Gillman Land Sale

Adjourned debate on motion of Hon. J.A. Darley:

1. That a select committee of the Legislative Council be established to inquire into and report on the sale of state government owned land at Gillman, with reference to—

(a) the state government’s holding of state government owned land at Gillman over time and the events that led to an agreement between the state government and Adelaide Capital Partners in relation to state government owned land at Gillman;

(b) the conduct, including public statements, of the state government in respect of the agreement, and the decision not to offer the land for sale by open tender;

(c) the interaction between the state government, including the Economic Development Board, Renewal SA and parties who identified an interest in land at Gillman;

(d) the involvement of lobbyists and other third parties in negotiations between the state government and Adelaide Capital Partners;

(e) the role of Renewal SA, including Renewal SA Board members, in the sale of land at Gillman;

(f) the role of Renewal SA and other parties in the development of the Gillman master plan;

(g) the state government valuation process regarding the subject land;

(h) infrastructure planning undertaken by the state government to support development at Gillman and surrounding areas;

(i) the sale of other state government owned land at Gillman over the past 12 years;

(j) state government policies and guidelines;

(k) principles of good public sector practice; and

(l) any other relevant matters.

2. That standing order 389 be so far suspended as to enable the chairperson of the committee to have a deliberative vote only.

3. That this council permits the select committee to authorise the disclosure or publication, as it sees fit, of any evidence or documents presented to the committee prior to such evidence being presented to the council.

4. That standing order 396 be suspended to enable strangers to be admitted when the select committee is examining witnesses unless the committee otherwise resolves, but they shall be excluded when the committee is deliberating.

(Continued from 7 May 2014.)

The Hon. R.I. LUCAS (19:57): I rise to support the motion of the Hon. Mr Darley in relation to the establishment of a select committee to inquire into and report on the sale of state government-owned land at Gillman with reference to a series of issues of concern that the Hon. Mr Darley raised in his contribution.

The Liberal Party is already on the record through our shadow minister with prime responsibility for this particular area, the member for Bragg, indicating our willingness to support an investigation into this particular area: the decision the government took to sell 400 hectares of land at Gillman to a private consortium without offering the land via public sale.

There is a whole series of questions that the Hon. Mr Darley, the member for Bragg, the member for Davenport and a range of other media outlets in particular have raised that need responses. They can really only be provided through the hard work of a parliamentary committee of inquiry. I pay tribute to some of the work that media outlets such as The Australian in the first instance and also InDaily and other media outlets of course as well over a period of time have taken in pursuing this particular issue.

It is an indication of the importance of the work that some media outlets undertake in relation to trying to get information out into the public arena. This particular issue has had its difficulties. Ultimately, some of these journalists have managed to get copies of documents, which is not always possible for them, and put them on the public record, and also, in the case of some of the journalists, to get quotes from former members of the board of Renewal SA expressing their particular concerns about the government's processes on this particular issue.

One of the important issues that was not touched on in great detail by the Hon. Mr Darley (but certainly from our viewpoint will be an important part of the work of the committee) is that this particular agency, in terms of the way it was established, has a degree of independence in terms of its operations but, as the Hon. Mr Darley has indicated, there is certainly an argument in relation to how it handles taxpayer assets, that it should nevertheless follow established and due processes of government.

The Hon. Mr Darley has raised in great detail, not just in his contribution in the council but publicly on any number of occasions, his concerns as a former valuer-general in relation to whether or not the taxpayers did indeed get a good deal from the particular deal that the government wanted to see achieved, and that will obviously be an important part of the work of the committee. The aspect that I want to concentrate some brief comments on is the critical role of government and the critical role of ministers, and in particular Premier Weatherill and minister Koutsantonis. Their sticky fingerprints are all over this particular deal—in particular minister Koutsantonis.

Minister Koutsantonis made a number of statements to journalists in the early stages of their pursuit of this issue which, in my view, will not bear any close investigation at all. When the committee looks at the information that was available at the time minister Koutsantonis made those statements, in my early judgment it will be quite clear that he was deliberately misleading the public of South Australia in the period leading up to the state election on what was a critical issue for the government and for that particular minister.

