COPPER COAST DISTRICT COUNCIL

The Hon. SANDRA KANCK (17:24): I move:

That this council—

1. Notes the serious and continuing allegations about the District Council of the Copper Coast in relation to the fairness and transparency of the process for the sale of council land in Owen Terrace, Wallaroo;

2. Further notes the limitations of the inquiry being conducted by the Office for State/Local Government Relations, in particular the fact that it is dependent on information provided by the District Council of the Copper Coast; and

3. Therefore refers the matter of the process used by the District Council of the Copper Coast in divesting itself of council land in Owen Terrace, Wallaroo, to the Ombudsman, under section 14 of the Ombudsman’s Act, with particular reference to—

(a) whether all parties expressing an interest in the purchase of council land on Owen Terrace received equal and fair consideration;

(b) whether information provided by the council to account for its decisions was fair, accurate and consistent;

(c) whether any councillors that voted on decisions of council related to this matter had an actual or potential conflict of interest and, if they had, whether this was declared;

(d) whether the decision of the council on the divestment of council land complied with the council’s stated specifications and objectives for the divestment of the land on Owen Terrace; and

(e) any other matter about the administration of the District Council of the Copper Coast identified in this inquiry that, in the opinion of the Ombudsman, is important to bring to the attention of the government and the parliament.

I have a motion already in private business which I moved on the last Wednesday of sitting, and I will be discharging that because it will be superseded by this motion that I have just moved. Under section 14 of the Ombudsman's Act, either house or a committee of parliament has the power to refer a matter to the Ombudsman for investigation. We have this power, but it is rarely exercised.

I am moving this motion today for such an investigation to occur, for three reasons. First, I am convinced that there are deep-seated problems with governance in the District Council of the Copper Coast, and I will be outlining some of these later in my speech. The second reason is that, in the absence of an ICACC, we do not have a body with the right combination of powers, expertise and the necessary investigative culture to get to the bottom of these allegations. Thirdly, it is in the interests of all concerned to resolve this matter so that, ultimately, we can move on.

My motion calls on this council to note the serious and continuing allegations about the District Council of the Copper Coast in relation to the fairness and transparency of the process for the sale of council land in Owen Terrace, Wallaroo. It is worth putting this particular debate into some context. Most members would not be aware of the number and range of allegations being made against this council, but I will go through some of them. The bulk of what I will speak about will be on this issue of a Woolworths in Wallaroo. There are six points that I will address briefly before I get to that.

First, there are complaints relating to The Dunes development. Members would be aware, I hope, that there is a massive $750 million development occurring at Port Hughes at the present time, and it is a development that has been poorly managed. Members may be aware of questions that I have asked; for instance, about dust suppression in relation to that development. The dust churned up by the earthworks has led to holidays at a bed and breakfast across the road being cut short, and I have photographs of dust so thick that you cannot even see across the road.

There is a revolving door between the council and the developer, with former staff leaving the council to go to work at Quickview. I know that anyone who reads the Sunday Mail would be aware of the stories and revelations it has made that the police Anti-Corruption Branch is investigating the former council CEO, John Shane, and Peter Butterly, the principal of Quickview.

There is the issue of the proposed community waste water scheme. Council is developing a common effluent scheme, which is desirable in principle but, for some householders, it could cost up to $20,000 to connect into that system because of the extensive trenching that is required. There are questions being asked about why the council chose the more expensive gravity method over the vacuum method recommended by consultants KBR. Some critics say that the whole exercise is being driven by The Dunes' need for water.

I have recently begun to receive complaints that developments are not being categorised properly. Until recently, Mayor Paul Thomas has been a member of the Regional Development Assessment Panel, a position seen as being unwise to hold by many others in local government.

The issue of councillor conflicts of interest is another aspect of this. My office has received a number of complaints—several very well sourced—of individual conflicts of interest. These include how certain councillors have voted and a failure, in some cases, to declare that conflict of interest. There is the issue of attempts to conceal information, and several of my correspondents from the Copper Coast believe their council is actively trying to prevent them from seeing certain documents and finding out about the dates of meetings.

