million in subsequent financial statements.

Kennedy, who led infrastructure at the time of the purchase, signed off on 2018-19 financial statements and attested the department had provided all relevant information to the national audit office (ANAO) during its subsequent inquiries into the deal.

But the auditor-general found the secretary and department CFO’s representations were “inaccurate” because while the department had said it issued no additional valuation instructions, it later emerged advice to M J Davis Valuations was changed nine times over an eight month period.

“This means that the representations provided by the Secretary and Chief Financial Officer (CFO) as part of the financial statement audit were inaccurate,” the auditor-general found.

On Monday, Kennedy said he was “concerned” by the findings and will reflect on his role in the purchase once current investigations are completed, revealing he signed off on the financial statements because he didn’t want to leave the job for his successor.

“I was leaving the role as secretary and obviously going to Treasury and I felt it was important it was one of the last tasks I did,” Kennedy said.

“I felt it was an unreasonable thing to leave a new secretary to have to sign off on the financial statements of the year that I just oversaw the department for,” he continued.

Kennedy said it was his responsibility to sign off on the financial statements, and so he did.

“I didn’t appreciate the significance of this matter, I did know it was a matter being addressed, it would have been provided to me in advice that the CFO gave me,” he said.

“If I signed off I’m sure he would have advised me that he was comfortable with me signing off, and so I did sign off, but that will be one of my other reflections, whether I should have chosen to wait until that exercise had been completed.”

Reflecting more broadly on the scathing audit, Kennedy said the fundamental issue identified by the auditor-general was that senior decision makers were not adequately informed about the purchase, a finding other public service leaders and government ministers have routinely drawn attention to in recent weeks.

“I was surprised and concerned by the findings in the report, particularly the findings around unethical behavior and the fact that information was withheld from key decision makers, and that would include myself,” he said.

Kennedy said he will also reflect on whether the right set of systems were in place to double check large land procurement processes.

“I’m very disappointed, there’s a very large number of public servants that have worked extremely hard around this issue,” he said.

“It’s now reflecting poorly on all of us, so we need to get to the bottom of it and find out why the systems didn’t bring this issue to a head.”

Other senior public servants have reflected on how departmental processes should change in the wake of the Leppington deal, amid ongoing investigations into exactly what occurred.

Department of Finance Secretary Rosemary Huxtable told estimates last week that all APS secretaries will be “looking very closely at their processes”, specifically around how procurement is undertaken and what safeguards are in place on large deals.

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