But Mr Barr says the model didn't work and he has fixed the problems in the two new agencies that replaced the Land Development Agency on July 1.

Mr Barr made the comments during a parliamentary investigation of this week of three much criticised lands deals - the government's purchase of a block in Glebe Park, and the paddle boat and the bike hire businesses at West Basin. The deals have been criticised by Auditor-General Maxine Cooper, who found poor record keeping and inconsistent and inadequate valuations - to the extent that integrity could not be demonstrated.

Mr Barr said while the agency had given him weekly briefings and he had had "a degree of arm's length oversight", it had deliberately been given the authority to make decisions without referring constantly to the minister.

He had not always been informed of land purchases, and purchases had "very rarely" come to him for sign off, he said.

While it was appropriate for the agency to operate at arm's length, the process had nevertheless been "tested and found wanting", especially in the lack of documentation for decisions. Mr Barr said the fault lay with the "prevailing culture" in the development industry, where people were trained to operate commercially and not be "excessively bureaucratic".

"Clearly the lessons learned from this exercise are that ultimately that [way of operating] is something that will have to be stared down and stricter public-sector governance protocols put in place," he said, insisting the two new agencies had the necessary safeguards.

While the Land Development Agency board had been made up of members of the local industry, Mr Barr said the two new boards had been deliberately made up of people living outside Canberra, other than the representative from the National Capital Authority.

Given, "extensive media reporting on who used to work somewhere, or the extent to which there was a board member of the LDA who in previous role worked for a commercial real estate agency ... one of the lessons is to err on the side of caution, to attempt to address even perceptions of conflict of interest", he said.

Before the Land Development Agency board was disbanded, its chairman was Ross Barrett, director and part owner of civil engineer Woden Contractors. Also on the board were former Colliers head Jim Shonk, and Chris Purdon of Purdon Planning, which is business partner of Dexar which owns the Independent Property Group.

Liberal inquiry member Vicki Dunne pushed Mr Barr on whether he had been briefed during negotiations with the lakeside businesses.

Mr Barr said he had been briefed on "various aspects of the West Basin proposals, including necessary land acquisitions".

"Were you briefed on the process of acquiring the boat hire and the bike hire leases?"

"That that land acquisition would be necessary was understood by cabinet, by the cabinet subcommittee and by me as minister," he replied.

"And were you briefed on the processes of what was going on at various stages?"

"That the Land Development Agency would the lead acquisition process, yes ... My engagement was as it should be at the policy level, in relationship to both policy frameworks and planing frameworks."

"So what you're saying, chief minister is that you weren't briefed on the detail of the land acquisition for Mr Spokes, Dobel boat hire and separately on Glebe Park?"

"That there would be land acquisition and it would be the subject of the LDA's processes around negotiation, appointment of a negotiator, valuers etc, yes, but not on the commercial nature of the negotiation," Mr Barr replied. "That wouldn't be appropriate for a minister to be engaged in the commercial negotiations between the Land Development Agency, who were delegated to undertake that responsibility."

On Wednesday, former agency chief David Dawes answered critics about his connections with people involved in the three land deals. And former City to the Lake project director Tim Xirakis said the Glebe Park deal had been done behind his back, despite his position as project director.