Premier Weatherill, of course, through his public statements has sought to distance himself to the greatest extent possible from this particular deal, but the information provided to members of the opposition would indicate clearly that this deal would not have happened without the active engagement and approval of Premier Weatherill. So, the integrity and the credibility of the government and its most senior representatives (that is, the Premier and the now Treasurer) will be investigated, as it should be, by this particular committee of inquiry.

When you have former board members being quoted in The Australian—Mr Theo Maras, who resigned immediately following the sale, told The Weekend Australian that he had been unhappy with the process because of a:

…lack of competition and lack of transparency. I was not happy we did not follow the normal and due process of going out to public tender.

You have minister Koutsantonis and others telling the media that there had been, in essence, no other interest in this particular deal or this particular land, and then various media outlets and journalists subsequently were flooded with individuals and groups indicating that what minister Koutsantonis was saying was not correct, was not accurate, was not factual, and that indeed they had, to varying degrees, expressed interest in this land and would have wished to have participated in some sort of public tender process or something similar to that, rather than the truncated process that minister Koutsantonis and Premier Weatherill had signed up for.

What the committee will need to explore is not only the processes that Renewal SA and the various departments and agencies followed but also what specific involvement minister Koutsantonis and his ministerial officers and Premier Weatherill and his ministerial officers had in terms of bludgeoning this particular project through to its conclusion.

Certainly there are indications—I think it has now been put on the public record, so it is clear—that minister Koutsantonis was actively engaged in this particular process. It will be important for the committee to establish the extent of that engagement and whether it was limited to what has been put on the record, the formal meeting with minister Koutsantonis and the board, or whether it involved other attempts by minister Koutsantonis and his staff to, as I said, bludgeon the Renewal SA board into changing its view on this particular deal.

It will be important for the committee to establish what those processes were. It is clear from what is now on the public record that the board had a strong view that was opposed to what the government was doing, and then, in the process of a week or so, it changed its position. Subsequently a significant number of the board members resigned in protest at the actions of the government on this issue. So the work of the committee is ahead of us.

The Hon. Mr Darley has outlined in detail some of the issues that need to be pursued. Certainly, and as I have indicated, from the opposition's viewpoint we see this as an important issue that potentially strikes at the heart of the integrity and credibility of some of the most senior government representatives, together with government agencies that have been involved. There has been recent publicity, and it is important for this committee to be established this evening and for it to commence its work immediately.

Freddy Hansen, the former highflying chief executive of Renewal SA, has just been kneecapped by the Weatherill Labor government only a couple of years into a five-year term. I am sure he will receive a very healthy payout with the knee capping, so we need not feel too sorry for him, but, as we understand it from media reports, he is fleeing—my word, not his—the shores of Australia to return to his home in the United States. That will occur in the week commencing 2 June, according to media reports. So if this committee is established tonight it should meet very quickly to establish its initial processes in terms of advertising, appointment of staff and all those administrative things that we need to do.

Certainly, as one member of that committee I will be supporting the very early decision to invite Freddy Hansen along, kneecapped or not, to the first evidence-taking meeting of the select committee to assist the committee in its dealings. That would certainly be a much cheaper exercise than having to fly the whole committee to Oregon, or the United States, with Hansard, as attractive as that might be, to go to Oregon—or wherever it is he is heading—to take evidence with Hansard. In the interests of the taxpayers of South Australia I would hope that the Labor members of the committee will assist the majority of the committee in an early meeting of the committee, probably no later than Friday of this week, as well as an early meeting to save money for the taxpayers of South Australia.

I am sure, as the Clerk can advise you, Mr President, that there has been at least one example where a select committee of the Legislative Council has been required to travel overseas to take evidence and that was the select committee in the early to mid-1980s which looked at the South Australian Timber Corporation, and it travelled as far as Greymouth on the western shores of New Zealand to take evidence in relation to some significant investments that the timber corporation had taken on behalf of the taxpayers of South Australia.

So, there is nothing contrary to standing orders but, as I said, in the interests of the taxpayers of South Australia, I would hope that those Labor members who were appointed to the committee will make themselves available to prevent that sort of unnecessary expense for the taxpayers in terms of taking evidence from Freddy Hansen prior to his leaving our shores on 2 June.

It may well be that even if we take evidence—given that we have had no documentation from the departments and agencies or any other evidence—that we still need to get information from Freddy Hansen and that might be possible by way of video link-up, or some sort of technology link-up or correspondence and questions to be sent to him, and we would need to explore with him as to whether or not he is prepared to assist the committee's inquiries in that way should the committee make that decision.

