The chairperson of Renewal SA, Bronwyn Pike, has confirmed that the board warned the State Government of the risks of not going to tender with the now controversial sale of land at Gillman.

However, she says the board believed the proposal from Adelaide Capital Partners (ACP) was the best deal for the land and supported the sale in its final formal advice to the Government.

The board approved the deal on 28 November 2013.

As reported by InDaily yesterday, a board document dated 20 November 2013 advised against the sale to one consortium without going to tender because of concerns about probity and transparency.

Pike, a former Victorian Labor MP and minister, told InDaily today that the deal was the best for the state and that the Government was right to approve it – notwithstanding the risks identified by the board.

“The Government made its decision on the basis of advice from a range of sources,” Pike said.

“Renewal SA gave advice that the proposal was a smart one that ticked all the boxes and, on balance, that it should be approved.

“But the board did point out that there was a risk in not going to tender.”

However, she said the final decision on the sale and the process was an appropriate one for Cabinet to make based on advice from Renewal SA and other agencies.

“There was a risk, but that wasn’t material to the government making a decision to not go to tender.

“It’s a good decision – nothing else came anywhere near it as a good proposition for the use of the site.”

Last night the State Government bowed to pressure and released an extract of the advice from the Renewal SA board it claimed advised the land be sold to ACP.

The advice is reproduced below.

4. RECOMMENDATIONS:

It is recommended that the Board of Management approves:

1. That the advice be provided to the Minister for Housing and Urban Development that:

a)     Renewal SA’s landholding at Gillman / Dry Creek, that is the subject of the Adelaide Capital Partners (ACP) unsolicited offer to purchase, has been identified as land appropriate for industrial / commercial development to support employment and growth targets contained in the The 30-Year Plan for Greater Adelaide and as such a resources sector services hub is an appropriate use of the land;

b)     The ACP offer of REDACTED (GST exclusive) as their first exercisable option for 150 hectares of land at Gillman / Dry Creek and REDACTED (GST exclusive) for their second and third exercisable options for 257 hectares of adjacent land represents a good value offer based upon independent valuation advice and comparable market evidence;

c)     Renewal SA’s consideration of ACP’s unsolicited offer has been managed within existing policy relating to off-market transactions and has been guided by independent probity advice.

It is recommended that the Board of Management notes:

1. That advice pertaining to whether the ACP proposal meets with the Government’s strategic economic development objectives and gives Government sufficient confidence to proceed with accepting the offer on a preferred basis will be provided by other Government agencies, and ultimately this will be a policy decision of Cabinet. 

Yesterday InDaily revealed board documents from November 20 in which the board advised the Government to reject the sale of the land to ACP because of the lack of a tender process. At the time the board warned it had no way of knowing the true market value of the land – which ACP was proposing to buy for around $100 million – without a tender being completed.

The November 20 advice – drawn up after a board meeting with Minister for Housing and Urban Development Tom Koutsantonis in which members expressed their unhappiness about the deal – is reproduced below.

“The board of management recommends to the Minister for Housing and Urban Development:

The South Australian Government reject the ACP submission to purchase 407 ha of Renewal SA-owned land at Gillman/Dry Creek for future industrial development.

The South Australian Government offer the Gillman/Dry Creek land to the market for sale in a transparent and open manner.

“The Board of Management notes that the Minister for Housing and Urban Development will advise cabinet:

“Renewal SA’s board of management has resolved to advise the minister to reject the ACP proposal and instead offer the land to the market for sale in a transparent and open manner having regard to the following key risks:

• The lack of market testing to determine the competitively derived market value of the subject land

• The probity of accepting an unsolicited offer for the subject land and the potential for industry/community dissatisfaction with Renewal SA facilitating the sale of the subject land through a non-competitive process

“The board of management notes:

• Cabinet has the ultimate authority to approve the ACP proposal if it determines to do so having regard to whole of government considerations”

Defending the land sale yesterday, Koutsantonis told a press conference the deal put to the board on November 28 had been “fundamentally different” to the deal put up on November 20.

“What Renewal SA was saying was if the Government was considering accepting the proposal as was before it was amended then it should have gone to public tender,” he said.

“Fundamentally different, there are all sorts of issues that are different – for example, one is about exclusivity over the land and who can enter it.

“The Government did not accept the proposal that the board were not happy with.

“What they were concerned about was making sure they got the concessions they were seeking, and they got them.”