Victorian Ombudsman George Brouwer.

Victorian Ombudsman George Brouwer. Photo: Jemma Wallace

Ombudsman George Brouwer has slammed the state government's Planning Department for failing to provide frank and fearless advice, and for yielding to pressure from ministerial advisers over the botched rezoning of Ventnor at Phillip Island for housing in 2011.

Planning Minister Matthew Guy has survived an important test ahead of this year's state poll, with Mr Brouwer's report focusing on public service and the minister's advisers, rather than the minister's decision-making.

However, Mr Brouwer notes that Mr Guy refused to hand over important documents requested as part of the investigation.

Planning Minister Matthew Guy.

Planning Minister Matthew Guy. Photo: Luis Enrique Ascui

In a report tabled in parliament today, Mr Brouwer highlights that in their first briefing to the minister's office on the proposed rezoning, planning bureaucrats opposed the move. They later changed their position after what they viewed as a "direction" in an email from Mr Guy's adviser, Marc Boxer.

Mr Brouwer accepts Mr Guy was unaware that his advisers were acting in his name.

The report acknowledges that, despite contradictory and confused advice, Mr Guy was ultimately responsible for the rezoning decision.

"I consider that the inappropriate recommendations and lack of frankness in the [departmental] advice had limited, if any, impact on the minister's ability to make an appropriate decision ... The [departmental] briefing adequately informs the minister of the risks associated with the decision."

Mr Brouwer also finds:

  • The revised recommendation to approve the rezoning did not reflect the department's real view, which was that the minister should not intervene.
  • Ministerial advisers including Mr Guy's chief of staff, Meg Bartel, were aware the department opposed the rezoning.
  • When Mr Guy decided to approve the rezoning he did not believe the department necessarily supported the move.
  • One senior bureaucrat, who had previously worked as a consultant with the company proposing the rezoning on behalf of the landowner, had himself advocated the rezoning to an independent panel but failed to declare a written conflict of interest when dealing with the Ventnor issue under Mr Guy.

The report does not address why the minister's office was intent on rezoning the land against the views of the Planning Department, the department's lawyers, the local Bass Coast shire and two independent planning panels.

It also does not address why the minister overturned his original decision just days later amid protests from within the Liberal Party - including from the office of then-premier Ted Baillieu - the local community and celebrity tweeter Miley Cyrus.

That backflip triggered court action by aggrieved property purchaser Ms Carley Nicholls, and confidential out-of-court compensation payments by the government believed to total about $3 million.

Opposition planning spokesman Brian Tee, whose complaint triggered the Ombudsman’s probe, said the report left the "real" question unanswered: "What motivated the minister to act contrary to the Planning and Environment Act, to legal advice, and the wishes of the community, and to give a potential multi-million dollar windfall to the landowner?"

Mr Tee said the report showed planning in disarray in Victoria.

"This report paints a picture of dysfunction and crisis in the office of the state’s highest planning authority, the Minister."

As The Age revealed in 2012, Mr Guy's initial approval of the rezoning followed approaches to his office on behalf of Ms Nicholls and husband Jim Hopkins (a Liberal Party member at the time) by family friend, former Kennett government planning minister and nearby resident, Rob Maclellan.

At the time of the rezoning in 2011, Mr Maclellan's former chief of staff, Meg Bartel, held the same position in Mr Guy's office. She left his office soon afterwards.

Fairfax Media understands that the Ombudsman's investigators did not interview Ms Nicholls, Mr Hopkins or Mr Maclellan. The report does not discuss Ms Bartels' departure from Mr Guy's office.

Mr Brouwer concludes that the Ventnor saga highlights the danger of bureaucrats feeling directed by ministerial advisers, when such advisers have no legal authority over public servants.

The report recommends written guidance to staff to ensure deparmental advice is frank and fearless, and that requests for changes to briefings from ministerial advisers is rejected.

The out of court settlement in August averted a potentially damaging Supreme Court case and followed threats by Ms Nicholls to reveal all about the events leading up to Mr Guy's initial rezoning, and around the subsequent pressure from senior Liberals to overturn the original decision.

In The Age in June Ms Nicholls claimed Mr Guy had visited her holiday home on Phillip Island months before the rezoning in September 2011 and, over the kitchen table, had given her a favourable hearing.

The minister denies discussing Ventnor when he visited the Nicholls property.

Fairfax Media understands that Mr Brouwer has not referred the Ventnor matter to the government's new Independent Broad-Based Anti-corruption Commission (IBAC).

Mr Guy said the Ombudsman’s report showed that claims against him and his office were unsubstantiated and highlighted a "smear" campaign against him.

In a fiery press conference, he accused The Age and the Labor party of colluding and called on both to apologise.

Mr Guy said: "There is no smoke, there is no gun, there is no bullet. The gun wasn't even loaded. This is a complete heist by the Labor party and indeed what has clearly been shown to be the left-wing hate media down at The Age."

He indicated he would be considering legal action.

"I am absolutely and utterly furious. I am absolutely outraged," Mr Guy said.

"I made this decision, not my department and thus these people are owed an apology.’’

The Age editor-in-chief Andrew Holden, said it was absurd to suggest the newspaper was running a smear campaign.

"This is what real journalists do. They investigate government decisions, they hold those in power up to scrutiny," he said.

"It is a pity that Mr Guy, in the midst of his outrage, defied the Ombudsman and refused to hand over important documents that were requested as part of his investigation. Clearly there were failures in this case, which simply underlines the need for independent media organisations."

- with Richard Willingham

rmillar@fairfaxmedia.com.au