Federal government paid 10 times more than airport land value

The federal government’s $30m acquisition of land for Western Sydney Airport was ‘unethical’.

The view of Western Sydney’s airport project from the west. Picture: Toby Zerna

Taxpayers shelled out nearly $30m to the billionaire Perich family for a parcel of land in western Sydney that was worth just $3m in a federal government deal that “fell short of ethical standards”.

A scathing report published by the Australian National Audit Office on Monday also found the Department of Infrastructure paid 22 times more per hectare for the Leppington Triangle land in Bringelly, on the outskirts of Sydney, than the NSW government paid for its portion.

The land, owned by wealthy businessmen Tony and Ron Perich through their Leppington Pastoral Company dairy farm, was bought by the federal government in July 2018 for $29.8m with an expectation it would be needed in about 30 years when a second runway for the Western Sydney Airport was constructed.

The Leppington Pastoral Company donated nearly $58,800 to the Liberal Party in the 2018-19 financial year and $62,700 to the Liberal and National parties in 2015-16.

It made smaller donations to the Labor Party in the mid-2000s.

The Perich brothers are worth a combined $1.75bn, according to a Forbes rich list last year.

Auditor-General Grant Hehir said the department’s operations during and after the acquisition “fell short of ethical standards” and an “appropriate” acquisition strategy was not developed. Instead, the government was focused on “incentivising an unwilling seller to dispose of their land some 32 years in advance of when it was anticipated to be needed for the airport expansion, an approach at odds with the department asserting that early purchase allowed it to capitalise on ‘goodwill’ from the landowner”.

Developer Tony Perich. Picture: AAP

The 12.26ha of land was valued by the federal government after approaching just one supplier, M J Davis Valuations, whose name had been suggested by the Perich family “then agreed to by the department on the basis that there were no conflicts of interest between the parties”.

“The approach inflated the value of the land, which in turn led to the Australian government paying more than was proper in the circumstances,” Mr Hehir said. Decision-makers were “not appropriately advised on the land acquisition”, the ANAO said, with formal briefings omitting relevant information such as the purchase price, that the price exceeded all known market valuations and the method of acquisition.

“The approach taken by the department of omitting key information in the briefings to decision-makers and ministers was inappropriate and inconsistent with acting ethically,” the report said.

Leppington Pastoral Company has 2000 cows across 11,000ha. It made a net profit of $113m in 2019, according to documents recently lodged with the corporate regulator, and has net assets of $625m.

The company’s spokeswoman said the value of the property to the business was worth more than the value of the land. “The land in question was important to our dairy operation and we were not a willing seller,” she said.

The price tag settled between the department and Leppington Pastoral Company was four times higher than the next highest valuation of $6.1m.

The sale was finalised when the responsible urban infrastructure minister was Paul Fletcher, now Communications Minister.

Urban Infrastructure Minister Alan Tudge’s spokesman said “there was no question of ministerial involvement in the report”.

Opposition infrastructure spokeswoman Catherine King said the government spent “tens of millions of dollars, above valuation, on land owned by a Liberal Party donor”. “Ministers bear ultimate responsibility for this decision. The Deputy Prime Minister (Michael McCormack) and Minister Tudge need to urgently front up and explain what went wrong, what they knew about it, and what they are doing to fix it,” she said.