I obviously cannot pre-empt a decision of the committee but should the committee take that decision, it may well need be that we get back to him. He may well feel disposed to protect his own professional interests. He might want to follow the evidence that others give—because he is leaving our shores, others might want to dump on him and his reputation, and blame him for everything—and he might want to defend his interests by following the proceedings of the committee and, if he wishes, to clarify issues at a later stage.

Anyway, I am jumping a long way ahead when I do not need to. From that viewpoint can I conclude by saying that the Liberal Party members, as the member for Bragg has previously indicated, strongly endorse the motion that has been moved by the Hon. Mr Darley.

The Hon. T.T. NGO (20:12): I rise today to place on the record the government's opposition to this dangerous motion that presents significant risk to this state without providing anything close to a benefit in return. The risk is to private investment into our great state—not just a risk to this specific investment, but to the perception generally of South Australia as a great place to do business. Private investment in South Australia is crucial to the ongoing economic prosperity of our state, particularly private investment that supports the mining industry.

This government has made supporting and facilitating the development of the mining industry a key strategic priority. Mining exports in the year to March 2012 totalled $4 billion—four times greater than a decade ago. When a group of South Australian entrepreneurs show that they are willing to risk their own money to invest in a strategic objective, it is incumbent upon the government to consider the opportunity very seriously and very carefully.

This is exactly what occurred when the government was approached by Adelaide Capital Partners (ACP) to purchase the land the subject of the Hon. Mr Darley's motion. Let us be clear about what the Hon. Mr Darley's motion potentially places at risk: we are considering risking the creation of over 6,000 jobs; we are considering risking the development of a global logistics hub to support the exploration and development of South Australia's oil and gas reserves; we are considering risking the provision of industrial allotments catering for other large-scale transport logistics uses; and we are considering forfeiting a long-term strategic advantage for South Australia in a key growth industry. And to what end? What clear and likely benefit justifies this risk? What is clear is that this land has lain dormant for decades. The approach by ACP presents an opportunity for the development of this underutilised site using private sector money. This is a unique opportunity. Right back to the MFP days, significant investment of government funds has been an assumption to develop the land.

Renewal SA's board provided advice to the then minister for housing and urban renewal that the proposed sale of the land at Gillman to ACP, first of all, represented good value; secondly, had been managed in accordance with the Renewal SA's existing policies regarding off-market transactions; thirdly, had been guided by independent probity advice; and, finally, was ultimately a matter for cabinet. The government is comfortable with the advice received from Renewal SA's board and welcomes scrutiny as to the sale process.

Let us be clear though, any witch-hunt threatens the viability of the transaction and threatens private sector investment in South Australia. The government makes no apologies for supporting economic development. It has been widely reported, but for the record I stress it here again, that ACP was granted a period of exclusivity to seek the necessary international investors necessary to proceed.

A select committee probing the transaction before it has been completed has the real potential to jeopardise an important transaction crucial to the future of South Australia. ACP continues to negotiate with investors prior to deciding whether to exercise its option to purchase. A politically motivated witch-hunt threatens to undermine the transaction with ACP and, more generally, the private sector's confidence to invest in this state.

All those with an interest in the continued economic development of the state should be careful to conduct themselves in a fashion that does not scare off international investors who are needed to make the potential development a reality. Asking the select committee to inquire into the proposed transaction seems a futile and potentially dangerous exercise, therefore, the government opposes this motion and urges other members to do the same.

The Hon. M.C. PARNELL (20:17): The Greens are supporting this motion to establish a select committee to inquire into and report on the sale of government-owned land at Gillman. Like many in the community we believe that there are important unanswered questions around the decision by the government to not offer this land for sale by open tender or, it seems, by any other process that maximised its value to the community. None of the explanations offered by the government so far are believable and the community has a right to know what is going on.

The government has effectively said that no other credible proposals for the use of the Gillman land have been put forward and that the executive arm of government was quite within its rights to negotiate and strike a deal in secret with a single bidder. We know that a number of other proposals from different companies had been put forward over the years and rejected. There is an old adage in politics that if you want to get to the truth you follow the money. I think this is exactly what this select committee should do and I have every confidence that it will.

