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Govt’s final Gillman defence falls

Jan 14, 2015
Jay Weatherill and Tom Koutsantonis led the boosters for the Gillman decision. Photo: Nat Rogers/InDaily

Jay Weatherill and Tom Koutsantonis led the boosters for the Gillman decision. Photo: Nat Rogers/InDaily

The handling of the Gillman land sale now stands as an object lesson in the failure of government to properly represent the public’s interests.

And yet, even now, after a Supreme Court judge has slammed the decision as ignorant, unlawful and unjustifiable, the Government is still deflecting, ducking and weaving.

This morning, Acting Premier John Rau even suggested the decision could be laid solely at the feet of Renewal SA’s former leadership, particularly Fred Hansen, the chief executive moved on by Premier Jay Weatherill last year.

Justice Malcolm Blue’s judgement focuses on the validity of Hansen’s decision, but essentially only for complex legal and procedural reasons. In any case, he makes it clear that Hansen was acting with the support of the minister – then Infrastructure Minister, now Treasurer, Tom Koutsantonis.

The judgement also makes clear what everyone knows – that Koutsantonis fronted the Renewal SA board to try to calm their doubts about selling the 400 hectares of land to Adelaide Capital Partners without going to tender.

The board – as InDaily revealed exclusively last year – had originally rejected the sale without tender option. Later, the Government’s own Treasury echoed their concerns.

Weatherill was a fan of the deal, as was Koutsantonis. Both have argued that the Cabinet made the decision to sell the Gillman land – as is their right.

Today Rau told ABC 891 “if you’re looking at somebody taking responsibility, almost everybody who is responsible for this decision has moved on”.

What was he thinking?

To now blame Hansen for the decision is ridiculous, but it isn’t surprising to anyone who has followed the story closely that the Government would seek to change its rhetoric in the face of undeniable facts.

To summarise briefly, in December 2013, the Government “dropped” a good news story on Gillman to The Advertiser – which duly reported it as the establishment of a hub for the mining industry, with thousands of jobs likely to flow. They followed this up with a story about Renewal SA board members resigning – and then they let the story go.

InDaily’s Liam Mannix, The Australian’s Sarah Martin and ABC 891’s Ian Henschke took up the battle, first revealing that Government claims that no other parties had been interested in the land were false.

Mannix then produced a startling series of exclusives, publishing document after document from within Renewal SA showing that another key government claim was also embroidered – that Renewal SA had supported the sale.

In fact, the truth was that the board had raised explicit concerns about selling the land without going to tender.

Only after a painful series of twists and turns – detailed in part in Blue’s long judgement – did the board pass a motion in support of the sale. And the hapless Hansen signed it off. (Blue’s judgement says: “The Chief Executive made the substantive decision to enter into the contract and obtained the approval in principle of the Minister.”)

Weatherill and Koutsantonis’s various justifications of the Gillman decision fell away in the face of the revealed facts.

The final – and only – remaining defence of the deal was that it represented value for money.

Now, Blue’s judgement – objective and incisive – has destroyed the certainty of that proposition.

As he points out using unrelenting logic, we simply don’t know whether we’re getting the best return for the land.

The Cabinet was flying blind.

As the Justice puts it: “There was no objective reason why the general principle that sale be undertaken by a competitive sales process should not have been applied to the Land.”

And this: “It is difficult to avoid a conclusion that it would be imprudent or unreasonable to sell land by accepting an unsolicited offer without first exploring the merits and likely results of engaging in a competitive marketing and sales process.”

He points out a huge difference in two valuations obtained for the Dean Rifle Range – a parcel of land within the Gillman estate. This difference was noted in a Cabinet submission on the Gillman sale.

“The discrepancy between the two Dean Rifle Range valuations as disclosed by the December Cabinet submission was vast,” the judgement says.

“One valuation was more than three times the other valuation. It may be expected that opinions of two valuers will typically differ in the order of up to 10 or 20 per cent or, in a complex valuation, perhaps in the order of up to 50 per cent.

“In those circumstances, in a general sense, each valuation gives confidence that the other valuation does not contain major vitiating errors. When the discrepancy between the valuations is as large as was the case here, a decision-maker could have no  confidence that either valuation was of the correct magnitude. On the contrary, prima facie at least one valuation must be the subject of major vitiating errors.”

Then comes the final spear through the heart of the Government’s value judgement.

“Finally, the extrapolations from the two valuations contained in the Cabinet submissions involved average values of $5 per square metre and $15 per square metre. ACP’s unsolicited offer was $30 per square metre. That in itself throws doubt on the relevance and reliability of the valuations to value the Land for the purpose of assessing the ACP offer.

“The decision-maker did not assess the benefits and prospects of proceeding to market the Land in an open and competitive manner as an alternative to accepting the ACP proposal, did not have an understanding of the nature and extent of alternative purchasers and developers of the Land, did not have a relevant or reliable valuation of the Land, did not have independent advice concerning the basis on which to assess the alternatives to accepting the ACP offer and did not have a basis on which to compare the value of granting the Options to ACP as compared to the value of unencumbered dealings with third parties in connection with the sale and development of the Land.

“The decision-maker did not have a basis to consider it more beneficial to grant the Options to ACP than to engage in a competitive marketing and sales process.”

Due to various legal machinations, Blue found he could not overturn the contract – it remains valid.

So will the sale provide the best possible return for taxpayers?

We don’t have a bloody clue – and neither does Weatherill, Koutsantonis or anyone else in Government.

David Washington is Editor of InDaily.

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