LANDGATE
OFFICES — SALE
411. Dr D.J. HONEY to the Minister for Planning:
I refer to an article by Hamish Hastie in The Sydney
Morning Herald analysing the sale of the Landgate offices in the Midland
town centre that reported the property sold for $17.3 million. Industry sources
have indicated that the rentable area of 13 700 square metres of office space
would normally be valued at around $68 million. Even if we discount an
estimated $10.5 million in forecast building upgrades, the available
information would indicate that the government has sold this office space at a discount
of over $40 million.
(1) Will the
minister table the financial analysis that supports the sale of this asset,
including justification for the claim of a $12 million saving over the course
of the lease?
(2) How does
the minister justify the estimated annual rental cost of around $5.7 million,
given that normal rental yield of around five per cent for buildings of this
value with a long-term government tenant, which includes a $10.5 million
upgrade, would normally be around $1.4 million a year?
The SPEAKER: Minister, before you answer, I would like
to give the Leader of the Liberal Party some guidance. That was a very long preamble that contained a lot of argument. Some of
that argument could have been framed into questions. Of course, had you
framed it into questions, you would have had way too many questions to make it a suitable question for question time. I ask you
and those who assist you to consider that. That preamble was way too long; it contained considerable argument; and had
you wanted to challenge some of that or ascertain or make a point, you
could have asked those questions. You have now asked a long series of
questions, but I think the issue you are raising is clear, and on that basis I will
ask the minister to respond.
Ms R. SAFFIOTI
replied:
(1)–(2)
This was a proposal that was put through the problem and opportunity statement
process and assessed primarily by the Department of Finance. In the assessment,
it looked at a number of different factors. It looked at the cost of
refurbishing the Landgate building in the future, the cost of current
accommodation for the public servants and the fact that the building was
significantly underutilised. Through all that, it came up with an analysis.
Members on the other side of the
chamber should not be shocked by these types of arrangements. In fact, the
previous Liberal–National government entered into similar arrangements
for the refurbishment of the Treasury building in the CBD. I am advised that
the most costly accommodation across the entire public sector is some leases
for the old Treasury building in the CBD. People could argue whether that was
value for money. But if people look at the whole precinct, they will see the
redevelopment that has occurred and the
reactivation of that place. The old Treasury building—I think it had
Lands as well—was left dormant for many, many years. As I understand,
a premium price was applied to the accommodation and taxpayers are paying a premium on accommodation in that
building as part of the total redevelopment. Is the member arguing that
should not have happened?
Dr D.J. Honey: No. I am arguing this is not a total
redevelopment.
Ms R. SAFFIOTI: Is the member arguing that should not
have happened, because I think he is.
In relation to all these types of projects, the most costly
accommodation with one of the longest terms for lease costs is that building
that the previous government entered into. Does anyone argue when looking at
that building and say it should not have done that reactivation? Of course not,
because the entire product is of benefit to the entire community.
A cost–benefit
analysis was done. It was undertaken through the market-led proposal process,
led at the time by the Department of Finance through a steering
committee independent of ministers, and a recommendation was made. Where was
the former government's analysis for the Treasury building? Where was
its analysis?
Dr D.J. Honey: I wasn't here at the time.
Ms R. SAFFIOTI: The member was not here. As I said,
the member makes a lot of comments about these types of projects, but the reality is, just as we saw with the Treasury building,
which was empty, dormant and subject to graffiti and other impacts for
many, many years—this is something we never did under our government—the
former Liberal–National government entered into a relationship with a developer
to pay a premium price for accommodation for a product that benefits the entire
city and the entire community. That is what the former government did. The
member needs to read the media statement on the Treasury building—I did
that recently—because it states a premium price per square metre was
being paid for that accommodation. The member is saying that Midland does not deserve any redevelopment. That is what he is
saying: it does not deserve any redevelopment. I am saying what the
former Liberal–National government put in its media statement was that
a premium price was paid on that accommodation.
In relation to this
property, it was done independently. The steering committee recommended it and
then it was adopted. As I said, we looked at these factors: the age of the
existing building; the fact that it was underutilised because of changes that
have happened at Landgate; the price of accommodation in other areas for new
agencies moving in; and the cost of
redeveloping the building alone if it were undertaken by taxpayers. A number of
different factors were put into play, and the recommendation and
decision made at the time was that this project should be supported. It means that public servants will
return to Midland. It means there will be greater activation of the Midland
area. It means there will be accommodation
for public servants in that area. It will support the whole Metronet precinct
and the building of a brand new station. I think the idea of, again,
revitalising a suburban asset for public servants and efficiently using space
is actually a good outcome.
As I said, the member can explain the premium price that
taxpayers are paying because of the deal done by the former Liberal–National
government and then come back into this place.