One aspect that I would particularly like the committee to investigate and report on is whether this land deal with Adelaide Capital Partners is connected in any way with the decision to axe the Newport Quays development at Port Adelaide. The possible link between these two developments derives from the links between the key players and, in particular, the Brown brothers—Todd and Simon. The potential link between the failed Newport Quays development and the Gillman deal is something that a number of people have raised with me and in particular a number of journalists who have joined the dots and quite reasonably come to the conclusion that this matter needs further investigation.

So how have people come to this conclusion that the two matters may be related? To explain the link we need to look at the main players and we need to look at the timing and, as I have said, we also need to follow the money. Let us start with Newport Quays. The Newport Quays development commenced in 2004 when a consortium of developers comprising the Urban Construct Group of Companies and Brookfield Multiplex Group signed an agreement with the state government through the Land Management Corporation. The LMC subsequently became the Urban Renewal Authority and is now known as Renewal SA.

The Port Adelaide Waterfront Redevelopment Project Development Agreement was signed on 25 October 2004 and terminated seven years later on 31 October 2011. I do not need to go into all the reasons why the Newport Quays development was axed, but it is probably fair to say that it was a combination of economic, social, environmental and political factors. From the government's perspective, these were euphemistically packaged up in the phrase 'change of approach'.

Not surprisingly, the Newport Quays consortium were unhappy with this decision to axe their project, and they commenced legal action against the state government to recover damages. I should at this point note that my source for much of this information is an affidavit sworn by Todd Hamish Brown, the CEO of the Urban Construct Group of Companies, dated 9 December 2011. This affidavit forms part of the evidence considered by the Select Committee into Land Uses on Lefevre Peninsula—a committee which I chaired and which reported on 28 November 2013.

The affidavit was in support of the consortium's claim for damages against the state government. Mr Todd Brown claims the government was 'capricious' and acted in 'bad faith'. He alleges misleading and deceptive conduct and claims compensation for 'economic loss, loss of use, loss of profit or loss of opportunity' for what was to be a $1.5 billion project—perhaps even more. Mr Todd Brown puts forward a range of alternative rationales for the cancellation of Newport Quays by the government, including that the government did not advise Newport Quays of the potential impact of the proximity of Incitec Pivot or Adelaide Brighton Cement on certain stages of the Newport Quays project.

Todd Brown also believed that the popularity of the Newport Quays development was significantly impacted by media reports of the Texas fertiliser plant explosion, to the point where apartments in Port Adelaide were unsaleable according to real estate expert opinion. Todd Brown also suggests that the government had several ulterior motives for cancelling the development agreement, including their desire to win back public support in the lead-up to the Kevin Foley by-election.

I refer to the affidavit that was filed in court because it is the most comprehensive account of the consortium's version of events and because it is already on the public record. In fact, I was surprised to get a guernsey in the affidavit myself, largely as a result of the Greens' efforts to shine some light on the EPA's misgivings about building new houses so close to noxious and dangerous industry. I am actually immortalised at paragraph 80 of the affidavit, for those who care to read it.

According to the original court documents, the legal claim by the consortium against the government was for unspecified damages; however, media reports refer to compensation of 'hundreds of millions of dollars'. Sarah Martin, in The Advertiser of 15 December 2011, reported as follows:

Urban Construct is suing Patrick Conlon and the government over the $2 billion Newport Quays development.

The consortium behind the scrapped Port Adelaide project, comprising Urban Construct and Multiplex, has engaged senior lawyer Michael Abbott, QC, to take action against the Government and its development agency, the Land Management Corporation.

Premier Jay Weatherill last month retracted approval for the 50ha multi-stage development and said the developer would be paid $5.9 million in compensation.

But The Advertiser understands the consortium may be seeking hundreds of millions of dollars in damages.

So, that is Mr Todd Brown and Urban Construct. Let us now look at the business interests of his brother, Mr Simon John Brown. Simon Brown is a non-executive director of Adelaide Capital Partners, the successful (and it seems the only) bidder for the Gillman site. ACP is half owned by two companies: Gerlach Asset Development and ResourceCo Holdings.

