Gillman land deal falls through after ACP pulls out
A DEAL that Premier Jay Weatherill had promised would deliver 6000 jobs and a multi-million dollar boost to the SA economy is dead. GILLMAN TIMELINE
- ANALYSIS: Deal collapse leaves Govenment on shaky ground
- ICAC finds ‘maladministration’ by Renewal SA over Gillman
- $2.2m legal bill to clean up Gillman mess
- Gillman land deal ruled ‘irrational’ by Supreme Court
- Cabinet submission on Gillman land deal ‘misleading’
A DEAL that Premier Jay Weatherill had promised would deliver 6000 jobs and a multi-million dollar boost to the South Australian economy is dead.
In a serious blow to the Premier, the proponents of the Gillman land deal failed to pay $45 million for the site by Tuesday’s deadline, meaning SA was now the “proud owners of some swamp”, Mr Weatherill admitted.
The State Government also conceded that the Independent Commissioner Against Corruption’s finding that the sale process was mired in maladministration “created some difficulty” in finalising the deal.
Under the contract, Adelaide Capital Partners needed to transfer to the Government $45 million for 150ha of land at the site by 5pm on Tuesday.
It would have been the first stage of a three-stage development.
“Unfortunately, ACP were unable to settle on the contract,” Mr Weatherill said.
He said the Government planned to put the land out to market in the coming weeks and hoped to field proposals which created jobs rather than simply filled the land.
“What we don’t want to do is have it carved up and have the eyes picked out for landfill,” he said.
The Government was heavily criticised by the Supreme Court and the ICAC for agreeing to the ACP deal without putting the 407ha site on the market.
And an ICAC inquiry found maladministration on behalf of two Urban Renewal Authority executives.
On Tuesday, Mr Weatherill again defended the Government’s decision because he said ACP needed exclusive rights to develop the land to secure financial backing.
“It’s swamp land that’s laid there forever. We’re now the proud owners of some swamp. Nothing’s been lost, we still have this land,” he said.
Mr Weatherill said he had no regrets about backing the plans, which he labelled as “exciting”, however, he conceded there had been lessons learnt.
Mr Mullighan said that last week, ACP approached the Government with a revised deal that would have delayed the settlement but he “wasn’t sure” if it was appropriate to make public what changes had been sought.
He said the revision “wouldn’t have seen them settle the entire 150ha, which they were required to”.
“We didn’t think there was value in providing them (ACP) extra time,” Mr Mullighan said.
In a statement, ACP chairman Stephen Gerlach said the organisation was not seeking to change the price that it had agreed to, but needed to vary the “timing of payments”.
He said the original payment timeline was too risky for investors.
Opposition Leader Steven Marshall said the Premier had failed to deliver on his promised jobs boom.
“On top of Mr Weatherill’s failure to deliver jobs with his Gillman deal, the Premier as cost South Australians millions of dollars in legal fees and departmental waste.”
The Gillman land deal was the focus of an ICAC inquiry, which found maladministration on behalf of two Urban Renewal Authority executives.
The inquiry found the $100 million deal was unlikely to be a good one for the state and was the third high-level inquiry to savage the deal for bad process and not having an up-to-date or relevant valuation to ensure it was good value for taxpayers.
The Government signed the deal in late 2013, months prior to the knife-edge March 2014
State Election
When the Government announced the deal, it was presented as a future oil and gas hub. Minister Tom Koutsantonis said the site would support 6000 jobs.
But it was later revealed there was no mention of the 6000 jobs in the sale contract for the site and the promised oil and gas hub was not a clear requirement.
The bad news came on the same day the Government had to pay Adelaide City Council more than $20 million for a large piece of the land it had hoped to sell to ACP.
Both parties agreed to the financial settlement over the 2010 compulsory acquisition of the council’s half-share in the former Dean Rifle Range — a 276ha parcel of land, a large part of which was included in the Gillman deal.
The Government had only paid the council $1.52 million for the land following advice which considered the environmental condition of the land, after it determined sole ownership was the best way of unlocking the land for future industrial development.
ABOUT THE SITE
What is the Gillman site?
It’s a 407ha parcel of prime industrial land near Port Adelaide.
In 1987, it was the site of a proposed joint venture, between the Federal Government and Japanese investors, called the Multi-Function Polis, to develop futuristic villages containing housing, teaching facilities, business premises and recreational areas for about 100,000 people.
Why is it now controversial?
