Public servant investigated over $30m Leppington Triangle sale says auditor general was ‘unreasonable’

The commonwealth public servant investigated by police over the Leppington Triangle sale has rejected a finding the $30m price tag was inflated, accusing the auditor general of "unreasonable conduct [that] may constitute negligence".

In a submission to a parliamentary inquiry, the official accused the auditor of failing to "exercise a reasonable degree of care and diligence" through alleged errors about the property's categorisation as agricultural land and its market value.

In September, the Australian National Audit Office found that in mid-2018 taxpayers paid 10 times too much for land owned by billionaire dairy farmers to build a second runway at western Sydney airport after 2050.

The audit was triggered by the fact that 11 months after the $30m purchase, the land was revalued at just $3.1m.

The ANAO referred the sale to police, who concluded in September that there was "no evidence" of criminal conduct.

In a submission dated 30 December 2021, uploaded before the ANAO's evidence to Senate estimates, the public servant hit back at the auditor general for having "mistakenly placed the Leppington Triangle in an agriculture precinct, which would mistakenly infer a lower value for the property".

The official, whose name is withheld, claimed the ANAO in later appearances before two hearings gave "misleading or misstated" answers that "likely represent bad faith" and "raise serious questions" about whether parliament was misled.

In its report, the ANAO found that infrastructure department officials were "consulted on draft land use plans and [were] aware in advance of purchase that a future announcement about land use planning would place the Leppington Triangle in the 'agriculture and agribusiness' precinct".

The public servant submitted that maps from August 2018 show the triangle "was located within the western Sydney international airport precinct".

"At the time of the commonwealth's acquisition of the Leppington Triangle in 2018, the statutory planning documents of all three levels of government treated the Leppington Triangle as a future part of the airport, not as an agriculture precinct".

The public servant also accused the auditor general of having "mistakenly overlooked the differences in valuation standards" between fair value and market value.

"The market value methodology required an assessment of future probable zoning changes," they said.

"Any suggestion that the commonwealth should have, for the purpose of an acquisition, relied on a 'fair value' (current) assessment rather than a 'market value' (current and future) assessment is wrong, and would have resulted in an extreme injustice for the dispossessed land owner."

The submission stated the ANAO had "no evidence" the price was inflated and a review of prices of other land around the airport showed the $30m price tag was within the market range.

The public servant also complained the ANAO did not interview department staff involved in the purpose beyond "formal process-oriented entry and exit interviews", describing that decision as "highly unusual".

At estimates on Monday evening, the auditor-general Grant Hehir indicated he intended to make a submission in response.

Hehir agreed that the ANAO had not conducted any fresh valuations of the Leppington Triangle because it doesn't "redo" the department's work, it "can only go on the evidence that sits in department at the time".

Hehir said the ANAO generally only conducted interviews when there is a gap in records because it is not an "investigative body". Senator Rex Patrick suggested that interviewing the public servant might have prejudiced the police investigation.

The ANAO found the department originally proposed to ask the valuer to base the estimate on the "highest and best use" of the land, but after negotiations with the landowner, added a requirement to consider its "speculative industrial re-zoning potential".

The ANAO was critical of the department for opting for an early purchase to capitalise on "goodwill" from the landowner as opposed to a compulsory purchase.

This resulted in "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", the ANAO said.

In its response to the ANAO report, the infrastructure department said it was "concerned" by the findings of the audit and conceded that the valuation strategy was "unorthodox".

The department noted the ANAO's view the purchase could have been made at a much later date but argued "early acquisition provided certainty to stakeholders for long-term planning".