❓ Dr. Honey questions the Premier regarding the sale of the Midland Landgate property, alleging it was sold at an undervalue. The Premier defends the sale, citing independent assessments and cost savings.
AnsweredQoN 631Legislative Assembly
QuestionView source ↗
LANDGATE OFFICES — SALE
631. Dr D.J. HONEY to the Premier:
I refer to information from an FOI
request as revealed by Hamish Hastie in WAtoday on 24 October.
Several members interjected.
The SPEAKER : Order, please!
Dr D.J. HONEY : Thank you very
much, Madam Speaker.
I refer to the information from an
FOI request as revealed by Hamish Hastie in WAtoday on 24 October outlining how
this government sold the Midland Landgate property on the lowest value sale
scenario using the assumption of a vacant building.
(1) Why did the
government accept this scenario, considering the sale included a prime
government tenant for the whole 15-year lease period, making this a prime rental
property?
�(2) Can the
Premier explain how selling the Landgate building to avoid $12 million in
overall expenses will result in a saving to taxpayers when they will be paying
over $68 million more in rent than the building sold for?
(3) Why will the
Premier not release the modelling used to justify the sale to the public of Western
Australia?
631. Dr D.J. HONEY to the Premier:
I refer to information from an FOI
request as revealed by Hamish Hastie in WAtoday on 24 October.
Several members interjected.
The SPEAKER : Order, please!
Dr D.J. HONEY : Thank you very
much, Madam Speaker.
I refer to the information from an
FOI request as revealed by Hamish Hastie in WAtoday on 24 October outlining how
this government sold the Midland Landgate property on the lowest value sale
scenario using the assumption of a vacant building.
(1) Why did the
government accept this scenario, considering the sale included a prime
government tenant for the whole 15-year lease period, making this a prime rental
property?
�(2) Can the
Premier explain how selling the Landgate building to avoid $12 million in
overall expenses will result in a saving to taxpayers when they will be paying
over $68 million more in rent than the building sold for?
(3) Why will the
Premier not release the modelling used to justify the sale to the public of Western
Australia?
AnswerView source ↗
(1)–(3) I am pleased to answer that question, but at the
outset, I want to let the member know that the Auditor General has
reviewed this issue as part of the Department of Finance's 2021–22
financial audit. Finance has been told that the Auditor General has made no
findings in relation to the lease negotiation process or financial modelling that supported the sale and lease-back
transaction. The Auditor General has looked at it and that is the
finding. As I said, there is no issue with the financial modelling or lease
negotiations.
In
terms of the broader issue, the Landgate building in Midland is 30 years old,
or something of that nature . I have seen it over the years and it is a large
building. Landgate itself is now using only a small proportion of a very large
building. The building was old and it has had no major refurbishments or
upgrades in the last 30 years, so a market-led proposal was received on this
building. It was assessed as part of a rigorous three-stage assessment process
by two independent panels and committees comprised of senior public servants. It was recommended to cabinet twice that
we accept the proposal. The value of the land was tested on the market and determined by both Landgate and
a leading national commercial property firm. We had assessments of this
building carried out by two panels of senior public servants, the State
Solicitor's Office and a national commercial property firm, and
the Auditor General has found no issues in relation to it.
Part of the building has been leased
back. As part of that, two other offices from the Department of Communities will go into this building. It means
that we will not pay the lease costs on the two Department of Communities buildings and the actual overall
cost of this project is a $12 million saving on the alternative of us
having to refurbish the building. This is the commercial reality. We have to be
a bit flexible and innovative with these things. It has been assessed by a whole
bunch of people. It was not assessed by the political elements of government,
if you like, but the public servants on advice, and that is what was found to
be the appropriate way forward with this building. What happens next? The
building will be upgraded. There will be a coalescence of existing tenancies
into the building. There will be a fit-out. We will not have to pay the ongoing costs of the maintenance, the fit-out or the
upgrades. We will not have responsibility for cost escalation or
unexpected costs and, therefore, there will be an overall net saving on
government having to do that compared with this model.
outset, I want to let the member know that the Auditor General has
reviewed this issue as part of the Department of Finance's 2021–22
financial audit. Finance has been told that the Auditor General has made no
findings in relation to the lease negotiation process or financial modelling that supported the sale and lease-back
transaction. The Auditor General has looked at it and that is the
finding. As I said, there is no issue with the financial modelling or lease
negotiations.
In
terms of the broader issue, the Landgate building in Midland is 30 years old,
or something of that nature . I have seen it over the years and it is a large
building. Landgate itself is now using only a small proportion of a very large
building. The building was old and it has had no major refurbishments or
upgrades in the last 30 years, so a market-led proposal was received on this
building. It was assessed as part of a rigorous three-stage assessment process
by two independent panels and committees comprised of senior public servants. It was recommended to cabinet twice that
we accept the proposal. The value of the land was tested on the market and determined by both Landgate and
a leading national commercial property firm. We had assessments of this
building carried out by two panels of senior public servants, the State
Solicitor's Office and a national commercial property firm, and
the Auditor General has found no issues in relation to it.
Part of the building has been leased
back. As part of that, two other offices from the Department of Communities will go into this building. It means
that we will not pay the lease costs on the two Department of Communities buildings and the actual overall
cost of this project is a $12 million saving on the alternative of us
having to refurbish the building. This is the commercial reality. We have to be
a bit flexible and innovative with these things. It has been assessed by a whole
bunch of people. It was not assessed by the political elements of government,
if you like, but the public servants on advice, and that is what was found to
be the appropriate way forward with this building. What happens next? The
building will be upgraded. There will be a coalescence of existing tenancies
into the building. There will be a fit-out. We will not have to pay the ongoing costs of the maintenance, the fit-out or the
upgrades. We will not have responsibility for cost escalation or
unexpected costs and, therefore, there will be an overall net saving on
government having to do that compared with this model.
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