Suppressing dissent is another issue. The District Council of the Copper Coast has tried twice to silence the one councillor who dares to ask questions, Councillor Tommy Tonkin. The first time that it accused him of breaching the council's code of conduct, it was not able to sustain the charge and recently it has moved a vote of no confidence in him.

I turn now to the issue of the choice to locate a Woolworths supermarket at Wallaroo. This will be the basis of the remainder of my speech, but I do remind members of the comments that I made in my speech a fortnight ago, about the number of people who signed a petition and the number of people who have attended public meetings. There has been extensive media coverage of this matter, and more recently there was a rally on the steps of Parliament House. In fact, there were two rallies on the same day at the same time: one in favour of Woolworths and one against it.

The District Council of the Copper Coast is the subject of numerous allegations. Some of them are serious enough to have sparked an investigation by the Anti Corruption Branch, but I believe that is just the tip of the iceberg. Unfortunately in this situation the council is at war with a significant section of its own community. Only 11,500 people live in this council area and, in Adelaide terms, if you looked at the number of people who have signed the petition, that would equate to over 100,000 people in Adelaide; and 500 people attending a public meeting would equate to a meeting of 60,000 people here.

I think it is clear to anyone who cares to look that there is a serious problem. This group of people who are agitating cannot be dismissed as troublemakers. They are residents, many of whom could be described as being in their senior years, some of them retired, some close to retiring; they are not the type of people whom you would simply dismiss as troublemakers. These issues are being raised by a wide range of people, including local business people.

The controversy about the Wallaroo supermarket development concerns a $30 million project to revitalise Owen Terrace in Wallaroo. Owen Terrace has a very unusual configuration, with a shopping precinct on the north side and a large area of open space on the other side. In that open space is a park, toilets, the remains of a rail yard (still the departure point for a tourist railway), a bowling club and a croquet club. The development involves relocating the bowling club and the croquet club and several other sports organisations to a new facility that will be built with the proceeds of the sale of the land and then, on that land, we will see the building of a supermarket and specialty shops.

The council made the decision, earlier this year, to sell that land to Leasecorp (in partnership with Woolworths) over the proposal by Carramatta (working in association with the Drake Foodland group). There are many emotions associated with this choice, but here I concentrate on the process. One of the terms of reference that I am suggesting for this inquiry by the Ombudsman is whether all parties expressing an interest in the purchase of council land on Owen Terrace received equal and fair consideration. I have two credible complainants against this process. One of the complainants is not in a position to speak out, but Bob Soang (general manager of Foodland) is. The following is my summary of the allegations that he has made, as expressed in media interviews and letters to the Yorke Peninsula Country Times.

The proposal from Carramatta, the company acting for Foodland, was far superior to that offered by Leasecorp acting for Woolworths in the following ways. Carramatta offered substantially more money for the land and Carramatta's proposal complied with the specifications outlined by the council for the project—in particular, it was consistent with the council's development plan provisions for Owen Terrace. The council's reasons for choosing the Leasecorp proposal over the Carramatta Foodland proposal have varied over time. Appendix 3 of the CEO's report of 7 May 2008 summarises the development proposals for Owen Terrace, Wallaroo.

Two proposals from each developer (the choice between Carramatta and Leasecorp) are summarised. Carramatta Holdings option 1 offers $3.1 million, with the council to provide a new central town square, a new public toilet, centre car-parking (additional to that required for the supermarket), and the relocation and provision of new clubroom facilities. The development would have featured a commercial residential mix, a 2,435 square metre supermarket, an undercroft car park, 10 specialty stores, 159 car parks, undercroft parking of 74 car parks and a residential complex consisting of 21 apartments over three floors. The council's suggestion to the proponents was that it should include a residential component. This, ultimately, in the decision-making of council, acted against Carramatta.

