The NT Government controversially awarded free land to a major Darwin developer without knowing the full value of the property and without a final cost-benefit analysis for taxpayers, a report by the Auditor-General has revealed.
- Scope of development ‘changed significantly’ behind closed doors
- $4.9 million buy-back of land included in deal after company awarded tender
- Tender process ‘raises questions’ about political donations from developers
Northern Territory Auditor-General Julie Crisp found serious issues with the awarding of the 168-hectare former Berrimah Farm site to Halikos Group in 2015 under the Country Liberal Party, including that the valuation of the land was rushed, no cost-benefit analysis existed and financial and reputational risks were not adequately mitigated.
Ms Crisp also flagged concerns the scope of the development, dubbed Northcrest, had changed significantly from what was initially offered for public expressions of interest.
Halikos Group were ultimately awarded the land for free.
Though it was not included in the Auditor’s report, another developer had offered the NT Government $30 million for the site.
Halikos Group said it would spend $60 million on initial infrastructure for the development.
The $300 million development, which will see 2,000 homes, a retail precinct and commercial office space, is estimated to be worth $1 billion when completed.
Ms Crisp’s report questioned what benefits Territorians received from the deal.
“I was not provided with a comprehensive cost-benefit analysis demonstrating the impacts to the Territory of the options available … at the conclusion of the (best and final detail proposal) process,” the report stated.
“There was no documentary evidence provided to my authorised auditors that all financial and reputational risks to the Territory… were adequately considered and mitigated.”
The original project offered $4 million towards the estimated $28 million in headworks on the site to the winning bidder, but changes were made to the proposal after Halikos was selected as the preferred tenderer by government, the audit report shows.
That included a $4.9 million buy-back of a section of land, as well as a government lease of office space on the site.
The report also shows a $2.9 million public bus depot that was to be built by the developer was dropped from the project, as well as other smaller requirements.
The site was independently valued at $30 million all-in and approved by the NT Valuer-General.
But Ms Crisp found the estimated figure was rushed for a “valuation of this scale and complexity”.
“The valuer was unable to gain sufficient information to undertake a hypothetical cashflow analysis of the proposed development,” the report read.
“Such analysis would be likely to produce a residual value which may differ significantly to the value provided.”
Deal ‘raises questions’ about political donor influence
Independent MLA Gerry Wood said it was unclear whether Territorians received the best value in the deal.
“I’m not sure this was a normal tender (process),” he told ABC Radio Darwin.
“The Government has done negotiations with a company without knowing the value of the land.
“If you have a proposal for someone to buy Crown land, you’d expect the valuer would have time to determine what the land was worth before entering into a sale agreement.”
Mr Wood said it was “not good stuff” and raised concerns “taxpayers may have lost out” on the deal.
Ms Crisp also found that one of the panel selection committee members had not filed a declaration of interests and confidentiality form on time, which she said had the potential to “compromise the integrity of the panel should a conflict exist”.
However, she concluded “the (Department of Infrastructure, Planning and Logistics) had complied with the systems and processes in place … to manage land development although some opportunities for improvement exist”.
In a response included with the Auditor’s report, the department said it would take Ms Crisp’s recommendations on board.
It also stated departmental staff were following orders from the previous CLP government by changing the scope of the project significantly during final negotiations.
“The department notes these changes were undertaken either at the request of, or approved by the government of the day and reflect the priorities of government at that time,” the statement said.
Halikos Group has attracted controversy in the past for large political donations to both Labor and the CLP.
Mr Wood said the deal raised questions about the influence of developers’ on political parties.
He said he wanted to see developers forbidden from donating to political parties in the NT.
“They can make a lot of money from government decisions …. And then the public say it doesn’t look so good,” he said.
“The donations inquiry is reviewing this and this is a good example of (why donations should be banned).”
Halikos Group managing director Shane Dignan told the ABC he felt it would be inappropriate for a private company to comment on the Auditor General’s report.