LAND MANAGEMENT CORPORATION

328 The Hon. D.G.E. HOOD (14 September 2011) (First Session).

1. Will the Minister for Infrastructure explain why the Land Management Corporation was allowed to enter into a joint venture (Soho) at Mawson Lakes (Technology Park) with Holcon Pty. Ltd., a subsidiary of Connor Holmes, in contravention of Government policy?

2. Will the Minister explain why the terms of this joint venture were so favourable to Holcon which receives 65 per cent of any profit and makes progress payments on land as development proceeds?

3. What is the status of this joint venture?

4. Why has this joint venture not been publicised by the Land Management Corporation as has been the case with other joint ventures?

5. Is it true that this joint venture was not successful and one of the options being considered by the Land Management Corporation is to wind up the joint venture?

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women): The Minister for Transport and Infrastructure has been advised:

1. There has been no policy precluding the Land Management Corporation (LMC) from entering joint venture arrangements.

The Soho Joint Venture was approved by State Cabinet and the Parliament's Public Work's Committee (see Public Works Committee Report 207).

The SOHO project was a small pilot project aimed at encouraging the development of 12 innovative small office home office (SOHO) dwelling units and 12 small commercial units on land owned by LMC at Technology Park, Mawson Lakes.

2. The profit share ratio was determined through commercial negotiation in the context of the risk profile, given that Holcon Pty. Ltd carried the borrowing risk for the building finance. The land was released and paid for as the project units in each stage were sold to minimise the risk to LMC. The residual land remained with LMC unencumbered by the development until it was released by LMC for the next stage.

3. Stages one and two of the Joint Venture, which comprised two dwellings and two office units, was not well received by the market with one dwelling remaining for sale two years after completion. The current status of the Joint Venture is that the residual land was sold and settled on 30 September 2011 at market value based on offers from two builders. It is now intended to terminate the Joint Venture when final accounts are completed and audited.

4. This was a very small joint venture that was marketed within the context of the development of Technology Park adjacent to the much larger joint venture LMC was involved in at Mawson Lakes. Given the eventual limited market appetite for the product it would have been inappropriate to heavily publicise or market the product. The SOHO joint venture was subject to the full scrutiny of the Parliament's Public Works Committee, which has received regular reports on the project's progress since approval.

5. Given the circumstances referred to above, LMC is intending to wind up the joint venture.