Simon is also a director of ResourceCo. ResourceCo is wholly owned by ResourceCo Holdings, which is in turn half owned by a holding company called SJK Brown Investments Pty Ltd. Simon Brown is a director and owner of SJK Brown Investments. Up until 2004, so was his brother, Todd Brown. There may be other business connections amongst the dozens of companies involved in their various business interests, and I would be surprised if there is not, but this is a start. The Brown brothers are linked by business interests as well as by blood.

The story of Adelaide Capital Partners' deal with the state government to buy 400 hectares of land at Gillman for $100 million has been outlined well enough by others and I do not need to go through it all here, but I would like to follow the money.

Among the issues to be determined by this select committee will be whether or not the value to be received for the sale of the Gillman land was appropriate, and this is a separate issue from the question of whether or not the process was sound and issues around the lack of any competitive tender. Most of the commentary suggests that the land has been grossly undervalued. If that is the case, why was the land disposed of so cheaply?

Let's consider the facts as best we know them. The deal with Simon Brown's company, Adelaide Capital Partners—the option to purchase the land at Gillman—was made on 18 December 2013. The following day, the settlement of brother Todd Brown's lawsuit against the state government was reported, that is, 19 December 2013. According to The Advertiser, the case settled for around $8.4 million, which is a little more than the $5.9 million that was offered by the government but well short of the hundreds of millions in losses and potential losses that had been suggested.

This raises a number of questions. One question is whether this relatively low settlement is an acknowledgement by the Newport Quays consortium that their case was weak and it was unlikely to amount in more compensation if it went to trial. It is hard to know whether that is the case, but it seems that they were doing quite well in court up until that point.

On 23 March 2012, the ABC reported that, at a preliminary hearing, Mr Michael Abbott QC, on behalf of the consortium, told the court that the government 'terminated this for the purpose of dealing with someone else and getting a higher price'. He said, 'They have used their discretion to line their own pockets.' Mr Abbott also said that the Port Adelaide by-election may have been another political reason behind the termination.

This argument seems to have landed on fertile ground because, on 31 May 2012, Judge Lunn, a master of the Supreme Court, ordered the government to hand over a range of documents that relate to the LMC's deliberations and communications in respect of, and the reasons for, the termination of the Newport Quays agreement. So, at that point, the consortium was about to get access to the real reasons Newport Quays was being axed. Judge Lunn said, at paragraph 28 of his judgement:

There had been a groundswell of constituents in that electorate who were not happy with the development. There is a reasonable possibility that the termination was linked to the forthcoming by-election and that, if so, it would have been capricious on the part of the LMC.

The judge also noted:

There is no explanation about why the termination was first publicly announced by the Premier and the second defendant rather than the LMC [the second defendant being Patrick Conlon].

From mid-2012, there is very little on the public record until the case settled on 19 December 2013, some 18 months later. Effectively, Urban Construct and the Newport Quays consortium appear to have accepted that the termination was not wrongful and that it was not entitled to uncapped damages.

What conclusions can be drawn from all this? Ultimately, the select committee will need to hear from all sides, but one proposition that must be tested is whether the Gillman land deal is, in some way, a sweetener for Urban Construct settling its legal action against the government after the Newport Quays development was axed.

Here is the question: was the Gillman land deal part of an off-the-record settlement of the Newport Quays lawsuit? Or to put it another way, was the state government's deal with Simon Brown's company part of some informal arrangement or understanding that would see Todd Brown's companies settle their court action against the state government for a relatively modest amount of compensation? This is why we need this select committee: to get to the bottom of these murky waters. If the government has nothing to hide, it has nothing to fear. I urge all honourable members to support this motion.

The Hon. K.L. VINCENT (20:28): Very briefly, I take the floor on behalf of Dignity for Disability to support this motion. In fact, Mr Parnell has just taken the majority of my contribution from me by saying that, if the government has nothing to hide, it has nothing to fear. Again, I do not hear anyone in the community saying that there is such a thing as too much accountability when it comes to matters that affect our community, so we certainly support this motion to look into a matter that is obviously very important to the South Australian community.

Motion carried.

The Hon. J.A. DARLEY (20:29): I move:

That the select committee consist of the Hon. Kyam Maher, the Hon. Rob Lucas, the Hon. Andrew McLachlan, the Hon. Tung Ngo and the mover.

Motion carried.

The Hon. J.A. DARLEY: I move:

That the select committee have power to send for persons, papers and records and to adjourn from place to place and to report on 19 November 2014.

Motion carried.