Option 2 from Carramatta provides the same development but with Carramatta to take full costs and risk of the restructure and any relocation in lieu of consideration. Drake Foodland says this proposal has been valued at $4 million. Leasecorp offered $2 million, increased after negotiation to $2.5 million under option 1 and, under option 2, they simply stated they would offer 5 per cent more than any other party offers. Their development consists of a 3,200 square metre supermarket with nine specialty stores, including a cafe, deck dining, an airconditioned mall, undercroft parking for 206 cars, a travelator, 84 above-ground car parks and public toilets. So, Leasecorp were offering substantially less, in terms of the price for the land, but they are providing a larger development: essentially, a shopping mall with more car parks than the Carramatta proposal.

The big sticking point has been the fact that Leasecorp was able to renegotiate its offer and no-one else had that opportunity. I heard one councillor say that, because Leasecorp had said that it would better any other offer, then the council was, in effect, bound to invite them in to increase their offer.

Did everyone receive fair and equal consideration? The next three terms of reference in my motion are designed to provide a clear starting point for the Ombudsman to investigate this central question. I believe the first test is (and this is in the terms of reference) whether the District Council of the Copper Coast decision on the divestment of council land complied with the council's stated specifications and objectives for the divestment of the land on Owen Terrace. The council was offered two different choices. It did not have to take the highest price. However, if the choice it made was significantly at variance with its broader objectives, and the sale price was significantly below that offered by an alternative bidder, there are questions that have to be asked.

A council report of 7 May outlined what the council wanted. On page 2, paragraph 7, the report states that three variations of any proposed design were sought and that each should give due regard to the principles of development control that apply to the town centre—that is, the Wallaroo Historic Conservation Zone, as contained in the council's development plan, and also consideration of the various principles in documentation entitled Wallaroo Town Centre and Coast Urban Design Framework.

Pages 3 and 4 outline two objectives: to relocate the bowling and croquet club and greens, preferably on a cost-neutral basis; and to underpin the commercial strength of the Owen Terrace precinct which will require attention to issues including land use and retail mix, built form and urban design. Page 4 also outlines several other considerations. These are that development is occurring in a heritage zone; it should revitalise the area and should seek a high level of ongoing occupancy rather than one with absentee owners and empty shops, and public car parks; and toilets that will be lost in the development will need to be replaced.

Clearly, both the Leasecorp and Carramatta proposals would appear to achieve the relocation of the bowling club. The revitalisation of the Owen Terrace area would seem to be realised under both proposals, although which would be the better is a matter for debate. However, the fact that it will create two supermarkets in the town seems an undesirable outcome in such a small town, which can only feasibly sustain one.

The wisdom of creating a large, enclosed mall in a country town main street is also questionable. In fact, everyone I have spoken to about this has instantly said that it will kill the main street. So, that does seem questionable, but perhaps it is just a poor decision and not a question of any lack of due process.

However, the fact that this development is occurring with regard to the principles of development control that apply to the town centre (Wallaroo Historic Conservation) zone immediately highlights process issues. The development plan provisions for that area, listed on page 79 of the Development Plan for the District Council of the Copper Coast, include preserving and protecting the Moreton Bay fig trees, maintaining and enhancing the historic character of the zone and continuous retail frontage to Owen Terrace.

Council chose a proposal that is more likely to be in conflict with those provisions, simply because it is a large, airconditioned mall that would present a blank wall to the street, and a blank wall certainly cannot enhance the historic character of that zone.

The issue of the Moreton Bay fig trees has been raised with me. Some local people say they believe that the Leasecorp proposal will result in the destruction of those fig trees, although when I spoke to him the Mayor said that if there was any sense of the trees being damaged he would be out there protesting against it. It appears to me that council chose a proposal which offered financially a lot less for the land and which also, particularly in terms of that blank wall, is at odds with the Development Plan.