In December 2013, the Labor State Government signed a deal for the site with Australian Capital Partners, an Australian-based consortium, without putting the sale out to the open market. Premier Jay Weatherill said it was a premium price and that there were no other credible proposals for the land. He added that ACP would have walked away if the site was put out to tender. Since then, industry sources have said the land could be worth up to $400 million and details of at least four other proposals have emerged. Four members of the Government land development agency Renewal SA’s seven-member board resigned over the deal, after advising the Government to reject it.
What was the deal?
The deal gave ACP exclusive rights over 400ha of land, which, as long at it meets conditions set by the Government, will be sold for $122 million: $45 million for the first parcel of 150ha, with options to buy the remaining 257ha. The deal collapsed on Tuesday, the day it was supposed to settle.
What is Adelaide Capital Partners?
It is a consortium led by former Santos chairman Stephen Gerlach. The consortium members are Gerlach Asset Development and ResourceCo — run by Simon Brown — which is a waste management company that has a site adjacent to the Gillman land.
What is maladministration?
“Maladministration in public administration is the unauthorised and/or mismanagement of public resources that might be described as improper, incompetent or negligent.” (ICAC website)
Gillman development timeline
December 23, 2013: The State Government announces in The Advertiser that it has struck a deal with consortium Adelaide Capital Partners to buy and develop the 400ha former Multi-Function Polis site at Gillman.
December 24: The Advertiser reveals that more than half of the board of State Government property developer Renewal SA resigned over the deal after rejecting it twice, believing it should have gone out to public tender.
January 22, 2014: Premier Jay Weatherill says “there have not been any offers for this land of any substance for the last 30 years”, adding that a competitive tender process would have driven away the developer’s interest.
January 25: The Government is accused of short-changing taxpayers by agreeing to sell the site for $100 million, a quarter of its potential value, without going to tender.
January 30: Mr Weatherill says the Government has received a “couple” of other proposals for the site but dismissed them as not “credible”. Asked if the Renewal SA board had rejected the proposal, then-Infrastructure Minister Tom Koutsantonis says: “Not that I’m aware of. If you have evidence of that, please show it to me.”
February 6: Details emerge that civil engineering firm Bardavcol had approached the Government with a detailed proposal for the site in May.
February 7: It is revealed that waste management company Integrated Waste Services is considering legal action against the Government after it submitted a detailed proposal for the site the year before. It is also revealed that Adelaide Resource Recovery had made a proposal but ruled out legal action.
February 11: Details emerge of the Renewal SA board’s advice from November 20, recommending that Mr Koutsantonis “reject the ACP submission”. Mr Koutsantonis says “the Government did not accept the proposal the board was not happy with”. He says the proposal that Cabinet approved was different.
February 12: Mr Weatherill admits Renewal SA was lobbied to overturn advice that the sale of the site be put to an open tender.
March 14: Acquista Investments, known as Integrated Waste Service, and Veolia Environmental Services initiate legal action against Renewal SA over the sale of the site. The waste company hopes the legal row will lead to a sale of the site by public tender.
March 24: A parliamentary inquiry into the deal is set up. Mr Weatherill and Mr Koutsantonis refuse to appear before the inquiry.
October 2: The Government decides to overhaul the guidelines for companies making unsolicited bids to develop public land or build infrastructure following the Gillman controversy, which Mr Weatherill says has scared investors away from the state.
January 16, 2015: The state’s Auditor General hands down his report into the deal, which finds a Cabinet submission showed the deal was a “good value offer” was misleading because it left out key advice.
January 22: independent Commissioner Against Corruption Bruce Lander reveals he is investigating the deal to determine if there is any evidence of maladministration.
January 23: Mr Koutsantonis admits the Government does “make mistakes” and its poor handling of the Gillman deal should not be repeated.
July 20: Acquista Investments’ appeal of Justice Blue’s decision to uphold the deal is dismissed. But Auxiliary Justice Bruce Debelle dissents. Mr Debelle says a “prudent” vendor would have investigated further the merits of a competitive sale process. The Supreme Court overturns “unlawful finding”.
September 10: The Government gazettes a rezoning of the Gillman site to allow redevelopment in line with ACP’s proposal.
October 13: The ICAC finds maladministration occurred during the Gillman land deal and makes negative findings against two Renewal SA public servants. No maladministration finding is made against Mr Weatherill or Mr Koutsantonis. However, Mr Koutsantonis apologises after the report includes evidence he swore regularly in the presence of senior public servants.
April 4, 2016: Acting Premier John Rau announces a deal to end legal action over Gillman. Taxpayers meet legal costs by the proponents, and ACP is given until November 1 to hand over a $45 million payment to access a 150ha parcel and keep the deal live.
November 1: The deal with ACP falls through, with the Government rejecting a revised offer.