Chief Minister Andrew Barr clearly needed to do something about the Land Development Agency, which had swerved off the rails into complex, perplexing land deals, in some cases without clear authority.
Whether his response – splitting the agency into two – was necessary is another question. The cynic will immediately note how conveniently this restructure dovetails with the government's desire to carve off a special precinct around the tram line.
The government has held this ambition for at least four years, since it brainstormed ways to "capture" increasing land values near Northbourne Avenue through special rating zones and levies, different planning rules and the like. That manifested itself in 2014 in a fast-track planning regime that was to apply to special precincts the government could declare. The fast-track planning was abandoned amid an outcry, but even then the government foreshadowed its intention to declare a special precinct around Northbourne.
The controversy besetting the LDA last year provided the opportunity. Now, under the banner of cleaning up the agency, the government has released a precinct map. The first special precinct is the Northbourne corridor, stretching to some blocks each side of the road to the city and the lakefront, with the government giving itself the power to declare other precincts if it feels the need.
The government hasn't provided details on how development might proceed in the precinct, although Barr has pointed to Southbank in Brisbane and Barangaroo in Sydney as processes he aims to emulate. Dwelling on the comparison briefly, an observer might note the detailed masterplanning and other work that was completed before the Barangaroo Delivery Authority went to market for bids. Barr already pushed through the demolition of Northbourne's public housing and sold off two of the biggest and most significant development blocks on the avenue, well before his nascent precinct.
That aside, it's enough to note that two imperatives appear to be at play here, not just the clean-up of the way the LDA does business. The clean-up did not need two new agencies, just one – or one new set of rules, and perhaps of personnel.
In setting up the replacement agencies, the Urban Renewal Authority and the Suburban Land Agency, Barr pointed to obligations in the legislation requiring that board members not pursue personal interests at the expense of the agencies, not use board membership to gain personal advantage, and not undermine the reputation of the agencies. Such fundamental obligations can hardly be new. But they point to one of the inherent problems with the way the LDA is structured. Close relationships between staff and developers, and between staff and consultants, are more than a problem of rogue operation; potential conflicts are embedded in the agency's structure.
The agency has enormous power. It is a monopoly sitting at the centre of the city's lucrative development industry. It controls the sale and release of land, and the price of land – for apartment blocks, shops and office space as well as new suburbs. It lets some of city's big civil construction contracts and develops most of those suburbs itself, designing them and setting block sizes and prices. In short, it has unequalled muscle, control and influence over land use. These are big powers involving big dollars.
In this context, an observer might ask why the LDA board is made up of people embedded in that very industry.
On the board is civil engineer Ross Barrett, former Colliers head Jim Shonk, Chris Purdon of Purdon Planning, architect Yvonne von Hartel of Peckvonhartel, lawyer and businessman Con Kourpanidis, ANZ economist Cherelle Murphy and public servant Sandra Lambert.
Barrett, the chairman, is director and part-owner of Woden Contractors, which has been contracted for more than $100 million of government work during his time on the board. Barrett makes no secret of his company but nor does he disclose it in his extensive biography on the agency's website, where he describes himself as a civil engineer.
Infrastructure for new suburbs is a large part of the agency's work and big business for companies like Woden Contractors. Of $114 million in government work that Woden Contractors has won since mid-2012, only a portion is with the LDA. About $83 million is from the Economic Development Directorate, which includes the agency, and about $32 million is from the Territories and Municipal Services Directorate.
Close relationships between staff and developers, and between staff and consultants ... potential conflicts are embedded in the agency's structure.
Agency chief executive David Dawes says the agency has only paid Barrett's company $14.7 million (some contracts are ongoing; others are with other agencies) since he joined the board almost five years ago, which is less than it paid in the 2½ years before that.
And he says Barrett does not take part in board discussions that relate to tendering of civil contracting work, regardless of whether Woden Contractors is a tenderer.
Shonk was, until 2012, a director of Colliers before he joined the LDA. The close relationship between Colliers and the agency was remarked on by Auditor-General Maxine Cooper in her investigation into land agency deals last year; Colliers has been by far the biggest recipient of real-estate agency work from the agency in recent years. Shonk has not been with Colliers since he joined the agency board, and Dawes says the board plays no part in appointing sales agents.
Purdon half-owns Purdon Planning with her husband Rob Purdon. The business is one of the most influential consultants in the city, employed by a string of developers in their applications for approval to government, including landmark projects such as SHL's Campbell 5 and the Cooyong development in the city, the Foy Group's plastics-to-fuel plant in Hume, the Canberra Centre, the Williamsdale solar farm, University of Canberra student accommodation, Australian National University student accommodation, and the Labor Party-owned Labor Club's hotel in Belconnen and apartment block in the city. Purdon Planning is also contracted directly by government for masterplans and other planning work, including on the light-rail project, the proposal for housing in west Tuggeranong, the Kingston Arts Precinct and the Cooyong planning.
Chris and Rob Purdon's business partner is Dexar, owner of the Independent Property Group; Dexar chief John Runko is their co-director in Purdon Planning. Independent is another of the big real-estate firms the LDA uses. Barr courted controversy last year when he recorded a video endorsement of Dexar.
Dawes says Chris Purdon has declared the potential conflict and removes herself from any discussions that may give rise to a conflict of interest relating to her company.
Asked how many times board members had stood aside from discussions because of a potential conflict, Dawes says it has happened three times in the past two years: twice in 2015 and once in 2016.
Board minutes for February 2015 show Barrett left the room when the board approved the awarding of an $18.8 million tender for Denman Prospect stage 1A1 civil construction to Group One.
There is no mention of Barrett absenting himself from the discussion in July 2015, when the board approved the contract for stage 1 of civil construction works at Throsby, but it seems likely he did, given part of the minutes are redacted. Unlike Denman Prospect, the minutes do not record the amount nor the winner, noting that the winner represented the best value for money and the highest score on health and safety. The government's contracts register shows the $19.25 million contract went to Barrett's company, Woden Contractors.
When the $24.2 million stage 2 civil construction contract for Throsby was awarded to Canberra Contractors in October 2015, board minutes record the winning company and the amount. They also note that a paper had already been circulated seeking board approval but not to Barrett, given his interest in Woden Contractors.
In November 2015, the board approved the contract for stage 3 of civil construction at Throsby. The minutes do not name the successful contractor, nor the amount. Again, part of the minutes that would indicate Barrett absented himself from the discussion have been redacted. This contract does not appear on the contracts website, but the LDA says it was awarded to Group One, which is not Barrett's company.
The government says its appointment of industry people to the board is deliberate: it wants and needs people with real-world experience. It also insists these conflicts are managed – through board members declaring their business interests upfront, declaring them again when any related issue comes to the board's attention and not taking part in discussions when their companies bid on related projects.
Surely a simpler, more transparent way to deal with such conflicts would be to appoint people who don't do business in Canberra.
Kirsten Lawson is The Canberra Times' chief ACT political reporter.