In an interview on ABC Radio on 639 and in other statements to the media, Bob Soang of Drakes Foodland expanded on these issues in a very convincing way. In isolation, this could be seen as a poor decision rather than an inappropriate one but, seen in the overall context of this debate, it raises more fundamental questions. So, I believe that council has some questions to answer. Let us see how it has approached this.

One of the terms of reference for the Ombudsman is whether information provided by the District Council of the Copper Coast to account for its decision was fair, accurate and consistent. So, let us look at the council's response to date. Its first response was that it was not a matter of the highest price but of the best proposal, and that came from the Mayor. This seems shaky against the fit with heritage provisions, but it is possible that council honestly made a bad decision. However, more recently council has changed its argument and it is now saying that it did, indeed, get the best price.

The developer Leasecorp issued a statement claiming that, while Carramatta's proposal was offering more in the first instance ($3.1 million), council would have had to spend an additional $1.6 million for a new town square, car parks and public toilets. Council also issued a statement along identical lines in a public statement on 2 September in the Yorke Peninsula Country Times. However, this shift of rationale simply highlights the questions about the processes used. The report to which I have been referring provided two options for council to consider. Leasecorp's first option offered $2 million, which was upgraded to $2.5 million, while its second option simply stated that it would beat any other bid by 5 per cent.

Carramatta's first option would have left the council with the cost of new parks, car parks and toilets, but its second option was an offer to take on the total risk of the relocation, the rebuild of new sports facilities and the replacement of parks, car parks and toilets. That would have achieved the cost neutral objective of council, and Carramatta says that this second offer is valued at $4 million.

Both the council and Leasecorp have focused on the first of the two options proposed by Carramatta. The fact that Leasecorp was able to renegotiate its offer has rightly attracted considerable attention. The council has justified this on the following grounds: first, it chose the offer it liked and then sharpened its pencil; and, secondly, it was obliged to renegotiate because Leasecorp had guaranteed to beat any offer by 5 per cent. However, Carramatta's second option was also an open-ended offer. So why was it not consulted and asked to renegotiate? After all, some pencil sharpening on the basis of a $3.1 million or $4 million starting point could have yielded an even better result for the council than the low base Leasecorp started with.

Leasecorp said that it would better any offer by 5 per cent. If you consider that the Carramatta base proposal was $3.1 million, and you better that by 5 per cent, then Leasecorp should have been offering to bid $3.25 million. In fact, in the end it was $2.5 million, which is way off the mark. Members will have noticed that, while its promise was that it could offer 5 per cent more than any other bid, it has not been called upon by the council to deliver that actual target. This sort of decision immediately leads one to look for conflicts of interest. It is very hard to explain why the council would opt for $2.5 million for the sale of land when it could have got a total package from Carramatta of $4 million.

One of the terms of reference for the Ombudsman's inquiry is whether any councillors who voted on decisions of the council related to this matter had an actual or potential conflict of interest and, if they had, whether this was declared. I have been informed of at least 10 actual or potential conflicts of interest and, as members know, there is an ACB investigation going on in relation to The Dunes, so it is not an abstract matter in this council but a real problem.

In relation to this specific matter, one potential conflict of interest has been identified in that the councillor who moved the motion is a former real estate agent who is alleged, until relatively recently, to have held property in the vicinity of the development that could have been expected to appreciate. There are several real estate agents on the council, and it is possible they slip up from time to time and forget to declare conflicts of interest. But, more interesting is the council's response.

In the Yorke Peninsula Country Times of 30 September the council had an advertisement entitled 'Council response to Kanck's statements'. The mayor, Paul Thomas, stated that the councillor in question retired from his real estate business in 2006. However, that person still uses the email address of his former business, and that former business is still listed as a source of income in the councillor's register of interest from September 2008. This again is not damning in isolation—it could be another slip up—but it fits a pattern that is emerging in this council. Either this council does not have any understanding of conflict of interest or it is knowingly abusing it.

