Auditor-Generals Report: Sale And Lease Of Crown Land

This speech was delivered on 15.09.2016 in the NSW Upper House. You can read the full debate online here.

I have been a member of this Parliament for about five years and in that time there has been a persistent and consistent theme from members of the public—that the Crown land estate in New South Wales has been woefully mismanaged. Whether it was representatives speaking to us about the Talus Trust in Willoughby, where they feel the community has been locked out of prime public land and one well-connected individual has got pretty much bargain-basement access to precious public land; or the Paddington Bowling Club, where the locals could not believe that a property developer had turned up like a cuckoo, kicked out the bowling club and seized control of precious high-value public land at Paddington; or King Edward Park where the community fought for years in court to uphold the terms of the plan of management and public law principles so that this enormously historic and important coastal park was not handed over to private developers; or concerns about travelling stock routes or the increasing commercialisation of coastal caravan and holiday parks—people were saying that something was deeply wrong with the way in which Crown land was being managed in New South Wales.

A lot of the criticism was directed at the previous Labor administration. It would be fair to say that former Minister Kelly came in for repeated, robust and well-targeted criticism for the way in which he mismanaged the Crown lands estate—midnight signatures being applied and parcels of land being delivered to those in the know. People have been saying for years that we need an inquiry into this because something is horribly wrong. It has been a long-term project to achieve the current General Purpose Standing Committee No. 6 inquiry. I commend all members in this Chamber who joined us in that inquiry. The Chair has done a good job and I appreciate that the Minister has twice given evidence to the inquiry. The committee found the same thing—namely, that around the State those concerns have been validated—and just as we finished taking evidence in the inquiry the Auditor-General came along. Indeed, if one wanted proof positive of the concerns we had been hearing in that inquiry, and that we have heard as elected representatives, we got it in the Auditor-General’s report on 8 September. In that report the Auditor-General said:

The Department’s overall governance of decision-making for the sale and lease of Crown land is inadequate.

I think the term “inadequate” is very polite. The Auditor-General also said:

Most guidance for staff is significantly out of date, which has led to inconsistent decision-making. There is low compliance with policy including in relation to rebates on rent, debt management, rent redeterminations and direct negotiation of leases and sales. Oversight of decisions has been limited, with no quality assurance of post-decision review processes. The Department has not monitored tenant compliance with lease conditions.

That paragraph would blanch the face of any Minister who was in charge of that department. I do not blame the current Minister for this state of affairs. The Minister has made repeated references about things being marginally improved, and I accept that. Minister Blair is not responsible for the inherited mess that he is now managing; decades-long failure produced that. It would be wrong not to highlight some of the findings that the Auditor‑General has made as to critical policies and guidance being inadequate. The Auditor General said:

No policy is in place for debt collection. More than $6 million in debt exists in leases we examined, with several organisations owing the equivalent of more than ten years of rent. Twelve organisations had an outstanding debt over $100,000. While the Department must follow fair and reasonable procedures when making decisions, the lack of a timely resolution to these cases raises concerns about the Department’s ability to manage outstanding debts. The Crown Lands Act provides the Department with the ability to revoke a lease for failure to pay. The Department has recently centralised its debt recovery function and is working to improve its management of debt.

In one paragraph it shows systemic, comprehensive failures by the department and the public is paying for it by the failure to collect debt. As to consultations not being meaningful, the Auditor-General said:

The Department does not have policies to guide consultation with the community or interested organisations.

It does not even have policies. Communities have said that they think they are being frozen out and not being consulted, and the department does not have a policy. The Auditor-General said further:

There is no guidance for staff about when community consultation should take place or what it should involve.

We are talking about a department that manages 42 per cent of the State, some of the most crucial land in the State, and it does not have a policy about public consultation. I continue the quote:

The Department has generally only conducted consultations relating to leases or sales when staff anticipate they may be controversial.

It is more a public relations process than a public consultation process—this might go pear shaped so we might as well put an advertisement in the paper. The Auditor-General said further:

The focus on the Department’s community engagement plans has often been on risk management rather than community engagement. For example, the Department prepared a community engagement plan for the Sandy Point quarry in March 2016.

This is on the Minister’s watch. The Auditor-General also said:

This document is heavily focused on communicating “key messages” to the public and reducing negative publicity, rather than providing opportunities for the community to have input into the process.

So even when the department engages in consultation it is done more through some glossies to try to sell its story rather than finding out what the public wants. In relation to not being transparent, the Auditor-General says:

The Department’s decision-making processes for sales and commercial leases are not transparent to stakeholders. This means that a potential sale or lease applicant, or an interested member of the public, will find it difficult to be informed about or scrutinise the Department’s decisions.

To say it was difficult is an underestimation as the Auditor-General then says:

Our analysis of the Department’s sale and commercial lease records found that 97 per cent of commercial leases approved in the last four years were directly negotiated, while 50 per cent of Crown land sales from the past four years were directly negotiated.

And what flows from that finding? The next paragraph reads:

Direct negotiations can create opportunities for dishonesty or bias. Even in cases where there is no evidence of wrongdoing, direct negotiations can create a perception of conflict of interest or improper conduct. In addition, the absence of competition makes it difficult for an agency to ensure, or prove to the public, that it is getting value for money.

I will return to something that the Minister put on the record a couple of times. The advice he has is that 42 per cent of the State is valued at only $12 billion. That is a nonsense—it must be a nonsense. It is a gross undervaluation of the real value of the public estate, and it is providing carpetbaggers with an opportunity to come in and steal value from the public by starting with such a gross undervaluing of the public estate.

As I said earlier, I do not blame the current Minister for the unholy mess that he has inherited. I accept that he is taking steps, and meaningful steps, to try to correct it. But fixing this up should be a whole-of-parliament job achieved by all of us joining together. There is an obligation to lay the legislation on the table and to let the community have a look at it because an historical mess needs to be fixed up by all of us joining together on the new legislation that is due.

In the evidence before our committee the department had two opportunities to be frank with us and tell us honestly about the mess that is the management of Crown land. I accept that the Minister gave honest answers, but we did not get frankness from the department; the department did not volunteer any of this to us. The department did not tell us about the woefully inadequate debt recovery policy, it did not tell us about the outstanding debts—it gave us none of that. It could be said that the department got the Auditor-General’s report later and that it was not aware of its own mess, but that is not true.

The department was given the Auditor-General’s report on 4 August and representatives from the department came and gave evidence before our inquiry on 15 August—more than 10 days later—and they said not a word about it. I believe that is a comprehensive failure of accountability on behalf of the department. I do not believe the department was honest and frank with us. I think the committee deserved more and I know that the general public deserved more. I hope that in the reform process we will get a lot more frankness and a lot more honesty so we can fix this unholy mess—that is, the way in which we deal with Crown land.

, , ,

Comments are closed.