There have been other serious allegations of conflicts of interest, which I am happy to share with any other member who wants to come to see me about it on a confidential basis. Another part of this motion further notes the limitations of the inquiry being conducted by the Office for State/Local Government Relations and, in particular, the fact that it is dependent on information provided by the District Council of the Copper Coast. There are serious allegations, but what are the options for getting to the bottom of them? There is the police Anti-Corruption Branch, but it cannot compel witnesses to come forward. I suspect we are talking about maladministration rather than outright corruption in this case.

The Ombudsman has extensive powers, but under section 17 of the act he does not have to deal with any complaints if there is not sufficient personal interest. As I have argued before, many people who have a grievance are not in a position to complain and may rely on friends to lodge those complaints.

There are several complaints that I cannot speak about because they could hurt people who rely on council for some of their income. In that respect, we do have a quite powerful watchdog in the form of the Ombudsman, but there are limitations on what he can do on an individual basis. That brings me to the preliminary inquiry by the Minister for State/Local Government Relations, and I have become convinced that this is not an adequate tool.

First, it is not an investigatory body. The Office of State/Local Government Relations has responded to these allegations by offering workshops and training. This supportive approach also characterises the minister's statements on this matter, and that is often the correct course but it is not adequate when more fundamental questions of maladministration are being asked.

Secondly, it does not have investigative powers. It is requesting the council to supply it with information: it cannot compel. Yesterday, in a ministerial statement (and I thank the minister for that) the minister referred to the Government Investigation Unit from the Crown Solicitor's office making further inquiries. That is good, but the CEO's report of this November states that the 'CEO has provided a voluntary witness statement to an investigator in relation to council's divestment of land on Owen Terrace, Wallaroo'. That is an interesting revelation to me—that it was voluntary.

Thirdly, there does not appear to be any reference to the inquiry being conducted by minister Gago in any council documents until November. Up until that point, the only source of knowledge of this preliminary inquiry was media reports. So, provided all the councillors were aware of media reports, they might have known that this inquiry was going on and put up their hand to speak to people from the Office of State/Local Government Relations.

Fourthly, the Copper Coast council appears to be treating this whole process with contempt. In the face of all this scrutiny and criticism, councillors are becoming more evasive. They are trying to silence the only dissenter in the council—Tommy Tonkin—most recently with a no-confidence motion. Locals have also given me information that I regard as extremely reliable that council is changing the times and venues of committee dates and taking items into workshops which do not have to be open to the public, and it appears that this is being done to avoid scrutiny. These are not the actions of people who recognise and are trying to change their behaviour.

Finally, any decision through this process will be controlled by the government. It will not necessarily be transparent. When one considers how heated this debate has become up on the Copper Coast and when one looks at the backdrop of developer donations—and, yes, there are rumours and stories about significant donations from Copper Coast developers—a government-controlled process will not convince people.

An inquiry by the Ombudsman will have the independence and the power to resolve this matter. If maladministration is found to have occurred, it will be dealt with. If the council is exonerated, the debate will be over and everyone can move on. Honourable members should know that I do understand how divisive this sort of debate can be in the community. I know it is even breaking up friendships in that area, but some of the same people who ring me telling me that this is happening and that it is not good and that it is tearing the community apart are also urging me to keep going, and that they want an inquiry like this. They know this is something that has to happen.

As I have said, I have been able to cover a small portion of the allegations concerning the District Council of the Copper Coast. I am happy to brief members privately if they would like more information. I ask that honourable members give this motion serious consideration. I believe it is the only way that we are going to get a resolution to this and stop the swirl of innuendo, rumour and bad relations that is engulfing this area. I hope that, with the concurrence of honourable members, we will be able to put this to a vote in a fortnight.

Debate adjourned on motion of Hon. J.M. Gazzola.

[Sitting suspended from 17:55 to 19:45]